The GAP Corporation is a multinational company that specifically deals with clothing and fashion accessories. The companys brands are Gap for high quality apparel, Old navy for casual family apparel, Banana republic for more sophisticated apparel, Athleta for stylish sports clothes and Piperlime offering casual to high fashion foot wear. The Company has employed many strategic approaches since its inception in order to maintain the influence that it has over the financial market through the clothing industry. The strategy that the company has mainly employed is the business level strategy which has helped it remain a force in the financial market. This is because it has helped it to bring out tactical and innovative ideas that can sustain its existence for a long period. The company has been researching in the market for very many years, and this has helped it maintain a relatively high success as compared to its competitors. This factor can be seen through the companys success from the year 2009 when they sold only 16 units compared to the year 2010 when they sold over six million units.
Internal environmental analysis
The GAP Corporation in 2010 was recognized on the list of 100 Best Corporate Citizens because of focusing on improving factory conditions for the employees and also improving standards for the suppliers. The Company recognizes that employees are their most important asset so they developed diversity and enrichment programs for motivating them and thus increasing productivity. The Company is also concerned with the suppliers and thus formed its own vendor conduct code (COVC).The code was to ensure that the vendors employees also worked in safe and healthy environments and were not over worked and were fairly paid. The Company also does branding and product development from design to distribution in-house but has also collaborated with other celebrity designers to develop their products, for example, Stella McCartney.
The liquidity ratio is calculated as:
Current ratio = Current Assets / Current Liabilities
4664/ 2131= 2.2. This ratio shows that the company can easily pay off its short-term liabilities easily.
Profitability ratios: Return on assets (ROA)
Net income/ total assets= 3125/7985 =0.39. This ratio shows how efficient the company is in using its assets to generate income.
External environmental analysis
The sales of the business have been on an upward trend for two consecutive years and this is a positive aspect. Gap Corporation was among the companies that dominated the clothing industry and dealt with all the market segments but there were new entrants for example Uniqlo from Japan who focused on making designs for the youth demographic. Information systems and technology are very important aspects to ensure the success of the company because through this the company can be able to get feedback from its customers from all their stores in various countries and can also monitor workflow in their various stores. Not only did the company open branches in different countries but also had franchising agreements in other countries for example Bahrain.
Conclusion
A countrys economy affects its operations for example in 2009 poor economic conditions in the United States affected the sales of the brands and the revenue decreased but by mid-2010 the sales had already gone up again. The company faces rivalry from other clothing companies for example Gucci.
The purpose of this essay will be to discuss the agency issues that are occur in multinational banks and how these agency issues differ from those of domestic banks. Agency issues refer to the conflicts of interest that usually arise between the shareholders and managers of a company. These conflicts usually occur because of the different interests represented by both groups which bring about an agency cost problem. The theory that is commonly used to explain agency problems within organizations is referred to as the agency theory. The theory explains the various aspects of agency issues such as why companies make bad acquisitions that are detrimental to the financial management of a company, the aspect of capital structure and the selling of company stock in the public market (Emery et al 2004).
Agency issues or problems are a common occurrence in many organizations especially publicly listed companies that are trading in the financial markets. These conflicts always arise as a result of the differing opinions between shareholders and managers of a company when it comes to running the operations of the company. For example an agency issue might arise when a company decides to invest in a business venture that the shareholders of a company might view to be too risky financially.
Because risky business strategies increase the risk of debt, shareholders can be able to benefit from the investment only if it yields higher returns than the initial investment. However in the event the risky business strategy fails, the shareholders will share in a significant way in the losses that have been incurred by the company. Agency issues are therefore constant problems that a company has to deal with especially when exploring new business investments (Brigham and Daves 2010).
Multinational Companies and Banks
This study seeks to determine the agency issues that are related to multinational companies with particular focus on multinational banks. Multinational companies are described as those companies that have business operations in more than one country. These companies manage the production of goods and services in more than one country and they employ a large number of employees to conduct the various business operations of the company.
These companies have been termed by many financial experts to be the distinctive feature of todays globalized economy as they contribute to a large portion of the worlds financial markets. Some multinational companies in the world have large budgets that exceed the gross domestic product of most countries in the world which means that they have a powerful influence in the local and international economies of countries around the world. Multinational corporations (MNC) conduct their business with the main aim of maximizing the shareholder wealth of the companys stakeholders (Pitelis and Sugden 2000).
Multinational banks have an equal influence on the globalized economy with most banks operating in more than 100 countries. These banks have an equal impact on the economy of the countries where they have established their operations which means that they are important instruments in the financial growth of a country (Barba and Giorgio 2004). Some of the well known multinational banks in the world include Citigroup which operates 16,000 offices in over 140 different countries.
Citigroup boasts of an employee base of 200 million customers while the second most known multinational bank, HSBC, boasts of having 128 million customers spread over 86 countries around the world. Multinational banks are some of the most profitable companies in the world and their growing influence in the financial markets of the world demonstrate their stronghold on investment and financial matters. A surprising fact that has arisen in the research of multinational companies is that most studies which have focused on the rapid growth of multinational banking over the last few years have been unable to provide any useful evidence that can be used to prove that the growth of multinational corporations is profitable for a company in the domestic front (Focarelli and Pozzolo 2005).
Studies that have been conducted on multinational companies have revealed that while domestic and cross-border financial expansions have been viewed to be beneficial for most companies in terms of the real economy, there has been weak and unsupportive evidence that explains the scope of the economies of scale and also the shareholder value of these financial diversifications (Hauswald and Bruno 2009). According to Cornett et al (2003), the limited number of studies that have been conducted on whether shareholder value is affected by cross-border expansions has still not been addressed adequately by most researchers in the field.
The debate has however continued on the costs and benefits that most multinational companys direct towards diversification activities. The arguments have mostly been based on a theoretical point of view with most researchers arguing that cross-border diversification activities can enhance the value of a company where they increase the market share and market power of the company in its country of operation (Correia 2009).
This increased market share enables these countries to efficiently utilise their physical and human resources for optimum results that will ensure the company continues to stay in business across the border (Amihud et al 2002). However, diversification might also diminish market share in the event the shareholders of the company view the diversification exercise to be too risky. This gives rise to an agency issue or problem for the company that in turn creates agency costs that will be needed to deal with the conflicts between the shareholders and managers of a company (Martin and Sayrak 2003).
Agency Issues in Multinational Banks
Just like all companies, multinational banks experience agency issues as a result of conflicts of interest that arise between the investors, shareholders and managers of the bank. To deal with these conflicts, companies usually spend financial resources and funds to ensure that the conflicts have been properly addressed. The cost that is usually spent to deal with agency issues is referred to as agency costs and these costs are usually higher for multinational corporations when compared to those that are incurred by domestic companies.
The reasons for this are that a lot of costs are needed to monitor and evaluate managers and chief executive officers who are operating across the border and also the employee numbers of multinational corporations are larger than those of domestic companies which means that more money needs to be spent to manage any conflicts of interest that might arise within the organization (Stiroh and Rumble 2006).
Multinational banks just like multinational corporations are driven by the main goal of diversification and expansion across the border and this might create an agency issue with the shareholders of the company who might have a problem with the large amounts of money that are needed by multinational corporations to invest in cross-border business ventures (Acharya et al 2006). An increase of the MNCs market value and share power usually comes at the expense of the companys customers, clients, investors and shareholders where their investments are used in the expansion activities of the company.
Such a situation leads to agency problems or issues that have a negative impact on the allocation of company resources which are needed to enhance the cross-border diversification activities of the multinational corporation. Most of the agency problems that arise in multinational corporations are similar to those that occur in domestic companies where a conflict of interest between the executives of the MNC and the corporations shareholders leads to an agency problem (Lamont and Polk 2002). To understand the genesis of these conflicts of interest, the agency relationships that exist in multinational corporations need to be discussed.
With regards to financial management, the agency relationships that exist in most corporations are the relationships between the stockholders and managers of a company and the agency relationships that exist between the stockholders and debt holders of a company. In such companies the shareholders wealth maximization might be overlooked as managers of the company strive to achieve their own personal goals rather than those of the company. Many multinational banks are operated by chief executive officers who are focused on maximizing the profitability of the company at the expense of the shareholder (Baker and Powell 2005).
As mentioned earlier, most multinational banks focus all their resources on the diversification of their businesses to international borders which at times impacts on the shareholder in a positive or negative way. When multinational banks engage in the cross-selling of financial products to international customers abroad, they create agency problems with their shareholders in the domestic market who might not gain shareholder values from their activities.
Most studies have revealed that managers are usually driven by the personal need to expand and maximize the size of their companies because of the benefits that come with company maximization. The benefits that accrue from maximization include job security where managers are assured of working for the organization in the event a hostile takeover occurs or the company is involved in a merger or acquisition. Managers who take part in diversification activities also increase their personal power and status both within the company and also in the eyes of investors. They are also assured of a higher salary and bonuses when they engage in company expansion activities as compensation in companies is usually directly correlated to the size of the organization (Brigham and Daves 2010).
Agency conflicts under such management usually arise when the managers of a company decide to pursue company diversification without considering the effect that these expansion activities will have on the shareholders of a company. The companys shareholders might object to the wealth maximization activities that the company wants to undertake which in turn creates an agency problem. If these problems remain unresolved, the shareholders might decide to withdraw their investments in the form of company stock and invest them elsewhere lowering the common stock held by the company.
