Human Resources Development
The aim of this paper is to integrate various human resource models with practical knowledge within the work environment in order to promote quality skills suitable for an effective human resource manager. A sample of a human resource manager’s job description will be developed to derive relevant experiences suitable to perform this job. The need assessment will be undertaken to identify the relevant skills possessed by the potential human resource manager, as well as a gap analysis regarding the skills that will need to be obtained within the work environment. Training needs will be assessed and these will aid in developing a suitable training plan.
Human Resources Development
Human Resources Development (HRD) is a model that defines a framework within which organizational human resources can be developed through improvement of both the organization, and the human capital serving in this organization, in order to achieve improved performance. According to Kamoche (2011), capacities of human resources within any given organization depend on their ability to access quality education. Proper integration of academic skills with career development efforts promotes human capital and the subsequent organizational effectiveness. HRD enhances development of crucial competencies that aid individuals to effectively perform their current and future tasks through exploiting learnt skills, knowledge and experiences.
Human resources within any given organization employ HRD to instill management change, thereby paving way for rational integration between employee and organizational needs. HRD is more than a theoretical field of study since it incorporates the crucial concepts of training development aimed at enhancing human expertise in order to boost performance with organizational development, aimed at developing the organization by exploiting expertise offered by available human capital in order to improve productivity. In order to determine how human resource development theories can be integrated in real life situation, the position of a human resource manager will be chosen, and this will be employed to identify training needs that would enhance the development of an effective human resource manager.
Job Description for a Human Resources Manager
Upon graduation, I would like to work as a Human Resources manager in a well-established financial institution. The specific purpose of this position will entail the provision of effective support for a wide range of human resources activities including staffing, recruitment, training, career development, employee mentorship, compensation and reward development, and performance evaluation. According to Mary (2006), the broader scope of a Human Resources manager’s position will include recruitment and staffing. The Human Resources manager will identify vacancies that need to be filled, select applicants with relevant skills, conduct interviews, and recruit suitable workforce upon successful completion of the interview. The human resource manager will also be responsible for employee performance management.
This responsibility will mainly include administration of compensation and benefits among other rewards upon satisfactory performance. He/she will further coordinate orientation for new employees in order to enhance the positive outlook towards the overall organizational goals. The human resource manager will also be responsible for policy development and documentation. He/she will identify suitable processes and procedures that need to be integrated in the organizational policy in order to enhance development. He /she will also be responsible for providing potential employees with information regarding organizational rules and policies, opportunities for promotion and employee benefit and rewards, duties and responsibilities, and working conditions. As a result, the Human Resources manager will enhance quality performance while ensuring that the employees’ needs are well integrated with organizational goals and objectives (Rudiger, 2005).
The Human Resources manager will equally be responsible for organizational departmental planning in that he will allocate duties to organizational workforce while ensuring relevant match between employees’ technical knowledge and skills with organizational goals. The human resource manager will also enhance employee relations by serving as the link between organizational top management and employees through answering complex questions, thereby, aiding to address work-related challenges. The Human Resources manager will also maintain relevant reports comprising of all the information relating to personnel-related data. He /she will assess employee training needs, organize relevant training programs and adopt effective training methods that will aid to address identified needs. The manager will maintain records that provide crucial information concerning employee recruitment, performance, absenteeism, turnover, and transfers.
They will equally analyze these records in order to establish the root cause of employees’ problems within the organization in order to develop suitable recommendations on how to address them. The human resource manager will also be responsible for enhancing employee welfare, health, safety and wellness. His duties will include coordinating compensation and welfare programs intended for enhancing employees’ personal needs. He will equally coordinate occupational health and safety by communicating to employees on how they can enhance their own safety as well as that of other people.
As explained by Henri Fayol in his Classical Management Theory, an effective human resource manager should be able to integrate his knowledge and capacities to the structured organizational setting while effectively influencing efforts of his subordinates to contribute to the overall good of the organization. As a result, this indicates that an effective Human Resource manager ought to have quality skills that would enhance significant contribution to the overall organizational goals to contribute to the critical component of a successful financial enterprise. In order to excel in the chosen job, a human resource manager will need to have excellent interpersonal skills that will enable him to communicate and interact with his colleagues at work, thereby enhancing his ability to get along with other people.
Social intelligent skills will also be important in that they will enable the human resource manager to relate and coordinate his subordinates in order to ensure effective performance. The human resource manager will also need to have effective verbal and non-verbal communication skills, which will enhance his ability, get along with people from diverse ethnic backgrounds. This will mainly enhance his capacity to effectively communicate with wide array of audiences within the organization. Effective group cohesiveness skills will equally be important, as these will enhance the human resource manager’s ability to promote effective teamwork within the organization.
Academic skills will equally be important to qualify for the position of a Human Resource manager. A person pursuing the human resource manager’s position needs to have a bachelor’s degree in Human Resource Management, although senior level Human Resource managers may need to have a master’s degree in the same field. Experience in different roles in the Human Resource department is equally important as this provides learning avenues that enhance professional development. An employee pursuing the position of a Human Resource manager ought to have a generalist, as well as a specialist Human Resource experience before assuming the full responsibility of a Human Resource manager (Pan, 2009).
Movement into senior Human Resource management position requires a low-level Human Resource manager to obtain a HR certification from the Human Resource Certification Institute after obtaining the correct level of experience. Promotion to the executive level of Human Resource Management requires the attainment of quality expertise in different fields including marketing. Other skills that would be crucial for this position include proper communication, speaking, writing, reporting, computer proficiency, negotiation and supervisory skills. As explained by Martin Hahn in his quantitative management theory, acquisition of a wide range of management tools enables a human resource manager to effectively control almost everything within the organization to promote quality performance and the subsequent organizational success.
Assessment of Current Skills and Abilities
As explained in the system management theory, any given firm comprises of different parts that demand performance of different tasks to promote proper functioning and the subsequent success of the larger organization. As a result, this indicates that a wide range of academic skills that I have obtained in school will be appropriate in enhancing effective management of human resources in any given organization. My bachelor’s degree in human resource management will promote my ability to identify various organizational strategies that would enhance the delivery of quality result not only by the human resource manager but also by his subordinates.
Further skills including writing, reporting, and communication skills that I have obtained in school will be appropriate in enhancing proper communication, and quality report writing in the organization. Innate organizational and relational skills that I have will equally enable me to effectively relate with organizational employees in a manner that would enhance identification and subsequent satisfaction of their personal needs. As explained by Mayo in his behavioral management theory, employees are normal human beings with concrete personal needs, which need to be met to motivate them. The skills will thus promote effective motivation of employees by promoting their personal development needs.
Although I may not have all the required skills that would help me to directly fill the Human Resource manager’s position in a financial institution, basic skills particularly those obtained during my college education would pave way for the entry-level position in the field of Human Resource Management. A bachelor’s degree in Human Resource Management may aid in paving way for me to serve in a generalist position within the Human Resource department. The communication skills that I have learnt in college will enhance my ability to communicate to a wide array of potential subordinates concerning the organization’s work conditions, rules, policies, and long-term goals. The skills will equally enhance my capability to inform different employees concerning their duties and responsibilities, while enhancing a positive outlook concerning the long-term organizational goals. The writing and reporting skills that I have learnt in school will enhance my ability to compile effective reports concerning different aspects of the Human Resources including performance, absenteeism as well as viability for compensations, rewards and benefits and promotions (James, 2004).
The computer skills learnt in school will equally enhance quality report writing, as well as, proper maintenance of quality data, which matches employees’ qualifications and performance with compensation and benefits among other rewards. Time management skills will help me to conduct different duties within the right time frame in order to deliver timely results (Matiaske, 2005). Public relations and speaking skills will equally aid me to address a wide array of audiences during staff meetings and training sessions as these will ensure the correct information is conveyed in the most appropriate and official manner, thereby, rendering expected results. These skills will equally help me to effectively coordinate orientation sessions for new employees in order to ensure that the correct impression regarding the overall organizational goals is created to enhance quality performance.
Although a wide range of essential skills needed for this position will have been attained at school, there are other essential skills that are critical in enhancing quality performance, which can only be learnt through on-the-job training. Performance management skills are important and these can only be obtained while one is working within a specific organization. According to Forbes (2003), performance management refers to the process through which a manager can coordinate joint efforts with subordinates in order to plan, assess and monitor individual work objectives in relation to their contribution to the overall goals of the organization. This process is different from the normal performance review in that it involves a consistent assessment of individual employee’s progress in order to provide relevant coaching, which would ensure that employees are able to meet their objectives aimed at enhancing and organizational growth, on one hand, and self-development on the other.
The interview skills are equally important, as these would aid a Human Resource manager to identify potentially effective employees with appropriate skills, and positive outlook that would enhance quality performance and overall contribution to the organization’s success. These skills can, however, be obtained at the place of work since each organization has unique goals that determine the type of skills appropriate for a managerial position.
Staff development skills will equally be important for an effective Human Resource manager. While these skills can only be obtained through on-the-job training, they will be essential as they equip the Human Resource manager with crucial knowledge on how to analyze employees’ training needs, how to develop effective training strategies, gather appropriate training materials, and blend employees’ learning approaches with the most appropriate and available training infrastructures (Scannell, 2000).
Effective leadership skills that can enhance the tactical integration of employee self-development needs with overall organizational goals would equally be suitable for an effective Human Resources manager. Through on-the job training, the Human Resource manager will be able to develop great ideas on how to bring employees together as a united team that is guided by common goals in order to enhance success within the organization. Quality leadership skills will equally help the Human Resource manager to effectively execute organizational development plans in order to promote attainment of long-term goals of the organization. The skills will equally help the Human Resource manager to establish effective strategies that can enhance teamwork within the organization (James, 2009).
The Human Resource manager would equally need to obtain effective negotiation skills through on-the-job training. According to Gilley (2009), negotiation skills are crucial for any Human Resources manager as they promote fair compromise between top management and employees within any given organization. Effective negotiation skills are important in that they promote a win-win situation; where the organization is able to make maximum benefit by exploiting employees’ expertise, while employees are able to maximize their potential for self-development while serving in the organization.
In order to bridge the gap prevailing between my current skills and abilities and the wide category of skills and abilities necessary for any effective human resource manager, it is important for me to obtain a wide range of management skills through on-the-job training as these will enhance my overall performance. On the job training will enhance my interview leadership, negotiations, staff development and performance management skills. In order to
obtain these skills, varying training approaches will be adopted to enhance effective learning.
According to Rudiger (2005), adopting a holistic learning theory in any training process enhances effective learning since this approach integrates human intellect with emotions, imagination and body movement. Facilitation theory is equally important as it assumes a humanistic approach by allowing the learners to participate in facilitation thereby enhancing effective participation. The two approaches will thus be integrated with the training process to promote positive training outcomes.
In order to enhance quality performance while serving as a Human Resources manager, bridging the gap between academic theoretical skills and on-the-job practical skills is important. The Human Resource manager will need to attend varying on-the-job-training programs that would enhance attainment of leadership, negotiations, interview, and staff development and performance management skills.
The Human Resource manager will need to attend varying HR management seminars where they can be equipped with trainer’s training skills. Through such seminars, the Human Resources manager will be able to obtain staff development skills that they can utilize in order to effectively meet employees’ training needs. Through the seminars, the Human Resources manager can equally obtain training on staff selection and recruitment. Through these trainings, the Human Resource manager will be able to develop appropriate skills on how to effectively identify suitable employees for particular job positions, and conduct effective interviews through which potentially productive employees can be identified. They can effectively coordinate orientation and induction sessions that would enhance the positive outlook of overall organizational goals and objectives in order to enhance performance (Margaret, 2000).
Mentoring will equally serve a great deal of importance as the Human Resources manager will be able to learn from experienced management staff who would aid in identifying weak areas that might require improvement. Through this method of training, the Human Resources manager will be able to identify essential managerial practices that would enhance their overall performance.
Management games will also provide a suitable opportunity for the Human Resources manager to learn a wide range of managerial skills including decision making and analytical skills. The Human Resource manager will thus be able to effectively analyze staff-related problems and make rational decisions on how to solve them (Scannell, 2000).
The Human Resource manager will equally engage in role playing sessions where they will assume realistic responsibilities within an imaginary situation. While the Human Resources manager through role playing will be able to assume different duties that they are bound to take in real life situation, they will be equipped with appropriate skills that would be applicable in varying situations including group decision making, teamwork and conflict management.
