Category: Business 11471

Summary

Information systems are essential to the success of any current business organization. It helps an organization adopt an organized set of components that collect, transmit, store, and process raw data to develop better information for action planning. Information systems are necessary for management and operations in any business organization or firm. All day-to-day activities are now supported through the use of information systems. The organizations culture, politics, and structure can affect the implementation of a new information system; introducing a two-factor authentication prevents cyber-attacks and data loss the information system is likely to experience.

Organizational Challenges of Adopting a New Information System

Organizational culture creates an environment where the firms vision, processes, and policies are attained. It can determine the success or failure of adopting certain information systems within the organization. Employees perception of the usage of a particular technology implemented in the organization is adversely affected by the culture (Mardiana, Tjakraatmadja & Aprianingsih, 2018). Their perception of a non-implemented information system is likely to affect any move towards implementation. Relationships such as attitude, intention to use, and user satisfaction have been significant in determining the usage of certain technology in a clan culture within an organization (Mardiana et al., 2018). The benefits users likely get from the new information system have also proved essential to the new models success (Mardiana et al., 2018). Culture can be a dominant factor in an organizations venture towards adopting a new information system, as it can make it fail or progress.

The perceptions of organizational politics can impact the success of information systems. An effective information system is costly to be fully functional as it requires training and purchasing necessary equipment. High investments can be challenging, causing great disapproval from some stakeholders. Compatibility is also an issue as an experienced and well-skilled individual is required to operate the system. The perceptions of information systems success and organizational politics are usually negative (Romi, 2022). As identified, it is expensive to adopt a new information system. There are always challenges in process and structure, technical and systems tuning, and system design, all brought about by organizational politics (Romi, 2022). Corporate politics affect performance due to having negative effects on employees productivity, commitment, and perceptions of job satisfaction (Romi, 2022). As a result, implementing a new information system is challenging as the employees are unhappy.

The arrangement and division of activities within a company comprise the organizational structure. Organizational structure outlines how activities within the firm are to be directed per the aims and goals of the organization (Khamis, 2018). It plays a very crucial role in the success of an information system. A good structure is vital in ensuring good information flow within the organization (Khamis, 2018). It also makes it easy to make approved decisions for each level of management within the firm. A new information system is easily integrated into the organization when adequate communication is presented to all stakeholders and employees (Khamis, 2018). A sound information system must be built on understanding the organizational structure to be successful and non-opposed (Khamis, 2018). A lack of proper planning may result in total failure in adopting the new system, which, in turn, becomes catastrophic for the organizations success.

Importance of Two-Factor Authentication

The risk of authentication credential compromise is rising due to poor user password adoption. Phishing attacks, database leaks, and password breaches result in the insecurity experienced by most online users (Williamson & Curran, 2021). Many individuals opt to use the same password in several accounts to avoid forgetting, which is a precarious decision. The only possible and efficient way to mitigate the rise in password breaches is to adopt the two-factor authentication process. The two-factor authentication increases security by immediately reducing any potential risk of compromised passwords (Williamson & Curran, 2021). It double-checks the identity of the one accessing the account, ensuring no intruder gets illegal. Even if the password is compromised, the hacker gets limited time to access the account fully as they lack approval at the second factor (Williamson & Curran, 2021). Two-factor authentication provides vital protection against any unauthorized entry into the user accounts, thus reducing fraud risk and cyberattacks.

The move to provide two forms of identification to access data and resources in a particular account effectively keeps intruders away. It ensures the maximum secureness of all the account information and resources, thus limiting the loss of vital information belonging to an individual or organization. The main types of two-factor authentication include biometric logins unique to the owner, additional logins such as security questions, and devices the owners hold and receive other login credentials (Colnago et al., 2018). A password alone is limited to accessing the account as it does not entirely pass the authentication check. With this security feature, a business or individual can safeguard and monitor vital networks and information (Colnago et al., 2018). Turning this option on provides an additional layer of security that must be provided to access the online accounts. Without the provision of the second requirement, no login will be attained, as the logins will be incomplete. As a result, hackers will find it hard to access the account using only stolen passwords or any login information.

Introducing a new information system is likely challenged by the organizations culture, politics, and structure. An organizations culture affects employees perception of introducing a new system to the firm. Organizational politics indicate how the managers impact the running of the organization. Managers have the power to direct any changes that depict a negative political feeling to the performance. Organizational politics negatively impact overall organizational performance. The organizational structure represents how the firm is organized, making it easy or hard to integrate new changes. Lastly, introducing a two-factor authentication process is key to securing information. It ensures maximum security of online data by providing extra protection.

References

Colnago, J., Devlin, S., Oates, M., Swoopes, C., Bauer, L., Cranor, L., & Christin, N. (2018). Its not that horrible. Proceedings of the 2018 CHI Conference on Human Factors in Computing Systems, 456(1), 0111. Web.

Khamis, A. (2018). Effect of the organizational culture and structure on the effectiveness of accounting information systems. International Journal of Multidisciplinary, 03(09), 298301. Web.

Mardiana, S., Tjakraatmadja, J. H., & Aprianingsih, A. (2018). How organizational culture affects information system success: The case of an Indonesia it-based company. Journal of Information Systems Engineering and Business Intelligence, 4(2), 8495. Web.

Romi, I. (2022). Perceptions of organizational politics impact on information systems success: An empirical investigation of the banking sector. Archives of Business Research, 10(2), 2638. Web.

Williamson, J., & Curran, K. (2021). Best practice in multi-factor authentication. Semiconductor Science and Information Devices, 3(1), 1622. Web.

Introduction

It is hard to disagree that businesses depend greatly on the efforts and commitment of employees. When willing to implement a major and significant change, the readiness of workers to be loyal and contribute to the companys success severely impacts the achievement of expected outcomes. However, not all organizations are aware of the best way to motivate their staff and raise their productivity, especially during times of change. Strategy maps are underestimated by many leaders, and the purpose of this writing is to explain how a selected article explains the value of the identified method.

Summary of the Reading

As mentioned in the introduction, the authors aim to enhance the audiences perception of strategy maps and improve and prove the significance and value of the latter. As stated by Kaplan and Norton (2000), organizations need tools for communicating both their strategy and the processes and systems that will help them implement that strategy, and ignoring this necessity is the primary mistake of many leaders (p. 168). Some key terms that are used in the writing are the following:

• Strategy map (a visual representation of a firms purposes and the ways that they are connected and should be achieved);
• Balanced scorecard (a management tool that outlines the skills that employees need to contribute to the four areas: financial, customer, internal process, and learning and growth (Kaplan & Norton, 2000, p. 169).

The Authors Findings and Conclusions

It is possible to say that the authors findings are valuable for various industries and government and nonprofit firms. The main contribution of Kaplan and Norton (2000) is in their development of a standard template that executives can use to develop their own strategy maps (p. 170). In their opinion, any company can use this template that addresses four areas, such as customer, financial, learning and growth, and internal process, to illustrate its objectives, performance measurement tools, and strategic direction linkages. As a consequence, each step is outlined in detail, and some common mistakes or the best solutions are mentioned in the article.

Practical Implications of the Article

Evidently, the writing under analysis is a valuable guide for all companies, even if they do not plan any changes in the nearest future. The template developed by Kaplan and Norton (2000) is a practical tool that leaders may use to learn more about their business, motivate employees, alter or support their mission and values statements, and define an effective measurement system. What is more, the article may be useful for those firms who mistakenly choose to measure only the cost and quality of their operationsand not their innovations or their customer management processes (Kaplan & Norton, 2000, p. 169). This writing would motivate them to change their perceptions and analyze whether they have other errors.

Conclusion

To draw a conclusion, I find the article to be rather detailed, strong, and well-written. I believe I captured the main idea of the authors, who managed to explain it in an engaging yet concise manner. What I liked most about the writing is the comparison between a general commanding their troops in a foreign territory and a leader of a firm trying to get their employees motivated for a change. One point for me to take away from the article is that employees should always be provided with the most detailed information about all the objectives and steps of the change process for the latter to be efficient. In relation to this necessity, I have a question: How are the best ways for firms to inform their employees to both motivate their involvement, earn their trust and loyalty, and avoid resistance to change included in strategy maps?

Reference

Kaplan R. S., & Norton, D. P. (2000). Having trouble with your strategy? Then map it. Harvard Business Review. Web.

The benefits and risks to acquire other radio stations for Radio One

From the onset, Radio One has been aggressive in growing its business by attracting the African-American population. The merger of Clear Channel with AMFM Inc provides several opportunities to stay in line with that strategy. Radio One is aggressive in pushing the companys platform through acquisitions. This is another important step in building the reputation of Radio One as the primary provider of AM and FM Radio to several African-America markets.

The acquisition of the stated radio stations from Clear Channel has several benefits for Radio One. In terms of competition, the possible deal will eliminate a big player in the market. Prior to the Clear-AMFM merger, there were several radio stations that existed in one area. Through the acquisition, Radio One will eliminate one player in the industry. In addition, the market is covered by the targeted station will be included in the current market being served by Radio. The possibility of expansion is evident and improvement in market dynamics is highly possible.

Based on demographic statistics, the African-American segment is the largest minority group in the US. The figures state that growth in the African-American population has been figured at an average of 60% annually. Moreover, the income generated from the segment is 150% higher than what can be gained from the actual population. Through the acquisition, Radio One will be given a huge piece of the untapped market. The market covered by Radio One can potentially double in the next 5 years once the acquired radio stations are integrated with the system.

