Category: Corporation

Describe how the turnaround team may have used Gerard and Turfs transformation skills to overcome the frustration of employees

According to Gerard and Turf, transformation comes about when a collaborative culture emerges based on shared meaning and mutual understanding of thoughts and feelings (Palmer, 2009). The turnaround team at Tyco Corporation worked to bring about understanding to all employees on what the management team was doing. They had to explain in detail and to make the vision of the new management team very vivid and clear so that the employees would feel like part of a team.

This would also make them feel that they shared the same values and goals with the management, and their effort to deliver the best for the sake of the corporation was not being taken for granted. Good communication with the employees, which includes not only passing information but also listening to them, lead to a new collective understanding (Kanter, Stein, & Jick, 1992).

By emphasizing these key areas, they were able to make the employees feel like part of the vision bearers of the corporation and would feel appreciated and readily cooperate with the management. Making someone feel appreciated is a key motivating factor and helps to avoid incidences of having a frustrated workforce. This approach is similar to Gerard and Turfs transformation skills.

Tyco used vignettes to communicate changes in ethical behavior. Write a vignette that could be used by Tyco to assist in overcoming the cultural change barriers that companies like Tyco faced. What international issues might need to be taken into account in writing these vignettes?

One of the most important assets that we have as a corporation is our diverse backgrounds. We come from different corners of the world, and we live completely different lifestyles. Those of us from the United States probably will have a pizza for dinner, while our brothers from Japan would already have taken sushi for the same dinner, but several hours earlier. When some of us in the south go to work in frozen winter, others in the Middle East will have to endure some scorching sun. These are just but a few examples of how diverse we are as a corporation.

Our diversity is what makes us. We may be different, but without a single one of us, we are not complete. It is like the different fruits put together to form a pudding, or different vegetables constituting a salad. More clearly, we are like the different ingredients that make a cake! Without yeast, (never mind it is just a spoonful in whole dough), it is not a cake. The small ingredients used are as important as the rest in forming the final product.

We should be able to embrace each other despite our differences. We should be able to see ourselves as a whole part of Tyco Corporation. We are the ones to implement change and we are the change that we want to see in this corporation. If anyone does not play his part well, he or she is the one who holds us from moving to the next step. We should avoid the donkey mentality- so stubborn that it cannot change its point of view. If we embrace change, we will soon be like this nicely baked cake, which is one big item, yet we know it is made up of many minute ingredients. This is how we want to be.

Using Ford and Fords four types of change conversations, describe how Tyco would go through the process of communicating change to its staff

To communicate the change to its staff, Tyco Corporation would need to ensure that the staff is empowered appropriately. This makes it possible to integrate initiative conversations into the whole workforce. Empowered people tend to feel that its their responsibility to adopt and implement change that is proposed or introduced.

Secondly, the corporation would need to ensure that there is a common language that is understandable by all the staff, in order to ensure understanding. The absence of a shared language would lead to a breakdown of conversations for understanding (Ford & Ford, 1995). A common language can be ensured by interpreting all forms of communication into the local or native language of each location where the corporation has a branch.

To ensure maximum performance, conversations for performance would need to be established. The communication should be thorough and careful, to ensure that the intended message of change is received and comprehended comprehensively. There should be no case where the intended message is watered down or not delivered effectively. This would finally be followed by conversations for closure.

Imagine that you were CEO of Tyco when the former CEO was still on trial for fraud. You are trying to rebuild the companys corporate reputation. Write a script for your address to the shareholders after 18 months in the position. Pay attention to the appropriate use of metaphors in your change conversation to this group

The last eighteen months have been a period of the baptism of fire for this corporation. We have seen some of our best and our worst moments. We have been forced to implement some very radical changes in the entire company from the smallest branch to the largest, in each country where we are present.

We have successfully managed to roll out training that will promote a paradigm shift from the bent mentality that was prevalent in our employees, to create a new, changed mindset and bring about new motivation. So far, our efforts are bearing fruit. The employees are motivated and our products are still top-rated in the world. Our partners have developed confidence in us and our rating is gradually improving.

We have written down an ethical guide which is a blueprint for our recovery. This corporation is founded on some very strict ethical standards. Regular auditing will is also being carried out on a regular basis. It is the responsibility of our staff to implement and uphold these moral standards, which are a major supporting ligament for any institution. This will ensure that there is no abuse of resources and the level of productivity is maintained to the maximum.

Our corporation is not yet completely out of the woods, but no doubt, we have made some great stride which has left both our friends and foes dumbstruck. We can clearly see the light at the end of the tunnel, and in a short while, we will be where we want to be. This is not a dream, but a reality that is unfolding slowly day by day. The changes we have implemented will ensure that the corporation gains and are rejuvenated every day.

What issues emerge in this case in terms of communicating change with the outside world?

Communicating change with the outside world is really a daunting task. We have to ensure that people get to see and understand not only our point of view but also appreciate and like our way of thinking. Communicating change with the outside brings about the problem of a language barrier, culture, and different levels of understanding among people. The number of people who appreciate what is doing is so low; hence people tend to dwell on assumptions and fallacies which may not be true. This makes it a big challenge for any corporation or institution to rebrand easily without spending an enormous budget in the process.