Training through presentations will promote attainment of a wide range of management skills that would enhance effective leadership. This is because the Human Resource manager will be able to access a lot of information through film presentations and these are particularly important since the manager can replay them in order to enhance understanding and review subsequent discussion questions for clarification (James, 2004). In order to ensure that positive results will be obtained from varying on-the-job-training approaches, suitable learning approaches will need to be incorporate in the training process. The human resource manager will need to adopt active learning approach by actively participating in varying training activities including management games and role playing.
Honest efforts will equally be appropriate as they will help the human resource manager to actively participate in training programs and this will include asking questions, responding to any query directed to him and coordinating ice breakers between sessions. Making use of relevant materials will also be appropriate as it will help the human resource manager to capture intended knowledge through effective use of available training materials. The human resource manager will also need to undertake constant self analysis as this will help him to assess the effectiveness of training. He/she will equally be able to identify areas where he did not understand and as such, he will identify areas that need clarification.
It is obvious that Human Resource management is a very important position within any given financial institution in that it deals with all aspects relating to organizational Human Resource in order to ensure that long-term goals of the organization are perpetuated. Integration of appropriate theoretical skills obtained at school with practical skills obtained at the place of work will ensure effective Human Resource manager’s performance, which would enhance the success of the larger organization.
Forbes, J.B. (2003). Corporate Mobility and Paths to the top: Studies for Human Resource and Management development specialists. New York: Quorum books.
Gilley, J.W. (2009). Principles of Human Resource Development. Reading, MA: Addison-Wesley.
James, W.W. (2009). What makes a Great Human Resource Strategy, Journal of Human Resource Planning, 22(1):49-89.
James, W.W. (2004). Integrating the Human Resource Function with the Business, Journal of Human Resource Planning, 17(2):71-112.
Kamoche, K.N. (2011). Understanding Human Resource Management. Buckingham: Open University press.
Margaret, M.E. (2000). Entrepreneurial Activities in Human Resource Management. American International College Journal of Business, 15(3)65-99.
Mary, T. D. (2006). Human Resource Management (11E). Journal of Applied Management and Entrepreneurship, 11(3)44-92.
Matiaske, K.R. (2005). Editorial: Human Resource Management and Economic Success, Journal of Management Revue, 16(2):55-89.
Pan, K.S. (2009). Globalization of Human Resource Management: A Cross-Cultural Perspective for the Public Sector. Journal of Public Personal Management, 28(2)23-82.
Rudiger, K. (2005). Editorial; Human Resource Management and Economic Success. Journal of Management Revue, 16(2): 76-105.
Scannell, E.E. (2000). Human Resource Development: The New Trainer’s Guide. Cambridge, MA: Perseus Publishing.
HUMAN RESOURCES DEVELOPMENT 10
Running head: HUMAN RESOURCES DEVELOPMENT 1
Studies reveal that, four main bodies of lore reflect the traditions of Canada`s main population groups. These encompasses French Canadian, Anglo-Canadian (Irish, Scottish, Welsh, and English), aboriginal (native Indian and Inuit), and many other ethnic groups. It is believed that various factors favored the preservation and development of folklore throughout Canada. This include, prevalence of a rural population until world war two, a high percentage of illiteracy among certain groups in earlier days, and the use of folklore to foster local and national self-consciousness. For instance, French Canada enjoyed for a long time a golden age of oral literature that lasted into the twentieth century; this was because of the French colonial policy that inhibited the establishment of a press in New France.
Accordingly, absence of publication and shortage of French institutes assisted in upholding a philosophy that was entrenched in folklore. However, early Canadian writers incorporated many traditional customs and legends into their works, an idea that fostered the recognition and admiration of the folk heritage. This happened because of French Canada`s rich contact with the native population, and on top of that Anglo-Canada`s predilection for life helped in differentiating further lore forms from others that existed in the whole of Canada. On the other hand, cultural change describes in public policymaking terms to emphasize the effect of ethnic wealth on a person and public conduct. This stresses on societal and ethnic wealth elements of policymaking, and the manner in which these factors interact with other factors (availability of information of financial incentives facing a person to drive or foster behavior). Such cultural influences include; the duty of nurturing, kinfolks and close acquaintances. They also encompass organizations such as learning institutions, workstations, and communities, and broader social stimuli like the media.
Studies reveal that this cultural investment exhibits into definite standards, approaches or social standards, which monitor interactive purposes that individual, assume centering on several or specific choices or ways of action. Accordingly, such communicative objectives interrelate with extra aspects driving behaviors like pecuniary spurs, directive and statute, and levels of information available for driving actual behavior and ultimately return into fundamental ethnic wealth. Moreover, the shifting of social zeitgeist involves the case where shared standards and ideals that preponderate in ethnic wealth, which evolve over time to influence behavior. Essentially, folk culture involves the philosophy conventionally practiced fundamentally by small, identical groups living in remote bucolic areas. Impacts of shifting to a market-influenced folk culture
At this point, there are many impacts of shifting to a market influenced folk culture. To begin with, various good attributes emanate from the shift to a market-influenced folk culture. Studies have shown that international trade regarding cultural goods and services in developed states has grown, since late 80s. The trend has gone on for some time, and in recent year Atlantic Canada has seen increase in the export of cultural goods and services that measure up to about $ 4.9 billion in annual basis. However, the shares Representing Atlantic Canada are not substantial at the moment but the market share is set to rise. This is one of the major advantages that the shift to market influenced Atlantic Canada Folklore has had. In essence, the export value of cultural goods of Atlantic Canada in early 2000, accounted for about $18 million, this means that shifting to the market influence of folklore has come with lots of economic benefits to the inhabitants of this region.
Accordingly, through market influence, the Atlantic Folklore culture has been popularized and therefore it has become more accessible and enriching in countless ways the quality of life of the residents of the Atlantic region. Thus, through this market shift, Atlantic Canadian households spent about $1000 on cultural products and services like cinemas and books. Furthermore, Atlantic Canada contains a large group of creative talent, enriched by its cultural heritage and ethno-semantic diversity. This has been a source of livelihood, since the shift to market influenced folklore culture allows people to take advantage and showcase their cultural values in cinemas or as plays and songs or music that generates income and boost the economy to another level. Studies also reveal that, many other advantages that come with the shift to the market. For instance, in the field of cultural production in Atlantic Canada, there is a growing number of artists and entrepreneurs like Maillet Antonine, Adams David, Flanker Press; these artists and entrepreneurs have succeeded beyond this region and gained access to the world market. This has changed inhabitants living standards to a large extend.
Generally, Folklore or folk culture is clustered and there are great trends of isolation, which promotes cultural diversity as a group`s unique customs that develop over several centuries. In essence, folk culture varies widely from place to place and in many ways, folk culture deals variedly with lives and habits of its people. It also affects the environment in which the people act, thereby tremendously influencing culture (Snow 45). In this sense, the impact of shifting to a market influenced folk culture is that people tend to esteem certain values and principles that act as determinants for their financial incentives and attributes towards clothing. Thus, Atlantic region people are oriented towards certain directions as regards the type of clothes; clothes contain certain culturally artistic representation of the inhabitants of the Atlantic region. Since people living in folk culture are likely to be farmers, growing their own food and using hand tools or animal power, shifting to a market influenced culture means adapting to new economic activities like farming to supply food for the market and individual supplies in small quantities.
Further still, an accommodation inclination is a big supplier to folk culture, where indigenous societies and environmental aspects regulate the type of house that is built in a district. Thus, market influenced folk culture will encompass market ideologies together with other environmental factors to determine the type and design of housing available in a certain setting. This means that shifting to such market oriented folk culture calls for adoption of market ideologies or assimilation of values and features of other customs availed in the market over the traditional ones. As such, dwellings in Atlantic region are historically created from local materials (wood, bricks, stones, and skins), which are uniquely and exceptionally arranged, and always tied to the market systems and the physical environment. Thus, buildings are erected without consultation of blueprint or architectural service.
However, market-influenced folk culture would incorporate local designing attributes and market trends to come with structures with good quality and showing all the goodness of the ethnic groups involved. A market influenced folk culture is less stringent in terms of behavior imposed on social norms or customs, thus a shift to such folk culture means doing away or tolerating some of the behavioral orientation to suit market systems. This in effect assimilates what is good in the market even if it emanates from another.
In effect, there are some tribes or ethnic groups that do not eat certain animals based on certain taboos, however, market systems may cause a shift or a deviation from that to suit the audience materially and economically. A market-influenced folk culture usually comprises of almost neutralized values and customs, for instance, because of market diversification, people may not be that stable and close knit and in rural areas. Such individuals would like a more classy area even though near their rural area, and would be less resistant to change since the sociocultural structure is more diversified and everyone values the other for mutual benefit in terms of economic gains. The original folk culture is associated with clustered distributions; where it is characterized by isolations and lack of interactions leading to breed uniqueness tied to the physical environment. However, market-influenced folk culture comprises of different foreign traits.
Thus, clustered distribution may not be the case, thus no complete isolation, which results in intermarriages with other ethnic communities, weakening the breed uniqueness since different ethnic groups have different breed distinctions as well as values and general cultural principles. As such, the three major tribes that Inhabit Atlantic Canada region have been accessed by other tribes forming bonds that resulted to intermarriages and thus assimilation of other peoples` cultural values.
Consequently, market-influenced folk culture has various positive as well as negative influences on an affected society or community. Shifting to market-influenced folk culture allows one to be assimilated or assimilate another person`s culture, as such Atlantic Canadians have interacted with other cultures through cinemas and books that contain cultural materials. In this sense, clothing becomes one of the resultant effects of market oriented folk culture as depicted in the Atlantic Canadian environments. As such, blue jeans have become the symbol of youth and more so westernization across the globe. This is because many people in foreign countries have been convinced to sacrifice their livelihood just to get the feel of having blue jeans.
This has caused jeans to become the status symbol in many regions (Asia and Russia) for instance, which means market oriented folk culture cuts across the borders and unifies ethnic groups across the world. Concerning the environmental impacts, folk culture is much considerate of the environment where physical features are valued as part of the daily life that people live. Such importance is given to the environment in that no modification or destructive moves are encouraged, thus, shifting to a market-influenced folk culture means diffusion into a world that esteems less the natural settings that people live in.
Therefore, great destruction to the environment will be something much normal in the traditional folk culture. In essence, market influenced folk culture adopts new and destructive behaviors from other ethnic groups thereby resulting into evil organizations within the folk culture that erodes the good morals or values of people. For instance, shifting to a market-influenced folk culture that does not esteem good neighborhood may lead to shift in economic activities by engaging in morally unfit behaviors like gangs to get money for sustenance according to the prevailing market trends. Eventually, there is big problem with globalization of culture because of market influence and this has been seen to have taunting or destroying effects on folk culture. However, this may also act as the preservation of culture where traditions care preserved as museum pieces or tourism gimmicks.
Snow, D. The Blackwell Companion to Social Movements. New York, NY: John Wiley & Sons, 2008. Print.
What is reward and reward management?
Organizations view issues of employees reward and reward management differently depending on the production perspectives and culture of the organization. However, the commonly known idea that revolves around rewards and reward management touches on the motivational aspects of the HR team within an organization or within particular business premises (Armstrong, 2010, p. 79). According to Taylor, employees reward is the recognition for the effort they put in production processes through proper and prompt remuneration, which usually entails payments either in monetary units or in non-monetary units. Employees receive money in form of payment as a reward for their performance or may as well obtain material gain and recognition as part of reward in their endeavors (Armstrong, 2012, p. 113).
All these aspects of reward round up to the decision made by the HR team and the importance they attach to the production inputs of the said employee. On the other hand, Taylor argues that Reward Management also known as the RM formula of motivation is the ability of the organization managers to evaluate, recognize and reward employees proportionately based on value created to the organization production processes. The ability to recognize employees’ efforts is the duty of the HR team and must remain within the bounds of the organization decision based on performance evaluation.
Explain why it is important for organizations to implement effectively reward management
From the foregoing, issues of employees reward depends on the illustrative business culture of a particular organization. The fact that an employee will obtain some formal recognition for the good performances relies on the documented terms of operations within the organization, which again varies as one transect into different organization. The truth of the matter is that employees’ payments for their efforts differ across organizations and to some extend captures skills more than physical outlay (Armstrong, Murlis, & Hay Group, 2007, p. 49). A close interview with the HR manager within the coca-cola company reveals certain issues why the company seems so much concerned with employees’ welfare. As exhibited, the HR manager reveals that the kind of operations within then the coca-cola company come in two different levels and require two distinct groups of workers.