In 1999, the total advertising revenues of radio companies reached USD1 billion. Reaching such a level is a major breakthrough for an industry that has been heavily regulated by the FCC. Assuming that there are 5,000 radio stations in the US at the end of 1999, this means that a radio station can incur as much as USD200 thousand of advertising revenues. Since Radio One is targeting 21 stations, the additional stations will boost the revenues of the company. As of December 1999, the revenues of Radio One reached USD82 billion. The additional stations targeted by Radio One can provide 6-12% more of the companys total revenues.

The deal with Clear states that Radio One will cover capital expenditures for radio stations. Each radio station will need USD100 thousand aside from the cost of assets purchased. Radio One plans to acquire 21 stations and capital requirements will total to USD2.1 million. In 1999, the operating expenses of Radio One amounted to USD16 million. The capital needed to run the 21 additional stations is approximately 14% of the total operating expenses in 1999. This is exclusive of the other expenses that will be incurred once the stations become operational.

In 1999, Radio One has recorded capital expenditures of USD3.3 million. This shows a 50% growth as compared to the capital expenditure recorded by the company in 1998. The proposed acquisition of 21 radio stations will further increase the capital expenditure of Radio One. Aside from boosting capital expenses, Radio One has increased property assets by more than 100% in 1999. The intangible assets have also upped by over 100% in 1999. The acquisition of the 21 stations will further increase the balance sheet of the company. Such growth is needed to sustain the stability of Radio One in the long run.

Despite the clear benefits provided by the deals, there are potential risks that are attributed to the transaction. Although there is enough supply of cash to push for the deal, Radio One needs to search for other funding sources. The first option involves the flotation of debt instruments. Based on Federal Reserve statistics, corporate bonds have rates starting at 7.1% for AAA bonds to 9.68% for B bonds. The credit risks involved in financing the acquisition through debt are high. Another option provided for the company is financing through additional stocks. The proposed acquisition of Clear channels has increased the stock value of Radio.

The biggest threat to the Radio industry is the substitutes that compete with advertising deals. Television, although limited in terms of market coverage is an effective medium to deliver advertisements. Newspapers are slow in delivering the message but cheap. The biggest threat for radios comes from a budding industry. The emergence of the Internet has the potential of controlling the advertisement industry. In 1999, the Internet has yet to reach full development. Technological advancements and other developments can decrease the number of advertisements on radios.

What price should Radio One offer based on a Discounted Cash Flow Analysis

The initial offer made by Radio One for the 21 stations of Clear Channel involves 20x BCF. This means that a station costs the projected broadcasting cash flow multiplied by 20. Exhibit 9 shows that the total BCF for Radio One New Markets is valued at USD 59,041 Using the 20x formula, the acquisition of the will cost Radio one USD 1.18 billion. The projections of BCF in the next 5 years totaled USD million. Given the cost incurred, the company will recover the cost in 10 years.

Given the competition in the market, the 10-year recovery period is considered as the benchmark. Unlike other industries, the radio business is strictly limited to revenues from advertisements. The inflow of cash from the additional business is critical in weighing the feasibility of the business. The 20x BCF appears to be the logical value that the radio stations from Clear Channel hold. Raising the USD 1.18 billion is another matter for Radio One. In the last 3 years, Radio One has experienced losses. The most logical source of funding for the company is debt.

The most logical price of the Clear Channel Radio stations is 16.5x BCF. There are several justifications for this price tag. First, the radio stations in the deal include areas where advertising revenue is still low. Second, the deal states that Radio One will cover for the capital expenditures to run the stations. Finally, Radio One will acquire only the assets of the stations, which means that there are other expenses that will be incurred once the stations become operational.

What price should Radio One offer based on a transaction and trading multiple analyses

Analyzing the transaction requires the process of dissecting the possible financial impact of the deal to Radio One. As a collective entity, Clear Channel has a BCF of 17.2 and AMFM has a BCF of 14.7. Since the initial offer provided is at 20x BCF, it appears that Radio One is overvaluing the targeted radio stations. There are several ways in which Radio One can still decrease the potential cost of the deal. The first involves the use of AMFM BCF. This is likely since the stations to be acquired by Radio One are from the former AMFM. There is also a possibility that the BCF of Clear Channel will be used as the basis for the transaction.

The most logical offer, however for Radio One pertains to the average BCF of AMFM and Clear. This will provide a clear view as to the actual value of the stations. The closet BCF multiple that can be used for the deal is 16x. Using the cash flow model, the value of the 21 radio stations is set at 16.5x BCF. Using the transaction analysis, the value of the stations is at 16x BCF. This shows that the second option will save Radio One more money without understating the targeted assets. The 20x BCF price appears to be high for uncertain markets.

Assuming that Radio One stock price is 30x BCF, can it offer 30x BCF for the new stations

There are several misconceptions as to the impact of stock price increase on the capacity of companies to acquire. Given that Radio One stock is expected to rise, the thought of increasing the offer for the Radio station is being floated. But it is important to state that the increase of stock price is more on investor confidence instead of company fundamentals. In the long run, however, the increase in stock price can provide Radio One the needed stability. The best way for the company to gain from such an event is to issue additional stocks. The strategy will increase the cash flow of the company and provide more resources for further expansions.

Given the BCF of future stations, the cost of the transaction will reach USD 1.77 billion. Since the BCF in the next years remains the same, Radio One is expected to recover the amount spent for the transaction in the next 15-16 years. The length of recovery provides more exposure to risks and uncertainties. In addition, the increase in Radio One stock price can change depending on the growth of the industry and the dynamics in the economy.

About Company

It is a company that offers a wide range of products to its customers. The products are saving products, financial planning service, insurance products, mortgage products and loans. The company was formed in 1964 after the merger of the Bingley Equitable and Bingley that was formed in 1851. It was formerly a building society, but in the year 2001 it was converted to the Bradford Bingley Public Limited Company.

Research

Rights issue refers to the process where the management of the company offers shares to their existing shareholders so as to raise money for running the operations of the company. The rights issues are usually transferable thus the holders can sell them to their shareholders and the customers on the open market. They can be sold separately from the shareholders to other investors during the life of the right or the shareholders may take up the rights or they may lapse them according to their will although when they lapse they can exist no more (Louth, N. 2008).

The factors that a financial manager should take into consideration when issuing the rights are subscription price per new share, number of new shares to be sole, value of the rights, the effects of the rights on the value of the current share and the effects of the rights to the existing and the new shareholders.

The rights issues may be underwritten. The duties of an underwriter are to ensure that the funds sought by the company will be raised according to the agreement that has been issued by the company. The underwriting agreement is the document shows the agreement that exists between the underwriters and the company. The agreement allows the underwriters to subscribe for the shares offered and that are not taken up by the shareholders. It enables the underwriters to terminate its obligations only in the circumstances that have been defined in the agreement.

The rights issue transactions involves allowing the company exists shareholders the right to subscribe for the newly issued shares in proportion to the shares that they hold. The rights issues are used so that the company can raise money that can be used to expand the companys operation and also to carry out a large takeover of a company. The shares that are obtained after issuing the right issues affect the per share calculations such as the earnings and the dividends per share.

The Bradford and Bingleys Chief Executives officer quit the company because it was experiencing credit crisis and thus the performance of the company had started to decline. The management of the company stated that they wanted to raise money of about £300 so as to boost the liquidity levels of the balance sheet of the company. He also stated that he would raise the rights issue so as to strengthen the financial status of the company.

The Sunday Times reported that the company would experience profit warming that would be contained within the banks rights issue document. The profits of the company also fell by almost half of the profits that were being earned by the company after the management had the assets written down including those of the United States Mortgage. The pre-tax profit of the company fell from £246m in 2006 to £126m in the year 2007. The banks also recorded huge losses due to the problem of the mismanagement of the United States housing market.

The Bradford and Bingley Company experienced problems of credit crisis because the borrowers in the United States defaulted to pay up their loans once the interest rates that were linked to the loans started to rise. The loans had been grouped together, repackaged and then later sold to the banks as an investment that derived high returns to the investors. The company also asked for bigger deposits from the banks and raised the interest rates for the new products and also raised the mortgage arrears, unfortunately the borrowers declined to pay up their loans and this lead to the credit crisis of the company. The company was reported that it would gain back its financial position through issuing the rights issue. The performance of the company declined even after the issue of the rights thus the management decided to scrap the issuance of the rights by replacing them with the restructured issues that were worth £258 million.

The reasons for using the rights issue to raise the companies money was because it would strengthen the groups capital position and reduce the impact of the reduction in the value of some of its treasury investments. According to some analysts they stated that the performance of the shares was weak since the investors were not taking up the shares and this resulted to large chunks of shares that were left to the underwriters to seek the issues of the rights issues. The sought out of the right issues was costly and time consuming and yet the company was not deriving enough revenue for the company.

It was also reported that share prices that would be offered to the shareholders would decline this is because of the deteriorating house market, macroeconomic down turn and the emergency rights issue that would delay the raising of capital for the company.

The current dividend policy of the company and whether it is successful or not. A dividend policy refers to the policy that is used by a company to determine how much dividends it will pay to its shareholders. The dividend policy is established on the basis of how it will impact on its investors and the perceptions that the company will be viewed at by the financial market. The policy is also implemented on the basis of the companys situation now and in the future. It also depends on the preferences of the investors and potential investors that would be interested in the management of the company.

