Confucius The Principle Of The Moral - 992 Words

During this semester, I learn lots of different ideas from different philosophers. I can get more knowledge and inspiration from the philosopher and I can think the question clearly in ways. However, the Confucius brings me a big influence and it is a very interesting because there are lots of ideas and concepts in a book called The Analects. In this paper, I will examine Confucius. Confucius is one of the most famous philosophers in China and he is a venerable teacher in the ancient China. The main concept of Confucius’ â€Å"Ren†. In Chinese, â€Å"Ren† means humanity and it is the principle of the moral. For people, humanity is a quality of human being. In another word, humanity is a part of a person s character and it represents the real nature of Also, â€Å"Ren† gives me some inspiration to help me to think about which kind of person I want to be. Learning in different ways, doing the right things in the appropriate position, treatment among people a nd the human’s nature are four things that I can learn from Confucius. One thing that I can learn from The Analects is a way of learning. Learning is an important process to help people to become mature because people’s brain can store more knowledge and people can apply their knowledge in the special circumstance. In chapter seven of The Analects, the Master said that one can become my teacher when I walk with two people. I will select their good qualities and follow them, and avoid their bad qualities. (7-22) This quote describes thatShow MoreRelatedThe Life and Work of Confucius Philosophy Essay Confucius1052 Words   |  5 PagesThe Life And Work Of Confucius Philosophy Essay Confucius (551 – 479 BCE), was a thinker, political figure, educator and founder of the Ru School of Chinese thought. Confucius was born at Shang-ping, in the country of Lu. His given name was Kong, but his disciples called him Kong-fu-tse, (i.e. Kong the Master, or Teacher.) His father passed away when he was only three years old. Confucius mother Yan-she raised him. During his younger years Confucius showed a love of learning, and an expression ofRead More Confucius and Confucianism Essay788 Words   |  4 Pagesthe most famous people in ancient China was a wise philosopher named Confucius (circa 551-479 BC). He was a great Chinese philosopher, educator, and political figure. His teachings and proverbs are in the Analects, which is the base of many Chinese theories. He was born in the village of Zou, and the state of Lu. His father died three years after Confucius birth leaving the family in destitution, but Confucius did have a decent education. 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After studying the Confucius theory of human nature, my outlook and view on many things have either been changed or at least question. I am left to wonder how being born into this belief system may impact an individual views of themselves, and the world around them. Overall Confucianism is a very practical belief system. Confucius seemed very optimistic about humans, in that the species could be improved if they trusted hisRead MoreConfucius Paper663 Words   |  3 PagesAccording to tradition, Confucius was born in the state of Lu (present-day Shandong Province) of the noble Kung clan. His original name was Kung Chiu. His father, commander of a district in Lu, died three years after Confucius was born, leaving the family in poverty, but Confucius nevertheless received a fine education. He was married at the age of 19 and had one son and two daughters. During the four years immediately after his marriage, poverty compelled him to become a sevant for the chief

Personal Experience In My Life - 1399 Words

My time working at a children’s psychiatric hospital helped me realize my strength and taught me more compassion than the rest of my life combined. Many times I had questioned if I was cut out for this work and if I was doing any good trying to help these children. I had to learn to walk on the fine line between growing thick skin and showing love and acceptance to kids who are seemingly unlovable. My experiences have continued to shape who I am had help give me perspective for when I find myself in difficult situations. I was just starting my senior year of college for my first degree. After several years of scrounging for hours between nannying, caregiving, and at an insurance agency, my nurse roommate suggested applying at her work, a†¦show more content†¦My teenage years, I was getting in trouble for back talking and going over my texting limits. Whereas these clients I came in contact with came from extremely broken homes, were dealing with substance abuse, and had more mental disabilities than I knew existed. Even more heartbreaking was the fact that they were between the ages of 5 and 18. As intimidating my week of orientation was and noticing all the areas I could not even begin to relate with my clients, I also had the reality that there was a reason I was led to this job and was hired on. I remember having the thought â€Å"By me smiling or not yelling when they mess up, I might be one of the only adult in their lives that shows them love.† This single thought kept me going and reminded me of why I continued to come to work each day. Based on lifestyles and experiences alone, I was not qualified and I would not make it more than a week. However, I was determined to not leave as fast as I came. My time at this hospital I learned that humor truly is great medicine. I made it my goal to find humor after each difficult shift. From one moment to the next, I might be breaking up fights between clients, holding a client in a safety hold to keep them from self-harming themselves, sitting outside of a seclusion room while an eight-year-old yells the most profane and derogatory terms at me, or simply listening to a girl tell me the horrors sheShow MoreRelatedMy Personal Experience In Personal Life774 Words   |  4 PagesMy mother perpetually advises me by stating â€Å"à ¦ ¸Ã  ¦ °Ã  § Ã  ¦ ¬Ã  ¦ ¦Ã  ¦ ¾ à ¦â€ Ã  ¦ ªÃ  ¦ ¨Ã  ¦ ¾Ã  ¦ ° à ¦ ¸Ã  §â€¡Ã  ¦ °Ã  ¦ ¾ à ¦â€¢Ã  ¦ °Ã  ¦ ¾,† which translates from Bengali to English as â€Å"always do your best.† Taking heed of my mother’s advice has led me to always try to be the best possible version of myself, in school and outside of it. Knowing myself, junior year was going to be arduous as is; I would be studying profusely for my SATs and ACTs, going nights with minimal sleep as I would be taking nine total classes, eight of which were Advanced Placement classes, andRead MoreMy Personal Experience : My Experience In My Life1003 Words   |  5 Pagesdifficult to write about my life—not because I do not know what to say, but because I am often fearful of sharing my experiences and having them impact how people view me. My identity and upbringing are not necessarily unique, but I have been in situations that society tends to be uncomfortable with. Repeated sexual assaults, psychological abuse, neglect, and financial hardships are factors in my life that I tried to forget when I started college. Now that I am at the end of my undergraduate educationRead MorePersonal Experience In My Life1002 Words   |  5 PagesA personal experience I have encountered would be growing up without my birth parents. 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Strategic Managements