The first category is the technical production aspect, which requires constant supply of human labour and retention of employees within the various departments. Therefore, to maintain those employees within the company premises, they much just receive better payments in form of reward (Secord & Secord, 2003, p. 67). The second category is the non-technical production aspect, which requires that the HR employ workers on contractual basis. However, the company would want to employ the same workers with production experiences to cut down the cost of training. This will mean rewarding the workers fairly to keep them coming back for renewal of contract. On the same account, the HR maintains that, they rewards employs based on their performances as a means to motivate them and improve on the level of output.
Compare the importance of Reward Management vs. Other HRM functions
The major functions performed by the HR team include employees hiring, training, retraining, employment, deployment, redeployment and demotion alongside motivation. Employees’ motivations come in various forms (Armstrong & Brown, 2006, p. 95). Apart from reward as a form of motivation, the organization may create some business cultures that will influence employees input in production processes like, job promotion, creating regular contact with employees, creating a good and healthy working environment and providing platforms for employees insurance. All these aspects of motivation appear important depending on how well the organization implements them. However, the main reason why people offer their efforts in production processes is to generate income and improve on their living standards. Thus, after employment, reward through better salaries remains the most prolific and integral part of HR operations to ensure that the business achieves its set objectives.
Armstrong, M. (2010). Armstrong’s essential human resource management practice: A guide to people management. London: Kogan Page.
Armstrong, M. (2012). Armstrong’s handbook of reward management practice: Improving performance through reward. London: Kogan Page.
Armstrong, M., & Brown, D. (2006). Strategic reward: Making it happen. London: Kogan Page.
Armstrong, M., Murlis, H., & Hay Group. (2007). Reward management: A handbook of remuneration strategy and practice. London: Kogan Page.
Secord, H., & Secord, H. (2003). Implementing best practices in human resources management. Toronto: CCH Canadian.
BUSINESS STUDIES 4
Running head: BUSINESS STUDIES 1
2008 US financial crisis
Studies indicate that social scientists have long been concerned about political institutions influence economic performance of different country or states in the world. It is apparent that today the current United States financial disintegration is one of its kinds, and it is the evidence of such political institutions influence on the economic performance around the world. The effects of the political institutions affected the United States housing market and quickly spread to the financial services sector in the year two thousand and eight and precipitated the worst economic catastrophe in the American history since the great depression. Accordingly, the disintegration spread or stemmed from a variety of regulatory policies that stretched back to the 1970s.
These strategies are in many ways related to a noteworthy notch with the rise of neoliberalism,’ which were wobbly packages of conventional ideas and strategy medicaments that offered less regime protocols. Consequently, this resulted to lower taxes and many other effects associated with such neoliberalism regulations and policies. Throughout this research paper, an analysis is carried out concerning the financial meltdown in relation to how government regulations among other critical issues influenced the financial disintegration. In particular, this paper focuses on how supervisory reorganizations closely related with neoliberalism’ fashioned obstinate enticements, which subsidized suggestively to increase lending in the hypothecation market, thus swelling conjecture in other fiscal markets. In essence, such behavior became increasing risky in many ways and the result of it all was the failure mortgage firms, major insurance companies, banks, and markets for short term loans. This generated a broad liquescency disaster, which shove the whole economy into an austere downturn circumstance.
Background of neoliberalism and roles of neoliberalism regulations towards the financial disintegration
To begin with, studies reveal that since the late 1970s, national politics in the United States has been dominated in an increasing way by neoliberals, who argue that less government regulation is better for the economy. Neoliberals’ argue that marketplaces in the United States are too firmly controlled and they propose that they ought to be unfettered to a large extent from the central administration`s control. The disagreement of neoliberals’ is entrenched in the conventional works of Hayek, who contended in favor of free markets and they were against any practice of national scheduling and involvement into the economy other than for resolves of remedying the most solemn market catastrophes or undesirable externalities.’ According to neoliberals,’ the quest of self-interest aided the most effectual market performance and in turn, the most actual route to pecuniary expansion.
Interestingly, this views came to what is called political fruition in the United States in the wage of Ronald Reagan`s election to power in the early 1980s; this paved way for the pursuance of these views since then, though in varying degrees by many other presidents that came after him. On the other hand, economic sociologists greatly disagree with these views, and they argue that market activities are always embedded in and constituted by political rules and regulations. This is where formal and informal political institutions that include property rights; these institutions are the essential fabric on which markets depend. Thus, sociologists’ argue that, without such supervisory institutes, markets are destined to catastrophe and more so flop. Accordingly, financial markets require the state to institute regulations to check extreme risk taking, which could lead to hypothetical rumbles. Essentially, sociologists affirm that, financial markets require the state to serve as the lender of last resort in a way to contain collateral damage during the time when speculative booms turn into bursts.
In relation to the 2008 financial disintegration, it is pointed out that this stemmed out of not too much regulations but rather too little. In this regard, the inadequacy of regulation in the financial services industry spearheaded the development of an ever more abundant supply of credit in the housing market in ways that developed the roots of the financial breakdown. Studies reveal that there is much debate on whether neoliberal reforms involved deregulation or reconfiguration in the overall regulatory burden on business. Regarding the financial services industry, regulatory reforms involved three main things. In a few cases, state oversight and responsibility for financial markets was reduced but not eliminated in a way analogous to deregulation in the conventional sense.
Often a time regulations were revised or reconfigured but not reduced. However, on rare occasions, as new markets were developing in the first place, regulations were not imposed on them at all. Despite all these, the state was ready to move swiftly into these markets, including other financial markets as the lender of last resort at a time when they began to collapse and threaten other parts of the economy. A according to findings, market regulation is a highly contested political process; the regulatory and other institutions in which market activities are embodied are political settlements emanating from power struggles, negotiations, and compromise. This reflect the balance of political power, and when that power balance shifts, many rules and regulations that govern markets also shift in a similar fashion. Studies also show that, neoliberal reforms involved apolitically contested process associating powerful players in and outside the state; members of the financial services industry and their political allies. These group or force behind the influenced several important occasions, which contributed to the financial disintegration.
In essence, the causes of the financial disintegration are far more complicated, since some regulatory factors were proximate to the disintegration than others. Moreover, studies also indicate that, the financial disintegration was not entirely because of the regulatory policies. For instance, studies reveal that, technological advancements in securities trading and risk assessment had a part to play regarding the financial disintegration. However, the regulatory policies created incentives and constrained behavior that increased the probability of a financial disintegration occurrence. Studies show that, in the late 1970s, many regulatory reforms occurred, and they contributed to the financial crisis of the year 2008, since their effects accumulated slowly over time. In review of the of the 2008 financial disintegration, there are many regulatory underpinnings; this include a variety of government policy decisions and some private sector.
Essentially, it is of great use to review the 2008 financial disintegration in brief and in a bit to lay the foundation for the unveiling of the neoliberal reform factors or policies that contributed to the disintegration process. Studies show that the catalyst for the financial disintegration in the late 2008 was the collapse of a bubble in the United States housing market, leading to rapid decline of housing prices in the late two thousand and six. The availability of inexpensive mortgage credit drove the growth of this bubble, and in part the federal reserve board`s low interest contributed to the growth of the bubble also. The increase in the availability of subprime mortgages had its contribution to the bubble growth. During the time when the bubble burst, many people began to default their loans, and this held grounds for those who had subprime mortgages.
On the other hand, rising felonies set off a hawser of events, which resounded through the mortgage, banking, and insurance diligences, and lastly brought the entire financial structure to the verge of disintegration. It began by the failure of mortgage companies like the new century financial, the federal national mortgage association, including many others. On the other hand, banks failed since most of the risky subprime mortgages were often pressurized with other types of loans as organized asset-backed securities; this were sold to banks and other investors, however, the indemnity loss was extraordinary.
In other instances, companies like, Lehman brothers went bankrupt after the failure by the federal government to bail it out. This was so because the federal government feared not to create perverse moral hazard incentives for other banks in the near future. Consequently, the markets for mortgages and bundled mortgage-backed securities began to size up as concerns regarding the risky nature of such financial instruments began coming to light. Concerning the American international group, it collapsed after many banks had purchased credit default swaps from it to counter the effects that mortgage backed securities would have had when they turned out negative because of mortgage defaults. However, when the housing bubble burst and mortgage defaults mounted, AIG got faced with disastrous possibility of an unprecedented number of payment claims at once against the swaps. Thus led to AIG`s credit rating to be downgraded, hence unable to raise enough new capital to cover its potential losses. AIG`s failure would have brought down many other banks that had been associated with, but the federal government`s bailout. However, the crisis was far from over, and it spread, where the general credit market failed.
Concerning the 2008 financial disintegration briefed in the preceding paragraphs, a number of regulatory roots provide insight into the disintegration that occurred. The financial disintegration was in many ways triggered by the disintegration of the housing market and the reverberation effects that followed. Studies show that the long=term economic backgrounds of hazardous mortgage debt and consumer debt that stretch back to the mid of the 1970s. Again, many of the regulatory reforms got their roots in the rising prominence of neoliberalism as the guiding light the United States regulatory policy. It is believed that, the rise of neoliberalism was driven by the financial services industry; many of those found on Wall Street, including their influential associates.
Studies regarding the national bureau of economic research show that the overall level of financial regulation in the United States dropped greatly between the 1980s and 2009. This was more obvious in the regulatory reforms concerning the banking industry where previous administrations had phased out interest rate ceilings for residential mortgages and other bank loans. The Glass-Steagall act of the 1930s was greatly pushed by neoliberals in the congress. In addition, neoliberalism was evident in Clinton’s administration regarding the decisions not to regulate over the counter derivatives and credit default swaps. This was because of the influential force of some members of the administration who argued that doing so would smother the efficiency of emergent markets for such things.
Neoliberalism also influenced the bush administration regarding the SEC decision allowing self-regulation of investment bank multinationals capitalization, liquescence and advantage positions. It is recorded that neoliberalism highly influenced Bush`s administration decision to reduce the dominance of GSEs in the mortgage market through the capping their ability to expand lending. This aimed at creating new opportunities for private mortgage companies to compete in the market. It is true that neoliberalism is often about reforming the tax code and regulatory structures, thus, the tax reform act of the mid 1980s that eliminated the interest deduction for consumer debt other than mortgages is important.
In essence, this legislation was meant to fulfill two functions; to reduce tax rates in accordance with neoliberal ideals concerning limiting the role of government in the economy through reduction of resources available to it. Secondly, legislation sought to simplify the tax code through elimination of tax expenditures or loopholes that had been inserted into the code over the years. This led to the removal of interest deduction for consumer debt. Through neoliberalism, the government sought for ways of broadening the tax base through the reduction of loopholes to avoid budget deficits that had resulted from reduced tax rates. Enforcement of property rights is one thing that neoliberals emphasize that the government had to put in place. In detail, the preference here is for self-regulation by market players since it fell in their collective interest to police themselves rather than the state.
However, this assumption was put to test by the recent financial disintegration. In essence, studies reveal that, Washington reined in aggressive regulation by SEC, part of the neoliberal movement, and this reduced pressure off sell-regulatory associations like the national association of securities dealers, which was so passive that traders and marketers became ignorant and indifferent about its activities. This led to the culture of tolerance that emerged, and which was inadequate for inhibiting the sort of opportunism in the markets, which is linked to the backgrounds of the havoc s that exhibited the markets during the crisis. Neoliberalism was far from over and it so tended towards self-regulation in the area of risk assessment.
In this regard, the troublesome effects of regulatory reform became compounded through the creation and blind faith in fancy statistical models for estimating risks, credit assessment algorithms, including other cognitive devices. These devices enabled mortgage lenders, financial services companies, borrowers, and investors to ignore the mounting risks associated with the development of increasingly complicated financial instruments. In addition, the adoption of the VaR models as the de facto standards for estimating the risks associated with asset-backed securities and credit default swaps bamboozled the government regulators as well as the private sector. In this sense, the federal government assumed in terms of classic neoliberal fashion that associations would have acted responsibly by developing accurate assessment models and thereby heeding the warnings of their own risk assessors at the time when serious risks got detected. However, the opposite happened, where the state permitted the credit agencies to police themselves even at a time when they faced conflicts of interest in rating securities. Interestingly, the credit rating agencies struggled to keep pace with rapid evolution of increasing and complex, hard to understand investment products; thus, the credit rating agencies failed to police themselves and hence the crisis was inevitable.
