Category: Business 11471

Competitive environment

Mymuesli operates in a competitive environment currently, but existing competition is going to increase even more as the company is going to enter new markets. Thus, it is significant for the organization to understand what its competitors are and how it can excel them. First of all, Mymuesli should realize that it is not yet well known to new markets, which means that some time should pass for buyers to realize that their preferred option is not the best one and it is advantageous for them to try Mymueslis products. Non-customized cereals turn out to be less expensive, and many clients prefer them as a result.

Competition exists even within the same concept, as there are many types of cereal targeted at children or women who are losing weight. To compete with other brands, Mymuesli needs to focus on the peculiarities of its products, prices, place, and promotion. To create brand awareness, the company should ensure that it offers exclusive options (such as a possibility to select preferable ingredients from the whole range).

Price should also be attractive to potential clients. Social media can be involved to enhance marketing, as it allowing becoming closer to clients. It can also be advantageous to consider the possibility of future innovations in addition to those that are already provided. For instance, the company may start selling its ingredients in retail shops so that not only online buyers will have a chance to obtain customized products. Finally, it is significant for the organization to develop a long-term plan instead of focusing on short-term goals associated with business expansion. In this way, it may be advantageous for Mymuesli to reduce prices and increase them with time.

Pricing strategies

Currently, prices for Mymueslis products vary greatly, and they depend on raw materials. Even though many clients accept the necessity to pay more for high-quality products, low-priced brands tend to attract more and more attention. It is significant for Mymuesli to ensure that its customers will not prefer products provided by their competitors. In this way, the company is likely to benefit if it established a new pricing strategy that is more stable and consistent.

I particular, a three-tiered strategy should be considered when a company starts expanding. In this way, each type of client will be aligned with a particular pricing strategy. Consistent pricing in online sales can be ensured if the organization tries to provide the same price range for all countries, in which it operates, regardless of its currency. Penetration pricing should be used for retail because it provides an opportunity to enhance brand recognition, as Mymueslis competitors will be likely to set premium pricing.

Thus, non-clients who visit shops looking for other products and potential clients from a new market will become familiar with the brand. With time, this approach can be altered to increase the companys profit. Finally, business to business sales should be considered. Depending on the quantity of product needed by a client and on the possibility to establish short- or long-term cooperation, product price should be increased or decreased. All in all, Mymuesli will have an opportunity to ensure brand awareness when it introduces its products to a new market. Customer recognition will be achieved regardless of existing competitors.

Needs and wants

To adapt its products to the clients needs, Mymuesli has already focused on customization, providing consumers with an opportunity to choose those ingredients they are willing to have for breakfast. However, it is critical to remember that customer demands are not stable. To understand what its clients want to receive, Mymuesli should gather clients feedback and analyze their interests. In this way, it will be advantageous to focus on social media, as people often use it to share things they like. The companys website can also be used. It should include a simple form for customer feedback that reveals whether clients are currently satisfied with the obtained products and what they want to improve or add.

Recommendations

• Mymuesli should identify its main competitors and their advantages to address them with more attractive products, prices, place, and promotion in the framework of a long-term strategy.
• The company should use a three-tiered pricing strategy to develop consistent prices for each type of client. The possibility of selling its products for a lower price before the brand awareness is built should be considered.
• Mymuesli should become closer to its current and potential clients:

  • Customer feedback should be obtained with the help of a special form on the companys website;
  • The clients needs and wishes should be identified with the help of the analysis of social media.

Dollar Shave Clubs value proposition and how does it differ from Gillettes

One of the major factors explaining DSCs success is the unique approach to working with clients and the companys value proposition. It presupposes a fair price and a client-centric service focused on the increased level of satisfaction among clients. The brands strategic decision was to reduce the razor price and eliminate the monopoly in the given segment by introducing a cheap subscription, only $1 per month in return for a stable supply of required razors and blades. In such a way, the price becomes much lower if compared with Gillette, which has another value proposition and offers high-quality razors that cost a lot and should be bought periodically. This radical difference preconditions the fast evolution of DSC and its success.

In which ways is DSCs business model a disruptive one

The model employed by DSC can be described as a disruptive one because of several factors. First of all, it does not follow patterns accepted in the industry and used by giants such as Gillette. Instead of spending giant resources on advertising, developing new products and types of blades, and guaranteeing the presence of products in different parts of the world and various retail locations, the company offers a subscription model that does not presuppose this sort of spending and works differently. Customers are attracted not by new items or ads; instead, they benefit from cheap prices guaranteed by subscription, which destroys schemes accepted in the market and used by other significant actors.

The strategic options open to Gillette in responding to DSC and which of these options should Gillette pursue

Because of DSCs success and the loss of market share to 54%, Gillette has to respond to a new threat and introduce new offerings. The company has already launched the Gillette-On Demand service providing an opportunity to order new blades and razors using the internet; moreover, there are free extra offerings. However, the brand should continue pursuing Internet resources and exploiting its dominant position in the market. Membership in the Gillette club can be rewarded by special discounts and the provision of items required by clients. Additionally, it should reduce the price of its razors via the shift of focus from advertising to online presence. It will help to remain in touch with clients and guarantee the firms ability to compete.

Why would Unilever spend $1billion to acquire loss-making DSC?

Unilevers decision to enter the razor market was followed by DSCs acquisition and $1billion purchase. There are several factors explaining the deal. Low prices come from cheap blades provided by the company to its clients. However, regardless of this fact, DSC and the model used by it can be viewed as the future of the sphere as it presupposes the value disruption and the employment of new models that are more effective in the modern business environment. Under these conditions, the given deal is a great success for Unilever as it offers multiple opportunities in the given market segment, and DSC can be used as a platform for growth.

What general implications can be drawn from this case with respect to the consumer goods industry as a whole

The case demonstrates the importance of using new models to shake the market and disrupt other companies value propositions. DSC changes the game rules by suggesting cheap blades for only $1 per month, which strikes Gillette and other rivals, which sell extremely expensive items to their clients popularized by various ads. Additionally, it is vital to monitor the current clients preferences to understand whether they are ready for a value disruption or not and integrate a new approach.

Organizations must learn to adapt and try to fit in with components within the external environment for them to be successful. This environment comprises of components that are beyond the control of organizations. Organizations can be broken down into four main categories. They include; Private, Public, Profit and Not-for profit organizations. These components impact businesses, either positively or negatively. There are two main types of external environment, the micro-environment and the macro-environment.

The micro-environment comprises elements that have a direct impact on the operations of an organization. The macro-environment comprises elements that organizations have no control. The success or failure of any organization relies on their adaptability to this environment. There are several types of the macro-environment which are political, technological, sociocultural, economic and natural disasters. The size, purpose and type of an organization are important in determining the type of external environment it will operate.

To ensure the flow of its operations, an organization must respond to outside forces that impact on them. For example, the outbreak of the covid-19 early 2020 resulted in the collapse of numerous companies operating in different industries globally. This collapse resulted in the global increase in the rate of unemployment. It also resulted in global economic recession. However, Walmart, a multinational retail corporation, was able to respond to these changes and grow their revenue.

The value of Walmarts stock in 2020 increased by 22%. This can be attributed to the 30% to 50% discounts that Walmart was giving to its customers. Walmart understood that the post covid-19 period presented tough economic times for millions of Americans who lost their jobs. It also took the advantage of the stay-at-home advisory to grow its digital business through its eCommerce platform. This led to a tremendous growth of its sales revenue by 97% in 2020. The value of stock at Walmart grew 0.7% to $144.95. A dynamic environment is a type of environment that keeps on changing. This type of environment is characterized by rapid changes and uncertainty. For example, technological advancement, market expansion, the evolution of new products in the market, activities in the marketplace and government policies.

To survive in such an environment, organizations must watch out for signs for change.

For example, changes in the interest rates has a resulting effect of either expanding businesses or resulting to their closure. A fall in the rates of interest for businesses has the impact of allowing the growth of businesses and their competitors. This, consequently, changes the growth rate of the industry. A number of other factors can also lead to changes in the business environment. Such factors include the socio-cultural, demographic, geographical and economic.

One of the ways that organizations can survive in an ever-changing environment is through embracing innovation. There are 5 ways through which organizations can achieve innovation in a dynamic environment. One of the ways is embracing failure. Being innovating has its own share of risks. Innovative organizations should be willing and ready to take different levels of risks. However, not all risks can bring success to an organization.

It is imperative that organizations prepare for any uncertainties that may result from taking certain risks. For example, Walmart took a huge risk in investing heavily on its digital business. The order and pick policy embedded in its eCommerce platform was a risky decision. However, this risk resulted in an overall increase in sales revenue by 32%, from 65% in 2019 to 97% in 2020.

It is also important for organizations to give freedom to their employees to discover and explore new business opportunities. Organizations that motivate their employees and give them a chance of learning from the mistakes they make are more likely to succeed in their business venture. The second way organizations achieve innovation is by dedicating the appropriate resources. Being innovative requires and organization to have a wide range of resources at their disposal.

These resources can range from funding to increasing the number of employees required to accomplish a specific project. However, the resources required for innovation depend on the type of project to be accomplished. Some organizations go an extra mile of handpicking a team from all the functional areas of the organization that is primarily focused on accomplishing a specific project. Another way is exposing the company staff to open innovation.

One way of creating and encouraging an open innovation is by funding start-ups. Open innovation encourages collaboration within an organization in the creation of a new product or service. There is equal sharing of risks and rewards amongst all company shareholders and stakeholders. A classic example of a company that has embraced open innovation is General Electric. This company has hosted over a hundred challenges of open innovation.

The latest one being the development of an approach that will solve the issue of water scarcity. The winner of this challenge would bag $10,000 cash and an additional $25,000 grant for development. Another form of reward is being a supplier of General Electric. Another way is offering incentives. There are various ways of giving incentives to employees to help propel innovation. One of the ways of giving incentives is through giving cash and bonuses.

This strategy is mostly used by large companies such as Amazon and Best Buy. Offering non-monetary incentives is another way of motivation. For example, small and medium-sized companies give incentives in various forms. For example, week-offs, promotions, treating the workforce to breakfast or lunch and hosting a party. Different employees have their own perception on what motivates them best. Some prefer monetary incentives while others prefer non-monetary incentives. For example, acknowledgment by the management.

It is important for organizations to consider motivating their employees in the right manner in order to become more successful. The fifth way of achieving innovation is through employee training. All organizations must train their workforce to develop a more critical thinking approach in line with product design. Developing a design thinking amongst employees is one of the best ways that organizations can motivate innovations.