Question: Writea strategic change management report of Nestle Company. Answer: 1.0 Introductions 1.1 Authorization and Purpose The purpose of this assignment is to develop a strategic change management report of Nestle Company. The report will apply relevant theoretical theories to explain different strategies taken by Nestle to grow as a world class organization worldwide. It will describe in detail the various components of strategic management such as industry analysis by PEST and Porters five force tool, cultural and leadership influences, a strategic process taken by the organization to develop its product and services, the organization structure and how they manage change. It will also highlight the strategic innovation initiative, corporate level strategy, and business level strategy. Therefore, the assignment will be a summary about Nestl's external and internal business environment. It will be useful study for new entrants venturing into food and business industry and starting their own line of products. 1.2 Limitation Though the focus of this assignment is mostly on Nestle company, some information will be given for general organizations too where there are similar ways of strategic management. 1.3 Scope This detailed report has immense scope for management student and those with an interest in marketing to understand the dynamic of work in a top organization like Nestle. It will help them get an understanding about how companies put efforts to gain a competitive advantage in the market despite the presence of innumerous competitors. 2.0 Organization name and background 2.1 History The foundation of Nestle was laid in 1905 by the merger of Anglo-Swiss Milk Company, and it was established in 1866 by George Page and Charles Page. The company has grown extensively since First and Second World War by expanding its offerings from condensed milk to infant formula products. Nestle is listed in Six Swiss Exchange, and it is a part of Swiss Market Index (Cardello and Wolfson 2014). 2.2 Size Nestle is one of the largest Swiss transnational food and beverage company in the world according to revenues earned. It has a large variety of products ranging from baby food, breakfast items, cereals, confectionery, dairy products, frozen food and many other snacks. Many famous brands of Nestle like Kit Kat, Maggi, Nespresso, Nescafe and many others has annual sales of more than one billion. According to most admired company list of Fortune 500 in 2015, Nestle Company was now ranked in 38the position. Nestle company has more than 450 factories operating in about 200 countries worldwide, and it has given employment to more than 4 lakh people. It is also the principal shareholder of the leading cosmetic brand, L'Oreal (Anderson 2014). 2.3 Location It is headquartered in Vevey, Vaud, Switzerland. It is the leading nutrition, health and wellness Company. They are now celebrating 150 years of Good Food, Good life. The Company has established its branch in principal countries of the world. 3.0 Industry context 3.1 Pest analysis Pest analysis is strategic management tool used by a company to identify threat and opportunities in business. It is an external analysis of company when doing marketing research giving detail about political, economic, social and technological factors about Company (Modi 2013). The following are the analysis of Nestle Company: Political- Nestle has made necessary changes to enhance their product and through their range of food products their focus is to create a healthier population. Nestle Company supports Government's effort to promote healthier diet and lifestyles for people globally. Through the introduction of healthier food option, they want to remove disease like obesity, diabetes, etc (Petrukevi ius and Granskas 2014). Economic- Nestle has excelled economically as it has developed its own brand reputation and it is renowned as fast moving sector in the world. It is the major job provider and has given employment opportunity to many people. They are also economic earning source for the local outlet. Thus, they have promoted economic and social responsibility of the community. They have provided the economy with a supply of quality of food product and sustained the growth of the economy. They have also brought improvement in agricultural production and economic status of farmers (Manzaneque Corona 2014). Social: Nestle has tried to decrease carbon emission from their products and minimized water withdrawal in the last decade. Their main aim is to improve a quality of consumers lives by offering healthier food and beverage choices. Their uniqueness lies in the fact that through their product they have created value both for shareholders and society. Shared value is achieved when they maintain their own business principles as well as protect the environment during the process (Pfitzer et al., 2013). Technology: Before launching any product, Nestle undergoes strict quality check and RD process. They constantly renovate their product using RD expertise. They have excelled in technological aspects by keeping the highly developed manufacturing unit; maintain best RD capability in food and nutrition and international quality and safety standards (Babatunde and Adebisi 2012). 3.2 Five force analysis Porters five force model will discuss the uniqueness and productivity of Nestle. These are as follows: The threat of new entrants: Food processing is a vast sector, so there is major chance of new companies entering the market and creating their own brand image. Nestle has faced stiff competition due to new entrants in the market, but still they have retained their market share. Many new entrants enter the market every year, but Nestle has been a leader in food market for centuries. Nestle has maintained its consistency, and so there is the negligible threat of new entrants for them (Trieloff and Buys 2013). The threat of substitute goods: Availability of substitute is higher in product marketing, and it leads to heightened competition in food industry sector. To survive this threat, Nestle has to renovate its product regularly to retain their market share. Some unique innovation strategy taken by Nestle includes introducing consciousness and wellness factor in its entire product. Such initiative will help Nestle to stay ahead of other substitutes (Babatunde and Adebisi 2012). Bargaining power of suppliers: As Nestle has offered quality in all its food products, it has helped them build the strong relation with their suppliers. This is possible only because of massive buying power and continuous quality improvement. Bargaining power of consumers: This is a dominant factor to judge any companies position in the market. Despite the availability of substitute products, Nestle has offered influential choices in its products to make it successful among its users. Nestle understands the importance of satisfying customers which become evident by their health and wellness programs for the new product offering (Horn et al. 2015). Competitive rivalry: Healthy competition is beneficial for the company in the long run. Though Nestle is a leading food processing company, still they have major rivals like Kraft Foods and Groupe Danone. Every company spends a lot on marketing campaigns. This is advantageous for customers as they continuously get improved product quality and better choices (Keegan and Campus 2016). 3.3 Industry life cycle Nestls focus is not only on healthier and tastier food, but also in improving environment impacts of their product from manufacturing level to customer reach. They have used Life Cycle Assessment (LCA) to understand the environmental value of their product throughout the production chain. LCA seeks to preserve water, use natural resource efficiently, reducing air pollution and waste, conserving biodiversity and adapting to climate change. A few example of LCA in Nestls product includes the following: They have introduced ready to feed plastic bottle for infants in Germany instead of glass bottles. This has helped to reduce greenhouse gas (GHG) emission and also improved air quality. The introduction of Nescafe refill pack in Italy instead of glass jar has contributed to reducing resource consumption and GHG emission (Adams et al. 2015). 4.0Organizational Context 4.1 Leadership influence Nestle has grown from a small town operating company to world leading food brand. They have achieved this through exceptional leadership principles which expect every employee to work according to Nestls culture and values. They are committed to the concept of shared value. They demand continuous improvement in each employee's performance so that companies performance gets enhanced. They have a code of business and conduct in which there are non-negotiable standards of employee behavior in key areas. Their extraordinary leadership style has led them to success, develop as a team, bring good results and compete and connect with the external environment. All these factors have lead to the creation of shared value for both shareholders as well as society (Nestle 2013). 4.2 cultural analysis Nestle beliefs, customs, and practices have benefited society in many ways. One example is the Cocoa Plan launched by Nestle. It was introduced to facilitate African cocoa farmers and took advantage of increasing market price by increasing their productivity. It had a very positive impact on society, and it minimized problems like child labor and lack of access to health and education. For example educating farmers on farming methods not only improved cocoa productivity but also made them aware of disease and prevention methods (Mbugua 2012). 5.0 Strategy formation 5.1 Strategy process Nestls objectives are to be renowned as leading company in health, nutrition and wellness. Their slogan Good Food, Good Life' sums up their targets. This strategy formulation process takes place after analysis of current situation in the world and then identifying future objectives and missions for the company. Once the vision is defined, ones can formulate a detailed strategy. For example, Nestle objectives are clear in the above statement, so to achieve that they will plan and implement various strategies in alignment with their mission (Areal et al. 2016). 5.2 Intended strategies Nestle believes that trust is built over a long period by delivering on quality and promise. Their corporate ambition is Good Food Good Life and for this their intentions is to create alignment with their employees with their strategic priorities, so that it accelerates chances of fulfillment of objectives. They want from their people exceptional performance and the inspiration to build for the future wellness of the company. They seek to achieve their goal through short-term entrepreneurial action and leadership skill. They want to build trust by satisfying the expectation of consumers, shareholders, and community. They believe in creating shared value. For better performance in the future, they are investing a lot in future to sustain their people, technology, brand and R D. So they intend to meet today's need without compromising on future needs and create a great return for their shareholders (FitzRoy et al. 2012). 5.3 Emergent strategies Keeping in line with their objectives, their emergent strategy is to renovate their food and beverage portfolio consistently. The researcher of Nestle wants to explore nutritional therapy to maintain the health of the community. Their current strategy is to overcome all the challenges to global nutrition, health, and wellness and build an influential partnership with policymakers, stakeholders and leaders to have a positive impact on society. Through their product, they empower informed the decision regarding their food choices. They have also proposed a science based education programme "Start Healthy and Stay Healthy". Through this, they intend to educate parent about the nutritional needs required for a child during first 1000 days of life. There is Nestle Healthy Kids Programme to promote a healthy lifestyle in children through nutrition teaching and physical activity. They proposed to reduce an amount of salt, sugar, and saturated fats in their product as well as maintain consum er preference. For the better informed decision of consumers, they have improved labeling and printing guidelines daily amount in their product. Their strategic roadmap guides the organization forward towards their goals and gains competitive advantage in the process (Schlegelmilch 2016). 6.0 Strategic change 6.1 Business model There are eight elements of business models. These are as follows: Value proposition: Nestle has been creating value for its customers for many years. Due to the positive image and value creation, customers always rely on the products of Nestle. Revenue model: Nestle has their own revenue model, and they are generating enough revenue to pay back returns to investors by selling a different range of food products. Market opportunity: the Different market has a different market niche. As Nestle is dealing with daily consumed food products, they have the excellent market opportunity. Competitive environment: Nestle company has recognition worldwide, so competitors are trying to look for its weak points. Example Coca Cola is an active competitor as they had launched Aquafina against Nestle Water (Matzler et al. 2013). Competitive advantage: As Nestle has maintained its brand value since many years, they enjoy a competitive edge over other customers. They have constantly evolved and adapted to changes in the world market. Their core business principles represent fairness, honesty and concern for people. Market Strategy: As mentioned above, Nestles market strategy is focused on maintaining health wellness and nutrition through their product. They have guaranteed quality through their product and maintained safety of consumers as well as their employees. They have focused on building good relationship both with consumers as well as shareholders. They have plan for implementation of international code of marketing for breast milk substitutes. Organizational development: Through its marketing strategies, Nestle has efficiently maintained their reputation and developed the organization. Team Management Through influential leadership, Nestle has ensured that their employee works according to their values and principles and enhance their performance (Amit and Zott 2012). 6.2 Organization Structure Managing directors come in the top level of the organization structure of Nestle. Next level consists of the following: Marketing and sales manager ( National Sales Manager and goods manager work under them) Technical Manager- (plant manager and corporate manager) Supply chain manager (dealing with distribution service, operation and demand and supply planning). Finance Control Manager Corporate HR Manager Corporate quality assurance manager (Rezaeegiglo et al. 2014). 6.3 Magnitude of change Nestle operates in more than 100 countries, and it has to deal with diversity challenges in the international marketing plan. The result was that each business unit was not linked to a computer system from its headquarter. So it could not find ways to track performance at each level. This ineffective information system meant Nestle Company could dominate over its buying power and bargain with suppliers for better deals. So the operating cost was high (Harmon 2014). 6.4 Pace of change In response to the issue, Nestle management is planning to launch a standardized information system through which they could connect to 500 units worldwide. To facilitate this change quickly, they have involved top business executives and information system professionals for the project. The pace of change suffered initially due to employee resistance as they were not communicated about the need to change. Once this problem was addressed, the change was addressed quickly (Adams et al. 2015). 7.0 Strategic Innovation 7.1 Strategizing The vice president of Innovative Partnership at Nestle, Helmut Traitler has promoted open innovation in the company in the form of reorienting strategies with the view of sharing is winning'. Open innovation occurs when any company is ready for intellectual and technological openness, and innovative ideas move across the organization. In Nestle Company, innovation was brought only in packaging, and it mostly depended on its internal RD for innovative plans. But now they are strategizing on removing the past trend and expand its global partnership with the slogan sharing is winning. Their target is to achieve additional $5 billion growth each year. During economic crisis also, they also want to spend more than 2 billion dollars on RD every year (Deschamps and Nelson 2014). 7.2 Entrepreneuring Active entrepreneurial action drives Nestle's strategic innovation. Persons like Helmut Traitler have played a role in shifting their ideas to embrace open innovation. An entrepreneur in organization researched on opportunities and source of innovation and identified a level of change needed in the organization. They have the expertise to apply correct principles successful innovation (Rhaume and Gardoni 2016). 7.3 Venturing Venturing is related to what type of changes any entrepreneur want in the organization and how they go about to fulfill those ventures. At Nestle, the entrepreneurs stressed on achieving results and success as fast as possible. Traitler emphasized the need of developing exceptional internal RD facility as they share their resources with external partners during project development. The chance of failure or success depends on authenticity of organization (Martinez 2013) 7.4 Alignment The enormous size of Nestle is both an advantage and hurdle for the company to implement the innovative strategy. The company has to be aligned to its principles and values to meet its strategic objectives. Since there are about more than 2.5 lakh employees at Nestle, knowing each of them might be a problem. Companies often suffer due to miscommunication, but leaders can play a role in overcoming this issue (Bigliardi and Galati 2013). 8.0 Missioning and visioning 8.1 Purpose Nestle want to truly represent their slogan of Good Food, Good Life. They want to be renowned as a company promoting health, nutrition and wellness through their products. Their focus is on satisfying their customers by giving best of products range. Their purpose is to develop product keeping in mind customers preference and taste. They also want to promote environmental well-being by reducing carbon gas and other emissions from their product (Moura et al. 2015). 8.2 Beliefs Their belief is that they have given the quality product to their consumers for many years, and so they can retain the trust of customers if they consistently maintain their brand image. They intend to serve their customers better by offering a new range of products and improve existing products. The logo of Nestle is very apt according to its slogans. Henri Nestle chose the logo of a birds nest with a mother feeding her young baby (Gandini et al. 2014). 