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THE 2008 US FINACIAL DISINTEGRATION 3
Running head: THE 2008 US FINACIAL DISINTEGRATION
Discussion of Statement, Assessment of the form of International Business in which it is applicable, and Implications for IHRM
The global presence of a firm involves its operation and existence in different industries and societies across the globe. Such operations feature the prevalence of a firm’s operations, its services/products, and its market in different countries and societies. A common feature of such presence involves the establishment and maintenance of subsidiary enterprises in countries and societies away from the firm’s home nation, with close relations among them and the parent firm (Franco 2005, p. 654-656; Handy et al 1996, p. 6-12).
Activities and operations in the subsidiaries of multinational enterprises feature close relations with those in the parent firm, in terms of corporate culture, production methods and approaches, industrial and market objectives, resource use patterns, management structures, and market/industry strategies and approaches. The subsidiaries, nevertheless, require adaptation in their respective societies, industries, and markets, if they are to succeed within them. This is since different markets, societies, and markets in the globe feature variety in terms of system values, approaches, objectives, and standards, which the MNE has to consider and adapt to in its operations.
These considerations, factors, and environments constitute the foundation for MNEs’ capacities and potential to reach, exploit, and utilize opportunities and advantages that their global presence avails (Esso 2010, p. 168-170; Tarzi 2005, 497-504). Such potential and capacity is, nevertheless, available for such firms when they model their operations, structures, and cultures in suitable and productive ways to utilize such opportunities in respective societies, industries, and markets, through adaptation and integration (Erramilli & D’Souza 1995, p. 47-50). This is because productive and suitable ways in one society, industry, or market for the MNE may not be effective in another.
This paper agrees with the following statement:
A firm’s global presence provides some valuable opportunities for the firm to adapt to local market differences, exploit global economies of scale, exploit economies of global scale, tap into the best locations for activities and resources, and maximize knowledge and experience transfer between locations. A multinational enterprise needs to coordinate and balance the approaches of centralized integration and local adaptation to optimize these opportunities.
The discussion argues that the extent and level of competency and proficiency in MNEs’ development and enforcement of structural and process capacities determine the level of MNE success in optimizing these opportunities. Such capacities should suit the local market and industry environment of each of its subsidiaries. The paper argues that the development and enforcement of such capacities involve the achievement of coordination and balance in the approaches of centralized integration and local adaptation (Aziz & Makkawi 2012, p. 63-66; Gilmore et al 2003, p. 195-206). The paper also assesses the form of international business in which this statement is applicable and discusses the statement’s implications for international human resources management.
Global Presence of Firms as Basis for valuable Local Market Adaptation, Scale and Scope Economies, Resource and Activity Location, and Knowledge and Experience Transfer Opportunities
The global presence of a firm features the establishment and maintenance of operational capacities in various societies, industries, and markets in the globe. It involves the extension of productive operations in countries, markets, and societies other than its home nation. The objective of such extension features attempts to widen the field and scope of operations for the promotion of the likelihood and effectiveness of realizing certain objectives, such as profitability or operational expansion.
Common forms of the global presence of firms involve establishments of subsidiary firms or partner relationships with entities in international societies, markets, and industries. The presence of MNEs in global societies through subsidiaries or relationships with industrial or market entities presents them with valuable local market adaptation, scale and scope economies, resource and activity location, and knowledge and experience transfer opportunities (Gilmore et al 2003, p. 195-210; Arregle et al 2009, p. 86-88). These opportunities are available for MNEs since their presences in markets other than their home nation provide avenues for their industrial, social, and market influence and authority in international societies.
Influence/authority for MNEs to access opportunities available for business in other societies results from the establishment of productive operations in these societies. The first opportunity involves the chance to adapt and fit in the local market, given the differences from the MNE’s home industry/market that the new environment features. The MNE establishes operations in the local society through setting up a subsidiary in its market/industry. Through the subsidiary, the MNE gains the capacity to adapt to local market differences by modeling its local operations on strategies and approaches that fit the local market. Managerial authorities in the MNE’s subsidiary can assess the local market’s features and their differences from the MNE’s home society and adjust their operation model, production approach, and organizational processes accordingly (Sharma & Bandara 2010, p. 664-666).
The subsidiary can adjust to local market differences by adopting production methods, product design approaches, marketing methods, human resource processes, and other strategies that suit local market features, without endangering the general corporate culture, vision, objective, and mission structures in the MNE. Suitable changes in the MNE operations to suit local market differences may include the adoption of production and management strategies in response to market cycle, market demand structure, product marketing, and other differences in the local market (Makino et al 2002, p. 403-412; Buckley et al 2007, p. 500-503). The MNE thus gains the capacity to adjust its operations to fit local market differences and promote the chances of local success through its subsidiary’s management.
The second opportunity involves the MNE’s potential to benefit from global scale economies due to its global presence. Economies of scale involve cost-related advantages available for an enterprise due to the large scale of its production of one product, as a result of growth/expansion. The subsidiaries in different international societies, industries, and markets maintain close structural and operational relationships with the parent firm. This means that the MNE can reap cost advantages in its procurement of resources for its large-scale production of a product on a per-unit average basis. The MNE’s global operations mean that each of its subsidiaries can benefit from large-scale procurement of raw materials, product promotion, transport, storage, and other production processes since the average unit cost of one product is lower than that applicable in small-scale production operations. Such economies apply in capital resource costs, raw material expenditure, technology costs, advertising expenditure, and costs in other production operations (Hutzschenreuter & Grone 2009, p. 1149-1153; Foster et al 2011, p. 1-20).
These benefits represent enormous gains for the MNE as a whole, as the cost advantages for its individual subsidiaries add up to significant advantages globally. A related opportunity for the firm with a global presence concerns the economies of global scope. Economies of scope involve cost advantages that an enterprise obtains from the large-scale production of many products. Scope economies accrue for the firm with a global presence since the MNE can use the same resources to produce a variety of products in a large scale. Resources applicable in the large-scale production process of one product can also apply in the production process of others on a similar scale. These cost advantages may apply in storage, transport, advertising, technological investments, et cetera. The MNE also enjoys a lower level of average risk in production operations in comparison to an environment in which the scale of operation is small (Hutzschenreuter & Grone 2009, p. 1149-1153; Foster et al 2011, p. 1-20). This is since the firm enjoys a variety in its product line for the assurance of profitability and other objectives.
A fourth opportunity involves the MNE’s capacity to access and tap into the best market and industry locations for resource and activity advantages. The expansion process in MNEs involves decisions on the international markets and societies in which to establish operations, based on their resources and the potential that they present relative to the firm’s objectives. Attractive industry and market locations for the MNE feature suitable resource availability and abundance – capital, labor, raw material, et cetera – and environmental suitability, in terms of government policies, socioeconomic factors, security, and infrastructure. The MNE’s global presence presents an opportunity for the set-up and operation of subsidiaries in the global market and industry locations that feature advantages and suitability relative to its objectives (Hailu 2010, p. 104-107; Barthel et al 2011, p. 398-401).
The MNE can invest and establish subsidiaries in selective market/industry locations that its head management feels present resource, infrastructure, process, and other advantages. This capacity assures the MNE’s opportunity to establish in international market/industry locations where its management identifies local resource advantages that are suitable for the achievement of its objectives. The firm’s global presence also promotes such capacity through availing an immense capital-base from other operations and its attractiveness as a venture. Operations in multiple international markets and industries present the MNE with the benefit of credibility, recognition, and reliability as a venture among potential investors (Manolopoulos 2007, p. 359-364). This benefit allows unproblematic funding for the establishment of its operations in selective market and industry locations with resource and process potential in the globe.
MNE subsidiaries often exist in close structural and process relationships, among themselves and with the original firm (Manolopoulos 2007, p. 359-364). The management in the parent firm normally oversees operations and processes in all subsidiaries. Decision-making processes in subsidiaries normally occur under the authority of, or in conjunction with, the parent firm and consultation, coordination, and cooperation with sister firms in other global locations. This structure allows the MNE to maximize the transfer of experience and knowledge among its subsidiaries according to identified requirements. The purpose of such transfers is to achieve and maintain suitable production standards that suit and promote its corporate culture and production objectives both globally and in particular locations (Manolopoulos 2007, p. 359-364; Djurovic 2011, p. 3-5). Technological transfers, staffing movements, and training movements among the MNE subsidiaries and the headquarters are essential ingredients and parts of knowledge and experience transfers among global locations that the MNE’s global presence allows.
Need for Coordination and Balance in the MNE approaches of Centralized Integration and Local Adaptation for the Opportunities above in International Firm Operations
The MNE’s capacity to achieve and utilize the opportunities discussed above rests on the effectiveness of capacity that the firm’s management develops and enforces, in structure and relations among its subsidiary entities. The potential and capacity of the MNE to achieve and exploit these opportunities in its global presence results only when the firm’s head and subsidiary managements, in coordination and cooperation, model operations, structures, and cultures in suitable and productive ways. Such modeling should aim at utilizing the opportunities in respective societies, industries, and markets, through adaptation and integration.
The extent and level of competency and proficiency in MNEs’ development and enforcement of structural and process capacities that suit the local market and industry environment of each of its subsidiaries determine the level and the extent to which it can successfully optimize available opportunities (Uhlenbruck 2004, p. 110-114, 118-121). Innovation and creativity are essential ingredients in such processes since productive and suitable ways in one society, industry, or market for the MNE may not be effective in another. The development and enforcement of such model capacities involve the achievement of coordination and balance in the approaches of centralized integration and local adaptation. Centralized integration involves the set-up of structures and procedures in the MNE subsidiary’s operations and activities in the local industry and market that suit the local environment’s structures, systems, and requirements. It involves the establishment of recognizable structures that are consistent with local society, industry, and market requirements, features, and traditions. Such structures include managerial structures, corporate culture aspects, technological and infrastructural systems, decision structures, and organizational structures.
Centralized integration features the formation and enforcement of organizational control structures that meet local environment traditions and consistencies, including culture, government guidelines, business traditions, infrastructural systems, and resource factors. The set-up and enforcement of such structures allow the MNE, through its subsidiary, to integrate into the local system and its features (Erramilli & D’Souza 1995, p. 47-50; Sunkyu et al 2001, p. 369-371). Such integration is fundamental if the MNE is to thrive in the local business and social environment, as it shall utilize the local systems and features in its operations.
Local adaptation involves the MNE’s molding or shaping of its operations, structures, and processes based on local culture, value systems, and business production and operation patterns. The MNE’s processes, structures, and operations need adjustment through remodeling based on local systems, values, and cultures since such localization is fundamental for acceptance and tolerance in the local society. Without tolerance and acceptance, the MNE cannot succeed in its operations, as the local society could alienate the firm’s activities and subject its operations to social hostility and repulsion (Sunkyu et al 2001, p. 369-371; Tarzi 2005, 497-504). Such developments could pose a danger for the MNE’s operational objectives in the local environment, since decisive factors for market and industry success, such as product demand and resource support, could lack for the MNE.
The subsidiary also needs to observe and comply with the parent firm’s model and objectives, to ensure the promotion of the MNE’s global brand and identity. Compliance with the MNE’s global brand structure in the local subsidiary’s operations assures that the firm does not lose its global identity and position, in regard to its mission and objectives. Coordination and balance in these activities are essential to ensure the MNE subsidiary’s compliance with the structural requirements of its global identity, even as it strives to integrate into the local environment (Sunkyu et al 2001, p. 369-371; Esso 2010, p. 168-170; Tarzi 2005, 497-504). The extent of success in such balance and coordination in the MNE’s activities underlies its capacity to exploit the opportunities discussed earlier successfully, since different operational models suit different market/industry locations on the globe.
Suitable International Business Forms for the Applicability of these Opportunities and Requirements and Implications on IHRM
The suitable international business forms in light of the statement in focus in this discussion include all forms in which the environment and its features are essential factors for success. The statement features relevance in the operations of international business forms in whose operations the contextual environment and its features (culture, values, resources, and social and business environments) are essential factors. Such forms include foreign direct investment and joint ventures (Tarzi 2005, 497-504; Gilmore et al 2003, p. 195-200).