The directors of the Bradford and Bingleys company stated that they would declare the dividends of the company on the basis of fund that would be present on or about the 10^th calendar day of every month during the financial period of the company. According to HBOS they stated that the divided policy of the company would be distributed on the basis of 40% of the net profits of the company as on March 2008. The previous dividend policy was calculated by dividing the old annual dividend per share and the earnings per share of the company. For example the 2007 dividend was 49p while the earnings per share were 106p:

49/106=0.46 thus the payout ratio was 46p per pound of earnings that is 40%

The declaration of the dividend policy to be 40% from 46% shows a decline in the payment of the dividends to the shareholders. Although the 2008 dividend policy had hidden charges such as dividend cuts as cuts in the payout ratio and the dilution of the existing earning over the shares, the dividend policy did not show the its increase in value, but a decline in its value.

The dilution of shares would be 100/140 that is the old number of shares that would be divided by the number of share the result would be 0.71. The old Earnings per Share EPS of 106p would be spread over to the new shares thus

106p x o.71 = 75p

When the earning per share is applied then the new payout ratio would be 40% x 75p=30p

According to the HBOSs statement the shareholders of the company would receive 30p per share on the dividends that would be issued to them thus the shareholders of the company would receive the shares whose value would be less than what the statements would reveal to the company as the shareholder would receive the two thirds of the dividends of what they currently receive.

The dividend yield of the company as per 2007 was 9.8% but as per 2008 it would be 6.9% as it would be derived by taking the 30p per share in dividends by the average value of the shares at 435p = 30/345 = 0.69.The dividend policy does not appear to show the performance of the company as been successful, since the value of the dividend seems to decline as the company continues with its operations. From the year 2007 the dividend yield was 9.8% and the year 2006 it was 6.9% this thus shows a decline in the performance of the company.

The company had experienced difficulties due to the economic condition of the country of credit crisis that led to the decline of the net interest margin at the increasing arrears. The underlying profits of the company as at the four months of 2008 was £56 million as compared to £108 million in the year 2007 this showed that credit crisis had affected the performance of the company. The presence of the capital base and skills that TPG would be provided by the company would enable to access market opportunities available in the medium term of the company and this would improve the performance of the company.

According to Mathias Calice a partner at TPG he stated that the companys performance would be improved through having capital that would provide the platform for the potential growth and the profitability of the company. The TPG Company is a company that was established in the year 1992 and it had more than £50 billion assets under the management and offices of United States, Europe and Asia. The company has extensive experience with the global public and private investments and it invests in the world-class franchises across a wide range of industries such as financial services.

The estimation of the companys share price as at 2007 using the dividend growth model and the capital asset pricing model.

Dividend growth model

The dividend growth model is the model that determines the companys current price of stock as its dividends next period dividend by the discount rate less the dividend growth rate. The model assumes that the basis of valuing stock is determined by the current dividend, growth of the dividend and the required rate of return.

The formula for the dividend growth model is

Value = (current Dividend x (1 + Dividend growth))

(Required Return  Dividend Growth)

The Bradford Bingley divided growth rate would be 15% and the required rate of return is 20%. The current dividend of the company would be 8.7p.

The board of directors of the company stated that it would impose a final dividend of 11p and would lead to the declaration of dividends to 16.5p and this would show an improvement of the performance of the company by 11%.The board also stated that it would expect the future growth of the company to be balanced by the capital requirements of the company (SandherJ.2004).

Capital Asset pricing model

It is a model that is used to determine the appropriate required rate of return of an asset. The model takes into account the assets sensitivity to its non diversifiable risk that is systematic risk or the market risk. It is represented by the quantity beta (B) in the financial industry as well as the expected return of the market and the expected return on the theoretical risk-free assets. The expected return of any security is determined by its beta coefficient, the reward-to-risk ration for any individual security in the market that is equal to the market reward-to-risk ration.

E (Ri)  R_f = E (Rm)  R_f

ßim

or

E(Ri) = R_f + ßim (E (RM)  R_f)

Where E(Ri) is the expected return on capital asset

R_f risk-free rate of interest

ßim beta coefficient which is the sensitivity of the asset returns to market returns.

The reasons why the actual share price differs from the estimated share prices

The prices of shares depends on the businesses investment environment if the environment is conducive the value of the shares also increases. The investors may pull the financial prices away from their long term trend level and this may affect the value of the shares of company during a given financial period of a company.

When the investors are evaluating the value of the shares they react differently to the how the shares are in the stock exchange market. The reactions of the investors may either be optimistic or pessimistic reactions. For the excessive optimistic reactions the investors may have the prices of the shares as been evaluated as been high while the pessimistic investor they may the share prices to be unduly low.

The common stock prices of Bradford and Bingley Company today, is based on the expectations of the future performance and the forward looking valuation of a company. The actual share price can differ from the estimated share prices that will be charged on the shares of the company.

The short selling of shares can cause damage to the health of the real business as it can have serious verification on the respective employees and the customers of a company. In case of banks if the share prices fall, it becomes harder and more expensive for those banks to raise fund that is needed to run the affairs of a company. It further reinforces the downward momentum to the share prices because the prospects of the bank worsen as the cost of capital rises.

The implications of the undervalued company

The undervalued companies usually have low share price that does not reflect the assets that a company owns. The management of the undervalued company may be require the share prices to undergo a change in price so as to increase its valuation.The valuation of the share prices can be undertaken through issuing a premium to the shares or by having a price drop of its premium that is not being considered to lead to the undervaluation of a company. The firms that have investment strategies that have specific characteristics are termed as undervalued and although they can have excess returns than the firms without these characteristics.

The strategies that can be used to determine whether a firm is undervalued or not is tested through creating the portfolio of firms that possess these characteristics at the beginning of the financial time period of a company. The examination of the returns of the firm over the financial period of a company can be used to evaluate whether a firm has been undervalued or not, if the returns of the company are low this means that the company has been under valued.

The variables that are used to classify the undervalued companies are defined using investment strategies such as: guides that have variables that are observable, though they may be numerical in nature, the data of the variable that is collected from the firm in diverse method at the start of the testing period is also and investment strategy and the firms are classified into portfolios that are based on the magnitude of the variables.

The companys that have their price earnings that are low are reffered to as being undervalued. When the price earnings (PE) of a companys transactions are high the investors may have more earnings and this implies that they have larger implied expectations for the future earnings growth for the company.

The other factors that are considered when determined whether a company is undervalued or not is that: the rate of the firm, if the company has less component parts thus the investor may push for the break up of the firm, spin off and split off of the companys financial statement. The company is undervalued when the firm is too conservative in the way it uses its debt, thus the solution for this problem is to push for the higher leverage and recapitalization of the firms assets.

Market factors

It refers to the external agent that determines how the demand for or the prices of a good or service are affected. The management of Bradford Bingley Company stated that it would increase the dividend amount of 18^th of the month and it would also reduce the dividend amount to the 19^th of the month so as to show the presence of the ex-dividends for the company. The declarations of ex-dividends to a company without the permission of stakeholders of the company would be a violation of the expectations of the market factors of the company.

Market index

The market index is an index that is used to show the market trends in its securities. It is designed to measure the prices changes of the overall market such as the stock market or the bond market.

Cost of equity

It is the return of the investment that is required by the equity holders of a firm. It is calculated by using any number of different theoretical approaches that takes into consideration the current and long term yield requirements of the firms investors.

The formula for cost of equity is = Dividends per share + Growth rate of dividends

Current market value of stock

It represents that the market demands as compensation in exchange of owning an asset and of bearing the risk of ownership. It also represents the opportunity cost of investing in the shareholders. The compensation that the shareholders get is the dividend and the capital gains.

According to Morgan Stanley he stated that the cost of equity had fallen to its lowest level relative to its debt due to bad economic conditions of the market. Ian Scott stated that the companys balances to equity issued and buybacks announced would be close to zero. It was noted that the cost of equity funding was more expensive than the bank debt during the financial period of the company.

Share price

It refers to the price of the single share of the companys stock. When the stock is purchased the owners become the shareholders of the company that issue the shares. The share prices of a company are directly related to the companys earnings and their dividends.

It can not be used to measure the valuation of an underlying company this is because the number of shares that understand to a company varies for each publicly traded company.

It was noted that the companys share price had fallen and thus they would curtail the ambitions of the investors that would be interested in strengthening the balance sheet of the company through the issuance of the rights issue. The buy-to-let mortgage specialist stated that the raising of funds through the rights issue would not reflect the any improvements in the share prices as the value of the shares had declined due to low demand for the product in the market. The companys share price had declined by 70% as at 2007 and the recent studies showed that that the shares would fall from 135p as at May16 at 8am to 111p at the same time on May 20.It was recorded that the shareholders would not purchaser the shares as the value of the shares had lost value due to the existence of the credit crisis in the market.

The net interest margin of a company is the difference between the borrowing rates and the savings rate The company net interest margin had declined significantly thus for the company to overcome this problem it imposed restrictions that would prevent this problem from happening these are: increasing the interest rate of the loans and mortgages issued to the customers. The company would restore the company net interest margin thorough imposing tough conditions such as cutting down the saving levels of the company so as to maintain the profitability of the company., the company would also increase the staff deductions and increase the call centers and the offshore facilities so as to maintain the right net interest margin of the company.