To respond to this, the companys managers are forced to lower the price of their company stock so that more investors and shareholders can be able to invest in the company. The low stock prices in turn affect the financial returns on investment by the company which impacts on the overall profitability of the company (Schmid and Walter 2009).
To avoid such a scenario, the shareholders of a company are usually forced by circumstances to incur agency costs so that they can encourage managers on how to maximize the companys long-term stock prices. Agency costs cover three aspects which include the expenditures for monitoring managerial actions, structuring the activities of organizations and opportunity costs that are incurred by shareholder-restrictions when it comes to limiting the maximization activities of the companys managers.
Since managers are in the best position to manipulate information in the financial market, good incentives and compensation plans that are based on improving the stock prices of the company become good options to ensure their wealth maximization plans are dealt with. If the shareholders of a company fail to take any action on the behaviour of managers, they will incur a significant loss through their shareholder wealth as a result of managerial greed. Agency issues therefore have to be dealt with to ensure such a scenario does not happen (Fabozzi and Drake 2009).
Difference of Agency Issues between Domestic and Multinational Banks
The agency issues that occur in multinational banks are similar to those that occur in domestic banks as with all other companies that have investments from shareholders and other important stakeholders. However, there are several differences that exist between the agency conflicts that occur in domestic and multinational banks. To begin with, the agency costs that will be incurred by the multinational banks so as to effectively deal with agency conflicts will be much higher when compared to those of the domestic banks.
The high agency costs are attributed to the large number of managers, chief executive officers and employees who work for the multinational corporation which means that additional funds will be required to monitor the activities of the banks managers (Alessandrini et al 2009). Because profitability plays an important role in the diversification activities of most multinational corporations, agency problems will more than likely arise in trying to reconcile investment and commercial banking activities.
Investment banking for both domestic and multinational banks plays a pivotal role in the diversification activities of the bank but it creates an agency problem for multinational banks when managers try to incorporate investment banking into the commercial banking activities of the organization. Such reconciliation will lead to a decrease in shareholder value and the stock price of the company as the bank tries to manage a portfolio of various commercial investments (Focarelli and Pozzolo 2008).
Domestic banks are more focused on meeting the banking needs of the local market and also addressing shareholder investment issues to ensure that stockholders can be able to gain a return on their investment. Domestic banks that diversify their operations from within their country of operation do not have to incur diversification discounts which are usually transferred to the shareholders of the multinational bank (Villalonga 2004).
The economies of scale for multinational banks when compared to those of domestically operated banks are lower because of the increasing optimal size of the bank. As diversification involves increasing the number of human and financial resources, the additional costs needed to meet this increase in optimal bank size are always transferred to the shareholders of the company who might not be on board with the banks diversification activities. This creates an agency issue or conflict of interest for the bank where shareholders withdraw their stock from the bank (Amel et al 2004).
According to Laeven and Levine (2007), financial conglomerates or multinational banks that engaged in a lot of financial activities across borders had a smaller stock price when compared to domestic banks that had less diversification. The authors attributed this to the many financial costs that were needed to manage the international companies and also ensure that the expansion activities do not in any way interfere with the financial performance of the bank in the stock market (Lelyveld and Knot 2009). However, other researchers such as Baele et al (2007) noted that multinational banks had a strong positive relationship between the share price of the banks stock options and the income/balance sheet diversification costs that arise from increased lending activities by the bank.
Conclusion
This study has focused on the agency issues or conflicts that occur in multinational corporations with particular focus on multinational banks. The findings offered a definition for agency issues and also the types of agency relationships that exist within many companies around the world. The term multinational organizations and banks were also defined and the agency issues that arise in multinational conglomerate banks were identified and discussed. Since the investment activities of domestic and multinational banks are different, the agency issues that affect these banks are also different. The discussion therefore identified the contrasting aspects of agency issues between the two financial institutions.
References
Acharya, V.V., Hasan, I. And Saunders, A., (2006) Should banks be diversified? evidence from individual bank loan portfolios. Journal of Business, Vol.79, No.3, pp 1355-1412.
Alessandrini, P., Presbitero, A.F., and Zazzaro, A., (2009) Banks, distances and firms financing constraints. Review of Finance, Vol.13, No.2, pp 261-307.
Amel, D., Barnes, C., Panetta, F., and Salleo, C., (2004) Consolidation and efficiency in the financial sector: a review of the international evidence. Journal of Banking and Finance, Vol.28, No.10, pp 605-617.
Amihud, Y., DeLong, G., and Saunders, A., (2002) The effects of cross-border bank mergers on bank risk and value. Journal of International Money and Finance, Vol.21, No.6, pp 857-877.
Baele, L., Jonghe, O.D., and Vennet, R.V., (2007) Does the stock market value bank diversification? Journal of Banking and Finance, Vol.31, No.7, pp 1999-2023.
Baker, H.K., and Powell, G.E., (2005) Understanding financial management: a practical guide. Oxford, UK: Blackwell Publishing.
Barba, N.G, and Venables, A., (2004) Multinational firms in the world economy. New York: Princeton University Press.
Cornett, M.M., Hovakimian, G., Palia, D., and Tehranian, H., (2003) The impact of the manager-shareholder conflict on acquiring bank returns. Journal of Banking and Finance, Vol.27, No.1, pp 103-131.
Correia, R., (2009) Cross-border bank acquisitions: is there performance effect? Journal of Financial Services Research, Vol. 32, No.2, pp 169-197.
Emery, D.R., Finnerty, J.D., and Stowe, J.D., (2004) Corporate financial management. New Jersey; Prentice Hall.
Fabozzi, F.J., and Drake, P.P., (2009) Finance: capital markets, financial management, and investment management. New Jersey: Hoboken.
Focarelli, D., and Pozzolo, A.F., (2005) Where do banks expand abroad? An empirical analysis, Journal of Business. Vol. 78, No.6, pp 2435-2463.
Focarelli, D., and Pozzolo, A.F., (2008) Cross-border M and As in the financial sector: is banking different from insurance? Journal of Banking and Finance, Vol.32, No.1, pp 15-29.
Hauswald, R.H., and Bruno, V.G., (2009) The real effect of foreign banks. Paolo, Brazil: Paolo Baffi Centre Research Paper No. 2009-50.
Laeven, L., and Levine, R., (2007) Is there a diversification discount in financial conglomerates? Journal of Financial Economics, Vol.85, No.2, pp 331-367.
Lamont, O., and Polk, C.A., (2002) Does diversification destroy value? evidence from industry shocks, Journal of Financial Economics, Vol.52, No.1, pp 83-110.
Lelyveld, I., and Knot, K., (2009) Do financial conglomerates create or destroy value? evidence for the EU. Journal of Banking and Finance, Vol.33, No.12, pp 2312-2321.
Martin, J.D., and Sayrak, A., (2003) Corporate diversification and shareholder value: a survey of recent literature. Journal of Corporate Finance, Vol.9, No.1, pp 37-57.
Pitelis, C., and Sugden, R., (2000) The nature of the transnational firm. New York: Routledge.
Schmid, M.M., and Walter, I., (2009) Do financial conglomerates create or destroy economic value? Journal of Financial Intermediation, Vol. 18, No.2, pp 193-216.
Stiroh, K.J., and Rumble, A., (2006) The dark side of diversification: the case of US financial holding companies. Journal of Banking and Finance, Vol.30, No.8, pp 2131-2161.
Villalonga, B., (2004) Does diversification cause the diversification discount? Financial Management, Vol.33, No.2, pp 5-27.
In order to maintain and protect the professional image of the Altman Corporation, while at the same time maintaining a comfortable work environment, a new dress code policy is being instituted.
This document provides guidelines for dress and appearance. The guidelines apply to all employees including student interns. Everyone will need to exercise good judgment in the application of the code and discuss with their supervisors any questions or concerns about the guidelines.
General principles applicable to all employees:
Seams on all clothing must be finished. Clothes cannot be torn, ripped or frayed.
Pants should be neat and pressed. Classic styles such as chinos and dressy capris are unacceptable. They are civilian ware and not professional. Slacks of any kind are not professional either.
Sweat pants, exercise pants, yoga pants, shorts and leggings are unacceptable. Spandex biking shorts are also unacceptable. This is not an exercise class.
No bib overalls accepted.
Jeans of any kind are unacceptable. Jeans are too casual and do not depict a professional environment for such a corporation.
Underwear should not be visible above the waistline of the clothing. Neither should undergarments be visible through shirts.
Women should wear skirts or dresses that are of reasonable length. They should not be similar to those worn in the nightclubs. Tight skirts are not appropriate for an office setting.
Short skirts, beachwear and bare backs are inappropriate for the work place. This is not a beach.
Dress shirts, casual shirts, turtlenecks and golf shirts are unacceptable. You are not working in a restaurant but an office.
Inappropriate shirts or tops include tank tops, midriff tops, halter-tops, sweatshirts and t-shirts as outerwear.
Clothing must be plain with no wordings, logos, pictures, cartoons or slogans. That is too casual.
Political t-shirts are inappropriate. We are not campaigning for anyone.
No athletic shoes allowed.
Conservative loafers, sandals, boots, flats, dress heels and leather deck-type shoes are not acceptable. Neither of the above matches an office environment.
Hats of any kind are unacceptable.
Head coverings that are part of religious or cultural traditions are acceptable.
All executives and PR Representatives must wear a suit and tie.
For cold seasons, decent half-sweaters or full-sleeve sweaters would be accepted. No jackets or raincoats are allowed.