This is since success in these forms is dependent on managerial influence of such features in the local environment in ways that facilitate integration without loss of business identity. This discussion’s implications for international human resource management involve the need for models and approaches that promote compliance to, and consideration of, local environment features such as cultural values, management approaches, and workplace structures in such management. Training in local models and approaches is essential in international human resource management to promote the integration of international businesses in the local environment. Such integration is necessary to promote suitable environments for international business success, by promoting acceptance and tolerance in the local society for market benefits such as high demand (Rivenbark 2007, para. 1-12). IHRM needs to consider training in local approaches, structures, and values and the recruitment of home country skills in managerial and operative positions, for such success.
It is true that a firm’s global presence provides some valuable opportunities for the firm to adjust to features in the domestic market, utilize international scale and scope economies, harness suitable resource environments, and achieve optimum knowledge/experience transfer among global locations. A multinational enterprise needs to coordinate and balance the approaches of centralized integration and local adaptation to optimize available opportunities. The extent and level of competency and proficiency in MNEs’ development and enforcement of structural and process capacities determine the level of their success in optimizing these opportunities. Such capacities should suit the local market and industry environment of each of its subsidiaries. The development and enforcement of such capacities involve the achievement of coordination and balance in the approaches of centralized integration and local adaptation.
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Discussion of Statement, Assessment of the form of International Business in which it is applicable, and Implications for IHRM 12
According to studies, information is important for any business to succeed. For this reason, a business has to device ways of accessing information. Therefore, it is essential to understand the importance information access in business today. In recent times, every business has to deal with competition either form local competitors or international competitors (Guffey 25). To better the process of competition and business success, a business has to access information. The importance of information access is that; allows a business to make improvements in the goods and services offered. This includes the processes used for selling or offering the services; identifying of market trends will help bit competition.
Secondly, information access will help increase customer satisfaction because a greater way of understanding their requirements is availed through access to feedback and other key customer information (Guffey 34). Because of increase in awareness concerning what customers want and what the staff requires, there will be an increase in the quality of suppliers. Through information access, employees benefit from their colleagues` knowledge and expertise, and thus the find best ways of doing their job; thus, improving ways of production. Good information access will help an organization to have increased business effectiveness through better use of in-house expertise.
The four key points
First, will be used in examining the existing data as well as the missing data sources. Secondly, access will be used in maintain and securing databases. Thirdly, information access will be useful in organizing and retrieving information form a database. Finally, information access will help in creating an understanding and establishment of relationship table.
Relativeness of access
As business management profession, access will be relative to the job as one of the essential programs to be applied as it is easy and it has all it takes for business management professionals to utilize. Although access was crosschecked in class, not all chapters were covered and therefore, this gives the management student an added advantage after this research. This is because; the research has opened up avenues to great and essential information. Thus, this positions the candidate better than other job candidates.
Guffey, Mary. Essentials of Business Communication. New York, NY: Cengage Learning, 2009. Print.
A business is a firm in the micro-economic unit hence; a business environment can be described as a set of external forces or factors that can influence the running of a business firm. Business environments can be classified in terms of: economic and non-economic business environments and micro and macro- economic environments asserts (Reddy, 2002).
In the economic environment, factors analysed are those factors which have an economic impact to the business firm. In this scenario, General Motors the business organization under perspective is influenced by factors such as the government, households, overseas markets and the capital market. The outlook of the business outfit in the market place is a manifestation of the choices arrived at by the firm’s management. Government influences the business in terms of direct and indirect tax that it imposes on the firm, waivers and protections. The capital market being where it interacts with its customers also influence the working of the business firm in terms of other vehicle selling companies in the market and different regulations in the market. The household sector influences the business firm since it receives the services of the business sector in this case buys motor vehicles from General Motors (Adhikary, 2006).
In the non-economic environment factors that influence the business firm include: sociological factors, education and acquisition of knowledge, political, historical and physical factors. Sociological aspects refer to the ideals and cultural attitude of a society. The sociological factors of a society of a society are very critical in determining the kind of business an entity can carry out. In this case depending on how a society has been cultured, the vehicles purchased by the members of that society may vary from another society. On the other hand, education and acquisition of knowledge is important in the determination of how the business is managed. In addition to that, the success of certain kinds of businesses like General Motors depends on staffs that are highly qualified and specialised to ensure that services delivered are of high quality and that there is accountability of sales (Maheshwari, 2002).
Additionally, political-legal dynamics are also critical in the management of the business. This is because the political scene together with the legal fraternity comes up with the legislations that control the running of business in a particular area. Another factor that influences General Motors is that of historical background of an area. This influences the business especially since a region tends to be inclined to its colonial practices and the manner in which it carries out its business activities heavily depends on how business times was carried out.
The other kind of business environment can be categorised in terms of micro and macro-economic environments. Micro-economic attributes are those features that influence the company’s present environment and affect the business performance. These include suppliers, consumers, rivals, marketing agents and the public. At general Motors it is aimed that we have reliable suppliers, customers are created and retained and make the company as lucrative as possible. The macro-environment refers to a scenario is where a corporation and forces in the micro environment function in a larger scale. The macro-economic environment poses limitations to the micro-economic environment because the forces that were containable in the micro-economic environment are relatively difficult to control in a macro-economic level. If for instance it the customers, on a micro-economic level it’s easier to coordinate them as opposed to the macro-economic level (Adhikary, 2006).
Adhikary, M. (2006). Business Economics. New Delhi: ExelBooks India.
Maheshwari, R. (2002). Principles of Business Studies. New Delhi: Pitamber Publishing.
Reddy, R. (2002). Business Environment. New Delhi: APH Publishing.
Forum 8 1
Insurance and Commercial Bonding
Module Seven: special contacts 3- insurance, bonding and bailment
Question one: Explain what it is meant by the right of subrogation. How many subrogations affect not only the insured but also the person who has caused the injury or damage? Indicate other means by which the insurance company may keep damages as low as possible.
The right of subrogation gives the insured the opportunity through the insurer to claim for loss or damage against a third party. The right of subrogation arises once the insurer and the insured have greed under terms of insurance for the insurer to take full responsibility in claiming compensations for damages caused to the insured party by a third party.
Under terms of subrogation, the insurer steps in place of the insured party and may go ahead to sue the wrongdoer for the damage caused but after making proportionate compensation to the insured. With this policy in place, the insurer becomes the residual claimant and if incase the third party who is the wrongdoer agrees to make compensations then the insured and the insurer may decide to divide the amount compensated as per the terms of agreement. In connection, one would argue that the insured has a right under the terms of subrogation policy to sell his or her right to demand for compensation to the insurer in case of damages. In analysis, involving the insurer in making claims for compensation would have an impact on the amount of premium paid by the insured, which is accumulative in nature.
An insurance company keeping damages low would imply reducing the cost of compensation to clients or to the insured. As a business entity, the interest of an insurance company would be to maximize return and operate under low costs of compensation. To that effect, an insurance company may opt to provide training to its clients on the most applicable precaution that would help prevent getting into contact with some common unforeseen circumstances. Similarly, the insurance company may decide to provide maintenance in areas where chances of risks are high, for example servicing of factories, servicing of airplanes and maintenance of publicly used roads.
Question Two: What is bonding? Distinguish between bonding and insurance coverage.
Under security market operations, boding is a term used to describe the process of making an agreement between a bond borrower who is the bond issuer and a bond lender who is a bondholder. The bonding process involves an exchange of a bond as a promissory note with cash loans; a note showing that transaction has taken place between the borrower and the lender and that the borrower has accepted to make payments as per the agreements. Similarly, the promissory note shows that the lender who is the bondholder expects to receive some payments inform of premium or interest at a constant rate over a given period depending on the specifications made during the time of application. At the end of the maturity period, the borrower would pay an equivalent of the principle amount plus any other accrued amounts to the lender.
This principle amount is per value of the bond. The agreement between the borrower and the lender may specify that the bond be sold at a price lower than its per value during which at the maturity date, the full per value of the bond is paid to the bondholder. However, the bondholder may decide to sell the bond to a third party in which the amount at which the bond is sold for the second time would be higher than the terms of sale in the first case. Hence, there seem to be transfer of bond ownership. This decision to transfer bond ownership would depend on the terms of agreement between the initial borrower and the lender. The agreement may specify that the lender has not right to sell the bond to a third party in which case the decision to sell the bond is restricted. The entire process that take place from the time a borrower decides to promise for future payments using bond as a promissory note to the time the lender receives back payments under contractual agreements is called the boding process.
Even though some similarities exist between bonding and insurance-cover some differences persists between the two. Bonding and insurance cover function as financial security in an event of damages or wrongdoing and a mean of protection against other uncertainties. Business operations involve a lot of risks that managers would want to manage and among the other various methods that would help manage risks, managers and individuals would want to transfer the risks to a third party through either bonding or insurance cover. The difference observed between bonding and insurance policies underlies the nature of risk allocation among the parties. The insurance cover allows risk transfer from the principal client to the provider of the insurance cover. On the other hand, under bonding policy, the principal client shifts uncertainties to a third party who is the surety provider. Other distinction made include the following:
Perspectives on Risk
Business companies and individuals encounter different types of risks that range from automobile accidents, theft cases, fire, illness and death. With these uncertainties in mind, an insurance cover and boding provide services for managing risks though with different vantage points. With insurance cover, the insurance provider would decide to take all or most of the risks and to that extent promises to bear the entire responsibility of compensating the principle client. On the other hand, under bonding agreements, the surety provider gives a promissory note that outlines the responsibility for financial compensation. The promise to make compensations under bonding agreements exclude acceptance to take risk by the surety provider. In connection, under bonding agreement, the risk remains with the principal client who is the lender while under insurance cover policy there is transfer of risk to the service provider who is the insurer.
Meaning and the parties involved
The tow terms of contractual agreements may as well be distinguished based on definitions and the parties involved. For the bonding agreement to be complete, three parties must be represented. The three parties in bonding include the principal client who is the entity performing the operation, an obligee who is the lender and the surety which must be either an insurance company, a lawyer of a court. The surety acts as the foreseer and ensures that there is no breach of contract and that the parties follow the terms of agreements to the latter. Thus, bonding is a three party contract. On the other hand, the Insurance cover represents the interest of two parties who come into agreement by sharing their terms of trade. The two parties are the principal client who is the insured and the provider of the insurance service who must be an insurance company. There insurance policy specifies that the insured person receives protection from the insurer but after making, some contributions inform of premium.
Time of operation and maturity period
Bonding policy stipulates that the terms of agreement remain in place and very effective until the borrower finally makes payments for the remaining loan amounts and the loan’s principle amount. In relation, the boding agreement has a maturity date during which the borrower submits all the payment; the loan principle amount plus any other remaining accrued amounts. With payment of these amounts, the contract between the parties ends. However, under insurance cover, the principal client remains under the protection of the insurer as long as he or she makes continuous contribution through payment of premium to the insurer. The terms of trade remain in operation until the parties, the insured party or the insurer decides to withdraw from the policy but after consensus. In certain cases, there would be some form of compensation depending of the outlined terms of agreement during application. The level of protection offered by the insurance cover may last over several years perhaps until death of the insured. Cancellation of the process by the insured may illicit some form of fines under certain cases.
Consideration for losses
Under bonding policy, the parties do not give an account of losses since the parties do not expect losses in their agreement. With bonding policy, the surety company will examine prospect of the principal qualification as well as accepting the risks faced. On the other hand, an insurance cover provides for losses. The agreement between the parties is based on the notion that at one time losses will occur thus the need for compensations. Without losses in mind, no particular individual would want to insure his or her property or life.
Question Three: Discuss the different ways in which a bailment may be created, the duty on the various types of bailees. Compare a bailee to a common carrier and to an innkeeper.
The contractual agreement under bailment uses two distinct methods. The method used would revolve around the nature of trust and the risk that may result if incase one party becomes negligent in his or her responsibility. The two methods of bail creation include express agreement and implied agreement. Most agreements made between the bailor and the bailee revolves around express agreement. With express agreement, the bailor and the bailee make agreements in form of statement either orally or written. As long as the terms of agreement attest to the law of contract, then the agreement is stated as both valid and implied by the law. Similarly, a bailment may come into existence through the actions of the bailor and the bailee.
In case the two parties create a bailment because of their actions without coming into an agreement through either oral means or by written consensus, then the bailment creation is by implied act. The law would give a ruling in case of a breach of the contract that the parties accepted to form bailment because of their actions and the consequences determined by the court ruling as deemed fit under precedence. In some cases, law may create an implied bailment where a person obtains possession of another’s property without any form of agreement. This bailment arises because the law requires it to promote justice and fair play. The general notion under bailment is that the bailee only takes shot term custody of the property in question and not full ownership of the property. The terms of agreement have to give clear outline of the nature of custody and the period during which the property will be under the bailee and any other form of payment if need be.