8.3 Values The values and beliefs of Nestle can be understood by its logo of a mother feeding a young bird. Therefore, the logo represents the core value of Nestle, which are care, nutrition, family values, promoting healthy growth, safety, and comfort. Therefore, they are committed to their values by providing quality and nutrition in their food products. Nestle has maintained its commitment toward health and wellness throughout the years and helped consumers to live longer and productive life irrespective of age, gender or socio-economic status. Three essential ingredient of their success includes their employees, their developmental strategies, and commitment to quality. Their dedicated employees are their source of assets and strength, and they give them continuous professional development (Shankar and Perumal 2014). 8.4 SMART objectives Nestles major goal was to be recognized as a world leader in nutrition, health, and wellness. They wanted to be trusted by its stakeholders and excel in their financial performance in the food processing industry. Therefore above facts suggest that Nestle is very specific about its priorities of creating shared values for both shareholders and the community. They also want to implement these objectives after compliance with culture, values, and principles of Nestle. This will help them to develop a sufficient and sustainable plan (Ng and Dunford 2013). Their goal is very specific, and it can be measured by comparing the annual revenue of Nestle with other companies every year. They feel that their objectives are achievable as they have significant resources in the form of 2,80,000 employees worldwide and they have maintained their reputation in nutrition industry till now. The times needed to achieve any strategy depend on different plans". For example "The Nescafe Plan" aim was to complete the project by 2020. It is a global initiative by Nestle for promoting responsible farming, production, and consumption of coffee. They want to meet increasing demand for coffee, but they may face challenges like the low yield of coffee, fluctuating prices, coffee farming being challenged by alternative crops and stiff competition for raw materials (Luna-Reyes et al., 2016). Their plan will help in responsible farming in four ways: Training: Nestle wants to train farmers on better farming techniques and giving proper guidelines. Since the inception of the Plan in 2010, till now they have trained about two lakh farmers. Connecting with farmers: Nestle wants to collect green coffee locally and improve it at the farm level. Connecting with farmers, they want to maintain sustainability standard of coffee. This initiative helped them produce 1,80,000 tonnes of coffee by 2013. They also want to supply coffee in compliance with Sustainable Agricultural Network Principles by 2020. Maintaining future of coffee farms: Nestle has invested in the improvement of coffee trees through RD centers in France. The intention behind this is to give the farmers the feeling that coffee growing is an attractive means of earning livelihood (Bee et al. 2015). 9.0 Business level strategy 9.1 Product Nestles business level strategy is guided by the company's principles and values. They have constantly renovated their products and maintained a balance between it supply and product lines. They never compromise on quality to achieve short-term objectives. They strive to give the best and unique food products to its consumers. Their aim is to drive their business based on human values and health. Through their scope of operations in different countries, they want to commit to health and well-being of people. They have differentiation strategy to minimize the complexity of supply chain. Nestle now has the exclusive range of about 2000 brands. All the brands are supplied according to the target market. The range of products includes coffee, water, infant foods, cereals, frozen foods, beverages, confectionery, seasonings and many other things. Some important brands like Nestle Nuggets, Nestle corn flakes, Acti-V, Aqua-mineral, Cerelac, Neslac, etc (Hrebiniak 2013). 9.2 Value chain Nestle has developed their business level strategy in a span of 140 years. Nestle first successful product was infant cereal Farine Lactee'. Since then they have built their business with the belief to attain success in the long-term. They want to follow the legal requirement in the food industry and maintain sustainable activity for society. Therefore, they want not just value for their money, but they also want to create significant value for the community. They call this intention as creating shared value. They ensure that all employees follow update version of Corporate Business Principles, and they provide training to improve consumer's adaptability to the principles. There might be comprehensive modular training. As Nestle is operating in many countries worldwide, they ensure that they market their product according to local legislation and cultural practices of selected country. The features of their value chain include: Promoting nutrition, health, and wellness through their products. Nestle give assurance of quality and product safety throughout their world by maintaining a high standard of product. They have efficiently communicated with consumers to provide them with the right to informed choices in their product. Accurate labeling and nutritional information provide users to make their own healthy choices. They have maintained good human rights and labor practices by supporting United Nations Global Compact principles. Nestles success is dependent on their influence leadership ad skillful workers. There is a good range of respect and dignity between them. They appoint competent people and provide equal opportunities for development of employees skills They promote safety and health at work by giving a minimum chance of an accident at production unit. They also commit to sustainable business practices and utilize natural resources efficiently (Bee et al. 2015). 9.3 Resources Proper utilization of the resource is vital for the success of one's business. Any organization has two types of resource-one is tangible, and other is intangible. Tangible assets are company's visible assets, and intangible resources are companies definite asset accumulated through their history. Any competitors can identify tangible resource of other, but they cannot track intangible assets of competitors in the market. For example, one cannot imitate particular organization's financial, technological, physical and organizational assets. Conventional intangible assets include target consumers, innovation in company and reputation or brand image. Nestle has an enormous financial resource regarding total revenue generated, operating income, profit and total assets. Its unique organization resource includes their governing body of stakeholders, chairperson and directors of the company, its manufacturing unit worldwide and exclusive product technology centers. It physical resources are its variety of products such as baby food, health care nutrition, confectionery, water, pharmaceuticals, etc. More than three lakh employees of Nestle are its valuable intangible resource. It has other innovative resources in the form of world class science and technological resource to build its unique range of excellent healthy product. Reputational resource means it efforts by consumers to meet customers demands and expense of research activity (Nestle 2016). 10.0 Corporate-Level Strategy: 10.1 Vertical and Horizontal Integration Depending on much analysis, the conclusion is that the growth of Nestle came in the direction of Horizontal Integration. The reason why the growth of Nestle is termed as horizontal is because of its expansion in the food industry by merging with the well knew food processing industry referred to as the Anglo-Swiss Condensed Milk. This merger was very helpful for Nestle as it helped in the expansion of their products and made many resources available to this company. The horizontal integration extended to other countries also such as Spain, U.S, and Germany. Initially, the growth expanded internally within the organization, however, later it spread to the whole of Brazil. The company merged with Maggi. This merger was an indication that the corporation shall soon grow more within the food industry (Sanchez Rodrigues et al. 2015). 10.2 Diversification The diversification of Nestle started at the beginning of the 20th century. In the year 1904, the introduction of chocolate rights gave rise to new products under the Peter and Nestle brands. Like the competitors, Nestle struggled to boost sales in the European Market. It is a rumor that Nestle agreed to pay 500 million pounds to acquire Prometheus Laboratories. This is not the first acquisition of Nestle. Nestle has acquired many companies that were regarded as a leader in health science nutrition. It was Nestl's aim to become a leader in the coffee, baby food, and powdered milk products. Hence, Nestle focuses on increasing the strategic growth of the company. Health care markets are expected to grow rapidly than other food market products. Developing nations have people that are old. Hence, such kind of consumers is prepared to spend a considerable amount of money in health and nutrition. The profit margins of health care markets are also very high as compared to food products. The reason behind this is that people have become more careful about their health than any other thing, and that is why the pharmaceutical industry has become very popular (Kang 2013). 10.3 Strategic Business Units Since the foundation of Nestle in the year 1866, it has grown as the worlds largest market food company. This is an indication that shows that the strategic market of Nestle is already very strong. Nestle is organized into seven different global strategic units and engages in the overall strategic business development. Equivalent to this structure, Nestle is organized into five major geographical zones such as America and Europe. The regional development of Nestle is proof that it has an excellent strategic business program that is responsible for the overall development of the strategic business units of Nestle. However, as a universal company, Nestle faces many challenges and problems. The challenges may vary from environmental, social and economic issues. However, Nestle has the responsibility of operating decisions in many local units. This means that Nestle has a certain degree of independence relating to price distribution and marketing (Appiah-Adu and Amoako 2016). 11.0 Conclusion The whole report summarizes the strategic management process of Nestle Company. It has given valuable insights into what factors have contributed to the success of Nestle as the global brand. It has given the idea of how companies can build its reputation globally and also sustain it despite the presence of various competitors in the market. Through the industrial analysis of Nestle, we can get an idea about factors that influence its business and how they have overcome hurdles in their business. It has analyzed how different kinds of threats faced by Nestle in its history of marketing. The report has given information about influential leadership style and strategies taken by leaders to develop employees and enhance their product quality. It has also explained the strategic level of change in the company and how the company is driven innovative changes. The report has mentioned about the role of entrepreneurs in implementing innovative strategies and how they strive to keep it align ed with company's principles and values. The report on Nestle has given clarity about their specific mission and purpose and their SMART objectives. It has described their range of products and their way of creating shared values. Lastly, corporate level strategies highlighted how Nestle has expanded its business throughout the world and maintained their brand image since 140 years. It highlighted how they used corporate level strategies to expand its business units and diversified its business by operating in different countries and offering world class products. 12.0 Recommendation The report on the strategic management of Nestle was based on different management theories. Though Nestle has excelled in the successful implementation of their strategies, other companies might find it too difficult to bring management theories in to real world practice. Nestle constantly maintained uniqueness and quality of their products to achieve competitive advantage in the food and beverage industry. So the success of any company will depend on the culture of the organization and their execution skills. If any business wants to create a niche in their society, they will have to distinguish their products from others in the market and create a value for their product by advances in technological and other aspects. Nestle is a trendsetter in the food industry and new entrants entering this industry may take lessons from Nestles strategic management activities. This will help them to excel in their business and create their own niche in market full of competitors. Reference Adams, A., Schenker, U. and Loerincik, Y., 2015. Life Cycle Management as a Way to Operationalize the Creating Shared Value Concept in the Food and Beverage Industry: A Case Study. InLife Cycle Management(pp. 341-348). Springer Netherlands. Adams, A., Schenker, U. and Loerincik, Y., 2015. Life Cycle Management as a Way to Operationalize the Creating Shared Value Concept in the Food and Beverage Industry: A Case Study. InLife Cycle Management(pp. 341-348). Springer Netherlands. Amit, R. and Zott, C., 2012. Creating value through business model innovation.MIT Sloan Management Review,53(3), p.41. Anderson, P. (2014). Corporate Social Responsibility-The Impact of Size and Ownership on Company Decision Making: the Food Industry. Appiah-Adu, K. and Amoako, G.K., 2016. The execution of marketing strategies in a developing economy: A case study of selected market leaders.African Journal of Economic and Management Studies,7(1), pp.9-29. Areal, A., McIntosh, B. and Sheppy, B., 2016. Hope and glory: an expanded social strategy diagnosis model to incorporate corporate social responsibility within business strategy.International Journal of Business Performance Management,17(2), pp.117-131. Babatunde, B.O. and Adebisi, A.O., 2012. Strategic environmental scanning and organization performance in a competitive business environment.Economic Insights-Trends Challenges,64(1), pp.24-34. Babatunde, B.O. and Adebisi, A.O., 2012. Strategic environmental scanning and organization performance in a competitive business environment.Economic Insights-Trends Challenges,64(1), pp.24-34. Bee, J., Diby, P., Mback, B. and Wettstein, B., 2015. Nestl: Sustainable Value Chain Management from the Farm to the Fork. InSustainable Value Chain Management(pp. 313-325). Springer International Publishing. Bee, J., Diby, P., Mback, B. and Wettstein, B., 2015. Nestl: Sustainable Value Chain Management from the Farm to the Fork. InSustainable Value Chain Management(pp. 313-325). Springer International Publishing. Bigliardi, B. and Galati, F., 2013. Models of adoption of open innovation within the food industry.Trends in Food Science Technology,30(1), pp.16-26. Cardello, H. and Wolfson, J., 2014. Lower-Calorie Foods and Beverages Fuel Growth at Healthy Weight Commitment Foundation Companies. Deschamps, J.P. and Nelson, B., 2014. Innovation governance: How top management organizes and mobilizes for innovation.management,42, p.3. FitzRoy, P., Hulbert, J., Ghobadian, A. and O'Shannassy, T., 2012.Strategic management: the challenge of creating value. Routledge. Gandini, G., Gennari, F. and Cassano, R., 2014. Global responsibility and strategic risk management.Journal of Business management and Applied Economics,3(5), pp.1-17. Harmon, P., 2014.Business process change: a business process management guide for managers and process professionals. Morgan Kaufmann Publishers Inc.. Horn, I.S., Taros, T., Dirkes, S., Her, L., Rose, M., Tietmeyer, R. and Constantinides, E., 2015. Business reputation and social media: A primer on threats and responses.Journal of direct, data and digital marketing practice,16(3), pp.193-208. Hrebiniak, L.G., 2013.Making strategy work: Leading effective execution and change. FT Press. Kang, J., 2013. The relationship between corporate diversification and corporate social performance.Strategic Management Journal,34(1), pp.94-109. Keegan, T. and Campus, U.H., 2016. Strategic Management in an International Context. Luna-Reyes, L.F., Andersen, D.L., Andersen, D.F. and Jarman, H., 2016. Collaboration and Trust Building Among Public and Private Actors. InPrivate Data and Public Value(pp. 47-66). Springer International Publishing. Manzaneque Corona, E., 2014. Comparison of marketing policies applied by the same company in different countries and analysis of the reasons for the differences. Martinez, M.G. ed., 2013.Open innovation in the food and beverage industry. Elsevier. Matzler, K., Bailom, F., Friedrich von den Eichen, S. and Kohler, T., 2013. Business model innovation: coffee triumphs for Nespresso.Journal of Business Strategy,34(2), pp.30-37. Mbugua, T.W., 2012.Corporate social responsibility and competitive advantage in multinational food and beverage companies in Kenya(Doctoral dissertation). Modi, S., 2013. Study on Food and Dairy Industry. Moura, A., Branco, M. and Camoesas, M., 2015, June. NESTL, A GLOBAL FIRM AND ITS CUSTOMER RELATIONSHIPS. InIMC 2015 International Management Conference 26th June 2015(p. 96). Nestle, M., 2013.Food politics: How the food industry influences nutrition and health(Vol. 3). Univ of California Press. Nestle, M., 2016. Food, Agriculture, and Rural Policy into the Twenty-First Century: Issues and Trade-offs.Men's Health. Ng, S.W. and Dunford, E., 2013. Complexities and opportunities in monitoring and evaluating US and global changes by the food industry.obesity reviews,14(S2), pp.29-41. Petrukevi ius, J. and Granskas, J., 2014. Reducing NESTLE BALTICS vending machines idle time.Petrukevi ius, J. Reducing NESTLE BALTICS vending machines idle time: bachelor thesis [Manuscript]. Vilnius, ISM University of Management and Economics, 2012. Pfitzer, M., Bockstette, V. and Stamp, M., 2013. Innovating for shared value.Harvard Business Review,91(9), pp.100-107. Rezaeegiglo, R., Sadouni, A., Aref, F., Khotbesara, P. and Eslam, N., 2014. Review and Rating factors affecting the Deployment of (CRM) Customer Relationship Management at Nestle Company.International Journal of Academic Research in Business and Social Sciences,4(1), pp.539-547. Rhaume, L. and Gardoni, M., 2016. Strategy-making for innovation management and the development of corporate universities.International Journal on Interactive Design and Manufacturing (IJIDeM),10(1), pp.73-84. Sanchez Rodrigues, V., Harris, I. and Mason, R., 2015. Horizontal logistics collaboration for enhanced supply chain performance: an international retail perspective.Supply Chain Management: An International Journal,20(6), pp.631-647. Schlegelmilch, B.B., 2016. The Future of Global Marketing Strategy. InGlobal Marketing Strategy(pp. 221-249). Springer International Publishing. Shankar, N. and Perumal, P.V., 2014. A comprehensive strategic evaluation of success of Amul model.EXCEL International Journal of Multidisciplinary Management Studies,4(6), pp.222-232. Trieloff, W. and Buys, P.W., 2013. An analysis of the competitive business environment of a family run Brazilian auditing firm.International Journal of Auditing Technology,1(1), pp.52-74.