Enforcement
Any individual who fails to adhere to the new dress code policy will receive a warning but if they persist, the individual might be sent home and the payment withheld. This will mean a final warning. Further persistence will lead to immediate termination.
Background Information
Following some complaints forwarded to the company due to the unprofessional attire of some of the Altman staff, the company is seeking to make changes to the attire. The initial draft was rejected and the senior VP requested another one to be drafted.
Revision Summary
Classic styles of chinos, slacks and dressy capris will no longer be accepted in the companys dress code due to its unprofessionalism. They are too casual. Jeans will also not be regarded as part of the dress code. Jeans are casual and do not represent a professional atmosphere. Distress jeans are unacceptable also. Dress shirts, casual shirts, turtlenecks and golf shirts are clothing that are worn during vocation or sports therefore, they are not appropriate at the office.
All clothing must be plain and not contain any drawings or writings. This happens in restaurants and other non-formal areas, not in an office. Political t-shirts are also unacceptable because the firm does not do political campaigns. The PR Executives and Representatives will be expected to always be in a suit and tie. This would give them that appeal and they would look more professional.
Recommendation for Policy Adoption
I would like to encourage the staff of Altman Corporation to embrace the new dress code policy and dress appropriately and professionally. This new dress code would ensure that every employee and intern would look presentable and professional. The previous dress code made the offices look like a street since everyone wore whatever they felt like wearing. Clothing came in all shapes and colors and this caught the attention of the clients and not in a good way for that matter.
The dress code would also ensure uniformity in the dressing. The dress code will be strictly official, whether a permanent employee or an intern wears it. The dress code would also be used to give Altman Corporation its face. Since many clients visit the corporation, it would only be fair to make the clients feel like a professional lot is serving them. It would be very embarrassing to have a client, who is dressed in a full suit, being served by an executive dressed in a t-shirt, jeans and boots.
Eastvaco Inc. is an American organization that specializes in paper and paperboards processing, manufacture of specialized chemicals, lumber production, timber production, and development of land. The company has a decentralized leadership structure with its charlotte facility acting as an investment center with the responsibility of manufacturing the company products. This section examines the strengths, weaknesses, opportunities, and threats that face Eastvaco Corporation.
SWOT Analysis of Eastvaco
Strengths
From the company analysis, Eastvaco has several strengths that it can exploit to increase its performance and growth. The company has a favorable labor efficiency variance indicating that the cost of labor incurred by the firm is less than the budgeted labor costs. This could be because of good human resource practices and skilled employees in the firm. The comparison of Eastvaco with its industry and competitor performance indicates that eh firm has a strength in its strong liquidity and efficiency position. In addition, it has low debt ratios indicating overall financial viability compared to MeadWestvaco and the industry. Eastvaco also has strength in the decentralization of its decision-making. Through this strategy, the company can train its junior management on decision-making hence enabling them to assume future senior management positions in the organization (Artinkinson, Kaplan & Young, 2004).
Weaknesses
One of the weaknesses of Eastvaco is the measure of its performance using only financial measures. The measure only provides the financial performance of the organization and does not include the performance of other sections such as the customer, internal operations, and learning and growth perspectives. Despite a positive industry comparison analysis, Eastvaco has a weakness of low profits compared to MeadWestvaco and the industry.
Opportunities
The company has the opportunity to overcome its weakness of measuring its performance using only financial measures. Other non-financial measures such as a balanced scorecard should be used to measure the performance of the organization. Using such a measure, Eastvaco will be able to measure the performance of its entire departments such as the customer section, internal operations, learning, and growth perspective, and the financial sector. Analysis of the whole organization will provide the firm with a true picture of its overall performance hence exposition of areas that need further improvement (Kaplan & Norton, 2002).
Another opportunity is the opportunity to invest in the packaging project. From the company analysis, the packaging project seems favorable to Eastvaco because it has higher returns as indicated by a high NPV of $4,487, a high IRR and ARR of 11% and 24% respectively, and lastly, the shortest payback period of 3.2 years. In addition, the charlotte facility has the opportunity of acquiring the Cremodium facility at a low market price. Its acquisition will increase the companys productivity and overcome the weakness of low profitability.
Threats to Eastvaco
The major threat to the existence of Eastvaco is an increase in competition in the industry. This is possible because of free entry and exit. An increase in competition in the industry could affect the profitability of the company hence its production. However, the initiation of a new packaging project and acquisition of other facilities such as the Cremodium will alleviate any threats to the companys existence.
Conclusion
A SWOT analysis of Eastvaco arising from its financial analysis reveals that the company has major strengths in its financial performance, decentralization, and reduced labor costs. However, the company has a weakness in its realized profit and utilization of only the financial method to measure the company performance. The company can use its liquidity and efficiency strength to invest in the packaging project to increase its low-profit weakness and overcome industry competition.
References
Artinkinson, A., Kaplan, R. & Young, M. (2004). Management Accounting. New Jersey, NJ: Pearson Prentice Hall.
Kaplan, S.R. & Norton, D.P. (2002). The Balanced Scorecard. New York, NY: Harvard Business School Press.
The fundamental principles of valuation that ACME can apply to design its acquisition include collecting relevant information about the swap contract. The details must include the starting and ending dates, notional amount, rates to be used in payments, and settlement frequency. The following process is to calculate the present value of floating rates. This entails adding the current value of cash flows by first identifying the discount factor (df) for each time of the cash flow. The df should be defined according to the perception of ACME viewpoint of future rates using the forward rates such as the London Inter-Bank Offered Rate (LIBOR) ( SwapsInfo ISDA, 2022). It should be followed by calculating the present value of the notional principal. During the process, LIBOR forward rates will be used to discount the notional amount. The swap rate is determined and then used to determine its spread. Suing the approach, ACME will be able to design the right interest swap rate that suits the acquisition process.
Let interest rate swap be = IRS, present value = PV, notional principle =NP, floating rate payment = FRP
IRS= PV of FRP / PV of NP
Generally, an interest rate swap (IRS) refers to a mutual agreement between two parties to enable them to exchange interest payments in a given time. IRS is future contracts that are traded over the counter, which makes them customizable based on the preference of the involved groups. The focus is to enable a business organization to replace floating rate payments with fixed-rate based on LIBOR. The swap rate is the amount of interest demanded by the receiver during the exchange to cover for the possible uncertainty that is associated with paying the LIBOR rate on the specified time frame.
When the parties are making an agreement about the swap, the fixed rate flow must be equal to the expected value floating rate as per the LIBOR forward curve. A swap contract works in a way that when the receiver and payer agree, it is considered money whereby the lifetime value fixed interest cash flow must be equivalent to the speculated floating payments. In a case when the swap is less profitable, the counterparty has the potential of setting a countervailing trade ( Understanding Interest Rate Swaps | PIMCO, 2022). Since ACME wants to finance its acquisition with equity capital and debt, the appropriate interest rate swap it should opt for is the fixed-to-floating swaps. By using the equity, the company will be able to receive reasonable rates following changes in the market. In other words, the floating rates will guarantee ACME a positive stream flow of interest rates during the period. The fixed-to-floating swap will integrate the restructuring of the acquisition by prompting the investors to choose the fixed rate.
Despite the effectiveness of fixed-to-floating rates, ACME might face several challenges that might affect its acquisition process. They include uncertainty associated with changes in the value of currencies on a daily basis. The company might not be sure of the potential income that might be received following possible changes in the market. There is a reduced investment because most investors may fear the unpredictable nature of the floating exchange rates. However, the shortfall falls are extremely outweighed by the benefits of the option. For instance, it lowers the interest expense that the company should pay. Moreover, it will allow the management to easily match the assets and debts that are sensitive to changes in interest rates.
Value management is a process that is used to discover the different functions of the project. This includes coming up with techniques and tools which can be useful in meeting the required objectives. Value management will be used to successfully manage the construction of TechWatt Corporations new building. This will be beneficial, as it will ensure that the project flows smoothly from the inception to completion.
In addition, value management will assist in cutting costs while improving performance. This report will include the benefits of value management to TechWatt Corporation, the agenda for the study, techniques that would be useful if applied in the study. In addition, the issues that should be analyzed during the value management study will be dealt with. The participants of the program and the role they will play will be discussed.
Introduction
Value management has been widely accepted as a means of enhancing the value of a project from it inception to its operation. The process ensures that quality, performance, reliability are upheld while minimising the life cycle costs (Shen & Liu 2004).
Value management is useful in dealing with challenges like constraints in the budget and complexity of a project. Value management can assist in reducing costs while sustaining or improving the performance of a construction project.
TechWatt Corporation will benefit in many ways by using value management during the projects initial stages. It will be able to add value to the building project that thus improving its position in the market. The main benefit of value management is attaining the maximum the maximum value from the entire project.
This is what sets value management apart from other methods of improving value for projects or systems. TechWatt Corporation will be able to find the best ways to optimize design and establish the project objectives by analyzing the project briefs.
Information required before the workshop
Financial information is very important for decision making during the deliberations in the workshop. This includes the costs of the project, the expected benefits. The venture can create value if the benefits are more than the costs or if there is value for the money invested. Financial data is useful in his stage because sound decisions can be made based on this information. (Shen & Liu 2004)
Information about risks that TechWatt Corporation would face should be made available to the participants of the workshop. Considering risk is necessary in value management. Important data includes the kind of risks in the market and ways to manage these risks. In addition, the cost of dealing with risks should be highlighted. (Shen & Liu 2004)
People involved
Value management is a team activity which involves the interaction and cooperation of many people. The team TechWatt Corporation may include in value management study may include the project manager, constructor, company managers, the project finance team, design team, project cost manager.