Irrespective of the type of bailee in question, whether gratuitous or non-gratuitous, the duties performed and the roles assumed are similar. The most important thing is for the bailee and the bailor to understand that they are operating under a contract with the specifications of contractual arguments given priority.
Duty to take care of the property
The law treats all types of bailees the same as far as the duties performed are concerned. With specifications, the law states that the bailee is obliged to take full responsibility of the property bailed with ordinary prudence and as if he or she is the actual owner of the property. Irrespective of the bulk, the quality and value of the goods bailed, the sole responsibility would be to ensure that the goods are free from damage, distortion, or any similar effect. Thus, the bailee must treat the goods as his but with an idea that the possession of such goods is short lived and at one time, the right of ownership will be taken from him or her. The fact that a bailor decides to trust the bailee with his property does not mean that the bailor is careless or anything similar for that matter.
in terms of care. The issue may be that the bailor might have some commitments in other areas and may not have time to take care of the property. The responsibility bestowed on the bailee is limited to the existence of mutual contract or any form of written agreement. In absence of such an agreement, the bailee will not be held accountable for any loss of damage to the property. One cannot measure the amount of care given to the property under ordinary circumstances. However, as long as the goods are in their initial state of good condition, then the bailee is not liable to loss or breach of contract. In case of a loss or damage to the property under the custody of the bailee and given that the consent was under terms of contract, the bailee would be responsible and has to pay proportionately in which case the court may play part in determining the cost of the good damaged and the appropriate penalty. The terms of agreements vary among different individuals and societies and depend on the type of good under the custody of the bailee.
Duty not to make unauthorized use of the property
The bailee has no authority to use the property under his or her custody unless the agreement makes specification over the same. If in case the bailee goes ahead and uses the good in question, then he or she has breached the contract and is liable of making proportional compensations as specified by the bailor. If the terms of agreement specify that the bailee may use the property for specific purpose, then it would be sufficient for the bailee to use the product in which case no compensations would be demanded by the bailor but as per the outlaid terms of agreement. In case of tear, the bailee becomes responsible and has to make compensations.Duty to maintain separate identity of the goodsthe bailee does not has the authority to mix the products without permission from the bailor. In essence, the bailee should maintain the goods in separate states and in their initial conditions. The separate identity of the goods would help in distinguishing the goods from any other good that might have been left in addition to the goods in question.
On the same line, the bailee should not mix the bailor’s property with his own property to avoid confusion that may arise in case the bailor comes to collect his property. If in case the bailee accidentally or knowingly mixes the bailor’s property with his or her own and the goods were separable, then the bailee would be responsible for separating the goods and if the goods become inseparable, then the bailee is held responsible and liable to compensate the bailor for the loss or damage. In this case, the bailee may end up losing his or her entire goods to the bailor. Duty to return or deliver the property
As soon as the bailing period is over or the purpose for which the bailee bailed the goods or property is accomplished, then the bailee has to deliver the property. The bailor prescribes the delivery directions and requirements, which the bailee has to adhere to without breach. Holding the goods or the property b the bailee after the expiry period or after the purpose for which the goods were bailed is a breach to the agreement and any damage afterwards or loss encountered will be the responsibility of the bailee. In that case, the bailee would want to make prompt delivery of the property to avoid any unnecessary fines or compensations. The bailor has full authority over his or her product and may require instant delivery but not before the end of the bailing period. Under some circumstances, the bailee and the bailor may come to an agreement and renew the contract with same terms of trade or very different terms of agreement. The renewal of the agreement will occur after the bailor has checked the property and is convinced that the state of the item is good and accepts renewal of the contract.
Duty to return increase
In some cases, the bailee may accept to be in custody of a property without entering into an agreement with the bailor. In the event such happens, the bailee would be under the control of the bailor and any decisions made by the bailor concerning his property the bailee must follow without compromise or any sign of disagreement. The bailor may demand for profit and any other form of return from his or her bailed property, which the bailee must give and in compliance to the bailor’s demand. In connection, any accrued amount from the bailed good must be submitted to the bailor since the bailor has full ownership of the product and any other gain attached to the product. A person can analyze the distinctions observed between a bailee and a common carrier by the use of a table as below. The distinctions arise due to differences in terms of trade and agreements made between the two parties.
Bailee (private carrier)Common carrierHe carries the property occasionally to protect them against loss or damage.He carries the property as regular business strategy to earn money.He carries the property of particular persons with no inclusion of any other good to avoid mixing of good and eventual penalties.He carries the goods without any discrimination since there are no serious binding laws in case the goods get mixed upHe has no schedule of service.He declares schedule of service.He has the option to accept or refuse to carry goods. He cannot refuse to accept the goods without any reasonable cause.He is governed by the laws relating to b
He is governed by the carriers act.
The distinctions between a bailee and an innkeeper come in terms of their responsibility as defined by the law of contract. The area of responsibility and the penalty seem to differ significantly between the two. Such differences are as described below.
Bailee Innkeeper Is liable to the loss or damage to the property and may not be in a position to give proof for the damage or lossIs liable to the damage of the property but liability is limited to action of God or any natural occurrence that may cause damage to the property. At times may use the property in custody and make compensation laterIs not allowed by the law to use any of the property under his or her custody under any circumstances.The contract duration may vary depending on the nature of agreement. Sometimes the contract may take as long as months or years.The duration of the contract is fixed and may be as short as an overnight contract. Only takes responsibility of goods under his or her custodyIs responsible for the security of his or her guest and all the languages brought in.
Module Eight: business organization, sole proprietorship, partnerships and corporation
Question Four: Explain the significance of the memorandum of association, articles of incorporation and articles of association.
A Memorandum of Association is one of the legal documents used in the formation and registration process of any limited liability company. The document in its nature defines the relationships that exist between the company and the shareholders. As stipulated under company’s act, the MOA should be accessible to the public. In connection, the document gives information concerning the company’s name, the physical address of the company and the registration office, names of the shareholders the processes of share distribution.
The significances of a memorandum of association come under the various clauses as described under the company’s act and the purpose for meant for each clause. Under the name clause, the directors and the shareholders of the company are expected to state the legal and a recognized name of the company through which the company can be identified and distinguished from any other company operating in the same industry. The provisions of the company’s act revolve around the legality of operation as per the name of the company thus the MOA give specifications on distinctive company’s name. The requirement is that the name must end with the term Limited’. The MOA must have a clearly stated registered office with its physical location.
With the registration office in place, communication within the company or to outside destinations becomes very easy. Giving the company a physical location makes it easy to trace responsibility within the company and in cases of fraud it becomes easy to make follow up through legal proceedings. The company’s law specifies that the company must keep the record of all its registered offices as well as keeping records of incoming and outgoing communications. The registration office clause is vital and must exist to ensure continued operation of the business. Similarly, the MOA must have an objective clause, which summarizes the main objectives for forming the company and any other operational goals. The MOA becomes very vital since it acts as the centre of reference for company’s objectives since every company must operate within clearly outlined objectives.
In addition, the MOA outlines the main requirements of the shareholders who are the financers of the company. Without the shareholders, the company may not be in a position to conduct most of its important operations because of financial constraints. The MOA specifies issues of liability. The company has to give specifications on the extent to which shareholders of the company become liable to the debts of the company and the process of compensation in the event the company is dissolving. The document outlines that the shareholders are liable only up to their financial contribution to the business and no personal property may be taken to settle the debts of the company. Another important area specified within the MOA is how the company raises and uses its finances. This is specification is under the financial clause and states the company’s different shares capital and the nominal values of the shares. Finally, the MOA specifies on the number of members required and registered to form the company. This would give a legal framework of operation and the level of responsibility in case the company dissolves. For a public company, an equivalent of seven members is necessary
Significance of Articles of Incorporation
The Articles of Incorporation is a legal requirement of for formation of a company. The Articles of Incorporation also known as the Certificate of Incorporation provides the national state with the legal information on the business operation and the jurisdictions of performance. The information contained within the article of Incorporation should be accessible to every citizen. Thus the document is formed as a public record. In other words, the article of incorporation provides fro legal establishment of a business as a corporation in a given state. With specifications, the article identifies the business activities, the name of the owners of the corporation, information concerning shares and the issuance terms to the company stock and its shareholders and workers. The contents of the Article of Incorporation include the corporate desired name, both the general purpose and the specific purpose of the business, the business registered agents, the number of authorized shares of stock, share par value as well as preferred shares. All these information contained within an Article of Incorporation are important since they form the pillars upon which the corporation will operate and achieve most of its objectives.
Significance of article of association
Every organization operates under the provisions of article of association. It may not be compelling for the business to realize all the specifications within the Article of Association but must at least comply to most of those terms. The Article of association thus gives the functional relationship that exists within the corporation between the shareholders, the managers and other stakeholders. The literature within the Article of Association is simply a set of rules of operation for the business. These rules give a clear distinction in the roles assumed and the ranks of different stakeholders within the corporation. Every organization, both for profit and not for profit has a document that outlines responsibilities and the duties are assigned to every individual.
In most cases, the articles of association is concerned with operating issues such as calling of general meeting, appointment of directors as well as selection of managers within the organization. In connection, the rules within the article of association clearly state the procedure followed during issuance of shares, during payments of investor’s dividends and the procedure for making and presenting the financial audit report. The strengths of the articles of association underlie the fact that the interest is on the content and not on the form of its presentation. Some of the known forms of organization articles of association include charts, process charts and escalation procedures.
Question Five: Explain the duties of directors of a corporation. Who else owes similar duties? What remedies are available for the breaches of duties?
The shareholders are the owners of a corporation and they determine all the processes taking place within and outside the corporation. Most important step after the formation of the corporation is for the shareholders in agreement to appoint the corporation’s director and based on the interest of the shareholders, the director may be appointed from among the shareholders themselves or from outside sources. The duties and the responsibilities of the director is limited to the shareholders’ interest and specifications of the MOA and any other Company article that may appear relevant. The most connected duties of the directors of a corporation including duty of care and duty of loyalty.
Similarly, the directors of corporation have certain subsidiary duties that are as well important to operation of the corporation. These other duties include a duty of disclosure and the business judgment rule. The duty of care requires that the director would act with the same care an individual in the same position with similar circumstance would use. With the duty to care in mind, the director has to consider all the important information and any other alternative reasons as the basis for making business decisions. The more intense the nature of decision, the more care the director should posses, which should come after thorough investigation. The duty of loyalty investigates the effort the director puts towards fulfilling the requirements of the corporation in relation to the interests of other entities.
The shareholders expect the director the put the corporation’s interest ahead of any other interest including the director’s own interest as far as production is concerned. Fulfilling this duty would mean that the director operates under the regulations provided and in away that would not harm the corporation and its stakeholders more so the shareholders. In totality, the shareholder’s interest must reign over any other interest. The duty of disclosure restricts some privileges to the director and states that the director must give notifications on fraud plans to the company in case he or she is aware. Any deal that may incorporate fraud in itself must be avoided thus the director must act promptly in providing proofs over the same. Finally, the business judgment rule provides that any decision made by the director must be for the general benefit of the business and must have gone through series of vetting before implementation. Thus, the company becomes responsible for the outcomes of the decisions made by the director since the making of such decisions was under informed judgment. The main reason why directors operate under business judgment rule is to acknowledge the existence of managers, workers and other stakeholder of the corporation.
Management of a company differs with the company’s structure. In some companies, the director is the most superior person and makes decisions that affect production processes while in other companies, the chief executive officer becomes the final man. Under the underlying circumstances, the responsibilities and duties performed by the director mat as well be performed by the chief executive officer. In some cases, the shareholders may lose trust on the appointed director. This may come due to negligence of the director or for any other reasons specified as a breach of duty and a breach of the terms of employment. In case of a breach of duty, the most convenient remedies will include dismissal, shareholders ratification or excusing liability. With dismissal, the shareholders will decide to remove the director from the office by ordinary resolution method. The shareholders have the right to remove the director from the office and this right can never be taken away from them.
under the process of ratification, the shareholders may decide to ratify the remedy process by passing simple majority vote in a company’s GM. If in case the director happens to be one of the shareholders, he or she cannot vote in favor of his actions. Under certain circumstances a legal court is involved in the remedy process, the director can convince the court and get relieved from most of his or her liabilities. This may happen if the court is convinced that the actions of the director were honest and in good faith has elements of the advice of the company lawyer. This process would be termed as excusing liability.