Design thinking is a core element for successful organizations. It involves developing solutions to problems and brainstorming ideas that are relatively new to the organization. Through the observation of end users, a person is able to understand better the specific needs of a customer. A person is also able to discover new opportunities that the company might have missed. By participating in both convergent and divergent thinking, employees are able to brainstorm better for the benefit of the organization.

From the above discussion, organizations can take advantage of these ways of becoming innovative to enhance their creativity. Customer feedback is a crucial tool that organizations can use to get a competitive advantage over their competitors. Through employee motivation, organizations can get various ideas from employees that they can develop to improve on their existing products for maximum sales. They can also use these ideas in developing new and creative products that customers need in a dynamic business environment.

Abstract

Research reveals that contemporary businesses are increasingly faced with dilemmas in making business decisions; such decisions can take the form of a decision to attract new clients as well as maintaining old customers. It is for this reason that two or more business units join forces in terms of joint ventures to boost their business growth as well as to remain prospective and successful in the current business environment which is becoming dynamic day in day out. Further research indicates that competition has become the modern norm of survival in this twenty-first century and Siemens, as well as Fujitsu, have not been exceptional from such business rivalry. It is therefore an ideal decision by firms to form joint ventures and other strategic alliances to remain competitive as well as global in the quest for business scope.

It cannot be denied that with such strategic alliances like joint ventures businesses are evolving through the utilization of modern technologies like personal computers and mobile phones and therefore they meet the needs and desires of their customers which also change with time particularly with the emergence of technology. Firms enter into joint ventures and mergers to exploit the potential opportunities by utilizing their existing strengths as well as to avoid potential threats by working on their weaknesses in their business context.

Introduction

Fujitsu and Siemens Forming a Joint Venture

A joint venture or commonly referred to as JVs in essence is a kind of entry into the market that provides an opportunity to share several resources such as technology, ideas, capital and labor among other factors. Research reveals that joint ventures are commonly associated with political linkages that in the long run will lead to business prosperity in the target market. When an organization indulges in a joint venture then it boosts its market power, it will be able to meet the demands in that particular region. Before entering into joint ventures the respective companies wishing to form such business will have to critically look at some of the issues that comprise; management and control of the joint venture, duration of the joint venture, the available advancements in the modern business world and terms of the agreement among other factors that will ensure the smooth running of the resulting joint venture. Many marketers who have been in the business of international marketing for a long time believe that more than one mode of international marketing is suitable for a company. Companies such as IBM have in the past employed multiple joint ventures, direct exporting and indirect methods, franchising etc to meet the requirements of its customers. The choice of a particular method depends on many factors; the capital base available, the number of customers, the efficiency of reach, the government regulations and laws, protectionism and the number of competitors in that country.

Fujitsu Limited and Siemens AG came together to form one of the worlds largest computer companies the Fujitsu Siemens Computers with its headquarters based in Amsterdam and the Netherlands with its home market-based in Europe. The announcement made in 1999 saw the two companies have a share of 50% each in the companys infrastructure. The new partnership was designed to be operational on the 1st of October 1999 the saw the firms combining their portfolios to offer advanced information technology products and services. Individual financial performance, services and products offered by each company differ and therefore the joint venture is expected to incorporate not only the services but also the strategies used by both Fujitsu and Siemens to improve its computer business. According to the Frankfurt /Tokyo business wire it was announced that in the year 1919,The agreement between the two companies forming a European joint venture in their Netherlands offices was completed through which various management teams were created. Looking at the individual companies, a lot has been done by the two in terms of technologies, skills, human resources and infrastructure. (Frankfurt/Tokyo Business Wire, 1999)

Siemens Company

Siemens is an electronic and Telecommunication Company located in Berlin and Munich, Germany It is considered one of the greatest and successful companies of all time with well over 461,000 employees and millions of employees in over 190 countries according to 2006 estimates. Siemens has been active in many areas of electrical, communication, construction, medical and transportation sectors.

The main business that the company engages in is the communication sector. It offers products, services, and other solutions for industries adopting ICT technology in their day to day running of their businesses. Siemens also provides a range of power and lighting products such as electronic control gear, opt semiconductors, lamps etc. Medical and franchising and real estate businesses have provided a wide range of business spectrum for the company. The provision of integrated technologies, innovations and therapeutic services has taken the popularity of Siemens to higher levels. (Frankfurt/Tokyo Business Wire, 1999).

Strategies

Siemens has strived to grow in its business as the worlds leading telecommunications and electronic company. Its main goal states that it endeavors to maintain a strong but conservative financial position through the implementation of new marketing strategies. With careful management of its net working capital, the company intends to strike a good financial objective soon and one of them is the new joint venture with the Fujitsu Company. Through research and development, this company has developed innovations in the past making it a global prowess. Currently, the company holds to its name a whooping 53,000 patents including numerous licensing agreements around the world making it the most innovative company of the century. It was estimated by an annual world report that Siemens in technology and innovation is ranked among the top ten companies in the U.S, the best in Germany and second in Europe. (Fujitsu Siemens Computers, 2009).

This growth is attributed to recent transactions undertaken by the company. The most significant one was a breakthrough in the energy sector in which the company acquired CTI Molecular Inc. of the U.S (a wind power company) and Bonus Energy A/S (Bonus) of Denmark in 2005 and 2004 respectively. The company was interested in acquiring the two companies because of the lucrative potentially and fast growth in the energy sector. The company also continued its support for the automation portfolio in the industrial and manufacturing sector by further acquiring a locally based industrial gear manufacturing company in Germany- the Flender Holding GmbH-, the U.S based Robicon Corporation that deals with the manufacture and distribution of voltage converters. Acquisition of VA technologies of Austria in mid-2005 helped Siemens to consolidate its strategies in the industrial engineering and power distribution business

Fujitsu Company

From the JCN Newswires, we find that Fujitsu is regarded as a leading IT company based in Europe. This company is reported to have strategically focused on its generational mobility and businesses concerning its computer products and services the company has been diverging across other fields of businesses and currently it engages in;

• Development of various solutions concerning the computer business that has enabled it to be competent enough in the provision of the best technologies, software and computer services world wide
• Supply of computer equipments and solutions in various markets such as Europe, Africa and Middle east

Strategies

The company has in the past developed business models, marketing strategies and new innovations in the computer industry. Its main goals and objectives have been to;

1. Meet specific needs for of diverse market for their products
2. Maintain economies of scale
3. Augmenting productivity as well as maintaining efficiency and effectiveness in the production process.

Fujitsu main action plan is to exploit the personal computer market in order to enhance its survival and business success in the future. Market and customer operations have for a long time supported the various business groups available in the company. The other horizontal entity that has provided enough support for the business groups is the new technology platforms created to allow for the management and driving force for Fujitsu Siemens products. The company has also been able to implement strategic channels that allow the various enterprises whether small or medium sized to be served by the company. The company offers the following products to its consumers: notebooks, workstations, servers based with Intel and UNIX, the company also offers various mainframes and tools for storage (JCN Newswires, 2008)

Potential problems Fujitsu Siemens Company

When Negotiating the Agreement

Experts in the computer industry have predicted that there will be a major battle for the Asian markets particularly in Europe. This has been attributed to the fast growing economies of these countries. With a sizeable market and subscriber base, the companies will have a potentially huge market for their services and products to accompany the needs for the fast growing sectors of the economy such as industrial development, manufacturing, telecommunication, medical, education sectors among others (Fujitsu Siemens Computers, 2009)

During The Initial Period of the Joint Venture

The joint venture between Fujitsu Company and Siemens will meet harsh business challenges in the various countries; it has developed a strategic position to counter it. The joint venture aims to cut down prices for its services and products using entry price criteria. This will ensure that the existing companies will be forced to put up their prices or down to remain in business. Either way, however will pave way for the Fujitsu Siemens Company to gain a clear market share for its products and services. Since the joint venture is not the only company to try the computer market, it is aware of efforts done and being done by companies such as Dale and IBM being the competitors of the company. (Fujitsu Siemens Computers, 2009)

These developments have put a lot of pressure for smaller companies to merge in order to improve its market share. All these companies competing for the computer market is doomed to face harsh realities. First, they have been contented with low profit margins and high competition rates. Secondly, the increased need for massive investments in terms of upgrading available networks and development of new products which require lots of initial capital by the companies. That notwithstanding reflects the growing interest for the European market by global companies especially in the next three years.

The Principle of Tax Morality

Research indicates that the Fujitsu Siemens Company FDI has had the direct ownership of processing, manufacturing or assembling facilities in a target country by a mother company. Research reveals that The Company has utilized the modern concept of globalization and expanded its market share to various markets all over the world in order to boost its business operations. This implies that the company have had to comply to tax regulations of various countries in order to remain operational. The resources include; technology, personnel and capital. In essence the joint venture business have used the local resources in the target markets such as employees and capital requirements; such resources implies that taxes must be remitted to the government for instance, value added tax on capital equipments purchased as well as taxes levied on employed individuals such as pay as you earn taxes which the company has had to remit it to the respective tax authorities in the target markets. It is also possible for the company to set up its own company and start manufacturing the products directly. In this case we find that company has been applying the taxation principles in various countries that the company exist. There has been the application of international taxation on this company. The company has been reported to be adhering to various tax laws such as the taxes imposed on the corporate income, the indirect taxes and the tax incentives. (Mowery and Rosenberg, 1989)

Monetary and fiscal policies

Monetary policies are outlined programs that are used in the regulation of circulation of money in the economy. While, fiscal policies; are regulations undertaken by the government, to control tax collection and its spending in order to attain economic goals. Under monetary policies, the industry has continued to face poor policy framework in many countries, in many countries importation of technological parts is restricted or highly taxed because, money government view technology products such as phones and computers as luxuries. (Agre and Rotenberg, 1998)

The procurements procedures of these products are normally cumbersome. In many cases private organization lack access to important public data resources, policies on legal protection of technological products like software is weak and most governments dont focus on technology improvement strategies. Under fiscal policies, many countries revenue collection from the industry, thus, there have been significant increases in taxes in the industry. Tax collection in the industry has improved and many governments are able to get a substantial amount of money in terms of taxes from the industry (Mowery and Rosenberg, 1989)

The Impact of Tax in Strategic Management Decisions

Negative economic influence

The industry is likely to suffer from negative economic influence brought about by government and political interventions. The government policies on taxes controls, exchange controls, import restrictions, regulations of market, price control and domestication will adversely affect the industry. For instance, tax controls; the government may increase the tax on parts or machines produced in the industry, which will imply that production cost will go high this may impede, the consumers from by the product hence reducing revenues in the industry. In another way, the government may impose restrictions on imports. This will mean that essential parts required for assembling some products will not be able to reach a particular country. This will hinder the production of certain products thus adversely affecting the industry. (Cullen and Boteeah, 2005).