It is also evident that the average person.

References

Ford J.D. and Ford L.W. (1995)|. The Role of Conversation in Producing Intentional Change organizations. Academy of Management Review, 20, 541-561.

Kanter, R. M., Stein, B. A., & Jick, T. D. (1992). The Challenge of organizational change: how companies experience it and leaders guide it. New York: Free Press.

Palmer, D. (2009). Managing Organizational Change. New York: Free Press.

Submitting accurate and fair reports is a key component of ethical accounting practices. However, in the real-world setting accountants are often faced with demands of their superiors to alter the financial information for deceptive purposes. The following paper discusses the ethical concerns of such situations using the example of Mendez Corporation.

The two main stakeholders, in this case, are the president of Mendez Corporation, whose suggestion of altering the companys growth rate poses certain risks to the integrity of its operations, and the controller, who is ultimately responsible for making the decision. It is also reasonable to include the owners of doubtful accounts in the list since their yearly allowance depends on the decision. Finally, the companys management and employees can be considered involved due to the potential impact the decision may have on the companys reputation.

The presidents request poses a major dilemma for the controller. Two reasons can be identified to substantiate this conclusion. First, the controller is the presidents subordinate and is thus expected to comply with the recommendations. At the same time, the controller is expected to make decisions in accordance with the facts and results of financial analysis. Understandably, disobeying a superior can lead to tensions and, in certain cases, result in a workplace conflict. However, in this case, the compliance will constitute a deviation from the recommended accounting practices.

Second, and, perhaps, more importantly, deliberately altering the companys financial accounts constitutes an example of unethical accounting practices. Most likely, the presidents recommendation is aimed at creating the perception of a convincing sustainable growth trend. In other words, the president intends to use the reported information to attain a more favorable image of the companys performance (Bhasin, 2016).

While such an approach may result in the growth of customer base, this result is essentially achieved through fraudulent means. In the long term, such a decision can lead to a number of adverse effects ranging from the loss of trust on the part of customers to legal action from auditing bodies. Therefore, the controller is recommended to explain the possible negative impact associated with the suggested approach, contact an independent actor in an attempt to resolve the situation or, in the worst case scenario, terminate their employment. In any of the identified scenarios, the ethical dilemma will be resolved.

Finally, the Mendez Corporations growth rate should pose a concern to the controller in estimating the allowance of doubtful accounts. The estimation of salary is based on specific estimation mechanisms that involve funds already associated with the accounts in question. Including an unrelated variable does not constitute a valid addition to the estimation process and should thus be avoided unless a specific reason is presented by the president (Kimmel, Weygandt, & Kieso, 2015).

Admittedly, it is possible to speculate that the rapid growth rate was achieved by lowering the Mendez Corporations credit terms, in which case it would be reasonable to bring the salaries back up. However, no information is available that would confirm this assumption. Thus, this possibility is to be disregarded.

As can be seen, increasing the salaries in order to cover the unsustainable growth rate will draw additional attention from customers. Due to the fact that this attention will be obtained through misleading information, it will likely lead to the subsequent decline of the customer base in the long term. In other words, the recommendation is evidently unethical and poses serious concerns to the controller as well as the company in general.

References

Bhasin, M. L. (2016). Accounting manipulation practices in financial statements: An experience of an Asian economy. International Journal of Economics and Financial Research, 2(11), 199-214.

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2015). Financial accounting: Tools for business decision making (8th ed.). Danvers, MA: John Wiley & Sons.

Introduction

In this paper, I will give detailed information on the general performance of the target corporation based on its marketing and financial analysis. I will highlight the background of this company and its business activities. I will then proceed to analyze the business effectiveness in context of its financial performance. The challenges in its financial performance will be identified. I will base my interest on the companys transaction for three years that resulted to its performance. I will then make my recommendation on the course of the action that it is necessary according to my view. This idea may not be an effective idea today but it will be very effective and add value to the management of Target Corporation.

Company Background

The Target Corporation was formally known as the Dayton Hudson Corporation. Dayton bought the stock of Hudsons corporation in 1969 forming the partnership. He later bought many retail chain stores that facilitated the growth of the target corporation. This corporation has two centers one in Minneapolis and the other one in Minnesota on top of that it has three divisions that cater for all the income groups as indicated in fortune (1999). These are Mervyns which caters for the middle income groups and it is located in California it deals with casual apparel and home furnishing. The second one is known as Marshall Fields which is located in Chicago, Minneapolis and Detroit it deals with women and men apparel, accessories and home furnish. The last division is the Target found across the country and deals with the groceries and health and beauty products.

The corporation is headed by a CEO who is also the chairman the divisions are also managed by a different CEO and president. Each of the divisions runs as independently but they share technology, coordinate purchase and management of finance. Its mission is to provide quality goods at attractive prices in friendly environment. The corporation has continued to grow at a very high rate; in 2003 it had 1225 stores in 48 continental states. Their vision is to provide their services to all locations.