What Are Your Ambition in Life and Explain How Will You Achieve Them free essay sample

China will expand 6. 5 percent this year, the World Bank said, down from an earlier forecast for 7. 5 percent growth and compared with 9 percent growth last year, as export demand weakens in the United States, Europe and Japan. However, Beijing’s $587 billion stimulus will help it shift growth to personal consumption and spending on services, the World Bank said in its twice-yearly report. Government investment and banks’ small exposure to losses on the U. S. mortgage derivatives that sparked the global slump will also help China grow, it said. Nehru said that a recovery in the world’s third-largest economy would be reflected in a continued rise in the price of commodities, which, while still declining, had experienced a stabilisation. He warned that the sharp economic deterioration had led to millions of job losses across Asia, not yet fully reflected in official unemployment data. Growth in Indonesia will slow to 3. 4 percent this year, down from a previous forecast for 3. We will write a custom essay sample on What Are Your Ambition in Life and Explain How Will You Achieve Them or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 8 percent, the report said. Indonesia may return to 5 percent growth as the government fiscal deficit last year was 0. percent of gross domestic product, meaning policy makers have room to launch fiscal stimulus.The global economic crisis and the security threat posed by North Korea’s rocket launch will grab much of the attention this weekend when Asian leaders gather in Thailand for their annual summit. It will be the first meeting of the leaders of Japan, China and South Korea since Sunday’s launch of what North Korea called a satellite, but which many countries saw as a thinly disguised test of a rocket capable of hitting the United States. The summit, which gets underway on Friday in the beach resort of Pattaya, also comes barely a week after G-20 members agreed a $1. 1 trillion blueprint to revive the global economy. Other issues, ranging from energy and food security to climate change and world trade, will also be discussed by leaders of a region encompassing three billion people and which accounts for nearly 30 percent of global GDP. The 10 members of the Association of South East Asian Nations (ASEAN) span the political and economic spectrum: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

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Free Essays on Ethics In Decision Making

Ethics in Decision Making The decision making processes that people go through in their lives can have many different influences. One of the more important influences in the decision making process is the ethics involved in a decision. This begs the question, â€Å"What are ethics?† One definition of ethics could be a structured set of guidelines for personal and professional behavior (Houghton Mifflin Company, 2000). Another definition could be the study of the moral choices people make, and what drives these choices (Houghton Mifflin Company). Regardless, not all decisions carry a significant ethical weight. It is important to recognize the decisions that do have ethical questions attached to them and to weigh the decision against an ethical standard. Ethics can have gray areas and vary from one culture to culture, or even from one person to the next. One person may decide it is ethical to sell a car â€Å"as is†, knowing the car needs expensive servicing or repairs. This person may suppose that the buyer should read into the â€Å"as is† tag and understand the inherent risks associated. This ethical standard could shock someone else who might think it the worst sort of deception. The key is to reflect on the values of the society in which you live, and the personal moral code that one lives by. In a society such as mainstream America, the above sale would be legal and even ethical in most jurisdictions. Ethical standards are particularly applicable to business and professions, and as such are largely constructions of laws. Despite the legality of the aforementioned car sale, such an act would likely be viewed unfavorably by the majority of people in American society. As such, any person who chose to try and make a living selling cars must understand that while the sale was legal, society will not tolerate this and act decisively. People would eventually choose not to buy cars from that person. They would tell their fri... Free Essays on Ethics In Decision Making Free Essays on Ethics In Decision Making Ethics in Decision Making The decision making processes that people go through in their lives can have many different influences. One of the more important influences in the decision making process is the ethics involved in a decision. This begs the question, â€Å"What are ethics?† One definition of ethics could be a structured set of guidelines for personal and professional behavior (Houghton Mifflin Company, 2000). Another definition could be the study of the moral choices people make, and what drives these choices (Houghton Mifflin Company). Regardless, not all decisions carry a significant ethical weight. It is important to recognize the decisions that do have ethical questions attached to them and to weigh the decision against an ethical standard. Ethics can have gray areas and vary from one culture to culture, or even from one person to the next. One person may decide it is ethical to sell a car â€Å"as is†, knowing the car needs expensive servicing or repairs. This person may suppose that the buyer should read into the â€Å"as is† tag and understand the inherent risks associated. This ethical standard could shock someone else who might think it the worst sort of deception. The key is to reflect on the values of the society in which you live, and the personal moral code that one lives by. In a society such as mainstream America, the above sale would be legal and even ethical in most jurisdictions. Ethical standards are particularly applicable to business and professions, and as such are largely constructions of laws. Despite the legality of the aforementioned car sale, such an act would likely be viewed unfavorably by the majority of people in American society. As such, any person who chose to try and make a living selling cars must understand that while the sale was legal, society will not tolerate this and act decisively. People would eventually choose not to buy cars from that person. They would tell their fri...