Another related economic influence to the government policies is political stability of a country, for any business to grow they should be stability in a region or a country to ensure security for investors to be able to invest in the region. War, strikes and violence in a country will hinder the industry development. Other economic factors that will affect the market negatively are high cost of the labour; increase in interest rates, fluctuations in exchange rate and economies of scale. An increase in one of these factors directly results in increase in production cost which reduces revenues of the companies and hence development of the industry. (JCN Newswires, 2008).

Rationale behind the fall out

The basic rationale that made Siemens quit the joint venture is the fact that mobile phones are now increasingly gaining the market share than personal computers. Research reveals that with advancement in technology there is more demand of mobile phones than personal computers; this is because mobile phone technology is on a rampant invention i.e. with advances in technology the uses of mobile phones by individuals can now be said to be replacing the uses of personal computers. For instance, one can surf via mobile phone which is a faster and convenient way than when using personal computers; the later involves using a lot of processes and connections in order to surf or browse. (Cullen and Boteeah, 2005)

Many business oriented individuals are now utilizing online marketing is based on the technology of internet and the usage of mobile phones.

The Potential impact of supply Chain partners

On the other hand, suppliers take advantage of their unique supplies to ask and bargain for what they want and enjoy the monopoly and charge expensively for the products or services that they offer. Customers are very sensitive to any changes that may affect them that are caused by the bargaining power of the suppliers. Suppliers are a competitive threat in both mobile telephony and personal computer industries because they can raise the prices of new and the old supplies and therefore making the customers to try substitute products that can satisfy the same need. (JCN Newswires, 2008).

The implications for Fujitsu

Suppliers may cost the Fujitsu Company a lot of financial constrain if they switch and fail to supply their products as it is involving to get new and reliable suppliers that can give quality and be efficient all the time; in this case Siemens Company. (Philip, 1996).

For instance suppliers will have more power if they are few or alone in the market and will give their products at a very high price and will affect the sales of the Fujitsu in the long run. Siemens will be involved in a more profitable market than Fujitsu since the determinants of the suppliers power in both the mobile telephony and Personal Computer industries depends on: suppliers concentration in one particular place that is central in location, volume of suppliers that they offer to the market and finally the costs related to the total purchases that they do. (Agre and Rotenberg, 1998).

The suppliers ensure that they take advantage of their strengths to bargain and register as much profits as possible and make the buyers of their suppliers to accept what they offer and fix high prices; this may imply that Fujitsu may not survive in the market for long because people are opting for mobile telephones rather than personal computers.

The company lost its market share as a result of a stiff competition in computer market; this is clearly indicated by the siemens companys CEO Peter Loescher who claims that this happened as a result of a result of a poor performance of the business in the market whereby it is reported that the company sold its products at a cheaper price as a result of the existence of a weak dollar that led them sell the imported computers at a cheaper price. As a result this the company came up with a plan to restructure the company by creating job cuts in its subsidiaries whereby it had to improve its profit margins. The company had to reduce its workforce in its more than one hundred subsidiaries with over four hundred employees. Research indicates that in the year 2008 the siemens company was positioned itself in reducing its business unit from eight to three. On top of this we also find that the company had planned to merge the seventy regions of the company into twenty groups.

References

1. Adas, M. (1989): Machines as the Measure of Men: Science, Technology, and Ideologies of Western Dominance Ithaca
2. Agre, P E. and Rotenberg, M (1998): Technology and Privacy: The New Landscape. Cambridge, Mass.
3. Cullen, J. and Boteeah, K. (2005): Multinational Management. A strategic Approach, 3^rd Edition, Mason; Thomson South-Western, p. 54
4. Ergas, H. (1998): International Trade in Telecommunications Services: An Economic Perspective; Washington DC: Institute for International Economics
5. FRANKFURT/TOKYO BUSINESS WIRE (1999) Fujitsu and Siemens Launch Major European Computer Power: Companies Sign Contract Establishing Fujitsu Siemens Computers; Management Team Appointed. FRANKFURT/TOKYO BUSINESS WIRE
6. Fujitsu Siemens Computers (2009) Storage Basics  An introduction to the fundamentals of storage technology.
7. Fujitsu Siemens Computers (2009) Together with our partners.
8. Grant, R. (2005): Contemporary Strategy Analysis:  Blackwell Publishing Ltd., Oxford pp. 24-45
9. JCN Newswires (2008) Fujitsu to Acquire Siemenss Stake in Fujitsu Siemens Computers JCN Newswires
10. Mowery, D. C and Rosenberg, N. (1989): Technology and the Pursuit of Economic Growth, Cambridge: Cambridge University Press.
11. Pearce, D. (1983): The Dictionary of Modern Economics. Cambridge: MIT Press.
12. Philip, K. (1996): Principles of Marketing: Stages of customer relationships. 4^th European Edition, Prentice Hall Harlow (UK)

Introduction

The success of any organization or venture depends on the person who leads the group involved in completing that mission. Leadership is defined as the art of influencing others to their maximum performance to accomplish any task, objective or project (Vasilescu, 2019, p. 48). However, to be an effective and ethical leader, a person should understand and implement core leadership principles, theories, and styles (Kibbe, 2019). Although multiple theories were developed in this field, the five main leadership theories are trait, behavioral, contingency, power, and emotional intelligence (Kibbe, 2019; Mango, 2018). The three major styles described in the literature are transactional, transformational, and thought leadership (Wen et al., 2019). Furthermore, there are democratic, autocratic, bureaucratic, charismatic, and Laissez-Faire styles (Kibbe, 2019). The two leaders that will be discussed in this paper are Daniel Roth and Sam Hazen, whose abilities and strategies I have always admired. Although their leadership styles and theories vary, both effectively communicate their ideas and motivate their employees.

Daniel Roths Professional History, Organizational Challenges, and Views

Daniel Roth is one of the most influential business journalists of modern times. He obtained his bachelor of science degree in journalism from Northwestern University (Daniel Roth, n.d.). Roth has been working first as an executive editor and now as editor-in-chief at LinkedIn for more than ten years (Daniel Roth, n.d.). Furthermore, he had experience in writing and editing for Fortune, Forbes, Conde Nast, and Wired (Daniel Roth, n.d.). Daniel started writing stories about business and entrepreneurship in the late 1990s, working as a reporter at Fortune Magazine (Daniel Roth, n.d.). While becoming an editor and gaining more influence in the sphere of business journalism, he was lucky to interview Warren Buffett and Bill Gates (Daniel Roth, n.d.). Roths professional journey seemed smooth, but he faced various challenges that seemed to shape his identity as a leader.

Daniels leadership skills started to be noticed when he worked at Fortune, but they became especially prominent and useful at LinkedIn because Roth now oversees the companys writers and editors globally. Indeed, it is challenging to control employees who are not located in one physical place. Furthermore, they may have different cultural values; hence, the role of a leader is to study, understand, and empathize with these distinctions to increase work effectiveness. One of the significant challenges that Daniel faced initially was that employees were not well organized. Hence, he had to cultivate an environment of discipline and growth, in which his leadership style played a significant role. Moreover, Roth treats personal and organizational cultures and values with great respect. He thinks that LinkedIns mission to create a professional job-seeking platform became possible due to the fact that the importance of the writing staffs creativity is always emphasized and supported (Daniel Roth, n.d.). Daniel views that the democratic nature of the organizational culture at LinkedIn is the foundation of this platforms success.

Sam Hazens Professional History, Organizational Challenges, and Views

Another leader is Samuel Hazen who is the current chief executive officer (CEO) of HCA Healthcare, a leading provider of medical services in the U.S. and globally. Hazen has been working at HCA for almost forty years, and after serving at various levels, he was appointed as the companys CEO (Person details: Samuel N. Hazen, n.d.). He occupied different leading positions at HCA; for instance, he was the president of operations for four years before he became the chief operating officer in 2016 (Person details: Samuel N. Hazen, n.d.). Furthermore, Hazen led the branches of the organization in various states at different points in his career. In addition to his duties at HCA, Samuel is a member of the board of directors at the Federation of American Hospitals. His educational background of a bachelors degree in finance and a masters in business administration provided a solid foundation for Hazen to be an effective leader.

Hazens leadership abilities were particularly evident and essential during the COVID-19 pandemic, which struck the global community two years ago and is still ongoing. As the CEO of HCA, Samuel had to ensure that enough personal protective equipment and hospital beds were available at the organizations healthcare facilities (Newman, 2020). In this case, the organizational challenge was not a shortage of equipment but the need to reduce the number of workers due to the economic crisis. Thus, Hazen took measures to protect employees from the financial difficulties of unemployment. Specifically, those who could not get their regular working hours during the coronavirus crisis received monetary support from HCA, in addition to financial help from the federal government. Hazens central view is that the success of the company depends on people because they are the central workforce that fulfills the firms primary mission of serving patients in need. Moreover, he believes that HCAs most critical value is the desire to help patients with total commitment and dedication. Overall, Hazens leadership skills played a pivotal role in maintaining the organizations core structure during turbulent times.

Daniel Roths Leadership Theories and Styles

As the evaluation of Roths career path showed, he used a combination of leadership styles and theories in his practice. Indeed, he utilizes both trait theory and emotional intelligence in his work with employees. According to the trait theory, a leader must possess such characteristics as honesty, integrity, motivation, decisiveness, assertiveness, persuasion, and intelligence (Kibbe, 2019). Emotional intelligence is the capability to understand and acknowledge other peoples feelings, thoughts, and ideas (Kibbe, 2019). Roths style of leading people in organizations is primarily charismatic, which resembles transformational leadership. The latter is defined as a persons capacity to guide and direct other people in a way to facilitates their personal evolution and professional development (Wen et al., 2019). Notably, Roth had to heavily implement his organizational skills to improve employee culture when he joined LinkedIn. He needed to show that for individuals and companies to be successful, one must read other peoples and firms stories of successes and failures. As the history of LinkedIn shows, Roths strategies enabled this platform to gain an enormous number of readers and followers.