The management of Bradford and Bingley Company should ensure that imposes the right mechanisms that the operations of the company can be carried out effectively. The economic condition of the country although they affected the performance of the company they should have employed qualified personnel to carry out the transactions of the company as so to avoid the problem of over sharing the share while the demand for them is low. The management should have carried extensive research so as to ensure that it could predict when the demand for share would there so that to avoid deficits from occurring to the company.

Reference

Bradford & Bingley chief resigns Bradford & Bingley branch. Web.

The basic guide to rights issues, By Louth, N. 2008. Web. RNS Number: 7115V

Bradford & Bingley PLC 2008.

Bradford & Bingley plc 2008.

United States, Canada, Australia, Japan or South Africa. Web.

The Dividend Growth Model. Web.

Peter Green Director of Treasury & Balance Sheet Management SandherJ.2004 Balance Sheet Manager. Web.

What are we? FTSE-100 plc  floated. Web.

Native is a skincare company that provides products that are vegan and cruelty-free. One of their products that I use on a regular basis is Native Unisex Deodorant. This product has a sufficient competitive advantage that it has gained by being non-gender specific (Deodorant  Native, n.d). It can cater to men, women, and those who do not adhere to gender dynamics. In addition, being vegan and cruelty-free with an affordable price tag puts it in a favorable position among competitors.

The competitive advantage of this product stems from both its relevancy and defensibility. The current skincare and makeup market has a great emphasis on sustainable, vegan, and cruelty-free brands, which plays into Natives relevancy. The defensibility of the product stems from its gender-neutral and, therefore, timeless appeal.

If a competitor aims to enter the same market as Native Unisex Deodorant, it needs to be wary of certain barriers. First, it needs to consider the advantages that pre-established brands have. Second, cruelty free and vegan products tend to be high on the price scale, which might lead to the products low demand. The value provided to customers lies in supporting a sustainable business, feeling good about their choices, and receiving a product that does not conform to any specific gender.

In conclusion, Native Unisex Deodorant is a product that is capable of holding its own in the highly competitive skincare market. Its appeal and profitability strength lies in its wide range of customers that have use for it and relatively low cost. As mentioned previously, competition in this market is intense; therefore, a company entering this sphere of business needs to pay attention to many factors.

Reference

Deodorant  Native (n.d). Web.

Introduction

Entry into a new market can either be highly profitable or catastrophic for an organization. There are several factors that have to be considered when trying to enter a new market. Some of the factors include SWOT and PESTLE analysis and an evaluation of the best strategies and mode choices for the specific company and the host country. One can argue that despite the above mentioned, the most crucial element for successful penetration of a market is political goodwill. A positive administration affirmation allows the management and the business, in general, to advertise and sell their products comfortably. The purpose of this essay is to analyze the market entry strategies and mode choices for Siemens in relation to its entry into the Pakistani market.

The evaluation and analysis reveal that the company was primarily successful due to the positive political goodwill. Siemens, which is a German company, is among the largest importers of products from Pakistan. This is especially important to note due to the fact that other investors and businesses are not attracted to the Pakistan market due to the impact of the Kashmir war, despite the huge population the country hosts. The selected country, Pakistan, was selected due to the complicated nature of its political and economic stands. A second notable finding is that the right market entry strategies have enabled the company to remain top in their industry. However, much still has to be done to ensure that Siemens remains the number one choice of electronic brands in the country. It is suggested that the company adds a green field operation in Pakistan. The premise is deemed valid due to the large population size of the country. The paper will have a formal structure starting with this introduction. This will be followed by a brief profile of the company, the host country analysis, the strategy used in the host country, and the conclusion.

Brief Profile of MNE

The selected multinational enterprise is Siemens, which is a German electronic and electric equipment conglomerate. The company was formed in 1847 as a telegraph company (Siemens, n.d). To ensure that the company survived competition at the time, the owners were keen on innovation and improving communication. It was this need for innovation that led to the company developing the use of a needle to point out letters (Siemens, n.d). Initially, competitors used Morse Code to communicate. This revolutionized the way people used technology to communicate with one another, and can be tracked down to how phones are designed today.

It is important to understand the background of the company in order to put its impact into context. A review of the history of the company reveals that by early 1900s it was the largest company in Germany (Siemens, n.d). One way it achieved this was through mergers, which at that time were not common. For example, the company bought the Schuckert & Co., Nuremberg companies to expand its mandate and reach (Siemens, n.d). A part of the companys history is tied to the Nazi concentration camps as they were accused of exploiting free labor from Jews who were held captive in the stated camps. Due to the fact that the company was already significantly successful by the end of World War II, the management made the decision to move from Berlin in order to avoid further destruction of their assets. This strategic move ensured the survival of the firm after the war whereas many of its competitors were largely affected.

Today, Siemens has ventured into more than just telephones. In fact, their focus has shifted significantly from telecommunications to electronic machines in general. Some of the products that can be found within the Siemens brand include electronic equipment, building products, automated machines for plants and factories and even energy-related products. They have generators, steam turbines, phones, transformers and even speed trains as part of their brands. In an attempt to continue being relevant, the company has also ventured into renewable energy. For example, the firm has various microgrids that it controls and manages as part of its green energy mandate.

It is critical to note that Siemens is a global brand that has clients in all countries of the world. However, the company has offices in 200 countries (Siemens, n.d). It is important to note that these offices do not translate to factories as the company has factories in approximately twenty countries only. The company has employed close to 400,000 people worldwide and has incorporated various cultures, backgrounds and people into their business (Siemens, n.d). Despite this fact, the employees and all the offices, are linked by one main agenda that is determined by the firms headquarters.

A core resource and capability of the selected MNE is their technology. As stated, the company has focused on electronic devices and machines. The growth of the industry has ensured the development and innovation of new technology. Siemens has been keen on ensuring that not only does the company innovate its own solutions, but keeps abreast of all the other solutions in the market before their competitors. A second capability is a human resource the company has accumulated over the years. It is critical to note that the human resource ensures the clientele is comfortable with both the products manufactured and with the services received. Additionally, the company has been on the spot on their keenness on data privacy. This has ensured that their clientele is comfortable with sharing their information, as compared to their competitors, and purchasing items from the company.

It can be argued that the issue of data privacy is a competitive advantage for Siemens. Liptak and Eren (2016) note that consumers are keen on what happens to their data when they submit it to businesses. Companies that do not sell or share these data are often trusted and have an easier time ensuring consumer loyalty. Siemens has perfected this art to ensure that their competitors are assumed not to be safe in regards to their data protection policies.

Current Political Situation of Selected Host Country

As per the assignment, the selected host country is Pakistan, a country in South Asia. For the last several decades, the country has been at war with India over the Kashmir area. This has greatly affected the countrys political, social and economic stability. Politically, the country has received both support and criticism over the war. There has been an immense loss of life and property because of the war. It is important to note that the war has impacted some parts of the country more than others. For instance, the capital city, Islamabad, is more developed and more peaceful than Kashmir due to the war interests. Despite the geographical difference, all the cities and towns of the country have been affected by the war in one way or the other.

Political goodwill is a key opportunity for Siemens in the country. It is prudent to note that Pakistan has significantly good relations with Germany. The relationship between the two countries can be traced back to when Pakistan was declared a sovereign nation, with Germany, India and Japan being some of the countries to support the same (Taneja and Dayal, 2016). Additionally, the two countries have had positive trade relations over the years. As stated earlier, Germany is among the top importers of Pakistani products due to their bilateral trade agreements. The good political standing ensures that the government of Pakistan supports businesses with the government of Germany (Siemens, n.d). Therefore, issues such as licenses and other trade deals are easily made between the two countries. In turn, this has a trickle-down effect for multinationals such as Siemens.

A second key opportunity for Siemens in Pakistan is expansion. Malik (2017) notes that the selected country is one of the most populous in the world, with a population of approximately 210 million. Having a manufacturing plant in the country is strategic for Siemens for any of their numerous products. For purpose of this assignment, a focus on medical electronics is suggested. Germany is considered to have better health care than Pakistan. Therefore, an installation of a plant that offers similar quality health electronic products would be taken positively by both the Pakistani government and its public. Additionally, this not only makes it easier for the company to attract clients from the host country population, but it also ensures the availability of affordable labor. As stated, whereas the company has automated its processes, there is still a need for manpower. The large population, coupled with the unstable political environment allow the company to get affordable labor in the country.

Despite this, a key challenge the company faces in the host country is the cumulative impact of the war. It is prudent to note that the war has affected both the economic standing of the country and the people. This has two ramifications, the first being that the countrys instability has led to an increase in unemployment among the population. This means that the larger target population in the country will not be able to afford some of the products developed by Siemens. On the same note, and secondly, the individuals who can afford such products might not see it as a priority due to unstable individual income, for example, companies that would buy the turbines might be affected by war. Despite the challenge, the company can tap on its creativity and innovation to come up with products that will be appreciated by the population despite the instability. For instance, the firm can focus mainly on business-to-business partnerships to ensure that they are more profitable within that specific market.

Strategy and Mode Choices

There are several strategies that can be used when a company enters a foreign market. In the case of Siemens entry into Pakistan, it can be argued that the company used the global (standardization) strategy. There are several characteristics that made this the best strategy for the company. The first is the fact that all assembled machines and electronic commodities have to be of the same standard. According to Dhanabalan et al. (2018), the standardization strategy makes it easier for companies to monitor the quality of all their products. There is no room for the factories in the host countries to change anything about the production without confirmation from the headquarters. Additionally, a majority of the parts are developed in the headquarters and only shipped to Pakistan (and other host countries) for assembling. Another advantage of using this specific strategy is that it allows the company to maximize efficiency and minimize costs.