The Failure of the Peace Process in the Middle East Essay

The Failure of the Peace Process in the Middle East - Essay Example   Ã‚  Ã‚  Ã‚  Ã‚   Amongst these were associates of the Palestinian government, as well as Yaseer Arafat himself, presenting their pity to the Engineer’s relatives. The Israeli officers were in touch with the Palestinian government bureaucrats, earlier to the assault and they in fact talked to one another regarding whether or not to go further on with this intended murder. Enderlin writes that Shimon Peres and his consultants thought that it would be excessively dangerous from a political point of view to miss the act, since if Ayyash were capable to accomplish the suicide bombing earlier than the future elections the opponent leader, would be proficient to articulate that they did not do something when they had the opportunity.  Ayyash murder was the start of a series of proceedings that would eventually direct to the conclusion of the Oslo agreements. Next to the huge interment, Hamas hit back in a sequence of vicious suicide bombings in Jerusalem. Under the situation, i t made logic for the Israeli community to choose Benyamin Netanyahu who assured the safety that they so desired. This is right. Right away next to Rabin’s murder, the Left in Israel was very sturdy and the suicide bombings did harm them at the ballots. Though, it was not an exact bombing only that directs to Peres overwhelm. One of the most amazing and disastrous features about Enderlin’s story is just how slam Barak and Arafat’s cooperation groups had come to fundamentally finalize an contracts.... Eventually, Enderlin writes that Shimon Peres and his consultants thought that it would be excessively dangerous from a political point of view to miss the act, since if Ayyash were capable to accomplish the suicide bombing earlier than the future elections, Benyamin Netanyahu, the opponent leader, would be proficient to articulate that they did not do something when they had the opportunity. Ayyash murder was the start of a series of proceedings that would eventually direct to the conclusion of the Oslo agreements. Next to the huge interment, Hamas hit back in a sequence of vicious suicide bombings in Jerusalem. Under the situation, it made logic for the Israeli community to choose Benyamin Netanyahu who assured the safety that they so desired. This is, in some way, right. Right away next to Rabin's murder, the Left in Israel was very sturdy and the suicide bombings did harm them at the ballots. Though, it was not an exact bombing only that directs to Peres overwhelm. The whole Arab-Israeli society, who would have with no hesitation chosen Peres, boycotted the elections in dispute of the horrifying disaster at Kfar Kana, where approximately 100 Lebanese inhabitants passed away owing to the disgusting carelessness of the Israeli armed forces.One of the most amazing and disastrous features about Enderlin's story is just how slam Barak and Arafat's cooperation groups had c ome to fundamentally finalize an contracts. Shattered Dreams the Failure of the Peace Process in the Middle East by Charles Enderlin 3 All of the things were in its place, President Clinton, who was on his way away of workplace,

3. Report - Base on Case study Assignment Example | Topics and Well Written Essays - 1000 words

3. Report - Base on Case study - Assignment Example Cliff Lewis has been ranked the highest for providing adequate support to the employees for the growth of the department. Before appointing Cliff Lewis as a head of the Department of Town Planning, the department consisted of 55 employees. It has been identified that out of 55 employees, 35 are appointed for technical purpose, 5 are appointed as a project directors and 5 are appointed as expert coordinator. Moreover, rest of 5 employees are appointed for the administrative support. On the other hand, the Department of Economic Development is ascertained to be organised in an effective manner. Cliff Lewis has been identified to be making efforts to design the department in an organised manner. The Department of Economic Development has been restructured by Cliff Lewis by developing four business units with 25 employees. The employees are recognised to be assigned with specific job roles based on which operations are needed to be performed. The Department of Town Planning is suffering from a poor infrastructure. It has been also observed that the Department of Town Planning has failed to achieve several responsibilities within the due time. In this regard, numerous conflicts have been witnessed with the organisation for increasing complexities and lack of business effectiveness (Rochdale Borough Council, 2015a; Hickman & Banister, 2007). It is expected that after being appointed in the position of Head of Planning for South Berkshire Borough Council, Cliff Lewis has been planning to bring various changes in its operational performances as well as structural base. Cliff Lewis has decided to develop a new planning relating to Town Planning and Development Department (Pennsylvania Department of Community and Economic Development, 2000). More elaborately, it can be ascertained that Town Planning is a part of national law of the country. Initially, Cliff Lewis has been planning to develop a

Javascript Essay Example | Topics and Well Written Essays - 1500 words

Javascript - Essay Example Furthermore, needs change as a system is developed so the needs as identified when the system was specified may be different by the time that the system is tested. V & V process involves the whole life-cycle process it must be applied at each stage in the software process. It has two principal objectives namely the discovery of defects in a system and the assessment of whether or not the system is useful and useable in an operational situation. V & V should establish confidence that the software is fit for purpose. This does NOT mean completely free of defects. Rather, it must be good enough for its intended use and the type of use will determine the degree of confidence that is needed. The making of the game was quite enjoyable. The JavaScript usage was done to its extreme level for the use of DOM objects and extensive use of functions. The various details regarding the JavaScript would enable us to develop applications and make sure that all the various knowledge is used for enhancing technology. The various DOM and the JavaScript functions used enable us to understand the power of functions and discuss the variability of the various arguments. The events in JavaScript are used at its exhaustiveness and make sure that all the various solutions are quite knowledge oriented for its advanced use. The true use of the programming ability of JavaScript enables one to fetch a large knowledge in the use of functions, events and DOM structure to develop quite complex programs for developing better products and technologies. The Nougat and Crosses game has enhanced my vision towards the subject and the powerful components of the subject which is yet to be exploited for better use. The innovation in me has seeded with the surprising view of the functions and the objects that can be used with the language and enable its usage for developing bigger and better