Sam Hazens Leadership Theories and Styles

Sam Hazen is, if not a born leader, at least he is a well-trained professional with a 40-year of experience coordinating, guiding, and motivating HCA Healthcares workers. In his case, it appears that situational leadership theory is more applicable because of the changing nature of hospital circumstances and the healthcare field in general. According to Demirtas and Karaca (2020), in this type of leadership, characteristics and behaviors should act together with situational varieties to assume results (p. 14). For example, the fact that Hazen had to rearrange resources and alter employees schedules showed his and hence HCAs adaptability to external and internal problems. The leadership styles that Samuel employs are bureaucratic and charismatic. In fact, it is impossible not to follow established written rules when it comes to patients health; thus, the former style is necessary. At the same time, the latter type of leadership helps to inspire workers to higher productivity and greater commitment, both of which are vital in the medical field. Indeed, his approach and strategies were proven effective amid the pandemic.

Implementation of Personal and Team Concepts by the Leaders

The three essential social needs are to get along, get ahead, and create value. Firstly, a group demands respect, sharing and cooperation, conflict management, interpersonal connection, and servant leadership (Dye, 2010). Secondly, work requires commitment, a desire to make a change, and ethics (Dye, 2010). Thirdly, the order in teams is created through the integrity, trust, collaboration, and emotional intelligence of its leaders (Dye, 2010). In fact, team dynamics and productivity can be improved by applying leadership principles and giving individuals the abovementioned needs.

Sam Hazen and Daniel Roth mastered the aspects of social values, which allowed them to be influential leaders. Both leaders strive to show respect to their staff, cooperate with them, and share ideas. Hazen and Roth can be considered servant leaders since they realize the importance of people for their organizations. Furthermore, both are dedicated to their duties, which sets an example for their employees to follow their standards. Lastly, Hazen and Roth follow professional integrity and moral principles in their interaction with workers, which is vital for effective team management. An example of Hazens real-life implementation of his leadership skills is the fact that he was able to create a connected and collaborative culture at HCA with 285,000 workers (Newman, 2020, para. 20). Roth was able to connect more than 200 LinkedIn editors across the globe, making their work cooperative (Daniel Roth, n.d.). Although the leaders try to give teams a sense of connection, it is not always possible because of the size of their organizations. Still, they may try to organize more virtual events to ensure that all employees have the opportunity to interact with them directly.

The Leaders Ability to Guide Teams Effectively

Roth and Hazen were able to maintain their leadership roles not only due to their expertise in the field but also because they guided teams effectively. If the evaluation form in Appendix C of the textbook is applied to both leaders styles, it reveals that they are not afraid to be fully involved in projects and processes (Dye, 2010). Although they could not organize social events for their employees due to the company scale, the number of workers, and separation in space, Hazen, and Roth created a culture of cooperation, openness, and commitment to a common goal. However, decision-making is rarely team-based since the leaders often must consider various external and internal factors, which the staff may be unaware of, to ensure the best outcome for the organization. Nevertheless, Roth and Hazen should learn to trust their employees more to cultivate a leadership spirit because problem-solving and decision-making abilities are essential on all organizational levels.

Whole Person Leadership Model

The whole-person model evaluates leaders in terms of five domains. These domains are positive traits, negative characteristics, judgment, experience, and values (Dye, 2010). Roths positive characteristics are integrity and initiative, while the negative feature is dependence on outside circumstances. Indeed, Roth is a respected journalist and editor who is not known to have any issues like plagiarism or theft of intellectual property. Furthermore, he is a good problem solver and decision-maker with proper education, training, and skills.

An assessment of Hazens leadership characteristics showed that he is a person with diligence, integrity, and initiative. Indeed, his decision to reorganize HCAs infrastructure at the early stages of the pandemic was not only a timely initiative but also a farsighted step (Newman, 2020). It became possible due to his enormous knowledge, experience, and skills in the healthcare field, as well as his problem-solving, critical thinking, and decision-making abilities. However, like Roth, Hazen has a tendency for external dependence. Lastly, Roths and Hazens central values are integrity, respect, and commitment to work. As can be seen from LinkedIns and HCAs progress over the years, these two leaders are honest in their intentions and results.

Future Healthcare Leaders

Based on the information analyzed in this paper, Sam Hazen and Daniel Roth are effective leaders. Considering the experience, the former can be appointed a future healthcare leader. In fact, Hazen has the knowledge and four decades of experience in this area. It means that his expertise became somewhat intuitive, which is essential, particularly when society faces such public health emergencies as the COVID-19 pandemic. Indeed, Hazens strategy to reorganize HCAs structure and resources to ensure patient and employee safety is proof of his competence (Newman, 2020). Roth may find it challenging to change his path in the medical field, but it does not mean he cannot lead healthcare-related projects in writing and editing guidance and supervision.

Conclusion

In summary, Sam Hazen and Daniel Roth, evaluated in this paper, possess the essential characteristics of leaders with their unique leadership styles and theories. Roth follows the principles of trait theory, emotional intelligence, and charismatic style when interacting with other employees at LinkedIn. Hazen uses bureaucratic and charismatic styles since working in the healthcare field often requires not only the encouragement of employees but also adherence to the established rules and standards. Additionally, his primary leadership theory is situational because the diverse nature of emergencies and issues that may arise in hospitals demands flexibility in different instances. Overall, the two leaders are capable of effective team management.

References

Daniel Roth. (n.d.). About [LinkedIn page]. LinkedIn. Web.

Demirtas, O., & Karaca, M. (Eds.). (2020). A handbook of leadership styles. Cambridge Scholars Publishing.

Dye, C. F. (2010). Leadership in healthcare: Essential values and skills. Health Administration Press.

Kibbe, M. R. (2019). Leadership theories and styles. In Leadership in surgery (pp. 27-36). Springer.

Mango, E. (2018). Rethinking leadership theories. Open Journal of Leadership, 7(1), 57-88. Web.

Newman, E. (Ed.) (2020). Making a big company feel small: An interview with HCA Healthcare CEO Sam Hazen. McKinsey & Company. Web.

Person details: Samuel N. Hazen. (n.d.). HCA Healthcare. Web.

Vasilescu, M. (2019). Leadership styles and theories in an effective management activity. Annals-Economy Series, 4, 47-52.

Wen, T. B., Ho, T. C., Kelana, B. W. Y., Othman, R., & Syed, O. R. (2019). Leadership styles in influencing employees job performances. International Journal of Academic Research in Business and Social Sciences, 9(9), 55-65. Web.

Introduction

While hiring interns for unpaid positions with a promise of real-life experience is not illegal, it is a highly debatable approach to finding new talents. An inside look into business operations may help significantly to a fresh graduate, yet the question regarding the sacrifices necessary to be made for it still stands. The situation becomes worse if a company knowingly hires an intern without intending to somehow compensate for their efforts eventually and merely exploits their labor. This paper will reflect on the ethical issue that may arise during unpaid internships.

Discussion

The need to possess in-depth knowledge about internal processes specific to the industry causes many fresh graduates to become stuck in positions they did not intend to take. An unpaid internship may fill this gap and present a valuable experience, yet it has many ethical issues. Signing up for such a position leaves an intern with many uncertainties and a complete lack of essential benefits and guarantees, such as health insurance (Nickels et al., 2019). This risk must be justified by a promise of receiving a similar value back from a company. A probationary period when an intern works with a prospect of a full-time position if their performance is satisfactory will be more suitable for a company that seeks to weed out undesirable employees (Nickels et al., 2019). It is in a firms best interests to attract high-quality workers, making interns only a temporary option.

Conclusion

In conclusion, it is unethical to earn profit from the work of a person who gets nothing in return for their efforts. If a company benefits from the work an intern student performs, their work should be paid, at least in the future. A firm may suffer losses in reputation and human resources if its attitude toward unpaid workers is unethical. Replacing pain positions with fresh graduates may cause a loss of experience, while refusing to hire unpaid interns can lead to a lack of new hires.

Reference

Nickels, W. G., McHugh, S., & McHugh, J. (2019). Understanding business (12th ed.). McGraw-Hill Education.

Introduction

Johnson & Johnson is a multinational corporation with dozens of brands producing mainly pharmaceutical and consumer health goods. The company was founded in 1886 by pharmacist Robert Wood Johnson and his two brothers (Reed, 2020). Eight years after its foundation, Johnson and his brother started the first line of products for mothers and infants. The companys reputation began to grow since its sanitation products were mass-produced and thus more available. In 1921, Johnson & Johnson released its signature product  the Band-Aid (Reed, 2020). Over the next three decades, the organization established its present-day corporate structure when Robert Wood Johnson II decentralized Johnson & Johnson, transforming it into a union of companies, each with a specialization (Reed, 2020). In 1944, the company became public, allowing its shares to be traded (Reed, 2020). Fifteen years later, Johnson & Johnson began acquiring pharmaceutical research organizations, allowing the company to develop its core product  Tylenol (Reed, 2020). Thus, in the second half of the last century, the company focused on medical research and development, and it remains its primary interest today.

Pharmaceutical manufacturing is a vital and continually growing industry. In developed countries, it benefits from a considerable aging population. In developing ones, the emerging middle class provides the industry with growing opportunities. Furthermore, the scientific and engineering progress that occurred over the last decades maintains the industrys growing technological needs (Lee et al., 2015). Pharmaceutical companies explore methods to enhance quality and process efficiency  continuous manufacturing is the current trend (Lee et al., 2015). On the other hand, the industrys manufacturers experience pressure to innovate and accelerate their processes continually.

Pharmaceutical manufacturing is a highly competitive industry, where companies compete to develop and commercialize more efficient products. Johnson & Johnson produces a wide variety of products, including Band-Aid, face washes, baby powder, contact lenses, medicine, coronary stents, and many others. The company is one of the leaders in pharmaceutical manufacturing. Johnson & Johnsons primary competitors are Pfizer, Roche, Novartis, AstraZeneca, Bristol Myers Squibb, Procter & Gamble, and Merck.

Financial Analysis

Liquidity Ratios (Current & Quick)

Johnson & Johnsons current ratio is approximately 1.48, compared to 2.44 five years ago. While 1.48 is still an acceptable current ratio, the change in contrast to 2015 indicates that its ability to pay existing debts somewhat declined (NASDAQ, 2020). Johnson & Johnson might have faced this gradual decrease as a result of growth in its total liabilities over recent years. Despite the decline, the ratio still demonstrates Johnson & Johnsons financial strength.