A value manager must be part of the value management team. This individual is charged with the responsibility of understanding the value problems, coordinating value systems and implementing improvements to the company. (Woodhead & Downs 2001)
The finance team has to ensure that the project being embarked on by TechWatt Corporation has a sound capital investment plan. The team should also perform a detailed analysis of the project in order to find useful information that will be used during deliberations and decision-making. The finance team should ensure that the project follows the companys financial policies.
The accounting and financial reporting standards should also be followed. The managers responsibility is to ensure that there is proper planning. This includes asset disposal planning, asset maintenance, planning and capital investments planning. The basis of these plans should be the companys policies. (Woodhead & Downs 2001)
Areas for improving value
Constructing the new building to house the headquarters of TechWatt Corporation should create value for the organization. This may be in terms of increased profitability, a better working environment or improving the experience of the firms clients.
Value management will assist the organization in creating a means of balancing costs of a project and the benefits received. Value for money is a key feature in value management and it focuses on creating value for investment (DellIsola, A.1982).
Tools and Techniques
The value indicator technique is appropriate for this construction project. The focus of the technique is to ensure that the cost of a project matches the value that is realized from it. The relationship between cost and function of the structure to be built by TechWatt Corporation are critical in the value study. The value index is computed by dividing the dividing the function index by the cost index.
The function index is a number between zero and one which shows the degree of importance of the benefits expected. It can be determined by the value study team using mathematical methods such as the force decision method. The cost index is the calculated by dividing the cost of a component of the project divided by the cost of the whole project (Shen & Liu 2004).
Benefits of Value management for TechWatt Corporation
Employing value management during the initial stages of the building project will provide the advantage of acquiring greater insight about what the project is all about. The purpose and means of achieving the same will be known to various stakeholders. Often middle managers are not knowledgeable of all the aspects of a project and this will be a good opportunity to gain this insight (Woodhead & Downs 2001).
Value management will be useful for establishing project objectives, preparing the project brief and the consideration of concept and design alternatives. TechWatt Corporation will benefit from value management in many ways. It will be possible to simplify and ease processes in the project. There will be a lot of time, money is necessary to carry out the project successfully.
With proper planning and execution, efficiency will be enhanced hence time and money will be saved. Obsolete and redundant items and procedures can be known and discarded. For instance old technologies with are no longer efficient can be done away with (DellIsola, A.1982).
What the Value Management Study will entail
Value management will that TechWatt Corporation will be involved in will begin with the testing and validation of planning assumptions. The values, objectives and wants of the various stakeholders have to be informed about the planned changes and there approval sought.
What is important to stakeholders is what the managers need to embark on. After the decisions of the stakeholders are known and analyzed, the information received will assist in creating a lasting common vision and direction for the entire group. (Graham, Kelly & Male 2001)
It is imperative that the value management team examine the results of the study to company procurement and policies. In addition, they should ensure that there is no discrepancy with the law or company this is very important because it will ensure that there are no loopholes which can lead to lawsuits and exploitation by others.
Thereafter, the value manager needs to develop some master principles and goals which are the goals for the entire organization concerning a project. The challenges and opportunities that may be expected once the project work begins will be known to the important stakeholders (DellIsola, A.1982).
It is important to carry out a function analysis during the value management study so as to find out the things that need to be done so as to meet the projects objectives. The management of TechWatt Corporation should carry out this procedure so as to find areas of wastage, over expenditure and duplication.
This will provide an opportunity for value to be improved in the building project. The functional analysis will also enable the participants of the value management process to test the assumptions and requirements that are in the brief (Graham, Kelly & Male 2001).
TechWatt Corporation should be focusing on getting value for money therefore, the value management study will involve an analysis of the cost of the project verses the worth.
Each group of specialists e.g. the finance team, will have to examine, review and update the requirements of its own field. This will enhance the performance of the whole group as each individual contributes knowledge to his or her field of expertise. (Graham, Kelly & Male 2001).
During the value management study, it is necessary that the clients characteristics. This will ensure that the process takes into consideration the requirements of the clients that TechWatt Corporation serves.
The information that is necessary includes demographic data, experience, financial capabilities etc. this will enable the firm to use appropriate means of attracting and retaining customers. Value will be added to the process if customer service is carried out in light of the requirements of the customer. (Woodhead & Downs 2001)
The agenda for TechWatt Corporations value management study is to enhance its effective operations, customer service and business expansion. In addition, it is important that the process clearly show how the organization will get value for the money they invest in the project.
The individuals in the value management team will come up with measures to improve the business while meeting the customers needs. The new project should to add value to the core business of the organization. (Woodhead & Downs 2001)
Reference List
DellIsola, A.1982, Value Engineering in the Construction Industry, Van Nostrand Reinhold: New York.
Fong, P., 1999. Organizational knowledge and responses of public sector clients towards value management. The International Journal of Public Sector Management. Vol. 12, no. 5, pp. 445-454.
Graham, D., Kelly J., & Male, S., 2001. Value management of construction projects Wiley-Blackwell: Oxford.
Woodhead, M., & Downs C., 2001. Value management: improving capabilities. Thomas Telford: London.
Lin G., & Shen Q., 2007. Measuring the Performance of Value Management Studies in Construction: Critical Review. Journal or management in Engineering, vol. 23, no. pp. 2-9.
The Open Door Policy launched in 1978 denoted the commencement of a new era in the economic development of China. The countrys gross domestic product (GDP) level remains high, averaging approximately ten percent, which shows that it is a developmental state (Knight 2014). Accordingly, many multinational corporations (MNCs) consider China as a valuable partner and the target for investment. One of the key challenges associated with the operation on the Chinese market is the attitudes of local employees towards their workplace and career.
Most importantly, the generational differences that exist due to the historic events, social events and other local factors need to be taken into account. There are various studies that focus on the Western countries and the views of their employees, yet few authors explored the Chinese specifics related to the given area of interest (Yi, Ribbens & Morgan 2010).
The most significant differences can be noted among those who was born after the 70s, 80s and 90s. In this connection, it is evident that further research on the generational attitudes of employees in China in MNCs is relevant and necessary in order to provide practical recommendations.
Research question: What are the determinants that mainly affect the workplace attitudes of employees due to the generational differences for MNCs in China?
This dissertation aims to explore the current literature and the answers of the Chinese respondents who will be interviewed in the course of the study. The following goals were formulated in order to address the abovementioned research questions in a detailed manner:
To overview the contemporary academic literature that discusses the employees work values in China;
To specify the determinants that identify the work attitudes within each of the generational groups: the 70s, 80s and 90s;
To analyse the data collected from the participants and compare it with the literature based on such dimensions as gender, a work-family balance, career choice satisfaction, et cetera;
To draw pertinent conclusions and provide recommendations to MNCs operating in China, paying attention to its local environment.
This dissertation is structured in a classical way, including the introduction, literature review, methodology, analysis and discussion, conclusions, further research directions and recommendations. The critical literature review is used to collect information related to key theories, concepts and events associated with the 1970s, 1980s and 1990s.
Based on data collected from the recent evidence as well as the answers of the study participants in the course of interviews, findings are presented. The qualitative method analysis is applied to interpret the findings and provide relevant recommendations to MNCs operating in China. In addition, the paper discusses the gaps existing in research and practice in terms of a generational approach to managing employees in the workplace.
Literature Review
Identifying Major Concepts
A multinational corporation is defined as a for-profit organisation that operates in at least one more country other than its home country. The two key characteristics of MNCs include its large size and the worldwide presence, which is expressed in export and import of produced goods. These corporations make significant investment in foreign economies and open manufactures to transfer operations in their countries. In China, MNCs substantially contributed to the growth of the local market: in 2004, 28% of Chinas industrial output and 19% of its tax revenue was accounted for by MNCs (Park & Vanhonacker 2007, p. 8). Today, approximately 85 percent of the intellectual property is possessed by MNCs, while they brought a lot of cash transfers along with managerial knowledge. The concerns regarding the behaviours of multinational enterprises with regard to employees are reported as foremost and least developed (Park & Vanhonacker 2007). Various conflicts occur in the Chinese workplaces due to a lack of proper understanding the local culture and, most importantly, differences between generations.
One of the key trends in the area of the economic development of China refers to the fact that both local companies and multinationals consider launching more joint ventures and supporting the existing ones. This collaboration is mutually beneficial: one the one hand, the Chinese firms are looking for the ways to enter the markets abroad; on the other hand, MNCs need assistance in succeeding on the interior markets. As reported in the study by the KPMG, one of the Big Four accounting organisations, such a development needs to be encouraged by all the stakeholders since it is a path to overcoming the economic crisis (The future for MNCs in China: a KPMG study 2012). Namely, many Chinese organisations plan to double their workforce to meet the growing demands of the multinationals.
In order to better understand the attitudes of Chinese employees on their career and the place of work, it is essential to apply the concept of subjective well-being (SWB). It is a multifactor construct, reflecting an individuals idea of himself or herself, his or her life and social status. Most studies on SWB are generalised, and according to Diener, Lucas and Oishi (2018), this is due to the fact that the concept of SWB is developed at the intersection of economics and psychology and uses quantitative and qualitative approaches that reveal the socio-economic status and emotional responses of a person. The socio-economic approach to investigating the views of people determines the level of subjective well-being through the levels of national income per capita and GDP. The core of the majority of the recent studies is the question of how much subjective well-being is rising with the growth of social welfare (Diener, Lucas & Oishi 2018).