Analysis

Marketing analysis

The marketing strategy of this company is of a very high technology. It advertises in the local newspapers thus ensuring the local market is well informed of their products. The corporation also is aware of his targeted customers in each of its division and therefore tries at it level best to reach out to them. Yahoo a global internet company has leased the companys space in the Marshall Fields store. They use this opportunity to advertise their product through the net. They also operate direct merchandise and electronic retailing in their website known as www.target.com.

Financial analysis

The financial performance of the corporation from the year 2001 to 2003 has been very encouraging. They recorded an increase of $390 million in their revenue in 2003 as compared to 2001considering the fact that the total operating expenses had increase as well as the income taxes. Also it is clear that the value of the dividend per share had also increased.

The graph below analysis several items in the profit and loss account as well as the balance sheet to show the performance of this business for three years. It can be seen that the financial position of this company continues to increase as it approaches the year 2003. The total revenue has increased from 36851 million dollars to43917 million dollars. This implies that target has increased its sales to a recommendable value within these two years. Another interesting factor about this corporation is that although it continues to increase its operating expenses its income after tax is also increasing. Considering the assets of the company they follow the same trend.

Identified Issues

In doing the analysis of this corporation I identified various issues that face Target Corporation at companys level. Wall street journal (2004) the major problem with the companies operation is the increased operational expenses despite the high rate of expansion. Since this company shares the same technologies financial and supply services it should be reflected by a decline in operating expenses.

Recommendation

This company has the potential to meet its target in the near future. The operation expense is increasing as it grows its total debt also has an increasing trend. This might lead to a decline in the total income. My recommendation is that the corporation should not be thinking of outsourcing their debt instead they can go ahead and retain back their profit. They can also issue more shares to the public so that they can increase the value of the amount of the income of this company.

Fred (2004) the company also needs to improve their creativity in advertisement so as to fit in the competitive market. Since various division deals with similar lines they can merge them instead of one operating at a stone throw distance.

Implementation Plan

The first step would be to merge some of these companies that are near each other like in Kalamazoo in Michigan which has Marshall Fields department stores and Mervyns in less than a mile from each other. By so doing I will reduce the number of staff and the managerial expenses. This will lead to decrease in the operating expenses. The likely negative effect is that it might result to the divisions losing its customers but this can be avoided by creating awareness about the company by advertising. David and Ronald (2001)

The other plan would be to issue more shares to finance the debt and cater for the operating expenses. This will decrease the value of these expenses as well as the debt. There might also be an increase in the ownership of the corporation which will decrease the value per share. The company should continue providing a good public image to avoid this.

Closing remarks

From the above analysis it is evident that the Target Corporation needs to increase on its operating expenses to improve its general financial performance. There is need to merge some of the divisional stores that are found near each other. There is need to have a proper auditing to know which branch should merge. With the current internal auditors in this corporation there is need for financial analysts to help in analysis of the merging stores. My service will be at your disposal once you decide the course of action to take.

References

Branch, Shelly. (1999). How Target Got Hot. Fortune: 168-174.

David, W. & Ronald, R. (2001). Corporate Performance Management. Butterworth: Heinemann Publishers.

Fred, D. (2000). Strategic Management: Concept and Cases. India: Prentice hall publishers.

Zimmerman. (2004). Investors Aim Their Displeasure at Target. Wall Street Journal.

Introduction

The introduction of a new brand of product is a decision that should be analyzed comprehensively. Such products may be well received in the market, or the sales may fail to pick up. Also, the introduction of new products may affect the sales of existing products. Therefore, it is important to carry out a multifaceted feasibility study before the launch of such products.

The study can examine various areas such as the financial impact of the new product, as well as the target market, distribution channel, and effect of the new product on the sales of existing products.

In this scenario, Denver Furniture Corporation, a company well known for manufacturing high-quality products, intends to introduce a new brand that has a lower margin that than the existing brands. However, some in the companys management is concerned about the idea that the new brand will affect the sales of the existing products. Another part of the management thinks that the new product will boost overall company sales. Thus, the decline in sales of existing products will be offset by the sales of the new product. Also, the company has excess capacity. Therefore, there will be no financial requirement to expand the current level of production.

Objectives of the Paper

The paper seeks to carry out ratio analysis to ascertain the effect of the new brand. The three ratios that will be estimated return on assets, profit margin, and asset turnover. Thereafter, a comparison will be made between the value of ratios before and after the introduction of the new product. Also, a recommendation will be made on other options that the company can explore.

Calculation of Ratios

The table presented below shows the calculation of ratios.

Discussion of Results

A review of the table above shows that the current sales level is $45 million. The forecasted sales level without cannibalization increases to $60 million after the introduction of the new product. However, the effect of cannibalization reduces the forecasted sales level to $50 million. The management estimated that $10 million worth of sales for the new product will be from customers who would have bought the expensive products, explaining why the sales level dropped by $10 million.