Similar to the current ratio, the companys quick ratio has also decreased over the last decade. Johnson & Johnsons quick ratio declined from its previous decades maximum of 2.68 to 1.24 in 2020 (NASDAQ, 2020). Even though 1.24 is considered a standard quick ratio, the tendency to decline possibly indicates that Johnson & Johnsons ability to pay its obligations quickly is not overly promising.

Debt Ratio

The ratio is instrumental in understanding how the company uses debt to finance its activity. At present, Johnson & Johnsons debt ratio is approximately 0.22, indicating that it has more assets than debt (NASDAQ, 2020). Generally, a debt ratio lower than one is considered relatively healthy, and the lower it is, the better profits an organization can obtain. The rate helps establish risk levels, and in the case of Johnson & Johnson it shows that it is not problematic for the organization to repay its debt.

Total Asset Turnover Ratio

Assents is an indispensable element in securing that an organization can operate adequately and its organizational expenses. In this regard, total asset turnover refers to the organizations ability to generate high returns on its assets. Johnson & Johnsons annual total asset turnover is approximately 0.5 (NASDAQ, 2020). Whether the ratio can be considered reasonable depends on a particular industry. It appears that for the pharmacological industry, a total asset turnover of 0.5 indicates that the company can obtain a high margin of revenue over its assets.

Price/Earnings Ratio

The price/earnings ratio is commonly employed in estimating a stocks value. The ratio is also helpful in establishing whether a stock is overpriced or underpriced. A high price/earnings ratio is generally believed to indicate that stock might be overpriced, while a lower one shows that it might be underpriced. Higher price/earnings ratios could also signal that a company is regarded as more perspective compared to its industry peers since stock buyers are ready to pay more. Currently, Johnson & Johnsons P/E ratio is about 18.3 (NASDAQ, 2020). Whether the rate is high or low depends on the industrys average.

EBITDA

The ratio provides a rough estimate of an organizations cash flow. EBITDA shows the financial performance, excluding the influence of the effect of the capital structure (i.e., interest paid on borrowed funds), tax rates, and amortization policy of an organization. In 2019 Johnson & Johnsons EBITDA was declining and constituted $25.012B (NASDAQ, 2020). Yet, in 2020 the indicator increased to $26.553B, demonstrating an improvement in its overall financial performance (NASDAQ, 2020). EBITDA is also widely used as a component of various financial performance ratios.

Price/Cash Flow Ratio

The application of the ratio is dependent on a specific company, particularly its non-operating expenses. Cash flow values are significant in fundamental valuation and credit analysis. Presently, Johnson & Johnsons price/cash flow ratio is around 18.19. In the autumn, it reached its maximum at 21.4 in 2008 and recently began to decrease slightly (NASDAQ, 2020). Although the optimal price/cash flow ratio does not exist, similarly to the price/earnings ratio, the companys indicator seems relatively high, potentially signaling that its stock is slightly overpriced. Nevertheless, its meaning depends on Johnson & Johnsons competitors.

Market-to-Book Ratio

The market-to-book ratio or price-to-book is needed to determine whether the companys stock price is valued adequately. Johnson & Johnsons market-to-book ratio is at 5.9, demonstrating a continuous steady growth for more than a decade (NASDAQ, 2020). Yet, it dropped a bit from 6.05 in 2019 (NASDAQ, 2020). Comparably to the price/cash flow and price/earnings ratios, this indicator shows that Johnson & Johnsons stock price is trading at a significantly higher price than its book value. The price-to-book ratio suggests that Johnson & Johnson might receive a high return on its assets or that its stock price might be overpriced.

Times Interest Earned Ratio

The times interest earned ratio concerns a companys debt obligations. The ratio is essential for determining whether a company can honor its debt obligations based on its revenue. Johnson & Johnsons time interest earned ratio experienced growth last year and presently constitutes approximately 97 (NASDAQ, 2020). The increase positively correlates with the companys security insolvency, which is favorable for creditors and investors. The companys current times interest earned ratio shows its capacity to fulfill the interest obligations.

Return on Total Assets

Return on total assets helps to establish how efficiently Johnson & Johnson uses its assets to produce income. The ratio remained more or less consistent for two years and now is almost at 11%, which can be considered a good indicator compared to 2017-2018 when the ratio was around one percent (NASDAQ, 2020). Return on total assets facilitates understanding the connection between a companys assets and revenue. Hence, it can be concluded that Johnson & Johnson has continuously used its resources in an efficient manner.

Profit Margin on Sales Ratio

Currently, Johnson & Johnson has a relatively high-profit margin. Since 2018, the companys profit margin rose to around 21% (NASDAQ, 2020). In 2017 and the beginning of 2018, it was at a record low of 1.78% (NASDAQ, 2020). Nevertheless, the company did not manage to reach the same level as in 2014, when its profit margin was 23.27 (NASDAQ, 2020). A high-profit margin shows leaders in an industry, and in Johnson & Johnsons case, it indicates its competitive advantage.

Competitive Benchmarking

The company under consideration is among the leading in the Zacks Large Cap Pharmaceuticals industry. Nevertheless, in some aspects, it is less competitive than its industry peers. Bristol Myers Squibb, Merck, Novartis, Pfizer, and Procter & Gamble are giants in the pharmacological industry and Johnson & Johnsons principal competitors. For instance, the companys P/E ratio is not one of the highest. Pfizer and Novartis have somewhat higher indicators  25.3 and 29 correspondingly (NASDAQ, 2020). On the other hand, Merck has a lower P/E ratio  17.9. Based on the ratio, it could be said that compared to some of its industry peers, Johnson & Johnson is regarded as less perspective. Unlike P/E, the companys market-to-book ratio is somewhat lower than Mercks (5.9 and 7.1), but the difference does not seem overwhelming. Based on this indicator, Johnson & Johnson performs moderately well (NASDAQ, 2020). Regarding the current ratio, Johnson & Johnson and its competitors have similar indicators: while Johnson & Johnsons current ratio is approximately 1.48, Pfizer and Merck have comparable results  1.4 and 1.3 correspondingly. The only exceptions are Novartis and Procter & Gamble  their current ratio is below one.

The quick ratio situation is comparable, while Johnson & Johnsons rate is one of the highest, Novartis, Procter & Gamble, and Mercks quick ratios are below one, and Pfizers is 1.13. Bristol Myers Squibb is the leaders group with a slightly higher quick ratio of 1.27. Johnson & Johnsons total asset turnover is also among the highest (NASDAQ, 2020). In comparison, Merck (0.14), Novartis (0.1), and Bristol Myers Squibb (0.32) seem to perform relatively poorly (NASDAQ, 2020). Hence, as per the industrys average, Johnson & Johnson performs well in this aspect. While based on the price/cash flow ratio, the companys stock is somewhat overvalued, the stock of its competitors is mostly undervalued. Novartiss price/cash flow ratio (15.91) is below the industrys average and Johnson & Johnsons indicator (NASDAQ, 2020). Bristol Myers Squibb (12.90) is in the same situation. On the contrary, Mercks price/cash flow is higher than Johnson & Johnsons and constitutes 19.12.

Current Events Impacting the Company

The most significant current event for Johnson & Johnson is the pandemic. At the beginning of this year, the companys stock dropped significantly  from $146 to $112 (Trefis Team, 2020). The restrictions on non-urgent medical producers, to an extent, caused it. A sizeable portion of the companys products is used in elective surgeries, which have been postponed for months globally. Consequently, in the second quarter, Johnson & Johnson experienced a 34% drop in the sector of medical devices (Trefis Team, 2020). On the other hand, some of Johnson & Johnsons products popularity spiked; for instance, Tylenol and Listerine sales increased in the first quarter. Regarding the decline of the companys stock price, the federal governments economic stimulus helped it recover (Ozaist, 2020). Johnson & Johnsons historical stock prices can be seen in Figure 1 (NASDAQ, 2020). Due to the federal stimulus, Johnson & Johnsons stock almost regained its pre-pandemic rate and grew by 30%.

Furthermore, the partial reopening of the economy encourages the growth of the companys stock. As the lockdown restrictions are gradually lifted, healthcare facilities start managing the postponed elective surgeries (Ozaist, 2020). The drop of 34% in the companys medical devices sector improved to a mere 3.6% drop in the third quarter (Trefis Team, 2020). In the light of the improvement, Johnson & Johnson predicted its full-year revenue forecast to be around $7.95$8.05 per share, which was previously thought to be $7.75-$7.95 (Trefis Team, 2020). The softening of the lockdown leads to growth in hospital visits, prescriptions, and procedures, which is favorable for the company (Ozaist, 2020). Additionally, some of Johnson & Johnsons essential medications increased their market share. Thus, Imbruvica, Darzalex, and Stelara are projected to gain 60% growth in sales in 2022 (Trefis Team, 2020). The lifting of the lockdown and the federal governments help prompted the companys stock growth.

Another pandemic-related development that can considerably impact Johnson & Johnsons stock is a vaccine. Unlike some of its competitors, Johnson & Johnsons vaccine is one-shot, which gives it a competitive advantage (Trefis Team, 2020). The company prepares to resume its vaccine trials since it has been put on pause as a result of a participants unexplained illness. The successful development of a one-shot vaccine could encourage the companys stock growth next year.

Recommendations Regarding Johnson & Johnsons Stock

In conclusion, whether Johnson & Johnsons stock is worth buying, is complicated by its financial performance, public image, and metrics. Based on the CAMP model, the companys expected rate of return is 9.13%. Considering it is above the security market line, its stock can be regarded as underpriced. The companys price/earnings ratio, which is lower than its competitors, supports the idea. At the same time, Johnson & Johnsons price-cash flow ratio suggests that its stock is overpriced since the rate is somewhat higher than the industrys average. Experts also cannot reach a consensus on whether the stock is worth buying. Some suggest that due to the litigation risk linked to asbestos found in baby powder and the postponement of vaccine production, the stock is not a buy (Gatlin, 2020). Others claim that while some of the companys ratios signal that the stock is overpriced, Johnson & Johnsons financial health and high profitability indicate that it is a buy (Cohne, 2020). The recommendation regarding buying the companys stock seems to be a point of disagreement.