The liberlization and privatization of the indian economy

The liberlization and privatization of the indian economy Rajiv Gandhis government initiated the policy of liberalization since mid-80s. The liberalization initiatives have been undertaken in India with a view to increase a production, improve quality and get access to market for products and service abroad. Radical liberalization or globalization measures have been brought in since July 1991 to make the Indian economy progressively market oriented and integrate it with the emerging global economy structure. These measures include reduction and rationalization of excise duty and customs duties, delicensing of several drug and pharmaceutical products, ready access to import of raw material and capital goods and so on. It has created an environment conducive to an enterprise, investment and innovation. Indian industries have started to attract foreign portfolio investment and equity participation in new ventures. The government is committed to make foreign players feet at ease to invest directly and bring with it new technology and marketing skills. There has been impressive growth in FDI inflows to India with the introduction of policy reforms. As compared to a near total concentration in manufacturing till 1991, the bulk of new inflow has come in the energy and service sector. Liberalization The New Industrial Policy, 1991 A number of significant economic changes introduced by many a number of countries all the world over, the encouraging results of the liberalization measures introduced in 1980s by the Government of India, and the precarious economic situation that prevailed during the later part 80s have encouraged and forced the then Congress government, which came back to power at the center, under the leadership of Shri. P. V. Narasimha Rao-a non Nehru family member, to take some bold measures to rejuvenate the economy and to accelerate the pace of development. In this background, the Government of India announced its New Industrial Policy (NIP or IP) on July 24, 1991. The important objectives are: (a) to correct the distortions that may have crept in, and consolidate the strengths built on the gains already made, (b) to maintain sustained growth in the productivity and gainful employment, and (c) to attain international competitiveness. Therefore, the basic philosophy of the New IP, 1991 has bee n the continuity with change. Because, the new policy represents a renewed initiative towards consolidating the gains of national reconstruction at this crucial stage. But what is more important is the change (in continuity with change)-change in the attitude of the state towards the industrial society, change from centrally planned economy to market led economy, change from excessive government intervention to minimal intervention, change from nationalization to privatization, change from subsidization and cross-subsidization to gradual withdrawal of subsidy, etc. But these changes, which the government has introduced, represent a sharp departure from the earlier industrial policies. These changes pertain broadly to five areas viz., (a) Industrial licensing, (b) Public sector policy, (c) MRTP Act, 1969, (d) Foreign investment, and (e) Foreign technology agreements. Industrial Licensing This is one of the areas in which substantial change has been made by the government. With a view to give effect to these changes, the government issued a notification [viz., Notification No. 477 (E)] on July 25, 1991 and this notification has exempted the industrial undertakings from the operation of the following Sections of Industries Development and Regulations Act, 1951 subject to the fulfillment of certain conditions. Section 10 (which deals with registration of existing industrial undertakings); Section 11 (which is concerned with the licensing for new industrial undertakings); and Section 13 (which is concerned with the licensing requirements for substantial expansion). Further, the second schedule appended to the notification cited above [viz., No. 477 (E)] lists the industries which are subject to mandatory industrial licensing. According to this notification, only 18 industries were subject to compulsory industrial licensing. Further, five more industries have been excluded from the list of industries which are subject to compulsory industrial licensing subsequently. That means, only 13 industries are now subject to compulsory industrial licensing. Public Sector Policy A large number of Public Sector Enterprises have failed to achieve at least a reasonable rate of success. Some of the factors which have contributed to this situation are over staffing and over managing, price and distributions controls, etc. Hence, the government, in its Industrial Policy, 1991, introduced the number of significant changes pertaining to the PSEs. Some of the important changes envisaged by the New Policy are summarized below. Prior to the announcement of New Industrial Policy, 1991, seventeen industries were reserved exclusively for the state for their future development. Further, with respect to another 12 industries, the state was to play an important role by taking initiative to establish new undertakings. Besides, the state had power to enter into any other area reserved for the private sector. However, the failure on the part of majority of PSEs has forced the government to review its earlier decision. Consequently, the government in its New Industrial Policy, 1991 has pruned the list of the industries reserved for the public sector to only 8. Further, the government has dereserved 2 more industries. As a result, only six industries are now reserved for the public sector. They are: (a) Arms and ammunition and allied items of defence equipment, aircraft and warships, (b) Atomic energy, (c) Coal and lignite, (d) Mineral oils, (e) Minerals specified in the schedule to the Atomic Energy Order, 1953, and (f) Railway transport. Hence, the focus of the public sector will be only on strategic and high tech industries and on basic infrastructural projects. However the objective of the New Industrial Policy has been to withdraw the public sector investment from the activities which can successfully be taken up by the private sector enterprises. The emphasis of PSEs in future will be on: (a) Basic and essential infrastructural facilities, (b) Mineral resources, (c) Crucial areas in the interest of the economy in the long run and where the private sector investment is inadequate, and (d) Defence equipment. With a view to mobilize the resources and to have a wider public participation, apart of governments share holdings in its enterprises will be offered to the mutual funds, financial institutions, employs of PSEs, and the general public. The New Industrial Policy also proposes selective privatization of PSEs. Further, the policy also proposes to close down the PSEs which have become sick and which cannot be rehabilitated. The sick PSEs which can be revived will be refered to Board for Industrial and Financial Reconstruction for the formulation of revival packages. The New Industrial Policy also aims at providing greater operational and managerial autonomy to the management of PSEs and making the managements accountable for the performance through a system called Memorandum of Understanding. MRTP Act, 1969 The New Industrial Policy, 1991 proposes to amend suitably the Monopolies and Restrictive Trade Practices Act, 1969. To remove the threshold limits of assets in respect of MRTP companies and the dominant industrial undertakings. The important objectives of this were two in number. They are: Prevention of concentration of economic power in the hands of few which will be detrimental to the common interest; and Regulation of monopolistic, restrictive and unfair trade practices which are pursued by the business community and which are prejudicial to the public interest. The New Policy proposes to renew the threshold limits of assets and therefore, to repeal the Provisions of MRTP Act, 1969 pertaining to the first objective. Hence, the MRTP Act now concerned only with the prohibition of monopolistic, restrictive and unfair trade practices followed by the industrial undertakings and the trading communities. Foreign Investment As far as the direct foreign investment is concerned, the New Policy proposes to give automatic approval up to 51% of equity in the case of high priority industries and it has also identified 34 such industry groups. Further, the policy proposes to allow majority foreign equity holdings up to 51% of equity for the trading companies which are engaged in export activities. This is to enable the domestic companies an easy access to international markets. With a view to negotiate with the large international financial institutions and to approve the direct foreign investments proposals in selected areas, the New Policy proposes to constitute a special committee. Foreign Technology Agreements The New Industrial Policy proposes to give automatic permission for foreign technology agreements in identified high priority industries. Further, it also proposes to allow other industries to import foreign technology subject to the fulfillment of certain conditions. Conclusion The New Industrial Policy, 1991 certainly differs significantly from the earlier philosophies, approaches, etc. of the government. For instance, prior to 1991, scope of public sector was expanded by reserving more number of industries for the public sector. But now, its scope has been reduced drastically by reducing the number of industries reserved for the public sector. Like this, a large number of changes can be noticed in the new policy. This process has been continuing even in post liberalization era. Adding to this, the government has taken a number of steps to give effect to its policy decisions included in the New Industrial Policy, 1991. Though the economy has been benefited significantly from these measures, the economy has not been able to reap the full benefits of the Economic Reform Package owing to the political instability, etc. Privatization Privatization of PSUs Majority of the industrial enterprises in the public sector have failed to achieve the desired result. Of course, a number of factors-internal and external, controllable and non- controllable are responsible for his precarious performance. A look at the history of public sector undertakings (PSUs) in the country reveals the continuous expansion in the role of PSUs. Consequently, a number of enterprises have been established and huge amount of borrowed capital has been employed by the state even in the non-core, non-strategic and not so essential area. Hence, the state has made a number of changes in its New Industrial Policy announced on July 24, 1991. Introduction In the sixties and seventies, the public sector policy has been largely guided by Industrial Policy Resolution, 1956 which gave the public sector a strategic role in the economy. During the last four decades, massive investments have been made to build a public sector which has a commanding role in the economy. Today, many key sector of the economy are dominated by the mature public sector enterprises that have successfully expanded the production. In the early post-Independence years, there was virtual consensus about the need for the government intervention in economic activities. Pandit Jawaharlal Nehru described the public sector as Temples of Modern India. At that time, virtually neither questioned the strategy nor raised any doubts about its implementation. The number of central public sector enterprises increased from 5 in the year 1951 to 240 by the end of 1995 and investments in public sector undertakings (PSUs) increased from Rs29 crore in 1951 to Rs. 1,72,438 crore by the end of 1995. They contributed nearly one third of our exports. They made significant contribution to import substitution. Government undertakings account for more that 70% of the work force employed in the organized sector. They have greatly reduced the imbalanced of regional development and have laid strong base for the rapid development of the country. Some of the PSUs have earned a reputation par excellence at the international level. Some giant public sector units (e.g., Indian Oil Corporation, Steel Authority of India, Oil and Natural Gas Commission, Hindustan Petroleum Corporation Ltd., Coal India Ltd and Bharat Petroleum Corporation Ltd) figure in Fortune Internationals large companies. Further, the public sector accounts for one-fourth of the countrys GDP. There are two million employees in government undertakings and the average emoluments per annum amount to more than Rs.50, 000 each. Besides paying higher salaries, public enterprises assure job security, good working condition, attractive incentive scheme, participative management, higher degree of safety, adequate facilities, etc. Meaning of Privatisation The revolution of privatization started in 1980 and spread to many parts of the world. Several countries are privatizing their public sector enterprises. India is no exception to it. Privatization was meant to improve the performance of public enterprises. Privatization techniques have been tried in countries like Great Britain, China, US, Turkey, Brazil, Mexico, Japan, etc. Privatization, in the narrow sense, means transfer of ownership, or sale of public enterprises. However, privatization has been used in different ways as detailed below: Liberalization Approach: Privatization may be used in the sense of liberalization having fewer controls and regulation by the state in economic activities. This also means slowing of new controls and regulations and also dismantling of the existing controls and regulations. Relative Share Enlargement Approach: Privatization may relate to enlargement of the share of private enterprises in the production of goods and services in the economy. This means that faster economic expansion of goods and services produced by private sector and slowing down of production of goods and services in the public sector. Association of Private Sector Management Approach: This approach suggests utilizing the services of managerial personnel or executives of private sector enterprises for the conduct and management of PSUs. Transfer of Minority Equity Ownership Approach: Privatization may be defined as the transfer of minority equity ownership of public enterprises to private individuals and institutions so that the ultimate control continues to remain with the state. Transfer of Complete Ownership Approach: Privatization is also used in the sense of sale of all the shares to the private parties so that the public enterprises are converted into private enterprises. In India, privatization is taking place by adopting two common methods viz., (a) Having fewer controls and regulations by the state in economic activities, and (b) Transferring ownership of state equity in PSUs to private individuals and institutions. Benefits of Privatization It is expected that privatization will ensure the following benefits: Increasing overall efficiency: Improvement in the quality of management and decision making: No government financial backing, and therefore, capital market will compel these enterprises to be more efficient; Substantial reduction in governments budgetary support resulting in reduction in budgetary deficit; Recovery of government fund which could more productively be used in development activities; Reduction in political and bureaucratic interferences; Better industrial relations management; etc. Shortcomings Though the PSUs have contributed heavily to develop the industrial base of the country, they continue, even today, to suffer from a number of shortcomings which are identified below very briefly. A sizable number of PSUs have been incurring and reporting losses on a continual basis. Consequently, a large number of PSUs have already been referred of BIFR; Multiplicity of authorities to whom the PSUs are accountable; Delay in implementation of projects leading to cost escalation and other consequences; Ineffective and widespread inefficiency on management; Many PSUs are operating without the leader (i.e., chief executive or chairman); With a view to provide opportunities for more and more unemployed youths, more number of people, than required, were recruited and therefore, many PSUs are over-staffed resulting in lower labour productivity, bad industrial relations, etc.; un-remunerative pricing policy; and A number of sick companies (40 companies) which were in the private sector was taken over by public sector mainly to protect the employees. These sick units are causing a big drain on the resources of the state; etc. Methods of Privatization There are four important modes of privatization. They are: Franchising, (b) Contracting, (c) Leasing, and (d) Disinvestment. In India, disinvestment of government share of equity in PSUs is predominant. It started in 1992 immediately after the New Economic Policy in a phased manner. The main criticism of disinvestment of shares of PSUs in India is that it has been partial and half-hearted. There seems to be no plans to disinvest completely. The government still would like to keep a dominant control. 