The current level of net income is $12 million. The value is expected to increase to $13 million without cannibalization. However, cannibalization will reduce the net margin to the original level of $12 million. The total assets will remain constant because there are no adjustments that will be made to the production plant. A review of the sales revenue and the value of net income may indicate that there is a change in the profit level as measured by net income. It also shows that the sales revenue may increase by only $5 million. The values give a narrow view regarding the effect of the new product. This creates the need for ratio analysis.

The three ratios computed above provide information on the profitability and efficiency of the company. First, the return on assets measures efficiency in the use of assets to generate income, showing the profit per unit of assets and measuring profitability and efficiency in the use of assets. Higher values of the ratio are preferred because they indicate better performance (Drury, 2013). The current value of return on assets is 12%. Without cannibalization, the value is expected to increase to 13%.

This shows that the introduction of the new product will improve the profitability and efficiency level if there is no cannibalization of existing sales. The estimated value of return on assets with cannibalization is 12%. This is similar to the existing state before the new product is introduced. Since cannibalization of existing sales is a reality that exists, it can be noted that the introduction of the new product does not affect the return on assets.

The second ratio is the net profit margin. It shows the amount of profit that is generated per unit of sales and measures the profitability of an entity. A higher value of the ratio is preferred. The profit margin before the introduction of the new product is 26.67%. After the launch of the new product, the value of the margin drops to 21.67% without the effect of cannibalization. Thus, the new product lowers the profit generated per unit of sales.

This can be attributed to the fact that the net income is not growing at the same rate as sales. The net income grows by 8.3%, while sales revenue increases by 33.3%. Also, the new line of furniture has a low margin. This explains the decline in the ratio. The net margin that is generated with cannibalization is 24%. The value is lower than the current level of net margin and slightly higher than that of the new product without cannibalization. Thus, it is clear that the new product will not help to improve the profit margin irrespective of cannibalization.

The third ratio is asset turnover. This is an efficiency ratio that measures the sales units that are generated from a unit of assets. A higher ratio is preferred because it shows that the company is using its assets efficiently to generate sales (Wahlen, Baginski, & Bradshaw, 2014). The asset turnover ratio before the launch of the new product is 0.45 times, which is quite a low value. After the introduction of the new brand, the ratio is expected to increase to 0.6 times without the effect of cannibalization (Horner, 2013). This shows an improvement from the current state and indicates increased efficiency in the use of assets.

Furthermore, the value of the asset turnover ratio with the effect of cannibalization is 0.50 times. This is a slight improvement from the current state of the company and a decline when compared with the results without the effect of cannibalization. Thus, the introduction of the new product increases the companys efficiency in the use of its assets. This can be attributed to the use of excess capacity.

Implications of the Results

The results above show that the new product will lead to increased sales revenue. The net income will also increase by $1 million if the effect of cannibalization is ignored. Ratio analysis shows that return on asset increases by one point if the effect of cannibalization is ignored. However, there is no change in return on assets if the effect of cannibalization of current sales is taken into account. Therefore, the new product will not improve the current position of return on assets. Second, the new product line will not improve the profit margin. The margin after the introduction of the new product with and without the effect of cannibalization of current sales is lower than the state before the new product.

Finally, the new brand will increase efficiency in the use of assets as indicated by the asset turnover ratio. This can be attributed to the use of the companys excess capacity. The analysis above shows that the new product will not improve the financial position of the company but will only keep the idle capacity busy, thus increasing the companys efficiency in the use of assets. Therefore, with or without cannibalization of existing sales, the company will not be better off.

The company will only increase the sales of the low-margin product at the expense of the existing products. The company should not implement the proposal for introducing a new line of furniture because it does not improve the financial position of the company. However, if the management intends to pursue the proposal, then it will be profitable to eliminate the effect of cannibalization.

Recommendation of Other Options and Conclusion

Apart from introducing the new line of furniture, there are several other options the company can consider. The first option is that the Denver Furniture Corporation can rent the unused capacity (Clarke, 2012). If the company cannot eliminate the effect of cannibalization, then it can rent out the excess capacity. The revenue collected will be added directly to the companys income. This option affects increasing both the profit margin and return on assets. However, it will not affect the asset turnover ratio because there will be no change in sales. This option is suitable because it will ensure that the idle capacity is put to use without incurring additional costs.

The second option that the company can explore is to increase the sales level of the available line of products. This can be achieved through two approaches. In the first approach, the company could carry out extensive marketing. This can be achieved by increasing the amount that is spent on advertising and marketing. The second approach would involve reducing the price of existing products. Based on the calculations above, the current profit margin is 26.7%.

The company can reduce this margin to accommodate the two approaches. A reduction in price or increase in marketing expenses has the effect of increasing sales volume and reducing the idle capacity. Before implementing these two options, the management needs to ensure that the increase in sales revenue is higher than the anticipated decline in profit as a result of reduced prices and increased advertising costs. This will ensure that the profit margin will increase.