Overall, despite the asbestos scandal, several financial indicators, and postponement of vaccine production, Johnson & Johnsons stock might be worth buying. Based on the outlined in the text metrics, the company is financially healthy, trustworthy, and highly profitable. The potential production of the COVID-19 vaccine next year can also help Johnson & Johnsons stock rise. Hence, the companys stock can be considered a buy for investors searching for stable returns.

References

Lee, S. L., OConnor, T. F., Yang, X., Cruz, C. N., Chatterjee, S., Madurawe, R. D., & Woodcock, J. (2015). Modernizing pharmaceutical manufacturing: From batch to continuous production. Journal of Pharmaceutical Innovation, 10(3), 191199.

Reed, E. (2020). History of Johnson & Johnson: Timeline and facts. The Street.

Cohne, D. (2020). Is Johnson & Johnson (JNJ) a buy, sell or hold?. Stock News.

Ozaist, L. (2020). The impact of COVID-19 on a company: 6 Questions for the Chief Financial Officer of Johnson & Johnson. Johnson & Johnson.

Gatlin, A. (2020). Is JNJ Stock a buy as it ramps Coronavirus vaccine testing efforts?. Investors Business Daily.

Trefis Team. (2020). Whats happening with Johnson & Johnson stock?. Forbes.

NASDAQ. (2020). Johnson & Johnson (J&J). Yahoo Finance.

From a personal perspective, Home Depot is a company that epitomizes almost all elements of learning and value creation to the high extent. In particular, it has the highest level of motivating and inspiring people, developing leaders, and empowering employees at all levels. First of all, Home Depot defines the retention of talented and qualified employees as one of its top priorities (Hess, 2020). It aims to create the most comfortable working conditions, including bonuses, incentives, and insurance, to attract workers. At the same time, the company continuously organizes various training programs for employees personal and professional growth. Finally, Home Depot launches the Adobe Creative Jam in its Store Support Center that presupposes workshops, free-thinking team battles, and the performance of speakers to enhance peoples creativity and job commitment (Home Depot, 2018). In general, Home Depot applies various strategies to attract customers and provide opportunities for its workers to grow professionally and contribute to the companys growth by skills, knowledge, and experience at the same time.

At the same time, in relation to accumulating and sharing internal knowledge and gathering and integrating external information, the performance of Home Depot may be regarded as medium. Regardless of multiple training, knowledge sharing remains insufficient as these learning programs do not cover the encouragement of knowledge flow (Carson, 2017). In addition, the companys HR does not use all opportunities for more technology-determined recruitment. In this case, it is recommended to develop more efficient algorithms for the analysis of various aspects of organizational culture and relationships between employees to enhance internal data collection. In addition, HR should use modern digital advancement to make recruitment more efficient. These techniques will allow the company to improve the quality of its workforce, develop new training related to employees knowledge sharing, and increase general productivity.

Memorandum

TO:_______________________________

FROM:_____________________________

DATE:_____________________________

SUBJECT:____________________________

Home Depot may be regarded as an international retail corporation that successfully operates in the sphere of home improvement. At the same time, for continuous growth and development, the continuous monitoring of any companys internal and external environment is required. Thus, this memo will present the general analysis of Home Depots strengths and weaknesses, five forces of competition, the model of national advantages, learning opportunities, and recommendation for further activities.

Strengths and Weaknesses

In the present day, Home Depot is a multinational company which strengths are undeniable. It is one of the largest home improvement corporations not only in the United States but all over the world as well (Lowes vs Home Depot: Home improvement or stock improvement?, 2019). In addition, it has its own history, strong brand image, and brand awareness that allow to accumulate resources and take advantages from the economy of scale protecting its market share more efficiently. As a result, Home Depot is characterized by substantial profitability and its net income margin increases every year (Heres how Home Depot stock climbed 60% in 3 years, 2019). Excellent customer service and affordability may be regarded as the companys other major strengths. In particular, Home Depot offers experts advice to its customers, enhances buyers experience through the best prices in comparison with rivals, focuses on eco-friendliness, develops e-commerce, and introduces various options for purchasing, including BOPIS (buy-online-pickup-in-store) (Ferguson, 2017). Finally, Home Depot Takes a crucial advantage from its variety of products attracting customers who receive an opportunity to find all materials for construction, furnishing, and decoration under one roof.

At the same time, similar to any other company, Home Depot has weaknesses as well. First of all, although the company currently pays particular attention to the development of its online store, it started to implement this technology later in comparison with its rivals losing this competitive advantage (Kumar, 2019). In addition, spending more than $10 billion for e-commerce, Home Depot failed due to aging infrastructure (Giles, 2019). Finally, regardless of its availability in the United States, Home Depots is not adequately presented in the global market operating only in North America. In order to convert its weaknesses into strengths, the company may diversify its geographical presence by entering other countrys markets through partnership and enlarge its market share through acquisition. In addition, the company may diversify its products as well by offering other categories of goods such as apparel or food. Finally, Home Depot should continue the development of its online stores.

Porters Five Forces

On the basis of Porters Five Forces analysis, it is possible to state that the competitive rivalry in relation to Home Depot may be regarded as high. The company has multiple competitors, including Sears, Ace Hardware, and Lowes, who offer similar products, costs, and services for customers to attract them (Adamkasi, 2019). At the same time, the threat of new entrants is moderate to low  due to the companys size and market share, it operates at the level of multinational corporations that limit the entrance of new players by the requirement of substantial investments. Suppliers bargaining power is low as well as Home Depots suppliers cannot influence the companys decisions as it may change them easily. At the same time, buyers bargaining power and the threat of substitutes for Home Depot are high as consumers choose from similar products and pay attention to competitors other benefits.

Diamond Model of National Advantage

the Diamond Model of National Advantage presuppose factor conditions, firm strategy, rivalry, and structure, demand conditions, and supporting or related industries, for Home Depot, its factor conditions imply the following:

• Capital resources (debt-based and equity-based capital);
• Natural resources (North American water channels, renewable energy);
• Human resources (employees skills, recruitment and management strategies for professional growth);
• Infrastructure (cities infrastructure for the availability of the companys locations);
• Scientific knowledge (competitive advantage acquired through country-wide and industry-wide sources);
• Technological innovations (country-wide development of technologies that may be used by the company).

In general, the United States as Home Depots local market provide substantial resources for the company. Its economy and political structure allows the company to generate capital using employees skills, knowledge, and experience acquired due to opportunities for knowledge acquisition. At the same time, cities infrastructure is advanced enough to ensure customers access to the companys stores. Finally, Home Depot may apply existing technologies available due to the level of the countrys technological development to create competitive advantages.

In relation to industries, Home Depot has a network of related and supporting industries, such as packaging, raw materials, and industries that uses the products of the company, that ensure its stable growth and development by supplying and purchasing manufactured goods. In addition, Home Depot has multiple reliable international suppliers that ensure the quality of the companys products and services. At the same time, the presence of rival industries is weak as the improvement of homes in the United States traditionally occur through the purchasing of materials for construction and decoration.

In turn, Home Depots demand conditions are determined by the size of the market and consumers demands. Although the local market is large and people continuously needs materials for home improvement, a highly competitive environment forces the company to search and apply competitive advantages for growth and development. In addition, the countrys traditional business strategies determine the companys activities, tactics, approaches, and structures. In particular, Home Depot applies customer-oriented approach, the organizational structure on the basis of free communication, creativity of employees, and their professional growth, and continuous monitoring of opportunities for competition.

Learning Organization

In general, Home Depot may be regarded as a learning organization. First of all, it realizes he irrelevance of traditional training that focused on customer-oriented approach. In turn, Home Depot focus on its employees professional and personal development that will allow them to improve productivity, build solid relationships with colleagues on the basis of collaboration and communication, and make competent decisions related to their work responsibilities. In addition, Home Depots HR is data and technology driven, and these innovations allow them to recruit the most talented and competent workers.

Strategic Recommendations

As previously mentioned, Home Depot should focus on its digital presence on the global market through the development of its online store and enter the international market expanding its availability in other countries. In particular, it may enter South African market, and its initial steps should presuppose the in-depth analysis of consumers; demographics, cultural peculiarities, purchasing behavior, needs, demands, and expectations. In addition, Home Depot may partner with local companies to facilitate its entrance. At the same time, it should enhance inner knowledge-sharing and external collaboration with partners and other stakeholders on the basis of beneficial information, skills, and experience to become a more learning company and ensure additional competitive advantages.

References

Adamkasi. (2019). Porters Five Forces (Porters Model) of Home Depot. Porter Analysis. Web.

Carson, B. (2017). Home Depot training strategy: Improving performance in real-time. Rallyware. Web.

Ferguson, E. (2017). Home Depot SWOT analysis & recommendations. Panmore Institute. Web.

Giles, M. (2019). Home Depots $11 billion digital rebuild hits a legacy-tech speed bump. Forbes. Web.

Heres how Home Depot stock climbed 60% in 3 years. (2019). Forbes. Web.

Hess, A. J. (2020). Home Depots strategy for hiring 80,000 new workers: Help them with paying for school. CNBC. Web.

Home Depot. (2018). Jamming with Adobe for creative solutions to big problems. Home Depot. Web.

Kumar, U. S. (2019). Home Depot cuts sales goal as online push not delivering as expected. Reuters. Web.

Lowes vs Home Depot: Home improvement or stock improvement? (2019). Forbes. Web.

Introduction

A company whether it is a big or a small company, it will derive advantage from the exposure and experience that a good non-executive Director can transform. Non-executive Directors can offer a priceless involvement in the corporate decision-making practice, in influencing corporate strategy and in the distribution of resources to corroborate those plans. Their independence, impartiality and business wisdom should harmonise the specific knowledge and know-how of executive management.

Non-Executive Director- A Definition

A non-executive Director is a member of the board of directors will not be in the rolls of a company and typically offers his service to the company on a part-time basis only. The prime responsibility of any director is to safeguard the companys assets and to run the company in a manner that will end in most profitable and triumphant for the advantage of its shareholders. The NED (Non-executive director) may not assume any management function in the running of the business or to attend the day to day affairs of the company, other than helping in the deliberations of the board. However, the legal powers and duties are identical to those of decision-making process of the board of directors. The NED has a responsibility to keep him abreast of the business and about the financial standing of the company. It is, hence, crucial that he will have analogous right to access company information as the executive directors will have. Subsequent to the Higgs review, executive directors and senior managers must make sure that they offer non-executive directors with clear, complete and pertinent information to facilitate them to carry out the appropriate checks and balances; non-executive directors should maintain that information is adequate, exact, apparent and timely.(p 64 Combined Codes).