The minimization of operating fees is made possible due to economies of scale. For example, labor is cheaper in Pakistan than in France, yet Siemens might consider having assembling factories in both countries. The lower rates in Pakistan make up for the significantly higher rates in France, thereby, creating a balance. A critical element that ensures the successful implementation of this strategy is research and development. Indeed, one can argue that Siemens has a highly effective research and development department. It is crucial to note that whereas research is done for the different populations (including the Pakistani market), the research and development process is centralized at headquarters. This ensures that the interpretation of the data collected is done in the same fashion to come up with products that are supported by the entire Siemen brand. One can state that this was the best strategy for the company.

The company adopted two main mode choices when entering the host country. The two-mode choices are exports and joint ventures. Dhanabalan et al. (2018) note that the exports mode is best for companies that have also used standardization strategy. One of the benefits of the mode is that it sends the same item/quality of product and service to all its offices or host country factories. It is important to note that there are two types of exports that the company uses for the specific market. Direct exports involve sending a whole car to the market. This is usually made possible by people buying from overseas and transporting the same to the country. Additionally, individual companies also have the leeway of importing Siemens products from overseas into the host market and re-selling them. On the same note, the headquarters can send parts of the electronic products that are then assembled in the target market.

One benefit of this mode choice is that, as stated previously, it ensures the same quality is distributed all over the world. Another advantage of exports is that it also allows closer examination of operating costs and revenues (Richardson and Ariffin, 2019). Moreover, it ensures that the company can easily monitor economies of scale and adjust accordingly. Despite the benefits, one pitfall of the mode selected is that it attracts high transportation costs. This is regardless of whether the company is shipping whole electronic products or several parts to the host country. In addition, exports are often viewed as foreign by the locals. This makes it harder to market the products to the Pakistani market as a trusted brand. The impact of this can be minimized through indirect exports of parts as the assembling is done in the host country.

As stated, the second mode choice is a joint venture. Arguably, the first business relationship between Siemens and the government of Pakistan was through the development of the Indo-European telegraph link. This was done through a joint venture between the then smaller Siemens and an even smaller telecommunications company in Pakistan. Additionally, a second joint venture with Telephone Industries of Pakistan was formed to further cement Siemens brand in the market. Dhanabalan et al. (2018) argue that joint ventures are helpful in establishing stronger ties among the target population or host country. One of the pitfalls of exports mentioned is the lack of ownership of direct exports by the population. This issue is resolved through joint ventures as it allows locals to be involved in the business.

One advantage of joint ventures is that it lowers the operating costs considerably. This is due to the fact that all the partners involved have to raise funds for the business venture. On the same note, the risks of the business are also shared among the partners, thereby, reducing the impact of the same consideration for all who are involved. Additionally, the model is politically acceptable as it also includes local companies. Richardson and Ariffin (2019) explain that companies that partner with local businesses are more likely to receive positive political goodwill than those that do not engage the local companies. One pitfall of the company, which is also a disadvantage of the model, is that operational control can be difficult to handle if the partnership is not clear. This was, however, not a challenge for Siemens due to the fact that the company was keen on all its ventures.

Taking all this into consideration, one might suggest that the company has exhausted all the relevant strategies and modes for its host market. However, the population is still concerned with the fact that Siemens is a foreign company. To resolve this, the selected MNE developed a small factory for some of its smaller products. Despite this, there is still significant resistance from the community. This can be attributed to the fact that the stated factories are largely managed by Germans. The image exuded, therefore, is that the brand is foreign and locals should not engage with it at any given time. It can be suggested that a greenfield operation should be launched that also targets the employment of locals. Richardson and Ariffin (2019) explain that the premise means the development of a factory in the host country.

One advantage of greenfield operations is that it allows the creation and production of vehicles that are specific to the needs of the host country. Indeed, the research and development sector of Siemens is extensive, however, it does not factor in the minute details of individual countries and how these affect the shape, type and technology of the cars they should develop. Further, as stated, the issue of ownership by the locals has lowered the value of the brand in the country. A significant percentage of the population sees the brand as a foreign company and they are not obliged to see it succeed. The greenfield operations will resolve this due to the fact that it will create more jobs that will compensate for the fact that the brand is not local. It is important to note that for this model to work, the company must have political goodwill.

Conclusion and Summary of Key Findings

In conclusion, the selected multinational enterprise is Siemens, which is headquartered in Germany. The company has assembled units in approximately 20 countries across the globe. Due to the fact that it is one of the largest companies in its country of origin, the firm tries to standardize all its processes, goods and services to allow its target market to experience the same quality all over the world. Critically, the company is hosted in Pakistan, where it has a small factory as well. It is critical to note that Pakistan is one of the most populous countries on earth. The countrys political situation has highly affected businesses such as Siemens, due to the unpredictable nature of war.

One key finding realized is that political goodwill is critical in determining entry strategies in new markets. It can be argued that the company had an easier transition into the host country due to Germanys relationship with Pakistan, which has been positively supported by the two countries modern trade agreements. The firm has also used both exports and joint ventures to capture the market in Pakistan. One of the advantages of the strategies and mode choices used by the company is that it ensures uniformity in terms of standard and quality. However, for purposes of growth and local support, it is recommended that the company consider also incorporating modern greenfield operations that employ locals.

This case is important due to the fact that political instability is viewed as one of the most unsettling situations for businesses. However, from the case, it is clear that companies can still be profitable even when both political and economic instabilities are rife. Bearing this in mind, one can argue that firms can protect their assets and bottom line by incorporating the right strategies when trying to penetrate a new market.

Reference List

Dhanabalan, T. et al. (2018) Factors influencing consumers car purchasing decision in Indian automobile industry, International Journal of Mechanical Engineering and Technology 9, pp. 53-63.

Liptak, G. B. and Eren H. (2016) Instrument engineers handbook: process software and digital networks. New York, NY: CRC Press.

Malik, R. A. (2017) Pakistan: the next Asian tiger? The Diplomat. Web.

Richardson, C. and Ariffin, S. K. (2019) A leap of faith? managerial religiosity and market entry decisions, Management International Review, 59, pp. 277305

Taneja, N. and Dayal, I. (2016) India-Pakistan trade normalization: the unfinished economic agenda. New York, NY: Springer.

Siemens (2020) Our history. Web.

Stakeholders have a great impact on product markets as they determine the main trends and product requirements for a future period of time. To decide what a customer means by more colorful, more durable, or stronger, and to build these characteristics into a product, can easily involve misinterpretations. Moreover, needs and desires must be predicted years before the product planning activity can be implemented. Also, the development of a new product may require the creation of new machines, a new distribution system, and new processes and materials. The profitability of capital outlays for these purposes must meet investment criteria. With the time span between the birth of an idea and its development and commercialization, and the uncertainties of market reactions, product development becomes a sensitive activity. Since new products are basic to a companys growth and profitability, their development is a fundamental activity.

Shell Corporation is the largest oil company in the world with about 2.147 billion. Shell Corporation is the biggest oil refinery corporation specialized in oil and natural gas products, gasoline, and petrochemical manufacturing. The nature of business demands innovative solutions and new technologies to reduce environmental pollution caused by oil and gas refineries. In this case, the government, the corporation stakeholders, and consumers play a dominant role in strategies and approaches aimed to reduce pollution and introduce environmentally friendly technologies. The stakeholders and policy makers should start a fuel oil substitution for natural gas in power generating plants and the ten most highly polluting industries. They should also be substituting liquefied petroleum gas for leaded gasoline. The second step is to install new systems for combustion and emissions control in vehicles, in manufacturing, and in in-service industries. It is a known fact that annual automobile inspections are now required and are performed in public service stations as well as in private workshops (Shell Corporation Home Page 2009).

The main stakeholders are supplies, customers, the society (community), employees, and the state in general. In the US, the law makes available a repertory of ecological policy instruments of broad coverage and applicability, strong enough to support an integrated planning process comprising the federal government, the federal entities, municipalities, and society itself. This includes the ecological organization of regions and human settlements, the mandatory evaluation of environmental impacts of important projects, ecological planning regulations, steps for the protection of natural areas, research and education, inspection, and mechanisms for social participation. Ecological Balance and Environmental Protection became effective as an integrated legislative response to the environmental problems of the country. The law establishes a broad system of mutual assistance among the federal government, federal entities, and municipalities, decentralizing resources and responsibilities under a coordinated and cooperative framework. The authority should have a right to regulate mobile sources and emissions from businesses and services, parking lot inspections, vehicle traffic management, control over transportation systems and public roads, emission regulations for public transportation, and authority over urban development and land use. The federal regulatory agency has reserved to itself control over industrial sources, determination of technical regulations, and operation of atmospheric monitoring systems (Boddy, 2005).