As pointed out in the discussion above, the without cannibalization scenario results in an increase in sales by $15 million and profit by $1 million. If the company wants to introduce this new brand, then efforts must be made to reduce the effect of cannibalization. This can be achieved by proper branding in such a way that the existing products are clearly distinguished from the current products. This can be done by carrying out aggressive marketing to achieve market segmentation. This will help to differentiate the two lines of products. However, the company should ensure that the gains from product differentiation are not eliminated by the marketing costs.

References

Clarke, E. A. (2012). Accounting: An introduction to principles + practice (7^th ed.). South Melbourne, Victoria: Cengage Learning Australia.

Drury, C. M. (2013). Management and cost accounting. New York, NY: Springer Publishers.

Horner, D. (2013). Accounting for non-accountants (9^th ed.). New Delhi, India: Kogan Page Ltd.

Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2014). Financial reporting, financial statement analysis, and valuation: A strategic perspective. Boston, MA: South-Western Cengage Learning.

The competition aspect frequently becomes the key factor to companies development. In the case of WorldCom and Sprint, both companies thrived in the competition with AT&T and with each other. The beneficial effects of the competitive race included developing systems capable of handling millions of customer accounts and constructing national and international fiber-optic networks. Those benefits let WorldCom and Sprint dominate the field of long-distance services. The merger of these two companies could cause harm by reducing the competition level, which might result in high prices and low quality of services for customers.

The relevant product market is the first tier of internet services. It is the fast backbone that internet providers use to connect to instead of using direct connections. The advantages of the first-tier market include faster first-hand internet connections to the customers and higher quality services. As tier one connects domestic operations faster within the Unites States, customers are unlikely to turn to foreign providers, resulting in the United States being the relevant geographical market.

As WorldComs subsidiary company UUNETs share in the overall Internet traffic in the United States, equals almost 37%, the company is already considered dominant in the Tier 1 market. Moreover, Sprints share comes second after WorldCom with 16% (Prince, 2014). Considering that 15 companies establish the Internet backbone and two of them could merge into one implies the risk of more than half of the shared internet traffic proceeding through one company, making it dominant amongst other companies. The merged entity would not be interested in providing efficient connections with any other IBPs, and mutually beneficial access will diminish. Overcoming this problem would require UUNET/Sprint to refuse to interconnect with new entrants or limit these connections.

Although the marginal cost of supplying one megabyte of internet access could be anywhere near zero, the amount of the used production capacities to supply infinite volumes of data speaks for itself. The overall private line market in the U.S. is valued at over $9.5 billion (Prince, 2014). Data networks that utilize the slower X.25 protocol comprise nearly $495 million of the U.S. market, and the frame relay network market values at over $3.5 billion in the United States (Prince, 2014). Evidently, the government is interested in promoting competition in long-distance services because if the dominant network would start raising their prices, restoring the market to the competitive state might need intervention from the government.

Reference

Prince, J., & Baye, M. (2014). Managerial Economics & Business Strategy (8^th ed.). McGraw-Hill Education.

C companies and S corporations are similar across multiple dimensions as they both have limited immunity from company debts and liabilities. In terms of corporate relations with the board of directors, officers and shareholders, they must establish a corporate structure. Additionally, both C and S organizations must both file Articles of Incorporation with the governing state body and adhere to the corporate formation guidelines (What is a C Corporation? n.d.). However, despite a list of similarities, both types of companies have significant differences based on ownership, shareholder rights, and taxation. A C company may have an infinite number of shareholders, as well as be owned by other companies or trusts, while an S corporation cannot.

There are a variety of justifications to which a person would choose a C company over an S company. A C Company is created by obtaining a charter with the state of incorporation, where the owner has the option of issuing shares to other shareholders in return for cash, assets or keeping all of the shares (Kagan, 2019). Although most states have laws governing partnership rights and restrictions, this type of enterprise does not necessitate legal documentation. In return for property or services, partners obtain an interest in the partnership, which is a capital asset and reflects an equity interest equivalent to corporate stock. A C company may be preferred over an alliance by an entrepreneur seeking liability insurance from the businesss activities.

C Corporations may become a feasible way to get venture capital and other forms of equity funding. It pays corporate taxes, as opposed to S Corporations, and as a result, it faces the drawback of double taxation (Forming a Corporation, 2019). In addition, a C company is subject to much more federal and state laws than other types of enterprise, which may serve as a drawback for choosing such a business form. Therefore, for small business owners, the C corporation is an often-overlooked choice. Operating as a C company may provide structural benefits that an S corporation or other business forms cannot provide.

References

Forming a corporation | Internal Revenue Service. (2019). IRS. Web.

Kagan, J. (2019). How C corporations work. Investopedia. Web.

What is a C corporation? (n.d.). Tax Foundation. Web.

Working is an activity that human beings have to do to survive and support themselves and their families. In the world today there are diverse business opportunities available for people to explore and exhaust. At the same time, with good educational background and experience, people can get the jobs of their dream where enumeration is in terms of six figures. The decision of whether to run ones own business or to stick to formal employment depends on the individual. The purpose of this paper is to compare and distinguish the differences between running a business and employment in a big corporation. The main points of discussion are income, freedom and control, and flexibility.