39 companies have been proposed for disinvestment till 1995-96. All the companies proposed for disinvestment are central PSUs. No state level PSU has been proposed for disinvestment. It could only disinvest 1% to 35% shares of PSUs on an average. It is also observed that the shares of efficient and profit-making companies are disinvested more than the companies which are potentially sick or sick companies. The disinvestment percentage is also not much in loss-making and inefficient units, thereby defeating the purpose. The Finance Ministry has also explained that the government is consciously not off-loading larger chunks of its holding. The Rangarajan Committee has suggested that government holding in public sector undertaking must be less than 50%. But partial disinvestment will be of no avail to change the culture in the public sector undertaking. Future Plans of Government The following are the future plans of government: Strengthening strategic units, Privatizing non-strategic units by (1) Gradual disinvestment, and (2) Strategic sale, and Devising suitable rehabilitation package for weak units. Conclusion The privatization process launched with all seriousness after the announcement of New Industrial Policy, 1991 was a failure. The state must accept this and take necessary steps either to privatize or to improve the efficiency and performance of PSUs. GLOBALISATION Introduction: The expansion of economic activities across political boundaries of nation states. More important, perhaps, it refers to a process of increasing economic integrated and growing economic interdependence between countries in the world economy. It is associated not only with an increasing cross- border movement of goods, services, capital technology information and people but also with an organization of economic activities which straddles national boundaries. This process is driven by the lure of profit and threat of competition in the market. The term Globalization as such denotes adjustment of national economy with that of the world economy. It is conversion of a national market into international mobility of factors of production. In others words, it may be described as the integration of national economy with that of global economy. An important attribute of Globalization is the increasing degree of openness, which has three dimensions, i.e.; international trade, international investment and international finance. According to World Development Report, Globalization reflects the progressive integration of worlds economies. The manifestation of production includes spatial reorganization of production the interpenetration of industries across borders, the spread of financial markets, and the diffusion of identical consumer goods to distant countries and massive transfer of population across national frontiers. Globalization is a process of reaffirmation of faith in the markets, retaining the character of independence of a country. Here, the country follows a pragmatic policy with a shift in decision making from government to business. The market forces and the laws of economics will have greater importance than the political ideology. To make a country a successful partner in Globalization, the government must play a complimentary role. Factors contributing to Globalization: The important factors that contribute to Globalization are: (a) Technological Advances In communication: Technological advances in communication have made it possible to know in an instant what is happening in different parts of the world. The flow of information and ideas, boosted greatly by the Internet, can enable developing countries to learn more rapidly from each other and from industrial countries. (b) Improvements In Transportation And Technology: Improvements in transportation networks and technology are reducing the costs of shipping goods by water, ground and air. This can facilitate the movements of goods. Technological improvements can enable developing countries to leap stages in the development process that rely on inefficient uses of national resources. (c) Other Factors: Rising educational levels, technological innovations that allow ideas to circulate, and the economic failures of most centrally planned economies have also contributed to Globalization. Trends in Globalization: The important trends in Globalization are the following: International Trade: Trade in goods and services has grown twice as fast as global GDP in the 1990s and the share attributable to developing countries has risen from 23 to 29 percent. There is a compositional shift in trade, which has created a new pattern in the international exchange of goods, services, and ideas. Trade in components is one part of that new pattern. Advances in information technology helps to link firms from developing countries into global production networks. The tremendous growth of trade in services and, more recently, of electronic commerce is also a part of the new trade pattern. (b) International Financial Flows: There has been increase in international capital flows of developing countries. However, the financial crisis of 1977-99 have put the growing interdependencies among countries in the spotlight and led to intense scrutiny. Such flows are started to rise again. The financial performance of emerging markets in the 1990s made capital account liberalization an attractive option for developing countries. Many developing countries have began to loosen controls on inflows and outflows of capital. The East Asian meltdown has enhanced the attractiveness of long-term capital investment. Countries have started to recognize that foreign direct investment brings with it not only capital but also technology market access and organizational skills. An analysis of the period 1996-97 shows that foreign direct investment was less volatile than the commercial bank loans and foreign portfolio flows. (c) International Migration: Along with goods, services, and investment, people are crossing borders in large numbers. According to World Development Report 1999-2000, each tear between 2 million and 3 million people emigrate, with majority of them going to just 4 countries: the United States, Germany, Canada and Australia. The market for highly skilled workers will become even more globally integrated in the coming decades. At the end of the 20th century Globalization has already demonstrated that economic decisions, wherever they are made in the world, must take international factors into account. There is acceleration of goods, services, ideas and capital across nation borders. Advantages of Globalization: (a) Promise of Increase Productivity And Higher Living Standards: Globalization brings in new opportunities such as access to markets and technology transfer. These opportunities hold out the promise of increased productivity and higher living standards. (b) Increase In Trade In Goods And Services: There is tremendous growth in trade in goods and services. Trade in goods and services has grown twice as fast as global GDP in the 1990s and the share attributable to developing countries has climbed from 230to 29 percent. Increased international competition in services will lead to reduction in prices and improvements in quality. This will increase the competitiveness of downstream industries. Both industrial and development economics will gain by opening their markets. (c) Provide New Opportunities For Growth: For developing countries, trade is the primary vehicle for realizing the benefits of Globalization. Imports bring additional competition and variety to domestic markets, which benefit consumers. Exports, on the other hand, enlarge foreign markets and benefit business. Further trade exposes domestic firms to the best practices of foreign firms and encourages greater efficiency. Trade gives forms access to improved capital inputs such as machine tools, which boosts productivity. Trade encourages the redistribution of labour and capital too relatively to more productive sectors. It has contributed to the ongoing shift of some manufacturing and services activities from industrial to developing countries, providing new opportunities for growth. (d) Globalization of Financial Markets: Globalization of finance markets affects development because finance plays an important role in economic growth and industrialization. Financial Globalization affects growth in two ways. First, it increases the global supply of capital. Second, it promotes domestic financial development and hence, improves allocative efficiency, creates new financial instruments, and raises the quality of baking services. (e) Increased Flow Of foreign Market Capital: Globalization leads to increased flows of capital across countries. Flows of foreign capital offer substantial economic gains to all parties. Foreign investors diversify their risks outside their home market and gain access to profitable opportunities through out the world. Economies receiving inflows raise the level of investment. When there is foreign investment it is generally accompanied by management expertise, training programs and important linkages to suppliers and international markets. (f) Impact on Poverty: The fast growth and overall development resulting from liberalization, increased flow of trade ad capital could have a major impact on poverty. It is likely to reduce the number of people living in absolute poverty. (g) Increase The Level Of Interdependence And Competitiveness: Globalization is supposed to accelerate and increase the level of interdependence and competitiveness among nation. It is a change from plan to market. As a consequence, markets for merchandise trade are expanding, more and more service are being traded internationally, and capital is flowing in quicker and increasingly diverse ways across countries and regions. There is increasing integration of countries into World markets for goods, services and capital. In short, Globalization widens and intensifies international linkages in trade and finance. (h) Induce Domestic Firms To Improve Technology: The better technology brought in by the MNCs may induce or provoke the domestic firms to absorb similar technology. This may improve their competitiveness and expansion. Disadvantages of Globalization: The universal acceptance of the market economy and the Globalization led by private enterprises tend to have some harmful effects on the economy of developing countries. They are discussed below: Takeover of National Firms: There are a large numbers of cases of takeover of national firms by foreign firms. In some cases, the domestic firms had to handover the majority of equity to foreign partners of joint ventures due to their inability to bring in additional capital. Ruin of Traditional Crafts And Industries: Globalization has lead to replacement of traditional and indigenous products by modern products. This has resulted in the ruin of traditional crafts and industries and the livelihood of the people depended on these sectors. Brings Instability: Globalization sometimes brings instability and unwelcome change in the economy. It exposes workers to competition from imports, which can threaten their jobs. The inflow of foreign capital into the country through Globalization may undermine banks. (d) Widens The Disparity: Globalization will widen the disparity between one who are associated with market and one who are not. With the expansion of trade and foreign investment, the gaps among the developing countries will widen .it has brought in increased income inequality in many industrial countries .it is argued that the developing countries and the poor people are not in a position of achieving benefits from Globalization. The only beneficiaries of it are the developed countries and the MNCs. Growth rate of Indias real GDP per capita Per Capita GDP of South Asian Economies. Estimates of the Per Capita Income of India. CONCLUSION: Economic liberalization has increased the responsibility and role of the private sector. At the same time, it has reduced the control of the government on economy affairs. It is expected that the reforms would liberalize the Indian economy enough to create a conducive environment for rapid economic development. The Ninth Five Year Plan, therefore, rightly observed, The conditions that exist today, demand a decisive break from the past. The government has taken on itself too many responsibilities with the result that it not only encouraged a dependency syndrome among our people, but also imposed severe strains on financial and administrative capabilities of the government. Private initiative whether individual, collective or community-based forms the essence of the development strategy articulated in the plan. The process of reforms according to many economists and social scientists is not fast enough to achieve the goals. Jeffrey Sachs, director of Harvard Universitys center for international development and a noted economist, pointed out that the reform process in India had a long way to go. He feels that without a focus on the twin pillars of social and economic strategies, the future would be bleak for India, especially in the context of competition all around. Liberalization process is on the slow track. Government is expected to reduce and finally give up its involvement in economic matters and play a major role in providing the required socio-economic infrastructure. The government, however, is reluctant to give up its role of owning and controlling economic activities. At the same time its inability to spend for providing minimum health and education services. It is eager to spend on higher education without spending enough on primary and secondary education. It has failed in providing a corruption free administration, an essential precondition for increasing com