Any individual assuming as a non-executive director should have an extensive business background with diversity of talents extending ahead of business and financial wisdom.

It is always best not to employ the following individuals as non-executive Director:

• Companys former executive
• A professional consultant retained by the company currently on a regular basis
• A major customer or supplier

That individual must be able to exert his effort in harmony with executive colleagues, able to preserve his reliability and assume a stand, where is required. A non-executive director must also aware when to hunt for supplementary information if he considers that they are not in full custody of sufficient information on which to base a solid decision.

Guidance and Induction

The latest Higgs Report and the Companies (Auditing and Accounting) Bill 2003 and Directors stipulates that NED is to have an up-to-date knowledge and well-known with all features of corporate governance. The Combined Code advocates proper assessment of the performance of individual directors boards, and board committees. Hence, NED should be equipped with the required talents and information to carryout their duties as directors more effectively and proficiently.

Higgs suggests that funds should be made available for Directors to avail of suitable courses in professional development in order to build up and rejuvenate their acquaintance and skills.

Duties of Non- Executive Directors

Some precise tasks may be achieved better by non-executive Directors which would be complex for the executive directors to perform impartially.

• Counselling the Chairman on succession in regard to top managerial positions, especially in respect of the Chairmanship itself and the position of Chief Executive.
• Apprising on top management and board about hierarchy
• Suggesting on the sufficiency of financial and other data available to the board.
• Counselling on the designing and pattern of remuneration of executive directors to be decided and finalised by Remuneration Committee in the case of listed and giant companies.
• Representing as a member of a committee of the board to assess a specific subject or region of operation. In particular, to represent as a member of an Audit Committee of the board.
• To make sure that strategic alternatives have been analysed appropriately, having regard to competitive and economic factors.
• To make a more separate analysis to bear on management accounts, budgets, and financial information supplied to stakeholders.
• Offering an independent outlook when a company is either contemplating on an acquisition or is in the process of a bid.
• Assisting with the issue of taking over in a family company by legal heirs and performing as an arbitrator in differences among family members.
• One another probable role of the non-executive director is to function as a counsellor to the Chairman.

As a part and parcel of the board of directors, a non-executive director will also have a function in analysing information or resolving upon matters put before the board for consent. Such issues may include deciding course of action, sanction of annual budgets and plans, deciding on packages of remuneration for executives, endorsement of public announcements.

Proper attention should be given to avoid employing non-executive directors in executive position which should be executed by the full-time directors and officials. This can harm the independent perspective that a non-executive can bring to an organisation..

The non-executive director should not of the view that his duty starts and finishes at board meeting. NED should always keep the interest of the company in mind, For instance, by forwarding any pertinent information to the Chairman, maintaining contact with the company and in general keeping abreast of related progress in the market.

The Combined Code suggests that the Chairman should conduct the board or committee meetings with the non-executive Directors without the attendance of executives (§ A.1.3). Higgs recommended that the annual report should contain a report on whether such meetings have held.

Dedication of Time

The time dedication warranted from a non-executive Director have a tendency to vary significantly over the different phases of a companys life cycle. The quantum of time that a non-executive director should be anticipated to expend on company issues and the compensation should be coherent with his role on the part-time basis and he should not sacrifice his independent outlook. Where non-executive Directors are requested to assume additional responsibilities, it is appropriate that their compensation takes into account these additional responsibilities.

As homework for board meetings and personal attendance of NED is time consuming, an ample time commitment is essential if efficient contribution is to be made as a non-executive director. The boards of giant companies often assign part of their proceedings to sub-committees, such as an Audit Committee, Finance Committee, or Remuneration Committee. This would result in further requirements from a non-executive director allocated to such a committee. A non-executive Director might also be required to assume other special duties, like chairing or participating in a special or ad hoc committee. This would, of course, entail an augmented time commitment and of course it may only for a restricted period.

The Combined Code demands for more open and precise procedures in the engagement of directors and for the employment of a wider list of candidates. It is vital, therefore, that the broadest probable search for possible candidates is initiated. A non profit-making organisations the Boardroom Centre differentiates in making such exploration for companies of all sizes and keeps a register of apt qualified candidates. For both the company and director, confidentiality is essential and any probable candidates should go all through this procedure.

Developments Corporate governance in the UK

Developments of Corporate governance in the UK are detailed as follows:

In the wake of corporate scandals such as Maxwell and Polly Peck, initial corporate governance developments in the UK started in the late 1980s and early 1990s.Sir Adrian Cadbury led the. Financial Aspects of Corporate Governance Committee mainly to investigate the financial reporting malpractices. The committee published its Cadbury Report in 1992 which detailed a number of its recommendations for differentiating the organisations chief executives role with that of chairman, to have an equilibrated structure of the board, processes of appointment for non-executive directors, openness of financial reporting and the requirement for effective internal controls. The Cadbury Report contained principles of Best Practice and Cadburys testimonials were integrated into the London Stock Exchange Listing Rules.

After Cadburys recommendation, a Working Group on Internal Control was formed to offer direction to companies on how to observe with Code 4.5 of the Cadbury Code, accounting on the efficacy of the companys method of internal control. This paved the way in 1994 for publication of the Rutteman Report on Internal Control and Financial Reporting.

In 1995, following dilemmas about directors share options and pay, the Greenbury Report stipulated vast disclosure on remuneration in annual reports and required the formation of a remuneration committee consisted of non-executive directors. Once again, the bulk of the recommendations were incorporated in the Listing Rules.

In 1996, in January, the Hampel Committee was formed to analyse the magnitude to which the Greenbury and Cadbury Reports had been enforced and whether the goals had been achieved. Thus, the Hampel Report paved the way for the release of the Combined Code of Corporate Governance (1998) covering up fields pertaining to operations and structure of the board, remuneration of directors, directors audit and accountability, relationship with institutional shareholders, and the duties of institutional shareholders.

The 1998 Combined Code made applicable to all listed companies from 31 December 1998 until reporting years starting on or after 1 November 2003 and then it was replaced by the revised Code in 2003.

Listing Rule 12.43A now demanding companies to offer in their annual reports an exhaustive report of how they made applicable the Code principles and report that they have observed with the Code provisions or not,. If it is yet to be complied, the reason for non-compliance of the same and up to what period.

In between 1998 and 2003, Combined Codes demand companies to forward a report in their annual report on how they have enforced the Code Provisions and Code Principle pertaining to internal control. Elaborate directions for companies on how this should be accomplished were explained. In 1998 ,the Institute of Chartered Accountants in England & Wales (ICAEW) established Turnbull Committee by which then rechristened as the Turnbull Guidance, Internal Control: Guidance for Directors on the Combined Code which was released in September 1999. The direction has been approved by Securities & Exchange Commission (SEC) and such approved model is the guidance for management to demonstrate that they have reasonable internal control frameworks and financial reporting guidelines in place in order to observe with section 404 of the Sarbanes-Oxley Act.

In 2001, the association between companies and institutional investors was established with the Government instituted Myners Review, Institutional Investment in the UK. The main aim of the review was to reckon whether there were elements straining the institutions capability for investment decision-making process. It contained recommendations for the improvement of information between companies and investors and supported institutional investors to think of their duties as owners and how they should opt for their rights on sake of beneficiaries.

The Directors Remuneration Report Regulations were brought in 2002 to further fortify the strength of shareholders in respect of pay of directors. The regulations augment the quantum of information of which shareholders are provided on directors remuneration, some disclosures, as well as performance data and graphs. Shareholders are given authority to vote in a consultant role to give their consent on the directors remuneration report.

HM Treasury and the Department of Trade and Industry (DTI) in July 2002 initiated a reappraisal of the Combined Code following a follow-up of company law. It started some steps on the Higgs Report The Role and Effectiveness of Non-Executive Directors which was released in January 2003. Higgs recommendations included a detailed explanation about independence and the quantum of independent non-executive directors on the board and boards committee, an elaboration on the function of the experienced independent director to offer a substitute channel to shareholders and guide assessment on the chairmans operation its committees; modified stress on the procedure of nominations to the board through a transparent and stringent t procedure and evaluation of the performance of the individual directors on the board.

At the same time, the Financial Reporting Council released the Smith Report, namely Guidance on Audit Committees. In January 2003, both Smith and the Higgs Reports were released accompanied by the Tyson Report on the selection and growth of non-executive directors accredited by the DTI. The testimonials from Smith and the Higgs Reports resulted in transformations in the Combined Code of Corporate Governance released in July 2003. It is applicable to all companies listed on the primary market of the London Stock Exchange for covering years starting on or after 1 November 2003.

The Financial Reporting Council established the Turnbull Review Group In 2004 to deliberate the effect of Internal control: Guidance for Directors on the Combined Code and to evaluate whether the direction required to be updated. Hence, Internal Control: Revised Guidance for Directors on the Combined Code was released by the Financial Reporting Council in October 2005.

The UK Government initiated a Company Law Review in 1998 and released a White Paper in 2002. A variety of recommendations in the White Paper pertaining to reporting by a company and an important development is the need for companies to offer a compulsory Operating and Financial Review to offer data on the companys present and future strategy and performance. This came into effect from financial years starting from on or after 1 April 2005.

The corporate governance in the UK is significantly influenced by The European Union directive on corporate governance. The European Commissions Corporate Governance and Company Law Action Plan which was released in May 2003 recommends a mixture of regulatory and legislative initiatives which will have impact on all its member States including U.K which relates to:

• requirements for disclosure;
• the manner in which voting rights are to exercised ;
• voting in case of cross- border transactions;
• institutional investors disclosures;
• Board members responsibilities.

Statistical Data

Directors are wielding more pressure in the boardroom and have able to obtain greater independence from management.

As per recent survey perused by Mercer Delta Consulting, in collaboration with The Centre for Effective Organisations at the University of Southern Californias Marshall School of Business.

The study observed that of the directors surveyed:

• 92% observed that their board was independent of management to a big or very big degree;
• 94 %t informed that board members do offer opinions that contradict with the CEOs outlook;
• 72% observed that CEOs have a smaller amount control over their boards to certain extent or to a large or very large degree;
• 91%informed they had control over the meeting program.

The findings are footed on feedback received from 221 directors of Fortune 1000 companies in the U.S. with median income of $10 billion.