The most notable and common difference that has led to controversies in the working place is freedom. It is the desire of everyone to have some sense of freedom and to be in control. Working in a setup where one is employed can deny him the sense of control that they desire since being an employee means one has to be under some higher authority in the name of a boss. At the same time, one is tied down with the companys policies and rules. On the other hand, running a business gives one control of everything that goes on in the business. This means that one becomes a boss of his or her own.

Comparing these two scenarios brings us to another difference of money factor. Running a business is a risky affair and requires one to have considered all the factors involved before beginning. Income normally varies in businesses; there is no constant flow of income. There are instances when business is good meaning more cash is flowing in, but when business is bad one can even go at a loss. Depending on the viability of the business, then income can be a motivational factor to make one fully concentrate on his or her own business. This is because a viable business can instantly shoot one to riches. Unlike businesses, employment guarantees one income at the end of a payment period which is normally on monthly basis. Even upon retirement, one is guaranteed a good retirement package that will benefit him or her. In addition to a good salary, there are accompaniments in the name of allowances that are very inviting especially with higher positions in the big companies.

The last difference seen in these tow scenarios is ones flexibility. In running a business, one is assured of flexibility in terms of time. One can go to work any time they feel like and close business whenever they want, and depending on the nature of business, one can even work from home and make good money. They do not have to undergo the hustle of traffic and stressful work place environment. This is in contrast with employment as there are company rules that have to be followed to the letter. For example, employees might be required to arrive to work at 8 am every working day and leave work at 5 pm.

Whichever way one wants to go, solely depends on their choice. One can even run a business at the same time working under employment. This is more recommended because once the business picks it can be easier to focus fully on the business and quit employment. Business is also recommended because it creates job opportunities for others.

A corporation refers to a large business or multiple companies connected as an individual entity in terms of legality and board of directors. With regard to corporation types, there are several aspects that categorize these legal entities. The first element is profit. There are two types of corporations with reference to profit: for-profit and nonprofit. For-profit corporations make money for the shareholders, while non-profit ones are meant to create profit for a specific cause. A difference between the two is the fact that for-profit companies have to pay taxes while non-profit ones are exempted from it.

Another aspect that differentiates corporations is the place where they conduct business. According to this criterion, there are domestic and foreign corporations. The domestic ones are formed in the country where they operate. The advantage is choosing a place with beneficial legislation that would have favorable outcomes for the business practices. On the other hand, foreign corporations are not limited by borders. These are the big companies that can conduct business somewhere different from where they were initially formed. This allows for a bigger market, more opportunities, and a higher chance of substantial profit.

Corporations also differ depending on the shareholders. The number of shares someone owns is irrelevant since one share is enough for a person to be called a shareholder. Closely held corporations are characterized by a small number of owners. These are usually small companies that do not publicly trade. There are also publically traded companies, which are the ones with multiple shareholders and shares that are available for the public to purchase. Some examples would be Amazon, Apple, Microsoft, and Facebook.

Ways of Corporate Expansion

Expansion is the ultimate goal of every corporation that is focused on profit. Certain reforms maximise the potential of growth on many different levels (Singh et al., 2018). There are many ways for a corporation to expand, but there are four detrimental ones. Those are purchasing assets, merger, consolidation, and purchase of stocks. Each aspect of the corporate expansion is closely tied to these elements that subsequently lead to a solid corporate base.

Purchasing assets refers to the transaction between one company that buys another companys assets. The main advantage of this way of expansion is the possibility to choose the most favorable assets that have the most business potential. The merger is closely tied to the first way of expansion. However, in this case, a company is entirely absorbed by the corporation. A cash merger is when the shareholder trades the shares and receives cash in return, and a non-cash merger is the act of trading shares of the disappearing company in exchange for shares in the company that absorbs it. Consolidation and merger are similar in terms of the process but different in terms of results. In this case, the two companies that are participating in the transaction form a bigger corporation, and none of the initial companies disappear. Purchasing stock is another way of corporate expansion. This refers to a company buying the stock that would be enough to gain control over the business. Instead of purchasing all the shares, it means obtaining enough of them to have an influence on the company.

Corporations differ on many different levels, including profit (for-profit or non-profit), place of activity (domestic or foreign), and the number of shareholders (closely held or publically traded). Furthermore, corporate expansion is the crucial goal of every shareholder. The four main ways of expansion include purchasing assets, merger, consolidation, and purchasing stock. They refer to buying another companys assets, absorbing it, combining with it, or purchasing enough stock that would be enough to control it.

Reference

Singh, D., Pattnaik, C., Gaur, A. S., & Ketencioglu, E. (2018). Corporate expansion during pro-market reforms in emerging markets: The contingent value of group affiliation and diversification.Journal of Business Research, 82, 220-229.