One of the most important complexes of SWB is responsible for relations in the professional sphere: profession, professional identity, income, et cetera. The well-being of the subject in labor has a great influence on the experience of subjective well-being. Work-related values of an employee reflect his or her perceptions of professional activity, including internal values associated with self-realization, motivation, burnout, and results of labour. The concept of SWB in the context of career is a criterion of professional identity and a reflection of a subjects attitude to the results of the work. The main criteria for SWB in the professional sphere are job satisfaction, professional health, quality of working life, financial health and satisfaction, subjective economic status and income adequacy to individual needs. The components of well-being of representatives of various professions are studied, and attempts are made to identify factors of the professional environment that contribute to increase the level of SWB.
The first important attempt to represent the concept of a generation as a social group was initiated by Karl Mannheim, who raised the question of understanding the relations connecting people from one generation. The author argued that the generation is not a social group as the latter is a union of individuals interacting on the basis of naturally formed or pre-established relationships (Cassell 2017; Burnett 2016). Generations, according to Mannheim, do not correspond to these two signs, and, therefore, they cannot be considered a group, but they are a special social phenomenon. However, Kim et al. (2018) argue that Mannheim defined the criterion of belonging to a generation as a class fitting, such as a place, position of a person in society. Class affiliation is an objective reality regardless of whether a given individual is aware of it and whether he or she recognises it. Thus, he defined membership in a generation as a type of social position. However, the author did not exclude the formation of subgroups within the same generation, which result from personal contacts between people who are members of a specific group.
Exploring the Key Characteristics of the 1970s, 1980s and 1990s
Never before, companies encountered such a quintessence of accumulated knowledge, professional experience and youthful maximalism. Different views, misunderstandings, conflicts, contradictions, intrigues and other difficulties can be regarded as the signs of the modern workplace in MNCs (Lyons & Kuron 2014; Lyons et al. 2015). In combination, the employees of different generations are likely to redraw their perceptions about the workspace and the future of the work process. Digital transformation widens the gap between generations and sharply raises the question of adaptation to new environments. The representatives of the late Millennials generation are the fastest to navigate under the conditions of rapid changes, while technology for them is an integral part of life: a smartphone, laptop and headphones.
On the contrary, people of the older generations, despite their professional experience and high competencies, sometimes do not even know which way to approach the printer. Wen, Muthuveloo and Ping (2018) assume that such a gap in worldviews is inevitable, and it is inexpedient to gather all the unskilled enthusiasts or merely qualified workers in one company: this will damage the microclimate in the team and the entire work process. Costanza and Finkelstein (2015, p. 320) argue that Scanning the environment, identifying workforce trends, developing appropriate HR policies and practices, and evaluating those policies and practices are long-established organisational best practices . In an era of digitalisation, MNCs are expected to be prepared to transform their workspace, staffing structure and work culture so that they can confidently enter the future.
The Peoples Republic of China (PRC) was founded in 1949 and formerly known as the dynastic empire. Since its proclamation, the country experienced various important and dramatic events that significantly changed the values of its people. Yi, Ribbens and Morgan (2010) distinguish between the three main eras, including Republican (born 1930-1950), Consolidation (born 1951-1960), Cultural Revolution (born 1961-1970) and Social Reform (born 1971-1976) (p. 603). The assumptions of these authors are grounded on the idea of perceptional differences elaborated by Egri and Ralston (2004), who explore the cross-cultural changes and generational differences of people in the United States (US) and China. It is stated that the understanding of how the employees perceive their work is helpful to anticipate their resistance or receptivity of new interventions (Egri & Ralston 2004). In many respects, the social and political changes affected the views of different populations, whose perceptions vary depending on gender, career choice satisfaction, a work-family balance, et cetera. It should be stressed that people born at the intersections of the decades tend to adopt the characteristics of both them, which makes it much more difficult to predict their future decisions.
The 1960s were marked by the onset and heyday of the Cultural Revolution, when the traditional Buddhist principles were extensively criticised. The official task of implementing the Cultural Revolution stumbled out of following the Marxist-Leninist strategy of building socialism by the Chinese Communist Party (CCP). However, Mao Zedong, being afraid of growing dissatisfaction with his policies on the part of officials, gave this concept a different meaning. The Confucian heritage was ruined and regarded as the outdated ones, while the power of a single political leader was proposed as the way to future success of the country (Yang 2016). The general movement towards communism made parents to educate their children in the devotion to being a part of the society in its aspiration to common good and acting like a Little Red Guard. Perry (2018) claims that children and adolescents who lived in the 1960s witnessed this dramatic drama, which unavoidably left an imprint on their entire lives. Yi, Ribbens and Morgan (2010) agree with the mentioned scholar, adding that this generation also encountered natural disasters and poverty, which stimulates them to consider any changes with great caution.
The self-sacrifice of the Chinese as a national feature was also suppressed at the beginning of the 1960s led by a shift towards the individualistic interests. Even though the period of the Cultural Revolution lasted till Mao Zedongs death in 1976, the 1970s are regarded as the most influential years. In order to understand the modernisation of China better, one should consider it as a process of change, a long-term transition from one state of society to another. As for the modernisation of China, this is a process of conversion from a traditional agricultural society to a modern industrial society. It is assumed that the generation of the 1970s faced more tragic events than any other subsequent population (Edge 2014). Due to their critical situation, they tended to obtain higher education and count only on their own efforts in life and career. High wisdom and college education also allowed people to boost their skills and knowledge in order to apply at the workplace and become a competent professional.
Until the 1980s, the Marxist understanding of social development dominated in many respects in the PRC. Even the processes of pre-revolutionary China were widely considered as went in line with the formation theory, which reduced the struggle of workers and peasants with Chinese landlords, foreign capital and Manchu domination to the explanation of the reasons and nature of its socio-historical dynamics. The concept of building socialism with Chinese characteristics that was put forward by the Chinese leadership in the early 1980s expanded the scope of research, focusing on the pursuit of new approaches. The recognition of the uniqueness of the ancient Chinese civilization and social thought, as well as their impact on modern development, became significant (Wang 2014). By the mid-1970s, it turned out that successful modernisation was not possible while maintaining the tradition, yet the attempts to completely abandon it also did not lead to success.
In the view of the identified situation, it was necessary to empirically find the conditions for the synthesis of the traditional and modern national values. Giving the modernizing role to traditional culture has become the main task of the CCP, which has managed to find a solution to it based on the Chinese interpretation of the ideas of socialism. In other words, the central conflict of political development of the PRC of the 1970s: between the universalism of economic transformation and the characteristics of historical development and national culture. As a result of the struggle of opinions, the priority of the productive forces and Chinese conditions was balanced by the course towards building a socialist spiritual culture and openness to the outside world. Moreover, loyalty to Marxism was still proclaimed the main ideological and political constant determining the attitudes of people.
The agenda of modernisation and One Child policy were the core characteristic of the generation of the Social Reform that was born in the 1970s. They were often mentioned as modern realists due to the fact that the government encouraged them to seek the financial well-being, which was driven by the most drastic rates of rejuvenation in China. The countrys course on the economic development became more pronounced during this period, thus affecting people in a way that made them pragmatic and less emotional compared to the previous generation. At the same, the poverty was reduced, and hunger was not a dominant factor in life of those who was born between 1970 and 1979. Peacefulness and silence can be noted as the most vivid signs of this generation that preferred concentrating on the financial side of life rather than the political one.
The radical political movement is another core issue that meaningfully changed the views of the Chinese population in the early 1980s. The influx of foreign companies pushed the popularity of the Western ideology among the local youth. A lot of students feverishly promoted the ideas of democracy, equality, free markets and neoliberalism, and the government westernised China. However, the military actions as well as political chaos during mourning services regarding the departed leader in Tiananmen Square in 1989 showed their failure. In particular, the death of Hu Yaobang, a pro-reform Communist leader, demonstrated that the social and policy changes led to anxiety in social consciousness (Edge & Armstrong 2014). As a result, people turned to become more conservative and focused on the financial achievements through building their careers. The intellectual progress of youth lived in the 1980s is discussed by Cherrington (1997), who mentions that the protection of the intellectual property in China became one of the main concerns.
People born in the 1980s and 1990s are referred to as Millennials in this study. This group, known in China as the new generation, unlike the previous generation that was born before 1980 have an increasing impact on the consumption and habits in the workplace. The younger generation of China seeks to see the world, and many of them postpone the traditional stages of life (for example, creating a family) to travel more all over the globe. Millennials born in the 1990s, especially those who do not yet have income, are largely influenced by their parents. In their turn, the parents also tend to be affected by their enterprising and technically sophisticated children. Recreation and entertainment are the main reasons for the trips of all Chinese tourists (Radaev 2018). Particularly, it is pertinent for people born in the 1960s, many of whom fly the nest left by children, and the Millennials of the 1990s looking for new experiences.