From suppliers point of view, stakeholders determine the conversion of ideas into successfully marketed products. It combines technical and marketing competence and is concerned with strategies of the programmed introduction of new products to markets as replacements for decaying ones. Since it carries out an important mission directed at corporate growth and advancement, product development should report to top management. In some companies, particularly in large ones featuring diversified consumer products, a product manager is charged with directing the marketing effort of specific product lines (Boone and Kurtz 2002). The idea is to establish effective management in multi-brand companies by developing a series of profit centers in which product executives assume responsibility for the total marketing effort for a line. This approach grows out of the inability of one executive to master the intricacies and details of marketing several dozens or hundreds of products. The large drug and soap companies pioneered the concept, and Shell is one of the most successful in utilizing it. Product managers are expected to develop product ideas, nurture their brands, compete effectively within and outside the company, prepare budgets, work with marketing-research and advertising agencies, influence salesmen, wholesalers, and retailers, and generate sales, profits, and larger market shares. They must understand and represent markets, customers, and consumers (Boone and Kurtz 2002). Yet despite these onerous responsibilities, product managers usually lack commensurate authority. Although held responsible for profits, these managers generally cannot control costs of production or prices. Nor can they direct salesmen and advertising, or such supporting services as marketing research, package design, and product engineering. Authority for such activities is vested in others (Bearden et al 2004).

Customers are affected by marketing policies and products proposed by Shell. Product management refers to the adjustment of productive capacity and technology to consumer demand. Technically, it encompasses both product planning and product development, which in reality are synonymous. In consequence, we shall rely on the term product development in its broadest sense. Product development is concerned with offering the right goods at the right time, at the right price, in the right quantities, in the right place. Referring to the process of evolving new products, it is closely associated with market development. It focuses on the future product line, on products that should be added or deleted, on the impact of products on price, promotion, warranty, and service, and on the development of criteria to evaluate product performance. By assessing new or modified products that can be added by acquisition and internal development, product development becomes the lifeblood of a business (Shell Corporation Home Page 2009). Decisions in this area determine the products to be produced and stocked, as well as details concerning their appearance, form, size, package, quantities, the timing of production, price lines, and anticipated market segments. Product development combines the scientists function of analyzing, classifying, and organizing information into commercially feasible new products, and the marketers function of assessing unsatisfied wants and needs and identifying profitable market opportunities. Usually, this activity necessitates compromise among the engineering, production, marketing, and accounting departments. For example, the high specifications stressed by engineering may push costs above market acceptance. Effective product development adopts a critical but positive posture. Management cannot be satisfied with current products, regardless of how good they are. Such an attitude and expression of expectations achieve an even better match of corporate offerings with consumer expectations (Crawford 2006).

From the government (state) point of view, American businessmen have proven that they are the marketers of the world. They have seized the initiative as advertisers, sellers, product developers, packagers, merchandisers, and perfect of marketing communications systems (Kotler and Armstrong 2006). As a result, American marketing technology is being imitated in other parts of the world. Mass-marketing knowledge and techniques are exportable commodities. Less-developed countries are recognizing that their economies can be bolstered and their economic development stimulated through marketing. The ownership of market position is as important as the ownership of a physical plant, if not more so. In reality, marketing activities are among the most productive management responsibilities, perhaps even more productive than the activities related to shaping and creating products. Actually, expenditures on selling, advertising, sales promotion, and marketing research should be perceived and considered not as mere expenses but as business investments. They are investments in the same sense as expenditures on capital equipment, plant, warehouses, and furniture (Hollensen 2007).

The local community and society influence market demands and product innovations. That product development is a top management responsibility is implied in these observations, and in such statements as top managements two major responsibilities are innovation and marketing (or innovation and research and development). The establishment of product-planning departments that search for opportunities, recommend new products, and coordinate the efforts necessary to develop them is a recognition of management concern for these critical tasks. Product planning requires considerable lead time for a change, for the addition or deletion of products. It is not uncommon to spend two to four years developing new products, and this requires advanced market intelligence. Before adding a product, however, a company should establish various criteria concerning the size of the available market, the rate of return on investment, the net profit, the patentability of the item, the congruency with current corporate situations, and the impact on the sales organization (Hollensen 2007). These environmental policies are important because they have already undergone experimentation in other countries, have been widely applied, and their effectiveness has been proven. They imply the use of technologies that are commercially available, and the energy they require is available at a reasonable cost. They require adjustment in urban lifestyles and in institutional activities that can be accomplished in a short period, and they have a significant reduction effect on total emissions and on one or more of the major pollutants (Stavins and Haty 2005).

Staff stakeholders interests are really the issue at hand. In the appropriations legislation for foreign operations that must be passed every year, there has been report language and bill language that has addressed these issues. It is useful to separate nature and development in our objectives, argued one participant. It is said that the poor will always be with us, yet the same cannot be said of the environment. The real value in distinguishing between debt-for-nature swaps and structural adjustment lending is that the debt-for-nature swap can buy time until a longer-term solution to the environmental crisis is found. The speaker did not see the two programs in conflict but felt that they should be separated. The policy will be evaluated in terms of its impact on the environment and improve environmental conditions around the Shells manufacturing and refinery facilities. On the other hand, in its current form the environmental policies followed by Shell also poses a risk, indeed a threat: if environment and natural resources concerns are not taken into account in the plan and in adjustment conditions of the multilateral banks, then the net effect may be to increase the pressures on developing countries to unsustainably overexploit their resources (Boddy, 2005).

In sum, all stakeholders determine the market needs and demands. Stakeholders may shift their tastes radically, or technological developments may automatically force product decisions. Profitability analysis often leads to the dropping of products. Information from consumers, dealers, and other middlemen, as well as data concerning costs and actual and potential revenues, must be reviewed. If a new product is to be added, management faces the decision of developing the product internally or adding a product by acquisition. Internal development requires a considerable period of time, investment in research and development, and an effective supporting marketing and production program. These limitations, plus income-tax situations, often lead a company to merge to obtain new products. The large number of mergers that took place during the last decade seemed to be prompted by the desire to diversify and so balance company risks, utilize capacity and capabilities, complement available products, and smooth seasonal and cyclical fluctuations. Policy markers should consider the following actions: mechanisms to restrict circulation of all private vehicles one day a week during the winter; establishment of a corresponding system of incentives and penalties through higher prices for fuel and parking; removal from circulation of all vehicles found polluting excessively; prohibition of parking lots in specific zones as a disincentive and means of alleviating traffic congestion and increasing average speed; incentives for shared use of vehicles; restrictions to traffic in specific areas and at specific times; regulation and encouragement of institutional transportation; reconfiguration and freeing of roadways and lanes for the exclusive use of buses; establishment of continuous working hours in public sector offices to reduce the volume of trips per person; and an increase in traffic police for adequate enforcement of these actions Shell Corporation Home Page 2009). Although various elements must be distinguished, he counseled that the whole picture cannot be ignored. Rich stressed that the role of the multilateral agencies in influencing policy must be considered, which means analyzing how economic resources are targeted in various countries and what happens to the environment. The basic premise behind debt-for-nature swaps is that the urgent need for debt relief also presents a unique opportunity to leverage additional domestic investments in those countries for desperately needed environmental and social investments. If one accepts that basic principle then the conclusion is almost inexorable that the environmental plan and the accompanying World Bank adjustment conditions should, across the board and systematically, have provisions, incentives, and inducements to insure that a significant part of the debt relief granted to developing countries through the careful planning and strategic initiatives go toward these desperately needed, long-term environmental and social investments. Policy makers anticipate strengthening this requirement and shortening the period for inspections to every six months. Industries are now subject to constant inspections and will be required to install scrubbers and particle control systems. Policy markers should start mandatory inspection and control of diesel vehicles. Policy markers have begun the renovation of urban bus fleets, the installation of new engines, and an adequate diesel motor maintenance program to reduce pollution and expand public transportation services. The Shell Corporation will begin a program for retrofitting three-way catalytic converters in public service vehicles.

References

Bearden, W. O., Ingram, Th. N., LaForge, L.W. 2004. Marketing, Prentice Hall.

Boone, L.E., Kurtz, D.L. 2002. Management, McGraw-Hill, New York.

Crawford C. Merle. 2006. New Products Management. Irwin-McGraw Hill. 7th edition.

Boddy, D. 2005. Management: An Introduction. Financial Times/ Prentice Hall, 3d edition.

Hollensen, S. 2997. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition.

Kotler, Ph., Armstrong, G. 2006. Principles of Marketing. Prentice Hall; 11th edition.

Shell Corporation Home Page 2009.

Stavins, R., Haty, B. 2005. Environmental Protection and the Social Responsibility of Firms Perspectives from Law, Economics, and Business. Resources for the Future.

Reputation risk can be managed. However, reputation risk is the most difficult type of risk to manage. The image of an organisation is difficult to quantify and validate. However, every institution has its own image. Image comprise of how the firm is regarded by its internal and external publics. The image also depends on the corporate identity of the company. Although there is no parameter to measure the quantity and quality of reputation that a company bears, a positive image enhances the performance of an organisation. An organisation can only have a positive or a negative image and not both. Zolkos (2013, p.23) asserts that the public relations team of an organisation can predict the predisposing factors that can spoil the reputation of an organisation through research and forecasting. Scott and Walsham (2005, p.322) observe that sending difficult information enhances misunderstanding hence giving room for rumours and exaggeration. Sampath (2009, p.305) asserts that reactions towards reputation management should be proactive rather than reactive. It is easier to dissociate a company with a bad image than to med its image when it is already soiled. Reputation risk can also be managed through research and analysis (Sasaki 2010). A company should be able to predict various factors that are likely to soil its reputation. For example, G4S can predict that the employment of corrupt employees is likely to soil its image. Cases of robbery can also soil the reputation of a security firm. It is also reputation-damaging for a security officer to steal from the client. All these cases can be prevented through vetting and continuous auditing. Hackett (2013, p.34) affirms that G4S should put very strict disciplinary measures for its officers that are caught in misbehaviour. The company can also involve itself in corporate social responsibility. Such activities will enable the company to develop a positive image in the community and the public. Zolkos (2013, p.23) asserts that social responsibilities like cleaning of towns, education of orphans and poor children, the building of social facilities, and planting of trees will build a positive reputation for the company. The image comprises many facets of the organisation. Every other public of a particular organisation can make or destroy its image. Reputation risk is therefore manageable by training the public on how to treat the clients and potential clients. Watson (2003, p. 21) recommends that a security firm like G4S should be associated with accountability, trust, accuracy, transparency, and honesty. All these qualities should be cultivated in all its publics.