Public relations are vital for any company in sprucing up its image. Companies invest heavily in it so as to have their voice heard and appearance felt. Zappos is one of the corporations that have handled the issue of public relations well in the past. Under the leadership of an innovative and creative chief executive officer, the company navigated through difficult times and emerged the winner. The organization managed to handle its ethics and social responsibility, communications and trust conflicts, as well as negotiations.

Zappos employs effective communication strategies in improving its public relations. This initiative began as early as in 2012 when the company became active on social media. On Twitter, the corporation usually posts short tweets that show the images of people wearing shoes. The strategy is to attract customers to its online shoe retailing platform and make purchases. When the brand was listed on Facebook as a clothing store in Las Vegas, Nevada, it did not show any bravado in the content (Kumar & Mukherjee, 2018). This move goes against the status quo where people expect it to brag about its store and standing in the retail industry. The store is also on YouTube, where it posts quirky content that no one would expect, such as How to make a Cat bed from a cardboard box (Heinitz et al., 2018). This video features a Zappos branded shipping box in a short pictorial.

In 2017, the company introduced a department called Zappos for Good. Its mission was to foster the Zappos community and charitable causes. The initiative was intended to spread happiness and celebrate good in every person. This move would also require employees to be the best they wished to see in the world (Eva et al., 2019). It was an initiative by Zappos regarding its ethics and social responsibility. Being a company that was in the limelight, it needed a way to give back to the community through charitable donations, sustainability, environmentalism, advocacy, and adoption for animals. The company allowed its employees to come to work with their dogs that would be kept at the pet-friendly Zappos campus. It also sponsors an adoption fee through the Home for the Pawlidays campaign. The company also participated in beach clean-up exercises and achieving carbon neutral status for their travel activities (Dur & Schmittdiel, 2019). This move also had a positive effect on the public image of the company.

In 2015, Zappos waged war on managers when it introduced holacracy. This initiative involved empowering every employee and making everyone a manager. This decision meant that some workers were demoted while other employees were promoted. There was go-low among the managers who protested the move. The CEO, Tony Hsieh, tried to intervene by giving reasons in support of the model, but many of the managers did not agree. The move left Zappos in a bad light, making it quietly back away from the initiative (Alhidari, 2017). It, therefore, had a negative effect on its public relations.

In conclusion, the company is excellent in matters of dealing with public perception. It has maintained a significant following on social media. Its creativity also places among its peers to the extent of surpassing its parent company, Amazon. It also has perfect ethics and corporate social responsibility that assists it in giving back to society. It ethically handles these issues, thus, endearing them to the customers. However, the issue of holacracy was not handled ethically as it is not moral to place a manager and a worker at the same ranks to enhance efficiency and effectiveness.

References

Alhidari, A. (2017). Proactive communication mode (PMC) of Zappos: The success of consumer engagement. British Journal of Economics, Management & Trade, 16(2), 1-9. Web.

Dur, R., & Schmittdiel, H. (2019). Paid to quit. De Economist, 167(4), 387-406. Web.

Eva, N., Robin, M., Sendjaya, S., Van Dierendonck, D., & Liden, R. C. (2019). Servant leadership: A systematic review and call for future research. The Leadership Quarterly, 30(1), 111-132. Web.

Heinitz, K., Lorenz, T., Schulze, D., & Schorlemmer, J. (2018). Positive organizational behavior: Longitudinal effects on subjective well-being. PLoS ONE, 13(6), 18-24. Web.

Kumar S., V., & Mukherjee, S. (2018). Holacracy  the future of organizing? The case of Zappos. Human Resource Management International Digest, 26(7), 12-15. Web.

TELUS Corporation Capital structure

TELUS Corporation uses the highest percentage of gearing as compared to similar firms in the industry, both in Canada and in the US. The high levels of equity have not provided an attractive average return on equity (ROE) as calculated in the past three years. Low returns have impacted negatively on investor confidence, resulting in the low price-to-earnings ratio. BCE Inc which could be considered as the market leader in Canada has significant stakes in other telecommunication firms in the country. As a result, the firm is able to claim more revenues from its diversified asset base. TELUS Corporation is the second-largest telecommunication firm in Canada, based on revenues, assets, geographic coverage, and the number of customers in Canada.

The high levels of leverage expose the firm to financial risks, increasing the probabilities of insolvency (Baker & Powell 2005). Long-term debt as a percentage of earnings has been increasing at a sharp rate between 1998 and 2002 (Exhibit 5). The industry has faced decreasing revenues in the same period though companies in the industry are optimistic about the future prospects in the industry. Firms have maintained their capital expenditures mostly financed with debt despite banks being forced to review their financing options after BCE Inc failed to provide financial long-term backing for one of its subsidiaries, resulting in the subsidiary declaring bankruptcy.

Assessment of TELUS Corporation Financial condition

TELUS Corporation has high debt levels, as most of its acquisition strategies have been financed by the use of leverage. The company has been involved in several bridge loans, such as in the Cdn $6.6 billion acquisition of Clearnet Communications Inc and the remaining 30 percent stake in QuebecTel for Cdn $285 million. The use of bridge debt, amounting to Cdn $6.25 billion in the case of the acquisition of Clearnet Communications Inc, may require TELUS Corporation to incur higher than market level interest rates as the company increases the use of leverage. Another case where TELUS Corporation encouraged the use of leverage is by the use of the revolving credit facility from the banking sector.