Evaluation of Comptronix Corporation: Identifying Inherent Risk and Control Risk Factors Essay

1. Professional auditing standards present the audit risk model, which is used to determine the nature, timing, and extent of audit procedures. Describe the components of the model and discuss how changes in each component affect the auditor’s need for evidence. The audit risk model is used to determine the nature, timing, and extent of substantive audit procedures. The components of audit risk model usually stated as follows: DR = AR/(IR x CR) Where: DR = detection risk; AR = audit risk; IR = inherent risk; CR = control risk Detection Risk: auditors’ procedures will lead them to conclude that a financial statement assertion is not materially misstated when in fact such misstatement does exist. If auditors want to decrease DR, they had better collect more evidence and make sure the validity of evidence. Audit Risk: auditors may unknowingly fail to appropriately modify their opinion on financial statements that are materially misstated. If AR should be keep in low level, which means the other risks also should be low. Inherent Risk: The risk of material misstatement of a financial statement assertion, assuming there were no related controls. As inherent risk increases, PDR decreases, which in turn increases the auditor’s need for stronger evidence. Control risk: The risk that a material misstatement that could occur in an account will not be prevented or detected on a timely basis by internal control. If the strength of internal control is assessed as decreasing, the auditor should pay more attention to control risks. 2. One of the components of the audit risk model is inherent risk. Describe typical factors that auditors evaluate when assessing inherent risk. With the benefit of hindsight, what inherent risk factors were present during the audits of the 1989 through 1992 Comptronix financial statements? Inherent risk is a measure of the auditor’s assessment of the susceptibility of an assertion to a material misstatement assuming there are no related internal controls. Some believe that inherent risk would be greater for some assertions and related account based on some conditions as follows: †¢Complex calculations rather than simple calculations. †¢Non-routine rather than routine transactions. †¢Subjective data rather than objective data. More importantly is that inherent risk is always be effected by external factors as follows: †¢Changes in economic environment †¢Insufficient capital to continue operations †¢Technological improvements. †¢Transactions with related parties. †¢Susceptibility of assets to misappropriation. The inherent risk factors present during the 1989 through 1992 financial statement audits as follows: †¢Loss of Key Customer: Comptronix lost a key customer to SCI after the public offering of stock. Once the company lost their a key customer, Management have a strong motivation manipulate sales and operating performance to satisfy investor expectations because the loss of a key customer put too much pressure on management to meet the requirements of external users. †¢Public Offering of Stock: After Comptronix made its public offering of stock , they have the pressure which push the management to manipulate operating performance too meet the expectations from the external users. †¢Technological Improvement: Comptronix is a manufacture company which main products are circuit boards and the circuit boards’ development depend on technological improvement. The technological improvement has a negative impact on operating performance. †¢Pressures from a new star Company: By the first year of the fraud (1989), Comptronix became a new company which can employ more than 1,800 employees in less than a decade , and at same time, the company expanded its the size of the company in three different locations. The rapid development of company made the management adjusted their operations instead of monitoring company operations. †¢Estimation of Accounts: The high inherent risk accounts include Accounts receivable/ payable, inventory, and property, plant, and equipment. But all the accounts’ computation is based on estimation which led the numbers are very unreliable and subjective. †¢Cash Flow Pressures: Comptronix suffered net losses from 1986. Until the company attracted a venture capitalist, the company was able to generate strong sales and profits. Prior to 1989, Comptronix had generated only two consecutive years of profit after several years of net losses. cash flow of financial statement cannot cover many years of recurring losses. The management has motives to make up operating accounts to look perfect to attract more  investors. 3. Another component of the audit risk model is control risk. Describe the five components of internal control. What characteristics of Comptronix’s internal control increased control risk for the audits of the 1989-1992 year-end financial statements? Five components of control risk are: control environment, risk assessment, control activities, information and communication, and monitoring. Control environment set the tone of an organization by influencing the control consciousness of people. Risk assessment is management’s process for identifying, analyzing, and responding to the risks. Control activities are policies and procedures that help ensure that management’s directives are carried out. Information is needed at all levels of an organization to assist management in meeting the organization’s objectives. Monitoring of controls is a process to assess the quality of internal control performance over time. The information and communication is seriously weak in that he three executives were able to perpetrate the fraud by bypassing the existing accounting system. They could record the fictitious entries manually and other employees were excluded from the manipulations to minimize the likelihood of the fraud being discovered. Besides, the weak control activity and monitoring is represented by the fact that Mr. Shifflett or Mr. Medlin could approve payments based solely on an invoice. Therefore, the fraud team was able to bypass internal controls over cash disbursements. Internal controls were also insufficient to detect the manipulation of sales and accounts receivable. Mr. Medlin had the ability to access the shipping department system. 4. The board of directors, and its audit committee, can be an effective corporate governance mechanism. Discuss the pros and cons of allowing inside directors to sere on the board. Describe typical responsibilities of audit committees.What strengths or weaknesses were present related to Comptronix’s board of directors and audit committee? As shareholders have limited access to the sufficient information, they are hard to monitor the daily transactions and management. They would delegate the responsibilities to the board of directors. Then, board of directors require inside directors to provide sufficient information in order to make decisions those are in the maximum profits of shareholders. However, if the inside directors have improper purposes, it’s easily to be a manipulation tool for management. Audit committee is responsible for ensuring that the company’s financial statements and reports are accurate and use fair and reasonable estimates. More specifically, it is charged with overseeing the financial reporting and disclosure process, monitoring choice of accounting policies and principles, overseeing hiring, performance and independence of the external auditors, oversight of regulatory compliance, monitoring the internal control process, overseeing the performance of the internal audit function, and discussing risk management policies and practices with management. The control environment is significantly influenced by the effectiveness of its board of directors or its audit committee. Factors that bear on the effectiveness of the board or audit committee include the extent of its independence from management, the experience and stature of its members. However, among the seven individuals in Comptronix board of directors, five members are either inside directors or directors had close affiliations with management. In addition, the primary responsibility of the board of directors is to protect the shareholders’ assets and ensure they receive a decent return on their investment. Board members act as trustees of the organization’s assets and must exercise due diligence to oversee that the organization is well managed and that its financial situation remains sound. But the composition of Comptronix’s board of directors obviously lacks objectivity. A qualifying audit committee should be composed of independent directors who are not officers or employees of the organization and who do not have other relationships that impair independence. However, The audit committee of  Comptronix is made up two outside directors and one gray director, which would inevitably impair the independence. What’s more, to qualify, the committee must be composed of outside director with at least one qualifying as a financial expert. Nevertheless, for Comptronix Corporation, there is no indication of whether any of these individuals had accounting or financial reporting backgrounds. Lastly, the audit committee met only twice during 1991, it was not efficiently and sufficiently to monitor and oversee the financial reporting. 5. Public companies must file quarterly financial statements in Form 10-Qs, that have been reviewed by the company’s external auditor. Briefly describe the key requirements of Auditing Standards (AU) Section 722, Interim Financial Statements. Why wouldn’t all companies (public and private) engage their auditors to perform timely reviews of interim financial statements? The term interim financial information means financial information or statements covering a period less than a full year or for a 12-month period ending on a date other than the entity’s fiscal year end. A review consists principally of performing analytical procedures and making inquiries of persons responsible for financial and accounting matters, and does not contemplate (a) test of accounting records through inspection, observation, or confirmation; (b) tests of controls to evaluate their effectiveness; (c) the obtain net of corroborating evidence in response to inquiries; or (d) the performance of certain other procedures ordinarily performed in an audit. The decision to have a review engagement is a joint decision of the client and auditor. So a review would be performed when the benefits to the auditor and to the client exceed the costs to both parties. In general, firms with high complexity are more likely to be reviewed than firms with low complexity. Firms with high growth opportunities a less likely to be reviewed than those with low growth opportunities for they may be associated with higher information and litigation risks. And it’s also about the firms’ audit assurance and insurance needs. 6. Describe whether you think Comptronix’s executive team was inherently dishonest from the beginning. How is it possible for otherwise honest people to become involved in frauds like the one at Comptronix? We don’t think Comptronix’s executive team was inherently dishonest from the beginning. In opposite, we think there are two main reasons for the company committed the fraud. The first is its weak internal control. First comes to the company’s board of director. The board of directors is responsible for overseeing the actions of management. Factors that bear on the effectiveness of the board include the extent of its independence from management, the experience and stature of its members, the extent to which it raises and pursues difficult questions with management, and its interaction with the internal and external auditors. the audit committee of the board of directors should be composed of independent directors who are not officers or employees of the organization and who do not have other relationships that impair independence. In addition, the audit committee should have one or more members who have financial reporting expertise. However, Comptronix’s board of directors consist of the CEO and the COO of the company, And two of the other five directors who had close affiliations with management, one served as the company’s outside general legal counsel and the other who served as vice president of manufacturing for a significant customer of Comptronix, and one of the remaining outside directors who was a partner in the venture capital firm that owned 574,978 shares (5.3%) of Comptronix’s common stock, the second outside director who was the vice chairman and CEO of the local bank originally loaning money to the company, and the third outside director who was president of an international components supplier based in Taiwan. And there was no indication of whether any of these individuals had accounting or financial reporting backgrounds. 28.6% of the board consisted of inside directors. And even all of the board of directors disobey the independence and  effectiveness of the formation of the board of directors. The interest relationship with the company increased the potential risk for the management to commit fraud. The second reason is the huge pressure of harsh competition for the companies in the industry. The fraud was motivated by the loss of a key customer in 1989 to the three executives’ former employer, SCI. Since the first manipulation of the financial statement, they were forced to manipulate the other years and evidences to hide the manipulation, which created a vicious circle. In conclusion, the weak internal control system provided a good environment for the commission of fraud. The huge pressure of the company brought the motivation of the fraud. Both of them played important roles for the honest people to become involved in frauds. 7. Auditing Standards (AU) Section 316, Consideration of Fraud in a Financial Statement Audit, notes that three conditions are generally present when fraud occurs. Research the authoritative standards for auditors and provide a brief summary of each of the three fraud conditions. Additionally, provide an example from the Comptronix fraud of each of the three fraud conditions. (1) Three fraud conditions First, management or other employees have an incentive or are under pressure, which provides a reason to commit fraud. Second, circumstances exist—for example, the absence of controls, ineffective controls, or the ability of management to override controls—that provide an opportunity for a fraud to be perpetrated. Third, those involved are able to rationalize committing a fraudulent act. Some individuals possess an attitude, character, or set of ethical values that allow them to knowingly and intentionally commit a dishonest act. (2) Examples The incentive for top company executive to do fraud is that after the company went public, the company needed an increasing number for profit on the income statement, to attract more investors and make the stock price higher and higher. One of the opportunities for fraud perpetrated in Comptronix is that their internal controls were so insufficient. The three executives had so many authorities to get access to various accounts. They can get control of both checks and accounts payable, which enable them to make fake equipment purchasing recording. Because Comptronix`s quarterly filings were unaudited, the executives were successful in manipulating quarterly financial statements. After they successfully manipulated 1989 year-end sales and receivables, they thought their performance may not be discovered by external auditors and SEC, so they began recording fictitious quarterly sales frequently. 8. Auditing Standards Section 316, Consideration of Fraud in a Financial Statement Audit, notes that there is a possibility that management override of controls could occur in every audit and accordingly, the auditor should include audit procedures in every audit to address that risk. a. What do you think is meant by the term â€Å"management override†? Management override of internal controls is the intervention by managers in handling financial information and making decisions contrary to internal control policy. Managers may think they have the ability to operate outside of the internal controls, but this is not true. b. provide two examples of where management override of controls occurred in the Comptronix fraud. For example, Mr. Medilin, as controller and treasurer, has the authorization to manipulate both sales documents and accounts receivable documents. Thus he can enter bogus sales into the accounting system then make fake accounts  receivable to overstate the company`s earnings. Moreover, in order to overstate the equipment and accounts payable, the three company executives cut fake checks to the bogus accounts payable vendors associated with the fake purchases of equipment. However, the check preparing and recording of equipment purchases jobs should be distributed to different staff. Handling these two jobs at the same time by same executives provide them opportunity to make overstated recording of equipment purchasing. c. Research AU Section 316 to identify the three required auditor responses to further address the risk of management override of internal controls. Three required auditor responses to further address the risk of management override: (1) Examining journal entries and other adjustments for evidence of possible material misstatement due to fraud. (2) Reviewing accounting estimates for biases that could result in material misstatement due to fraud. (3) Evaluating the business rationale for significant unusual transactions.