Question six: Discuss shareholder agreements, closely held corporations, and the circumstances under which a court will lift the corporate veil
The owners of a company are the shareholders of that company. The shareholders’ actions and involvement in the company operation are under the regulations of the shareholders’ agreement. The shareholders’ agreement is a legal article formed based on agreement among the company’s shareholders and to which the shareholders must comply with their decisions to appoint the company director, capital contribution and sharing returns or profits. Before shareholders agree to make their financial contribution towards the company, the requirement would be that they make certain regulations that will act as a checklist to organizational moral behaviors. The main contents of the shareholder agreement include the structure of the company and the roles played by managers as well as the directors, the person’s to own shares and in what amounts, the possibility that a shareholder would be in a position to pledge their shares and the valuation process of the shares among other specifications. The shareholder agreement help prevent conflicts that may arise during sharing of the company profits and dividends. This agreement must be well written and kept for references.
With closely held corporation, less than five individual holds more than half of the company’s shares. Majority of the closely held corporations are private companies. Under the provisions of the company’s act and in relation to closely held corporations, if one of the shareholders decides to sell some of his or her shares or all of the shares, the selling must take place between such a shareholder and another shareholder within the same company. That is to say, the selling cannot take place if the buyer of the said shares is from outside the company. The fact that a closely held corporation is a private company does not mean that all private companies are closely held corporations.
Under company’s law, a corporation is a legal entity and one may sued the company in its name in case of default. The main reason why many people feel comfortable forming companies is the fact that companies have limited liability it gives to the shareholders. This level of protection the company offers to its shareholders by the court veil under certain circumstances. In the case of the court veil, the shareholders become liable and their property used to settle the company’s debt. The court may invoke the veil doctrine where there is no clear distinction between the corporation and the shareholders. The registration of the company must clearly state the level of liability and the responsibility of each shareholder failure to which the court retains the credential and determines the next course of action in case of business dissolution.
Similarly, the court may invoke the veil doctrine where it has been proven that the shareholders have acted based on fraud or when the company was formed without undergoing the required legal processes. In such a case, the court withholds the shareholders right to liability. In case of dissolution, the shareholders become liable to all debts and damages caused at the time the company was in operation.
Question Seven: Discuss broadly held corporations, shareholder rights, and distinguish between derivative action, dissent, and oppression remedies
The pillars of corporate governance underlie the concepts of disclosure, company transparency and factors of independence. A broadly held corporation also known as publicly traded corporation has certain characteristics that differentiate it from closely held corporations. A broadly held corporation under the Act of company formation offers its securities to the public and allows transfer of shares from an internal shareholder to and external party and more so to the public. The corporation stands a chance of disclosing its securities to the public and for trade with stringency in a number of ways such as disclosure of audit reports to the public, the time requirement for conducting a meeting and maximum dividends a shareholder can receive. A publicly held corporation should have an audit committee responsible for preparation of clear, precise and detailed financial report over the entire period of business operations. Similarly, a number of rules govern the relationships that exist between different categories of stakeholders within the corporation. Such rules are concerns takeover bids and the rights of shareholders. Other governing rules rotate around the independent supervision and the selection of the audit process.
The corporation’s charter and the company’s law provide for the rights of the shareholder in a number of ways. As the owners of the company, the shareholders may make certain decisions that are influential towards business operations. With distinction from other forms of businesses, the shareholders have limited liability, which is the most attractive factor towards the formation of a company. Other rights enjoyed by shareholders include the voting rights, right of relation to the transfer of the company stock, right to have the company dividend, right to have the company records and inspect them, the right to sue the company in case of negligence of directors or managers and the right to share the company proceeds in case of liquidation.
A derivative action is a lawsuit raised by a particular corporation shareholder against the corporation directors, managers or against other shareholders for failure in to comply with outlined terms of operation. A dissent is a disagreement arising from within the shareholders concerning the method of policy application, goals of the company or the methods used in calculating the dividends. On the other hand, an oppression remedy is a statutory right given to the oppressed shareholders and aims at empowering such shareholders to bring an action against the oppressing company.
Question Eight: distinguish among a sole proprietorship, partnership and a corporation. Delineate the advantages and disadvantages of each. Describe how the revenues, profits, liabilities, and assets are shared.
Sole proprietorship is a business enterprise owned by one person. The person under this case is a sole trader or a sole proprietor. Partnership is a business unit owned by more than one person. On the other hand, a limited liability company is an association of persons who contribute capital in order to carry out business together with the view of making profit. The actions of the shareholders within the Limited Liability Company have a connection to the company’s Act.
The advantages and the disadvantages of the sole proprietorship, the partnership and the limited Liability Company is as represented in the tables 1 and 2 below.
Table 1: advantages of the three business units
Sole proprietorshipPartnership Limited liability company Few legal procedures are required than in both partnership and in limited liability companies
Few legal procedure required than in limited companiesAccess to a wide range of sources of capital through sales of shares and debenturesDecision making and implementation is faster since there are no consultations requiredCan raise more capital unlike in sole proprietorshipShareholders have limited liabilitiesExercises direct personal control on the business at all timeDistribution of work among the partnersHave vast resources like qualified and experienced professional staffs.Close and personal contacts with customersCombined talents would lead to higher productionThe process transferring shares is easy Is able to access the creditworthiness of customersLoses and liabilities distributes among the partnersContinuous life in case of a public companyTable 2: disadvantages of the three business units
Sole proprietorship Partnership Limited liability company Has unlimited liabilityA mistake made by one partner by result in losses shared by all the partnersThe process of registration is expensive and lengthyExpansion of the business may be limited to scarcity of capitalThe liability if some partners is unlimitedMany legal requirements in case of a public company hence inflexible and rigid operationLack of specialization in running of the business by lead to poor performanceContinued disagreement between the partners can lead to dissolutionOwner of public limited companies to not participate in the management of the companiesThe owner of the business bears all the risks and in case of the loss her she surfers aloneDecision making may be low since all partners must be consultedPersonal interests of directors may have conflict with those of the companyLack of consultation would lead to poor decision making hence affecting the business adverselyLimited access to sources of capital compared to limited companies The profit made is taxed and the dividends distribute to the shareholders are also taxed
In sole proprietorship, the revenues and the profit realized remains with the sole trader. In other words, the sole proprietor enjoys all the business returns. The sole trader has unlimited liability to his or her business operations and in case of liquidation he or she bears all the risks which would extend to debt recovery through his or her personal property. The assets are properties of the sole trader and there is no sharing of the assets. In case of partnership, the revenues and the profits realized during the business operations would be shared among the partners according to the partnership deed or agreement. The assets are property of the partners and incase of dissolution the asset are shared among the partners according to terms of agreement. The partners have unlimited liability and bear full responsibility of the company’s debt. On the other hand, the shareholders of the limited liability company are entitled to share dividends and not profits. The shareholders have limited liability and the debt recovery is up to the share capital of the shareholders and not their personal property.
Question Nine: describe the types of corporate shares and compare the use of shares to bonds and debentures in financing a corporation.
The corporate shares are divided into two categories, the common stock shares and the preferred stock share. Common Stock has no restrictions on issuance. The common stock shareholders are the owners of the company who have the voting right during company’s annual general meeting. A company may decide to issues different classes of common stock with different voting rights, which include common stock class A and common stock class B. the preferred stock has several advantages compared to the common stock. With the preferred stock, the shareholders are entitled to promissory dividends. The preferred stock shareholders have right on the company’s stock and assets in case of dissolution and they get first recognition over the common stock holders.
Shares represent the ownership of the company and they give respective shareholders the right to make decisions that would affect the operations within the company. Through debentures, accompany may borrow money from external sources. In connection, different shareholders use equity and debts as funds and in return uses debenture as a reflection on the debt portion. On the other hand, bonds are used as a store of value and allow the bondholder to make speculations on his or her future proceeds. On the same note bond is a promissory note and the borrower uses bond to promise for future payments of his or her debts.
Module Nine: Real Property and Mortgages
Question Ten: contrast a tenancy in common with a joint tenancy and indicate how one can be changed to another. Why is the distinction important?
Tenancy in common is a situation where one assumes the responsibility over the property regardless of his or her stake in the property. In case of death of a co-tenant, the decision to assume his role would be dictated by the will and if the will certify the co-tenants who may not be close relatives of the diseased, then the co-tenants assume the roles as specified. On the other hand, a Joint tenancy requires that each tenant should be entitled to equal ownership in addition to having possession rights. The individuals receive the ownership right as well as having the right to break from the tenancy connections. This separation can be possible if the individual decides to sell his or her shares of the property to a third party.
Changing from one form of tenancy to another would involve a complete transformation of the nature of the contract of which the parties must follow the legal processes involved. The parties concerned must come into an agreement and specify the terms and the reasons why the tenancy has to change. The reasons and the new terms of agreements are thus submitted to an authority who will act as the regulatory body in case of change of thought.
Question Eleven: compare fee simple, life estate, leasehold interest, easement and tenancy.
A fee simple also known as an absolute fee simple is an estate in land ownership, which an earlier ownership cannot raise defeat over. A feel simple is symbolic in nature and represents the greatest value of land that an individual can posses, which is an absolute ownership of a property. A life estate is the interest in a real property held over the life period of the designated individual. The life of a person may limit the life estate in which case the property held becomes completely over the life control of the individual in question. A leasehold interest incorporates an element of leasing a real estate and involves ownership of the property. With specification, the law provides that the person who holds the leasehold interest becomes the owner of the property. An easement is a right to use the property of another person without necessarily leasing it. Under easement, one party enjoys the returns from another person’s property without becoming the owner of that property. In the case of tenancy, a person may occupy or posses the property of another person such as land or a building and the basis of payments in forma of rent.
Question Twelve: what is meant by mortgage, equity of redemption, foreclosure and power of sale? Explain the importance of registration and the priority between first, second and third mortgage.
Mortgage is a debt instrument in form real estate property and show that the borrower has obligations to settle the debts at a future time. The real mortgage acts as collateral and the borrower has to make payments before possessing back the real estate. Equity redemption is the right of a mortgagor, to prevent foreclosure proceedings through making payments on the amount of loan due. The promise to pay is through a real property pledges. The mortgagor accepts to pay the amount due plus any other interest over and above the mortgage.
Foreclosure is a procedure through which the holder of the mortgage sells the property following the failure of the failures of the debtor to comply and respond by paying back the loan. By selling the property, the mortgagor terminates the right of the borrower to repossess the property. Power of Sale is a clause inserted in a mortgage granting the creditor or the trustee the right to possess, advertise and sell the property in case the of default and delay in debt settlements.
The first, second and third mortgages rank in terms of priority with the first mortgage given priority over all the other two and claims payment on a property in case of default. The first mortgage uses the loan to value ratio to determine whether the lender would require private mortgage insurance or not. In connection, is the loan to value ratio is above 80 percent, then the lender would have to look for a private insurance against default. The main reason for application of the mortgage ranks is for the lender to prioritize on the interests attached on the principle amounts of the loan.
BUSINESS STUDIES 15
Running head: BUSINESS STUDIES 1
Kraft foods group
Organizational strategy is an important process through which the present situation of any given organization is compared with its targeted state with the aim of identifying the difference between the two states in order to identify what needs to be done for the desired transformation to take place. According to The Times (2013), this concept revolves around a specified definition of an organization’s objectives, goals, vision and mission, which act as a guide in the development of organizational plans and polices mainly in the form of projects and programs that guide accomplishment of these objectives. According to Michael Porter, organizational strategy should be the guiding principle for any company pursuing to obtain a competitive advantage. While most companies in the rapidly evolving contemporary business environment are only concerned about how they can grow fast to gain a leading position against their rivals, they tend to ignore the crucial concept of strategy which ought to guide organizational operations if at all a company is to obtain long-term competitiveness (Hammonds, 2007).