In the fiscal year 2001, the proportion of debt exceeds equity in the total capitalization of the company. 55.2 percent of the total capitalization of TELUS Corporation is financed by long-term debt which comes as a result of the companys aggressive growth strategy financed mostly by debt. Earnings of the company have been increasing at a modest rate, while the proportion of long-term debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) remains high at 3.4.

The LT debt to EBITDA ratio measures a companys capacity to service its incurred debt (Gallagher & Andrew 2008), information of which can be used by investors and credit rating agencies to estimate the period that a company would need to clear its debt, or the probability of the company defaulting (Van Horne & Wachowicz 2008). TELUS Corporations 3.4 LT Debt to EBITDA is the highest among its competitors, meaning that the company despite its size could find it difficult to access funds in the market as banks would opt to provide loans to companies in the industry that have a lower LT Debt to EBITDA ratio. Subsequently, TELUS Corporation has a low EBITDA to Interest ratio. Although at an EBITDA to interest ratio of 3.6 the company can pay off its interest on debt, the company would strain more than its competitors when using profits from operations.

Moodys Downgrade

TELUS Corporation had a high probability of getting downgrades from major credit rating agencies, but the company was mostly hoping for its credit rating to be taken a notch lower. While the market growth in Canada for most of TELUS Corporations service offerings appeared positive, increasing competition in the market meant that incumbents such as BCE Inc and TELUS Corporation would be affected in terms of revenues and they may therefore not realize the full benefits of the positive market outlook.

The CRTC (Canadian Radio-television and Telecommunications Commission) was the agency responsible for regulations in Canadas telecommunication industry and as such sought to increase competition by deregulations in the industry. The regulative environment gets more negative with the introduction of a price cap regulative regime which prevented incumbent carriers such as TELUS Corporation from raising prices they charged to consumers and competitors who purchased services from them for resale. Most credit rating agencies expect the regulatory decision will reduce TELUS Corporations EBITDA by about Cdn $300 million on an annualized basis.

The technological environment was advancing quite rapidly, meaning TELUS had to engage in acquisition programs for it to remain competitive in the industry. TELUS Corporations business model aims to improve revenues, cut costs and improve productivity. Execution risk for the company remains relatively high in relation to its cost-cutting plans, as reflected by the high costs of restructuring the company. TELUS Corporation tends to use long-term public debt to clear short-term borrowed finances. While this results in debt restructuring, debt levels for TELUS Corporation have not yet been reduced (TELUS Corporation).

With the bankruptcy of firms such as Enron and WorldCom, Moodys credit rating agency could not afford to take anything for granted especially in the troubled telecom industry. The financial statements of TELUS Corporation indicate that the firm is still profitable, though the debt levels could reach unsustainable levels. The restructuring of the company may indicate that the firm could lower its debt levels but there is a lack of evidence to point out that the execution risk of the phased Operational Efficiency Program is low. In his regard, the downgrade of credit rating was inevitable but Moodys downgrade was a bit harsh on TELUS Corporation.

Actions to assure Investors

Robert McFarlane, CFO of TELUS Corporation, could first propose measures that aim at lowering the LT debt to EBITDA ratio in the balance sheet, before initiating procedures that aim at lowering the proportion of long-term debt in the total capitalization of the company. TELUS has already reduced dividend payments, though further deductions may be used to trim the debt levels. The enhanced dividend reinvestment plan (DRIP) may fail to make the desired impact since major shareholders have reduced their participation in the program. Issuance of equity may not be feasible in the short run due to low stock prices in the market.

An appropriate solution in the short term would be to cut costs, in accordance with the Operational Efficiency Program, through job cuts. The company could also dispose of its non-strategic assets so as to improve cash flows (Brigham & Ehrahdt 2008). The option to swap debt for equity with the US-based hedge fund is available to McFarlane, but the hedge fund appears to have shorted the companys shares meaning that a further decline in prices may be possible. Debt repayments and repurchases, and reducing capital expenditures may reduce the debt to EBITDA ratio if TELUS maintains its revenue levels. Operational efficiencies may improve the companys cash flows and profitability, and therefore assure both investors and credit rating agencies.

References

Baker, H. K. & Powell, G. E. (2005). Understanding financial management: a practical guide. Oxford, UK: Wiley-Blackwell

Brigham, E.F. & Ehrahdt, M.C. (2008). Financial management: theory and practice, 12^th edn. New York: Cengage Learning.

Gallagher D. & Andrew, M. (2008). Financial Management; Principles and Practice. New York: Freeload Press Inc. TELUS Corporation: Capital Structure Management (Case number Ivey 9B06N020)

Van Horne, J. C. & Wachowicz J. M. (2008). Fundamentals of financial management, 13^th edn. New York: Financial Times/Prentice Hall.