The 1990s are more often interested in the culture and heritage of the region. Today, Millennials turned into the most active and important part of the population, being the key consumers, distributors and users of modern technologies. At the same time, growing up in the era of the technological revolution, they are the most active users of social networks, blogs, instant messengers and services. Millennials tend to buy less traditional attributes of success, such as cars, real estate and luxury goods compared to previous generations. For them, lifestyle, convenience and experience seem to be more significant than the fact of owning an object. Sharing (co-consumption) is on the Time magazines list of ideas that will change the world in the near future, and it is gaining momentum in development due to its proximity to the values of the Millennials. They have made car sharing, sharing of umbrellas in China (Sharing E Umbrella) or sharing of paid but temporarily unused parking spaces (Justpark) popular.
By the end of the 1990s, migrants from the rural areas moving to urban regions dramatically changed the composition of the Chinese labor force. Chan and Nadvi (2014) state that the so-called Mingong primarily worked in factories, construction sites, agriculture and in the field of services (security guards, cleaners). Of all the population, 37 percent worked in the manufacturing industry, while the rest mainly in construction (14 percent), restaurants (12 percent) and in other services (12 percent) (Chan 2014; Warner & Zhu 2018). Today, they account for 57.5 percent of all those employed in industry, 37 percent of those employed in the service sector and they make up the majority of 20 million homeworkers. The problems faced by this category of the Chinese workforce are associated with low wages and poor working conditions. In addition, a lack of skills and insufficient language knowledge makes them seek for low-paid jobs.
Methodology
In management and sociology, an individual is considered as a representative of a social type. If one strives to understand the attitudes of a person, his or her perception of external reality and the world of his or her self-consciousness, the rational language of categories and abstractions is insufficient. It is necessary to approach an appropriate comprehension of the meanings that a person puts into various judgments and actions. In addition, an individuals actions are not always completely realised by him or her, and in order to understand their deep meaning, it is essential to make a lot of efforts to decipher the externally observable behaviours and statements and interpret them in sociological terms. The rationalisation of ideas about human behaviour also requires certain theories within which these actions can be explained. Therefore, a qualitative method of research that is primarily aimed at studying the problems of social interaction between people, structures, social institutions and organisations is selected for this dissertation.
The two key methods of data collection are applied to obtain relevant information based on the literature review identified in the previous section and interviews with the representatives of the 1970s, 1980s and 1990s. The evidence from scholarly articles published within the last 15 years was targeted as it vividly focuses on the trends of the mentioned periods. In particular, data related to the 1970s and 1980s is extensively discussed by researchers at the beginning of the 21st century. Accordingly, the generation of Millennials is a subject of the growing interest as their behaviours significantly differ from those of other categories. The official reports of both local and global reliable organisations were also used as sources. The literature analysis was conducted by means of the critical synthesis as well as an objective presentation of various opinions.
The interviews as the most common method of collecting quality data is another method of obtaining necessary information utilised in this dissertation. The essential feature of this method is the purposeful and predetermined communication of the interviewer with the respondent. This is due primarily to its versatility: one can gather information about the past, present and future of the people studied, as well as subjective and behavioural information. The main purpose of a formalised interview is to obtain the same type of information from each respondent.
In order to contact the potential respondents, one MNCs operating in China was reached, and consent forms were provided to employees of various generations, including the 1970s, 1980s and 1990s. The consent forms involved a brief explanation of study intent, research questions, and significance of the findings to them and their organisation. Convenience sampling method was used to ask the employees to take part in the study, and the inclusion criteria identified for participants were their age, nationality, the willingness to contribute to the study and work for a MNC. In total, 15 respondents, both males and females, were identifies, of which 5 persons born in the 1970s, 5 persons born in the 1980s and 5 persons born in the 1990s. The interview questions were elaborated based on the review of the studies exploring the attitudes of the Chinese employees of various ages.
In order to conduct the interview analysis, a map of topics and concepts that are important in this interview and may have something in common with other topics or concepts from the books and articles studied will be created. The interviews with all the 15 participants will be documented by using audio recording technology, which will be clarified to the participants in advance. After that, the parts and quotes that reveal and supplement the assumptions are marked, assigning them a specific code (a word related to a particular topic). Furthermore, the concept map will be refined and complicated, thus replenishing with new ideas. The researcher extended the topics to find connections, gaps, tendencies, limitations and contradictions. In this way, several key collective topics will be discussed in order to answer the main research question.
Findings and Discussions
The employees of different generations have their own characteristics and approaches to work. Some of them value progressive careers and stability such as Cultural Revolution generation, while others (Social Reform generation) consider that the balance between personal life and work is essential, and there are people that do not prioritise work. The latter, Millennials believe that the key issue is to enjoy their life, but, at the same time, there is sufficient reason to state that in their free time, they strive to change the world for the better. This tendency is due to the cultural, economic and technological codes in which the mentioned generations formed as individuals and began their professional activities (Sadykova, Khairullina, Ustinova, Pelkova, & Efremova 2015). Speaking more precisely, these are people of different eras with diverse attitudes to life. For example, the parents of generation born in the 1970s employees raised them strictly in an authoritarian manner, as a result of which their grown up children are still used to receiving directives at the workplace.
At the same time, one should emphasise the fact that the 70s is a rather resourceful generation. Hardened by historical ups and downs, they are stress resistant and used to work a lot. They often perceive problems as a natural form of existence. For instance, if an employer finds an approach and builds relationships based on recognition of their merits, they will be a reliable framework for the team of any MNC. This population is accustomed to rely on themselves in completing tasks and making decisions, taking the responsibility for the consequences. Nevertheless, they are sensitive to innovations and criticism, and it is quite difficult for them to adapt to the translation of the workflow into instant messengers, social networks and mobile applications. It should also be identified that their attitudes to colleagues are much more friendly compared to younger generations, which is caused by the intention to work in cooperation and achieve common goals.
The work of employees of different ages in the same office can be compared with a meeting in the family of representatives of several generations. In particular, a mother will not impose on her son a pickle that he dislikes, make coffee for her husband that he does not drink or offer her sister a salad that she did not like last time (Beutell & Behson 2018). On the contrary, she would try to think through entertainment and refreshments so that everyone is comfortable, which is pertinent to a working environment. If an employer observes that the employee is burdened by the office work, he or she can be offered to work at home several days a month. To offer a promotion that is completely uninteresting for him or her is pointless in this situation (Beutell & Behson 2018). If an employee is focused on building a career like the representative of the 1970s, it hardly makes sense to transfer him or her to a remote work, yet assigning new tasks in which he or she will show the result is an excellent option.
It should be emphasised that the Chinese employees are committed to the cultural values of their national, in particular, collectivism. Despite the differences, all three generations complement and positively influence each other, united by the values of the company in which they work. In other words, it means that management should convey these values to everyone in an easily understandable manner. In addition, it is important that the representatives of generations want to listen and hear each other, and then the result and success are likely to be more positive. In general, the foremost task of the management of the MNC, where employees of various generations work, is not to try to remake one of the others, but to get the maximum effect from combining experience with non-standard solutions and the speed of younger generations.
Technology and Innovations
Millennials set the trend for thinner and lighter devices, the reason of which is not only aesthetic, but also practical such laptops can be carried almost everywhere. This generation also have special preferences in design of the workplace area, which a component of their SWB. For example, as shown by social polls, the younger generation prefers technology in bright buildings (Berkup 2014). Younger employees actively use computers for voice communications, popularizing this approach among colleagues. As a result, approximately 65% of MNCs workers use personal computers as a telephone (Berkup 2014).
Therefore, it is necessary to pay attention to the audio component of computers for instance, the presence of several microphones allows to better perceive the voice, avoiding extraneous noise, and the presence of buttons for controlling voice communications simplifies the corresponding actions of users. Employees of the older generations are less interested in the mobility of devices and feel comfortable at their personal desktop, with an individual working chair and a personal smartphone or PC. When choosing a desktop computer for employees, one should pay attention to the presence of built-in proprietary protection systems and discrete graphics, which are valued by the 1970s.
Gender
Women who have received higher or secondary education, but have not achieved career success present a vivid fact in the Chinese recent history. The further growth of these women was taken into account when developing the state plan, and they enjoyed many privileges from the state. For instance, the state provided them with employment and support in the field of healthcare along with the equal suffrage with men. However, since the end of the 1980s, this group of women has changed due to the development of a market economy and enterprise restructuring.
Women over the age of 40 who worked in the corporate and commercial sectors were dismissed for various reasons in the 1990s and became the first victims of corporate restructuring. According to statistics, in 1997, Chinese women employees constituted 56 million 38.8% of the total number of workers; there were 2.48 million women dismissed from work 45% of the total number of people who lost their jobs. If these women were unable to find work, they could only live on cash benefits. It should be noted that women aged 20-30 who have received secondary and higher education also often could not find work in the 1990s (Tatli, Ozturk & Woo, 2017; Xia et al. 2014). From the point of view of Marxism, the liberation of women is a measure of universal human emancipation. Women in workplace are the main symbol of achieving equal status for both men and women, which is an important indicator of the level of political and social culture of any country. One of the weakest issues in the gender situation worldwide is the career position of women and China is not an exception.
The strong pressure on women over marriage leads to negative economic consequences since many are afraid to get away from an unequal financial status compared to their husbands. Such an attitude in the era of market reforms leads to a new gender gap in income (Fincher 2016). This is evidenced by failures in protecting the rights of married women to property, a sharply increasing gender income gap and reports on domestic violence as well as an information campaign organized by the state that stigmatized educated unmarried women.
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HTC Corporation is a company producing mobile handset, founded in 1997 by Cher Wang, HT Cho, and Peter Chou, as the chairperson, Director of Board & chairperson and the president and the CEO of the corporation respectively. Based in Taiwan, the company has since been the producer of the operator devices that currently dominates the market in the world.