Different kinds of Board of Directors

In normal practice, boards historically were ceremonious and not as efficient as they are trying to become. Normally, such boards constituted of friends of a majestic CEO.

Mercer Delta research classifies the boards into five groups, each with certain features:

A Passive Board operates at the prudence of the CEO. There will be limited activity and participation by Board. Likewise, there will be little accountability as the board ratifies management wishes.

A Certifying Board endorses to share-holders that the CEO is executing what the board wants and the management is having capability to initiate corrective action whenever required. It also stresses for independent or outside directors and there will be no participation by CEO in the deliberations made in the Board meeting. It launches a well-managed success method. It is gives a birds view on contemporary performance. It assigns external board of directors to assess the performance of CEO. It is able and willing to transform management to be responsible to investors.

A Board with independent directors offers insight, counsel and support to the management team and CEO on vital accomplishment and decisions. It also acknowledges its responsibility to supervise the CEO and to evaluate the company performance. The board meetings are differentiated by constructive two-way discussions of major issues. Board members acquire enough industry experience and pecuniary expertise to augment value to their discussions. More time and prominence is spent delineating behaviours needed from board members and limits of the board and CEO responsibility.

During a crisis situation, the intervening Board becomes deeply involved in decision-making and discussions confronting the organisation. In such situations, intense and frequent board meetings are frequently summoned on short notice.

The Operating Board arrives at major decisions that the management implements the same. This category of board is not infrequent in start-up companies or early-stage where board members fill up openings in sharing management experience.

The operating board and intervening board are more opportunity in nature and fill a gap in a companys life cycle. Thus, it is significant to engage boards with the apt people, the right information and the apt constructive customs and climate and to spend more concentration on the right issues.

Personal Liability

The hazard of legal case against Non-Executive Directors personally on the board which they serve is very remote. However, except for extraordinary occasions, Non-Executive Directors are individually accountable for their deeds and decisions while acting as individuals or as members of a Board of a company. Hence, most companies offer Non-Executive Directors with an insurance protection for conclusions arrived at the regular course of board business and in harmony with the exact procedures. The insurance is planned to mirror the safeguard that would be extended under a commercial insurance policy. A Non-Executive Directors or Director who has performed sincerely and in good faith will not have to pay out of his or her own personal income any personal civil charge which is paid by insurance company in the implementation or supposed conduct of his or her board purpose, save where the person has acted irresponsibly.

NEDs engaged by Small and Medium Enterprises (SME) are more probably to act as consultant without adequate insurance cover which implies that SME regards them as of a mentor and not responsible for outcomes. There is a risk involved for NEDs who act as a director for SMEs as most of the companies do not provide insurance cover for them.

Disadvantages

It is alleged that some non-executive directors are on the board of more than a dozen companies. Further, they are engaged by companies in which they have no experience or ever employed in such industries. It is also advocated that a part-time director cannot contribute much and hence all directorship position in a company should be made on permanent basis. Some also argue that there should be full disclosure of all data about executives remuneration.

National Association of Pension Funds demand that there should be restriction on number of positions that a non-executive director position that an individual can assume. Association demands that non-executive director should work one day per week per directorship and it also urges an increase in the pay structure for non-executive directors who are asked to work for a full day per week rather than working on part-time basis (Credit Management, 2002).

According to survey, the average annual compensation by way of fees paid to NED in U.K is £25,000. However, U.S NEDs receive the same quantum of fees as that of their European colleagues but the almost receive the double the amount by way of stock or share-linked fees.

Case Study 1

BBC (British Broad Casting Corporation) currently is having five non-executive directors who were appointed during 2007. The well experienced non-executive director is Mr. Marcus Agius, Chairman of Barclays, Mr. Mike Lynch, Chief Executive officer and co-founder of Autonomy Corporation, Mr. David Robbie, director of finance of Rexam, the packaging company, Mr. Robert Webb QC, general counsel at British Airways and Samir Shah, chief executive of an independent broadcasting production company and Juniper, an erstwhile head of political programmes and head of current affairs of the BBC.

It is not clear the idea of having outsiders or independents to evaluate the BBCs executive operation was imposed by the British government or came from within the Corporation.

These independent directors have to operate more or less as non-executives in public companies sans financial risks by making certain that the board is executing its work properly. In other words, these independent directors should be critical friends tendering external judgments on decision made on the basis of their outside experience. Being the member of the Board of the Corporation, they are completely isolated from the Trust, which designs overall strategic direction of the BBC and supervises the actions of the Board.

For giving their valuable advise to BBC, they are paid a basic fee of £ 35,000 fee and also eligible for extra £ 5,000 for attending the committee meetings.

In the case of Samir Shah, a NED of BBC, there is potential conflict of interest since his company produces programs for the BBC. Mr. Shah usually abstains from sitting in the board when it deliberates on any province that might impact his business expertise in broadcasting.

For instance, Shan, along with another NED Agius, gave their advice to Director-General Mark Thompson over the Crowngate issue which paved the departure of the BBC 1 controller Mr. Peter Fincham. Usually, NEDs were consulted on the different episodes offakery that have shattered public hopes in the BBCs integrity. (Evening Standard, 2007:30).

Case Study 2: Equitable Life

Equitable Life is filing cases against Ernst & Young for £ 2.05 billion and claiming up to £1.7 billion against erstwhile board of directors of Equitable Life in the background of financial adversity which made it to verge of collapse in July 2000.

The erstwhile non-executive directors of Equitable Life were of the opinion that £1.7 billion lawsuit initiated against them by the Equitable Life was mere a guise of getting into the deeper pockets of its auditors Ernst & Young.

Equitable Life downfall descended after the holders of guaranteed annuity rate policies (GARs) succeeded a test case against the Equitable Life in the House of Lords.

It was held by House of Lords that the company functioned unlawfully when , in retort to mammoth decline in interest rates and current market annuity rates , it minimised the terminal incentives owed to GAR policyholders on retirement so as to stretch the available pot among non-GAR clients as well.

Equitable Life asserts that E&Y was not only in breach of duty but also negligent in failing to report that 1997 to 1999 accounts of the society did not cover proper provisions for GARs and having failed to report forewarning in the 1999 and 2000 accounts of the risk of losing the GAR.

Former non executive directors of Equitable Life were being accused of breach of fiduciary duty and negligence in not taking the legal advice before embarking on the differential terminal bonus policy which resulted to the GAR court case and in failing to mitigate the financial risk of losing GAR litigation and to intimate the policy holders about the risk.

The above case study illustrates how a NED can be later taken to task if he has not acted in good faith and with the negligence. (Birmingham Post (England) 2005:21).

Conclusion

No doubt that corporate governance is adding more responsibilities and augmenting pressure of work on non-executives. Now, NED are entrusted with more responsibilities which leading to escalating tension. The fissure between conventional NEDs function which assures that the company has the apt leadership and correct strategy now transforms into ever increasing onerous policing and supervising role as required by higher extent of scrutiny as it is expanding.

According to Price Water House, companies in U.K should understand that the role of NEDs have changed and they have to recognise the significance of such change when contemplating the selection , fixing pay-packages , commitment of time and assessment of NEDs to retain the dynamism of boardrooms of leading U.K companies (Financial Management , 2001).

List of References

1. (2001) U.K non-executive directors burdened by new workloads. Financial Management. 1 March
2. (2002).Ban non-executive directors.Credit Management.
3. (2005) Directors Claim Law Suit Aimed at E&Y. Birmingham Post (England) 21
4. (2007) So what is the Point these five Non-Executive Directors Sitting on BBC Board? Evening Standard: 30.
5. Heffes, Ellen M. (2005).Boards: independent directors seen more independent; Financial Executive.

A financial manager in an organization is the individual who, following the accepted principles and processes of accounting, is charged with the duty of managing the organizations financial programs, tasks, and systems in the general areas of accounting, staff payroll, the accounts payables of the organization. He also has the responsibility of giving proficient advice to the organization in the relevant financial areas. (City of American Canyon, 2005).

In an organization like Abel Athletics, the finance department plays a very pivotal role and the achievement of the goals of the finance department will contribute towards ensuring the successful accomplishment of the duties of the finance manager.

The finance department has a number of roles within Abel Athletics and some of these roles include:

1. The staff of the department has the duty of administering the finances allocated to the department by following all the necessary finance and accounting procedures.
2. The department should satisfy the public obligation of producing and printing the public companys annual financial statements of accounts.
3. The department together with the financial manager is involved in coordinating budgets with reference to the companys and departments costs of administration and financing the projects of the company.
4. It is also responsible for implementing new financial management technology and software and also accounting and financial procedures for the management of the organizations management. (Department of Enterprise, Trade and Employment, 2008).

The finance department offers support to the finance manager to satisfy the objectives of his work in terms of the department is staffed with researchers who gather current information on the market which are availed to the manager for decision making. The staff at the finance department are experts with whom the manager can consult on various issues pertaining to finance to have informed judgments.

Some of the ethical responsibilities of the finance department are for the members to be the hosts and have integrity, and evade conflict of interest in their work and personal associations. They should always ensure the information they present is appropriate, correct, well-timed and objective, understandable for full precise disclosure. They should act in good faith, apply their proficiency, take due care and avoid misrepresentation of material facts (Monsanto, 2004).

For the manager to utilize the talents of the finance department, he should be ready and willing to listen to everyone in the department without favor. The staff should all be dealt with equal and sow seeds of mutual trust, honesty, and respect among the entire department staff. The manager should always seek the counsel and views of the staff and ensure an inclusive leadership for them to feel free to share their expert opinions with the rest of the group members.

For the benefit of the staff and the organization as a whole, the finance manager should encourage his subordinates at the department of finance to take up extra classes to further expand their understanding of financial matters.

Some of the vital components of a financial system are: accounts payable to other firms accounts receivable from other firms, entry for new orders, payroll, accounting control for internal purposes, stocks control, reporting on a monthly basis, etc.

In assessing the financial stability of an organization, there are some ratios that can be employed, and these include the liquidity ratios, profitability ratios, debt ratio (Melissa Bushman, 2007).

References

Business Town.com. Accounting  Basic Accounting. Components of the Accounting System. 2003. Web.

The city of American Canyon. Finance Manager. 2005.

Department of Enterprise, Trade, and Employment. Role of the Finance Unit. 2008. Web.

Melissa Bushman. Associated Content. Using Ratio Analysis to Assess Financial Stability, 2007.

Monsanto. Code of Ethics for Chief Executives and Senior Financial Officers. 2004.