Organizational strategy is important since it enhances establishment rational choices that would govern the course of any business enterprise to be different from other rival companies in its pursuit to accomplish its intended objectives and the subsequent expected status. Unlike most companies that have ignored the crucial concept of organizational strategy in their structure formulation, Kraft Foods Group has established a rational strategy that defines its Vision, Mission, Values Objectives and Goals. It is obvious that the company has made a huge stride in defining its concepts particularly because it has been operating for a very short time. However, it is important to identify areas that might need to be changed to enhance attainment of company objectives intended. This paper is intended to evaluate the company’s Vision, Mission, Values, Goals and Objectives to determine the effectiveness of the company’s organizational strategy while identifying any improvements that ought to be made.
Kraft Foods Group is a North American food retail company that was founded in 2012 and is headquartered in Northfield city in Chicago. The company originated from the Kraft Foods International Company, which is multinational food company that was later renamed as the Mondelez International Company. According to Heathfield (2013), the company has been ranked as the leading Snacks and Beverage Company in the United States and the second largest in the world. Kraft Foods Group closely follows the footsteps of its mother company; Kraft Food International in producing the best known food products in the world. The company produces a wide range of food products including cheese and biscuits among other readymade meals, a wide range of beverages and confectionery as well as grocery products. The company has more than 127,000 employees serving in more than 223 companies distributed in more than 170 countries across the globe. Kraft Food Group produces a total of eleven brands, each of which generates an average of 1 billion in total revenues.
Analyzing the Company’s Mission Statement
According to The Times (2013), Kraft Foods Group has established a concise mission statement integrated within its overall business plan strategy aimed at enhancing long-term competitiveness against its rival food companies. Kraft Foods Group has adopted its renowned heritage in redefining its mission statement, which entails becoming the best North America’s food company. While this statement provides the overall framework for the company’s values and objectives, it indicates the company’s objective to attain absolute perfection in all aspects including quality, quantity, product delivery and taste.
According to Heathfield (2013), Kraft Foods Group aims at ensuring that its wide range of food products becomes the best choice for customers. As a result, the company has established a wide variety of product brands, which are popularly known as Power Brands. In order to enhance attainability of this objective, the company employs high innovative technology that aids in producing quality Power Brands. The company believes in having a new product out there now’ in that it concentrates on consistent innovativeness to ensure rapid production of Power Brands that tend to have a new and exciting look.
The company also employs quality managerial expertise in making informed planning decisions to enhance future quality of the Power Brands to ensure that more value for the customers is enhanced. As a result, top management places strict deadlines for marketing products to ensure that well coordinated planning efforts are consulted during product launches. Through these arrangements, the company ensures that quality production is met by integrating sufficient production capacity with customers’ demands for a wide range of products. The company’s leadership equally ensures that marketing as well as sales and supply chain arrangements are ready to facilitate timely product delivery to the market. It also restrains expenses to ensure that the whole process is maintained within the intended budget.
Analyzing the Company’s Vision Statement
According to The Times (2013), Kraft Foods Group has developed a suitable vision statement that includes, Helping People around the World to Eat and Live better’. The company’s vision statement indicates its overall commitment to ensure that healthy as well as tasty food products are made available. These developments indicate that customers are given priority in that the company ensures product enhancement for customers to enjoy. The company’s food products are developed with the sole intention of ensuring that nutritional value that meets customers’ needs is enhanced at an affordable price. The amount of potentially harmful ingredients including sugar, salt and fats are usually reduced in a wide range of food products while beneficial as well as nutritious ingredients are added. According to Heathfield (2013), the company produces huge quantities of cheese products that are fat free but enriched with calcium which enhances proper bone development. In order to promote overall consumer health, the cheese product has been enriched with double the amount of calcium than ordinary cheese, and some amount of vitamin D to enhance proper bone development.
Analyzing the Company’s Goals
While Kraft Foods Group has established a vision, which defines how it wishes to be perceived by others, it has established goals that would aid in attaining this vision. In order to become an undisputed world leader in supplying quality food products, Kraft has established strategies aimed at ensuring that the company’s food products become the most preferred choice for the customers due to their high quality and taste. The company aims at ensuring that customers view it as a reliable partner that is well placed to form strong alliances with a wide range of shareholders. It also aims to be acknowledged as a responsible business entity and a high quality performer in the food industry. Rationality of these goals can be identified from the fact that the company has tirelessly been pursuing to adopt every available form of technology in order to ensure that it has enhanced growth of its Power Brands. The company also pursues to enhance its brand portfolio while enhancing quality at the lowest price possible. This goal may however be unattainable since development of high quality products may demand higher investment on quality raw materials and high level expertise.
Analyzing the Company’s Core Values
To enhance the attainability of these goals, Kraft Foods Group has devised a set of goals that act as a guide for employees’ day-to-day operations. The core values that are deemed crucial in enhancing attainment of the company’s goals include maintaining a strong focus, commitment, desire to be innovative, willingness to move and implement rapidly, commitment to teams work, trust and confidence and passion to promote success. According to Heathfield (2013), Kraft has integrated employees from varying backgrounds and levels of expertise to work as a team, which supports the company’s Power Brands. The company has also structured its workforce in sets of Category Teams that aid in promoting cross-functional decision making in different teams. As a result, this ensures that expertise from different planning analysts is integrated in the company’s product development process. However, it is obvious that the company does not have directly stated core values but it has varying statements which can be coined together into a single word; responsibility.
Elements that Consider Needs and Goals of Specific Stakeholders
According to Heathfield (2013), Kraft’s vision statement expresses its overall intention in helping people to eat and live well. This portrays its commitment in ensuring that a healthy lifestyle characterized by safety and wellness among the consumers is enhanced. The primary focus on quality and safety thus promotes consumers’ health needs by enhancing quality nutritional value thereby enhancing proper body development.
The company’s commitment to form strong alliances through becoming an indispensable partner perpetuates shareholder’s needs by paving way for them to work for this company. The company respects shareholders’ rights of generating maximum returns by employing independent and competent directors who promote a Strong Corporate Governance.
The company is also committed to promote needs of the government as a stakeholder in that it enhances its legal compliance with legislation requirements for integrity. It pursues to become an undisputed global leader in supplying quality food products. The company is equally committed to enhance the interests of its workforce by treating all employees with dignity while promoting a suitable working environment. It motivates its workforce by encouraging them to do great things’ which ensures unlimited commitment to promote overall organizational success.
The company has a strong corporate social responsibility in that it enhances community involvement in Fighting Hunger while Promoting Healthy Living’. It provides humanitarian aid and other voluntary services in times of disaster.
What Needs to Change
Although the company has a seemingly attractive mission statement, a broader view on this statement indicates it is unattainable since being the greatest food company appears to be generic. In order to raise a sense of attainability among its workforce, Kraft ought to redefine its mission statement to include initial business segments like being the best food retailer as well as generating the highest level of sales, which could be achieved as the company progresses towards its overall target.
It is obvious that the Vision, Mission, Goals and Core Value statements are interconnected to work towards an overall objective that includes obtaining long-term competitiveness against its rivals. Although this company has been operating for only a short period, it has developed well integrated organizational strategies that can jointly promote a remarkable level of success.
Hammonds, K. (2007). Michael Porter’s Big ideas, Fast Company. Retrieved from http://www.fastcompany.com/magazine/44/porter.html
Heathfield, S.M. (2013). Build a Strategic Framework Through Strategic Planning. Retrieved from http://humanresources.about.com/cs/strategicplanning1/a/strategicplan.htm
The Times, (2013). Business Case Studies. Retrieved from http://businesscasestudies.co.uk/kraft-foods-uk/using-planning-analysts-at-the-centre-of-brand-development/corporate-goals-vision-and-strategies.html#axzz2c2Vj1FLW
KRAFT FOODS GROUP 8
Running head: KRAFT FOODS GROUP 1
Win the Contract
Our small business produces small remote control aircrafts capable of long sustained flights. The business is ready to expand by competing for Department of Defense (DOD) contracts. The company has identified a contract worth over $600,000 which it considers as a viable contract that will go a long way in promoting the expansion of the company. Further, as we prepare to bid for this contract, the company has determined that the contract falls under the simplified acquisition procedures. This paper provides the rationale for bidding for this contract indicating how the company will make its solicitation and describes the Uniform Contract Format (UCF) that the company will be required to fill.
There are three primary methods used by the federal government for acquisition. They include simplified acquisition procedures, sealed bidding, and contracting by negotiation. For our small business, the most suitable category of contracting will be simplified acquisition procedures. Simplified acquisitions are defined as acquisitions of supplies and services that are in the amount of $100,000 or less (Rumbaugh, 2010). The threshold for simple acquisitions is $250,000 inside the United States. A threshold of $1,000,000 is imposed where an agency head has determined that the acquisition for the supplies and services will be used to support a contingency operation or for the facilitation of defense against or recovery from nuclear, biological, chemical, or radiological attack as provided in the National Defense Authorization Act of 2005 (Edwards, 2006). Therefore, the purchase of remote controlled aircrafts for the Department of Defense (DOD) would be qualified under this category.
Under simplified acquisition procedures, the firm will issue a quotation to the DOD that will be subjected to competitive evaluation by the DOD. Upon approval, the company will receive a purchase order from the DOD that will include all the details that both DOD and the company need to know in order to complete the transaction. Such details include prices, delivery details, and federal contract and acquisition numbers. The company will be required to accept or reject the purchase order or deliver the aircrafts as the schedule provides.
Since the company hopes to expand its operations after winning this contract, it may consider negotiations with the DOD and seek to secure a Blanket Purchase Agreement that will enable the company to qualify for repetitive purchases. This will call for the company to market directly to the DOD beyond making the quotations. The company can also offer to deliver the aircrafts at a negotiated price over a given period of time. Moreover, since Blanket Purchase Agreements are used by federal departments to streamline the simplified acquisition processes, the company may exploit this opportunity (Judge Advocate General’s School (United States Army) & American Bar Association, 2007).
Since this supply can be classified as a non-commercial supply, the solicitation could be a bit complex and may require the inclusion of terms and conditions that are unique to the Department of Defense. As a result of such complexities, the company will be required to use the Uniform Contract Format (UCF). The UCF is a standardized format used to structure federal solicitations and contracts and is ideal for those non-commercial goods and services exceeding $100,000 (Compton, 2010). The Uniform Contract format is rather complex for small businesses since it has many details that need to be filled and small businesses may not be conversant with them. Many business managers feel that the UCF seeks too much information that is not common knowledge to all businesses. To overcome these challenges, a company can hire a consultant who will help in filing the UCF and verifying the attachments to the UCF. The contract for our company falls under this category.
The UCF has four main sections namely the Schedule, Contract Clauses, List of Documents, Exhibits and Other Attachments, and Representations and Instructions (Boyd, 2012). The Schedule is subdivided into eight sections that cover the basic characteristics of the solicitation including the contract form, supplies and prices/costs, product specifications, packaging and marking, inspection and acceptance, deliveries of performance, contract administration data, and special contract requirements. The Contract Clauses is the section where the company will list all those clauses that are applicable to the contract/solicitation. These will be the clauses required by the law, as well as, those that apply to the FAR part the company will be using (Compton, 2010). Identifying of the applicable clauses will be a challenge to the company; therefore, the company may consider engaging a consultant when filling this form.
In the List of Documents, Exhibits, and other Attachments section, the company will be required to identify the requisite document that should be attached to the solicitation (Boyd, 2012). The services of a consultant can come in handy in executing this section. Finally, in the Representations and Instructions section, a number of documents will be attached including Representations, Certifications and Other Statements, Instructions, Conditions and Notices to Offerors or Quoters, and Evaluation Factors for Award.
Some of the sections of the UCF are complicated and the company considers hiring a consultant to help in filling out the form and verifying all the attachments to the UCF. This will also be a good opportunity to train our staff on the procedures in making government bids, applying for contracts, and filling in the UCF and other required standard formats. Such a move will equip our employees with skills that will make it easier for the company to gain competitiveness in government contracts. References
Boyd, B. (2012). The COR/COTR answer book. Tysons Corner. VA: Management Concepts Press.
Compton, P. B. (2010). Federal acquisition: Key issues and guidance. Tysons Corner VA: Management Concepts Press.
Edwards, V. J. (2006). Source selection answer book. Vienna. Va: Management Concepts.
Judge Advocate General’s School (United States Army) & American Bar Association. (2007). Government contract law: The desk book for procurement professionals. Chicago, IL: Section of Public Contract Law, American Bar Association.
Rumbaugh, M. G. (2010). Understanding government contract source selection. Tysons Corner. VA: Management Concepts.
Running head: WIN THE CONTRACT 1
WIN THE CONTRACT 2
WIN THE CONTRACT 5