The reputation risk of G4S has tended towards the negative side for the last two years. The company has been featured prominently in the negative limelight after having failed to acquire ISS Ltd, a facility management group, in 2011 (G4S plc Annual Report 2012). Rosen and Riippa (2005, p.23) contend that having come out of a failed acquisition attempt with tens of million-dollar loss, the G4S has declined in popularity. Begelfer (2012, p.29) affirms that poor media relations further tainted the reputation of G4S since the company had publicly announced the deal. Most of the shareholders opposed the $5.2 billion deal, and hence it flopped within a span of two weeks. To many investors and potential investors, the company had not carried out proper research and estimates. Such trial and error in the management of finance can rarely be trusted. Investors would want to put their money in a company that has a firm foundation and/or one that rarely makes losses. According to Rosen and Riippa (2005, p.23), the G4S Company came out of the ISS acquisition attempt with tens of million-dollar losses. This further tainted the reputation of the company; the company was seen as a loss making institution hence further scaring away the investors. The whole saga was pointed at poor planning and poor investor relations. Armstrong (2008, p.24) observes that a company that poorly communicates with its source of funding is bound to fail. A negative reputation will also scare away customers from doing business with G4S. Begelfer (2012, p.29) affirms that customers want to do businesses with companies that are financially stable and that seems to have a successful future. Scott and Walsham (2005, p.322) observe that withdrawal of investors and cancellation of financial deals like that of the G4S and ISS may lead to negative implications in their future. The investors interpreted the fact that the G4S Company wanted to acquire an ISS that was in a completely different line of business and area of expertise as ill-advised. The company would have suffered great debts on its balance sheet through the acquisition of ISS. The financial and business advisors of G4S had misled the company in making investment interests. Investors are therefore likely to be scared from investing in a company that is poorly advised and/or one that may make wrong investments hence making them lose their money. In fact, Kemp (2004, p.257) affirms that the resignation of Alf Duch-Pedersen after the failure of this acquisition is an indicator that the company suffered injuries. Investors and shareholders may therefore use this case as a basis for them to withdraw their fortunes from the company. Gary (2013, p.17) adds that the disastrous Olympic contract also resulted in soiling of the G4S reputation more. The company has therefore ended up losing contracts worth millions of dollars.

Zalud (2012, p.20) asserts that allegations of fraud in contracts issued by the United Kingdom government have also resulted in more damage to the companys reputation. No investor would want to put his money in a company that practice fraud since it can easily be deregistered or heavily fined by the government. Sampath (2009, p.305) asserts that a company that deals with security and handling of cash like the G4S should portray the utmost honesty and transparency.

According to Kemp (2004, p.257), the implication of reputation damage at G4S has been a loss of business, trust and finances. The financial performance of the G4S has been on the decline in the last 20 months. This has made the company lose business to smaller and upcoming security firms. According to Dunning (2013, p.32), investors have also feared investing in a company that is thought to be on its decline trend. Loss of government and private sector contracts has also affected the company negatively. The financial standing of the company has also declined. Investors are the source of company revenue. As various investors withdraw their resources from the G4s, the company has continually suffered from a low financial base. Eccles, Newquist, and Schatz (2007, p.104) are for the idea that the fact that G4S Company failed to provide enough trained security guards to the London Olympics in 2012 made the company soil its reputation. Failure to provide security and having failed the country further made the company make losses. For example, in 2012, following the failure of G4S to provide security, the company suffered a decline of its shareholders by 9 per cent. According to Dunning (2013, p.32), the reputation of G4S as the most accomplished multinational security firm was further tainted when the labour Member of Parliament in London, Mr Keith Vaz, declared that G4S had failed the country. Not every other country would want to invest or trust G4S Company to manage its events. The Olympic Games come after several years. Hackett (2013, p.34) affirms that it was logical that G4S could have trained adequate security officers for the event long before the beginning of the London Olympics games in 2012. It is also worth noting that G4S security officers that operated in Newcastle in 2012 were all substituted with other local security personnel. About 500 security officers from G4S were replaced. A move like this may not go well with investors and potential investors. Redmond (2003, p.86) emphasises that replacement of G4S security officers by local officers meant the loss of business hence revenue. Furthermore, G4S was denied a security role in Scotland in the same year. Dempsey (2004, p.32) argues that the 2012 Olympics games may strip off G4S many business contracts that were on the offing. Eccles, Newquist, and Schatz (2007, p.104) argue that no investor or client would imagine hiring security guards without a means of communication. Communication is imperative in security matters. In the future, investors and potential customers may not outsource security services from G4S due to fear. Such moves have already taken roots in Bedfordshire and Cambridgeshire, where the government and private contractors have been advised not to outsource security services from the G4S. The complainants have cited the total failure of the G4S security services in the Olympics. According to Díaz (2012, p.49), G4S Company must therefore design ways and means of ensuring that it has adequately trained officers. Its officers must also be committed to their duties in order to salvage the current reputation crisis. Watson (2003, p. 21) claims that the failure of G4S officers to report to their duties like they did to one of the contractors in London in 2012, where a third of the security guards failed to report for night duties, will only make the companys image more soiled. The company will be labelled negatively for not honouring its work promises. No client would want to work with a company that breaches its contracts. This is especially worse in matters of security. Who would imagine looking for police officers to guard his or her investments at night after the G4S security officers fail to report for their night duties?

References

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Introduction

One of the central problems experienced by the Lima plant is its high turnover rates. As one of the biggest and most ambitious plants of the Treadway company, it is especially important to ensure that the factory is able to work at its best capacity. As outlined in the case study, the issues of low morale and high employee turnover, especially in the line foreman position. After evaluating the conditions of the plant and its employees, several key concerns were identified, including a lack of training for new hires, high tension between the salaried and hourly workers, and unsatisfactory work conditions. For the purposes of this work, all of the aforementioned problems will be discussed in the context of organizational improvement. First, each of the issues will be covered separately. Then, it will become possible to discuss the solutions that are most appropriate for the case and make an informed recommendation.

Central Problems

Lack of Proper Training

One of the central issues that influence the work of line foremen is a lack of systematized and proper job training. Without training, new hires are not fully aware of all the responsibilities they have, and the proper ways of navigating them. Because of their inability to adapt to the work environment effectively, most workers either fail to meet their quotas, establish productive relationships with their subordinates, or organize an effective work process. In addition, a lack of training disallows the line foremen from advancing up the corporate ladder.

Long Work Hours

Current foremens work hours are a problem that has not been given much attention. Despite that, the issue appears to be exacerbating other existing issues within the plant and making the work of these professionals much more difficult. Having a long list of tasks and responsibilities to take care of, foremen experience a high level of stress and pressure. Throughout a 12-hour shift, they need to monitor the work of others, direct maintenance work, manage various paperwork, and handle any potential disputes. This type of work becomes more arduous to complete, especially when each foreman has to cover for the mistakes of those before them. In addition, the foremen are punished for not meeting quotas. The choice of adhering to a 12-hour schedule and constant operation was made in order to save costs and utilize a smaller amount of workers.

Poor Communication and a Sense of Disconnection

As noted by the plant manager and other management workers, the line foremen find themselves on the lower end of the workplace hierarchy. They do not have sufficient authority to command the hourly employees, who have the protection of their union. Similarly, they are also put into a position of high demand and responsibility. The combination of these factors makes conflict with their subordinates and stress more prominent.

Lack of Internal Incentives and Promotion

According to the case study, the plant management has made a decision to increase the number of outside hires, using university and college graduates for their line foremen positions much more often than before. In the past, an overwhelming majority of the foremen were those who had shown the drive and a desire to be promoted. In addition, even the individuals within the foreman position rarely see promotions or any form of career advancement. The plant does not open new positions, instead relying on retirements and firings. As a result, there is no incentive for foremen to improve or increase their competency.

Potential Courses of Action

A number of activities and solutions must be introduced collectively. For the purposes of building a sense of community within the organization, the number of team-building, and outside-of-work activities must be increased. This can include café outings, common entertainment locations in the area, and other places that are suitable for many people. This approach would allow line foremen to become closer to other employees and understand them better.

Another potential avenue for change is creating new positions inside the organization that would alleviate some of the workload of the line foremen. The new position can be staffed by the most ambitious line workers, as a way to encourage upward momentum within the organization while also addressing the problem of foremen performance. Smaller changes, such as adjusting the shift duration, increasing the amount of in-organization promotions, and introducing better training programs for the professionals must also be used.

Conclusion

Considering the specific conditions of the plant and the needs of its leadership, it is necessary to improve the competency of line foremen first. By allowing more qualified workers to occupy positions of power, the amount of turnover will be decreased. Education and training will alleviate some of the stress and tensions felt by the foremen, making them better professionals and more likely to keep working in the organization. In addition, more opportunities for vertical growth should be created, as a tool for improving loyalty (Lewicka et al., 2018). In particular, opening new positions up for aspiring foremen and creating a quota for promotions of both in-organization and graduate workers can be effective.