Its association with the leading mobile operators has led to its popularity among the worlds major markets in the Europe, Asia, and the United States. In the recent past, HTC has been one of the fastest upcoming mobile handset production companies in the world. It was ranked number 3 in the Business Week global ranking in 2006 and was ranked the second in Asia the following year.
Mission
The mission of HTC Corporation was to be the leading pioneering manufacturer of tools used in communication and information technology like mobile handsets and notebook computers. This would be enhanced by provision of quality services and logistics.
Purpose of the Research
The research on HTC Corporation was conducted in order to explore the companys setting and strategies to obtain information that could be of use even to those companies that compete with it. A study on the prevailing business environment in the company by SWOT analysis would reveal whether the company meets the required specifications. Challenges and their possible solutions are also considered.
It is also aimed at assessing the extent to which the company digs into the world market. Particularly, it explores the companys investments in countries outside Taiwan and outside the Asian continent as well. In case the company has gone into the world market, the research explores some of the benefits the company has received and some of the areas that need reinforcement.
Finally, the research looks at the leadership of the company. What are the reputations of some of the key figures in the company that could be viewed as a marketing strategy? Possible problems that could be seen in the structure are explored and recommendations given on how to handle them.
The business environment of HTC Corporation- SWOT Analysis
In the SWOT analysis, the business structure and operations of the company is studied. When and why the company started and the products it deals in are discussed. It provides the organization with the information on the resources it has, and the way they can be used in reaction to the prevailing external environment.
The analysis is invalid if no objective solution can be obtained for the threats and weakness identified (Smith para2). HTC Corporation has been a pioneer, developer, and manufacturer of portable mobile products. Its products include smartphones, PDAs phones, and touch phones alongside many other products. These products use Microsoft windows Mobile or Android operating systems.
The company also deals in the development of software for mobile applications like Interface software, operating systems, and other application software. Its involvement in Original Manufacturing Design (ODM) operations has seen the company experience a generally increasing trend in the total annual revenue. It usually uses its brand name on the products, with some other products co-branded by other companies.
The company, that has its headquarter in Tauyuan, Taiwan, has almost 10,000 employees. It has other retail stores in countries in Americas, Asia, and Europe.
In this regard, the following can be the evaluation of the business environment in HTC Corporation:
Strength
The HTC Corporation has a number of factors upon which it can capitalize. Firstly, the companys use of its brand name enables the distinction of its products from others. Secondly, it also makes use of inventive and innovative procedures, like the involvement in ODM operations, which helps in marketing of the products. The company also has the ability to reach several distributors in the international market.
Besides, its partnership with key player Microsoft and other like Orange, Vodafone, 02, T-mobile and many other network service providers will continue to help the company advance into the market. It also receives high reputations in Asia, Europe, where they have several retail stores, and even in the United States. The corporation can also boast of labor availability due to plenty of human resources. Finally, dealing in a variety of mobile devices and software helps the company develops relations with a variety of dealers.
Weaknesses
The company also has some weaknesses. In the first case, its use of a co-brand name on some products definitely lowers the products market, as the consumers doubt its originality. Moreover, the corporation has relatively low reputation among African and South American countries.
Opportunities
There are also areas that the company could look into to challenge the others. Firstly, the need of the customers is never fully satisfied, especially in the current world of technology. Everyday there is a need to improve on the features of a mobile device. The services it can provide and how fast this can be achieved should be a factor to consider. Besides, developing countries could be the best markets for best selling companies dealing in information and technology products since such countries do not produce their own. Competition in such markets is not as stiff as the competition in the markets in the developed states.
Threats
A major threat that faces several production, and HTC Corporation is not exceptional, is copyright. A brand new product is introduced into the market and in the next one-year, similar, counterfeit product dominates the market mostly at lower prices. This leads to the loss of customers interest in the product since these fake ones are generally weak and short-lived.
Competition from the other mobile handset providers like Nokia and Samsung is also a challenge that HTC Corporation meet.
Some possible solutions and recommendations
SWOT analysis is a powerful instrument used by the management of an organization to both the external and internal factors affecting their organization and formulating strategies to overcome the negative factors while retaining the positive ones (Karadakis, Kaplanidou & Karlis 1)
The most effective approach in an attempt to withstand the above challenges is to be dynamic and be able to focus on what the future will require of the products manufactured. A chronological study of the generations of mobile devices that have been in existence since the 1960s when Motorola and Erickson dominated the market, the eighties when the huge analogue Vodafone was in place, up to the late nineties when the first message was sent, could help the company to forecast what would be desirable in the future.
As a manufacturer, HTC Corporation needs to adopt the current technology by adding features that are desirable at the time (Warman para15). Following the above trends, a company producing communication devices should currently researching on those that could be used by the challenged individuals in the society. Mobile devices for the blind and deaf should be an area of interest for a truly pioneering firm.
The company should also continue to form partnership with other firms like the one they recently formed with a navigation and solutions provider, Tom. This will enable the company to solve the problems of navigation and locations (Anon Para1).
Ensuring good working conditions is also another area that the corporations management should look into. Encouraging co-operation among employees, giving handsome remunerations, allowing a worker to what he is best in, and giving them opportunities to learn more, are the secrets behind the management of any successful companies.
HTC and Globalization
Globalization refers to the interaction of people and companies from different parts of the world usually for strengthening trade between these individuals or companies. It could involve not only individual companies but also the nations themselves. International trade has the advantage of promoting good relation among the participating states.
It has been facilitated by the use of Information Technology, which can enable an organization reach the world faster than it used to be earlier. However, globalization is not a new idea. It could be traced back many centuries when different countries traded with each other (Levi Institute para2). The difference is the adoption of current science and technology to improve the process.
In the recent past, the world market experienced a major crisis with some nations, or continents suffering more than others do. The global crisis had greater negative effects on the countries in the Central Asia and Eastern Europe. The international banking system was then affected in these countries. A research conducted by Berkmen et al (2010) revealed why some countries suffered the aftermath of the 2008 global crisis.
However, globalization is not only associated with fortunes. It comes with some challenges that the managers and professionals concerned must be aware of, and which they must form the required managerial strategies to solve. It continues to create massive change in the world of business and creates both opportunities and challenges for organizations, managers, and professionals of all types (Research and Markets: Outsourcing, Offshoring & Globalization continue to Create Massive Change in the World of Business- 250 Leading Outsourcing and Offshoring Companies Profiled para2).
Globalization in the HTC Corporation has not achieved to other competitors in the market like Nokia and Samsung. A web globalization report issued this year showed that Samsung and Nokia were rated fifth and fifteenth with HTC not featuring in the top twenty-five of the most popular website. This implies that, in terms of reaching the world market through the World Wide Web, both Nokia and Samsung will still be superior to HTC Corporation. As the current market wave prevails, greater part of the marketing is done online.
The company is also seen to have established fewer retail stores in Africa and South America compared to their stores in the European, and Asian countries. It is not very popular even in the United States where it has just eight retail stores.
The number of retail stores for the company stands at 1for Sudan and Senegal; 2 for Kenya and Uganda; 8 in the United States; 10 in Qatar and Japan; 38 in the United Kingdom; 80 in the U.A.E; 180 in Hong Kong and almost 2000 in India jus to mention a few. An unbalanced distribution of the retail stores is then evidenced indicating that the company has a lot more to do to compete in the global market.
However, the company is currently in the process of establishing itself in these other countries.
HTC has its North American headquarter in Washington. In effect, it has close relations to the local companies like Microsoft. This enables the companies exchange ideas thereby improving their services through improved technology. The company currently supplies a number of U.S companies with mobile handsets.
The same move should be extended even to the developing countries in Africa and other third world countries in the world. Competition in the market in an almost industrial state like India cannot be compared to the same in Senegal or Uganda where such technologies have not been developed.
Moreover, globalization is not only reaching for the world market. It also require the organization to inquire the current trends in the world markets, what people like and what they do not like in a product and a possible forecast into the future sales. Market and marketing research should thus be an integral part in the business planning of the company.
Leadership
The leadership in HTC Corporation comprises professionals from fields related to business and information technology. This has contributed to effective management of business planning and operations. The information of the profiles of the executives of HTC is available at their website.
Peter Chou: CEO of HTC Corporation
Peter Chou is co-founder and the current Chief Executive Officer of HTC Corporation. He has served the organization since it came into being in 1997. Chou has passion for excellent inventive and managerial skills and through his endeavors, the corporation featured in the world market as a dealer in wireless communication products (HTC Corporation website 2010).
He has served in the Information technology industry for over 20 years and has obtained outstanding achievements while in different capacities in different places. He has led the company during its integrated products development, which has seen the company emerge as the worlds largest manufacturer of smartphones and Windows Mobile PDA phones.
Under his leadership and management, the company has received several award had had been ranked internationally by various agencies. For instance, the Business Week global ranking placed the company at position two in Asia in 2007.
Before co-founding HTC Corporation, he worked with Digital Equipment Corporation as the Server Division Director. He has a bachelors degree in Electrical Engineering from National Taiwan Ocean University. In 2003, he obtained an Executive MBA at National Chengchi University, and in 2006, he completed an Advanced Management program from Harvard School of Business.
Cher Wang- Chairperson of HTC Corporation
Ms Cher Wang is also a co-founder and the current chairlady of HTC Corporation. She has outstanding records and long-term experience in the field of Information Technology. She has been able to help set up successful business plans in the technology sector due to her extensive managerial skills.