References

Lewicka, D., Aldona, A., Morrow, D., & Gorka, J. (2018). The effect of job characteristics on employee loyalty: The mediation role of vertical trust and perceived supervisory support. Marketing and Management of Innovations, (2), 168-185. Web.

Synopsis

Panera Bread Company derived from a business that is known as the predecessor of fast casual restaurants and a pioneer of the industry called Au Bon Pain. This business began by a French oven manufacturer in 1976 as a bakery business. Soon, this business was purchased by Louis Kane who attempted to expand it by opening 13 stores most of which he had to close down due to lack of success and growth. This is when Ronald Snaich joined the business and started an era of success for Panera Bread.

Between 1981 and 1984 the business managers mainly focused on the companys debt reduction. To increase the sales and revenues in 1985 Snaich added sandwiches to the stores, and then noticed that the customers tended to purchase the bread from the stores and made their own sandwiches. This observation started the fast casual specification of the business as the partners added freshly made sandwiches and coffee to their production which differentiated the business from its fast food competitors.

By 1991 the revenues grew and the company became the leader in quick service bakery segment. By 1994 the number of stores owned by the business reached 200, the company had revenue of 183 million dollars in sales.

Eventually Au Bon Pain acquired other businesses and the partners decided to pursue suburban growth since the main target customer base consisted of white-collar business workers of the urban areas of cities such as Boston. Yet, Snaich identified one more potential business opportunity transforming the quick service bakery stores business into a chain of cafes. In 2000s Panera expanded through new company-owned bakery cafes, business acquisitions and franchises.

The menus offered at Panera Bread restaurants now include a variety of items based on freshly made bread, they target sustainable and fresh ingredients and are called fast-casual restaurants. The menus of Panera Bread are very diverse and include breakfast and lunch items, sandwiches, salads, coffee and soft drinks, pastries and desserts.

The company stays at the top of its industry in spite of active and powerful competition from the side of other growing fast-casual franchises. In May of 2010 Ronald Snaich resigned and the new CEO William Moreton was assigned, he is planning to pursue innovations and keep developing the business and maintaining its uniqueness in the fast growing industry with a lot of copycats attempting to recreate what it done by Panera Bread.

Resources

• Financial capital. The company has rather large revenues in sales to be able to invest into innovations and adjustments that make the business more competitive and flexible which is necessary in the fast growing industry such as fast casual food industry.
• Suppliers. The company has a large supply chain from which is acquires the ingredients for it is foods and ready products. Cooperation with the suppliers and long-tern trusting relationships allows the company to increase the quality of received items and to minimize the cost due to profitable agreements and deals.
• Brand name  Panera Bread. Panera Bread or Panera is a well-known brand name that secures positive brand image and is associated with fresh and sustainable food, pleasant decor of the restaurants, and quick service.
• Manufacturing equipment. Since Panera Bread specializes on baking its own bread as the basis for a variety of menu items, the business requires advance equipment that would allow to make high-quality bread fast to be able to serve as many customers as possible.
• Management team. Management team of Panera bread is large and includes people responsible for various aspects of the business such as marketing, innovation, the IT, finances. The managers of Panera Bread are focused on constant improvement of service and product quality in order to attract and retain the customers.
• Human capital. Panera bread requires excellent and well-trained workers knowledgeable and experiences in relation to work in customer service and loyal to the corporate values.
• Trade secrets. As a business that competes in an industry full of companies providing similar services, Panera Bread is to keep trade secrets in order to remain on top. Obviously, the company is rather successful at keeping its trade secrets because according to Snaich Panera Bread style is not so easy to know off (Wheelen, Hunger, Hoffman and Bamford16-9).
• Innovative ideas. Innovation and the search for new market opportunities has always been one of the main focuses of Snaich. He and his partners have been determined to pursue the growth in the areas no one else saw and this is how they managed to develop a strong business with competitive advantage so significant that it is very hard to copy.

Capabilities

• Manufacturing of fresh bread. Panera Bread is a chain of fast-casual restaurants specialized on baking their own bread and serving it within a variety of menu items such as sandwiches, pastries and cookies, salads and soups. This aspect is one of the features that make the business stand out from the mass of other competitors in the fast-casual food industry.
• Marketing. Brand name is one of the factors that help to promote and market Panera Bread products. Besides, the company uses a complex of advertising tools to attract new customers.
• Internal network called Harvest. The personal network ensures special atmospheres within the company and provides fast and easy communication between the managers and employees, contains information about sales, market success and company development.
• Supply chain management. The supply chain of Panera Bread has been adjusted for decades selecting the best suppliers and most convenient distribution strategies to ensure the quality of products (Wheelen et al. 16-15). For example, Snaich personally took care of the supply chain of lettuce to make this ingredient reach the consumers as fresh as possible minimizing its way from the supplier to the restaurants.
• Strategic management. The managers of Panera Bread often face situations where they need to make sophisticated decisions and quickly react to various complex situations. For example, during the recession of 2008 Panera bread chose to target the consumers who had income while all the others focused on the unemployed sector of clients.
• Diverse menu and services. Panera Bread stands out in its industry because it manages to grasp a very wide range of services and experience provided to the consumers. For example, the restaurants offer coffee and pastries as well as lunch and breakfast menus that include soups, pastas, and sandwiches along with hot and cold drinks. Besides, it is different from Chipotle Mexican Grill as the latter is specialized on ethnic cuisine. Moreover, Panera Bread maintains comfortable design of the restaurants creating a home-like experience and offers free Wi Fi.

Core Competencies

Finding of fact #1

As a business competing within a fast growing industry (fast-casual restaurants are becoming much more popular to fast food chains) is challenging due to the fact that the growing popularity of a business of this kind attracts more competitors to the field and makes it harder for a business to stand out.

According to Snaich, who worried about preserving the uniqueness of the company, if it is not special, there is no reason the business needs to exist (Wheelen et al. 16-7). This way, what do the companys managers have to do in order to keep Panera Bread special?

First of all, to preserve its uniqueness, Panera Bread has to stick to its authenticity that has been already established in the fast casual industry. The company intentionally stays away from copying strategies pursued by the majority of other competitors.

Secondly, the reputation of a business and its brand image is built upon its relationship with the customers. This way, to stay popular, a company does not need to invent anything outstanding but to treat the clients in a special way, this will ensure the demand for its products even when there are plenty of other competitors. Nurturing the relationship with the clients is the way for Panera Bread to be preferred to other restaurants.

Finally, in order to establish even better relationships with the clients Panera may start customer loyalty programs to retain the regular visitors and make the new ones come back to the restaurants. This is a strategy to improve customer experiences and evoke the clients interest towards participating in two-sided relationships with Panera Bread. The chain could start offering customized menu items, start a discount program, assign bonuses for especially active clients, or develop a mobile application.

Finding of fact #2

The company is a rather popular chain of fast casual food restaurants, yet surprisingly its advertising strategy is rather careful and not very active. Obviously, to attract a larger number of clients, Panera Bread is to start a more active promotion of its own services and products. What would be a way to facilitate better advertising for Panera Bread and engage more potential customers?

The current advertising practices of Panera Bread include billboards and radio as the main modes with addition of TV commercials and some social networking. Since the main target customers of Panera Bread are younger people living in urban areas and involved in business work, the primary means for advertising should become the internet. Panera may use its banners with attractive pictures of their menu items on popular social networks, involve celebrities and start mobile campaigns.

Besides, the billboards in the streets should be used as before, but it is better to redirect the investments into radio and television advertisements to social networking and mobile advertising campaigns as these modes are gaining more popularity over the other mass media.

Moreover, another profitable way of advertising is giveaway samples and food tasting sessions which would win the interest of new customers and prove the high quality of the items sold by Panera Bread

Finding of fact #3

Panera Bread Company is proud of its pricing strategy which turned out to be an extremely successful way for the business to deal with recession and stay popular and profitable. As Snaich mentioned, the recession has been the best of times for Panera Bread because the company chose to stay true to its quality and did not pursue series of discounts while everyone else did (Wheelen et al. 16-23).

Panera bread added premium items to their menu targeting the kinds of clients for whom they would be affordable. Yet, is this strategy a way to go in the market where the number of competitors grows every year?

First of all, the popularity of Panera Bread and Chipotle Mexican Grill along with other fast casual chains gained their popularity due to the massive change of preferences among the clients who got tired of fatty and processed fast food meals and started to search for more sustainable products. The contemporary society have extremely changeable tastes, so if a shift of preferences happens again and the clients will start to buy less, Panera Bread is likely to lose greater income than its competitors.

Besides, the competitors of Panera Bread are aware of the advantages of the company and may start to pursue the same growth opportunities. For example, Starbucks may launch a line of new menu items similar to those of Panera Bread and distract some of the clients.

This way, higher prices of Panera are only valid while the company continues to offer the meals no one else serves. The company is recommended to pursue more exotic and gourmet additions to the menu to continue justifying their higher prices and the reputation of a unique place offering the most diverse and special experiences to its clients.

Works Cited

Wheelen, Thomas N., J. David Hunger, Alan N. Hoffman and Charles E. Bamford. Strategic Management and Business Policy Globalization, Innovation and Sustainability. 14^th ed. New York, New York: Pearson, 2014. Print.