She has received several awards and recognition nationally and internationally due to her competence. For instance, Business Week named Wang among the pioneers and innovators in the 2005 Stars of Asia, a program that focuses on those spearheading changes at their organizations. She was also named among the best ten managers in Asia the same year.
Before co-founding HTC, she was the General Manager PC Division. During this period, her relentless efforts enabled the company First International Computers (FIC) feature into the global market of Information technology.
She is the current chairperson of both High Tech Computers (HTC) Corporation and VIA Technologies Inc. Wang has a Master of Economics degree from University of California, Berkeley. She is of Christian faith and married with two children.
HT Cho- Board Member of HTC and Chairman of HTC Foundation
HT Cho is the chairperson of the Board of Directors of HTC Foundation. The Foundation was started in 2002 and was aimed at promoting and supporting education, character development, creating awareness on health issues as well as promoting the spirit of multicultural coexistence. It aims at promoting teamwork, strong values, and the spirits of rational thought among the various communities. The Foundation has financed various training programs for teachers, counselors, and even management staffs throughout Taiwan.
Cho was the president of HTC Corporation between 1997 and 2004. He also became the CEO for one year between 2004 and 2005. His overall competence has helped the corporation establish a working environment that gives room for inventions and innovation by the employees.
Cho was born in 1950 in Taipei county of Taiwan. H pursued a Bachelors degree in Electrical Engineering from Taipei Institute of Technology. He later served Digital Equipment Corporation for 21 years (1975-1996). During this period, he got successive promotions until he became the head of Taiwan Engineering.
Fred Liu- COO of HTC Corporation.
Fred Liu is the Chief Operations Officer of High Tech Computer Corporation. He is charged with the responsibility of directing, overseeing, and managing the operations at the international level.
Having joined HTC in 1998, he has served at different managerial capacities. He has successfully promoted sales of the companys products like the first generation PDA phones. He saw the company being rated highly in the Guinness Book of world records for overall sales.
He has been in the forefront in the implementation of Original Design Manufacturing (ODM) operations, a strategy that has seen the company advance in its sales at the international market. He was promoted to this position in 2006.
Previously, he had served as a programmer at Mattel Electronics Taiwan and Director of PC Server Engineering at the Digital Equipment Corporation in Taiwan.
Liu has a degree in Electrical Engineering from Tatung University.
Observations and Conclusion
Other than these key figures, the corporation also has vice presidents; country directors, product directors, account directors, and finance directors station different countries where the corporation is established. These are professionals, some of whom have masters and doctoral degrees.
The combination of professionals mainly from the fields of Information Technology and Business is a strong strategy that can enable the company to compete and beat other companies dealing in the same commodity. As has been witnessed, the company allows for, and supports the staff who would wish to advance in education as a way of improving the organizations overall management.
There is need also to accept that cultural diversity is prevalent and should be prevailing in any organization. What is important is then managing the diversity (Marquez 4).What could be reinforced is the inclusion of people from across cultures in the Executive.
This is because, in order to succeed in the current competitive world market, the organization need to recruit and retain employees from across culture and this should be exercised without biasness (Robinson et al 1). For example, having the top officials as all Christian could lead to bad reputations of the company among the Muslims.
Works Cited
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Karadakis, Kostas, Kaplanidou, Kiki and Karlis, George. Event leveraging at mega sports event: a SWOT analysis. International Journal of Events and Festival management, Vol.1. Iss.3; p170. Bingley. 2010. Web.
Marquez, Joan. Toward Greater Consciousness in the 21st Century Workplace: How Buddhist Practices Fit In. A Journal of Business Ethics, Vol. 92, pp. 211-225. 2010. Web.
Research and Markets: Outsourcing, Offshoring & Globalization continue to Create Massive Change in the World of Business- 250 Leading Outsourcing and Offshoring Companies Profiled, PR Newswire. New York. Jun 2, 2005. Web.
Warman, Matt. DIALLING UP YOUR FUTURE, We are spoilt for choice when it comes to mobiles, but what really matters when you choose one next time-price, function or network. The Daily Telegraph. London (UK): Jul 2010. Web.
The Union Carbide Corporation is a very famous chemical company, and it has its base in the United States of America. This company harmed its reputation in 1984 when it got involved in the Bhopal disaster in India. This disaster involved the leakage of hazardous gases which led to the immediate death of 30,000 people and then subsequent deaths totaled to 20,000. The Indian Government and UCC both owned the Indian subsidy which operated the Bhopal plant. But when this disaster struck, many cases were filed just against the UCC, forcing them to pay huge amounts of compensations in funds and otherwise. The company even had to sell its shares in India and leave the vicinity. The company did a lot for the suffering after the disaster struck and has long-term plans for the future as well in the shape of a Responsible Care System.
Company Background
Union Carbide Corporation is also known as Union Carbide at times, is proficient at manufacturing chemicals and polymers. It is the United States-based and one of the oldest there, having a human resource base of almost 3800. The company was very well known in the United States and generated sufficient revenue to be labeled a successful company. (Matten, 2008).
The company came into being in the 1920s when its researchers hit onto something very unique and economical. They came up with the economical way to make ethylene from natural gas, which was actually the initiation of the modern petrochemicals industry which is seen nowadays. Over time, Union Carbide has heavily invested in its research and development and today it stands in a very competitive edge over other similar companies in the industry. Just stating one instance of such a competitive edge, Union Carbide is the proud owner of some of the industrys most advanced, modern, and state of the art processes as well as technologies that support these processes. Even the catalyst technologies, which are the important components in speeding up this process, are under Union Carbide. Moreover, it also deals with economies of scale whenever it is doing any sort of production, thereby bringing its manufacturing to the large scale and low-cost production zone. The company went through divestiture and thus had to sell off major products that it owned, namely Eveready and Energizer Batteries, Glad bags and wraps, Simoniz car wax, and Prestone antifreeze. These products, especially Eveready and Energizer Batteries, show the caliber that Union Carbide had in the chemical industry. It can also be regarded as one of the very famous in the world because it was a major company in the top-most economies of the world that is the United States. (Driesen, 2003).
On February 6, 2001, Union Carbide became a subsidiary of the renowned company The Dow Chemical Company (TDCC) and which is also wholly owned, and thus, this brought a major change in the customer base of Union Carbide. The company now sells the majority of its products to the TDCC.
Union Carbide deals with the manufacture of those products which are semi-processed, that is, they are converted twice or thrice before they reach the end consumer. Some are produced in larger bulk because they are in a lot of demand by various customers, thus they are known as high-volume commodities. Other products that are manufactured are just done in small volumes because they are produced to serve small market niches. The ultimate products to which Union Carbide contributes through its manufacturing are the paints and coatings, automotive industry, oil and gas, household products, and personal care. Thus, this shows a wide range of products over which Union Carbide has its foot. (Hancock, 2004).
Problem Definition
Union Carbide is spread not just in the United States of America, but in other parts of the world too. And thus, it had its wings in India as well. In 1984, a major industrial accident gave a bad reputation to the otherwise well-known company. In this accident, the Union Carbide plant which is situated in Bhopal, Madhya Pradesh, India released 40 tonnes of MIC, aka methyl isocyanate. The location in which the plant was situated was the heart of the city of Bhopal. This release of dangerous chemicals resulted in the immediate deaths of many people. There are many sources which state the figure as to the number of deaths that took place. The Indian Supreme Court states that more than 3000 people died in this accident while the BBC states that 3000 died as an immediate reaction to this release whereas the subsequent deaths were immense too, amounting to a figure of at least 15000, conveying the harmful repercussions of this release. Another source is Greenpeace, which is an international NGO (non-governmental organization) that aims to work for the betterment of the environment, and it states the total number of deaths to be as high as 20,000. Another channel of information is the Bhopal Medical Appeal, the exposure to the tables, which were leaking hazardous chemicals, was so high and extended to around half a million people. If the number of deaths is counted to date, then it can be very effectively said that roughly one person has died daily because of this release since the day it occurred, bringing the value to 20,000. (Krarup, 2003).
The actual leak was caused because of the way the plant had been designed. Moreover, there was a lot of economic pressure on the company to reduce the number of expenses that they incurred in designing, repairing, and maintaining the plant. What enhanced the problem was the fact that the plant was situated in a very densely populated area. Usually, such plants are situated in isolated areas, and thus when such accidental leakages take place, their repercussions are very less. Moreover, other factors contributed to the worsening of the problem namely that there was absolutely no existence of any plans for a catastrophe of this kind. India is a poor country and thus it also lacked the resources to provide quick and timely health care for all the victims of the leakage, which were very large in number. Even socio-economic rehabilitation was a loophole that further contributed to this problem. (Banerjee, 2007).
Another factor which many sources cite is the fact that the company was not being very proper in following the laws when it came to safety and maintenance. That is, the company was not maintaining the plant well after production processes had been closed in the early 1980s. The low maintenance which was kept also led to a major problem that is the failure of the safety systems to work when this leak was taking place. The company was also storing chemicals in large tanks, which is considered a bad practice. The company should have stored them in many small tanks. Furthermore, the material which was existent in the pipelines was corroding and the company was making use of more hazardous chemicals than the less hazardous ones. (Smith, 2001).
Relationships with Government
Union Carbide Corporation was not the sole owner of the plant which was in operation in Bhopal. Rather, the Indian authorities, that is the Indian government was also the second owner of the plant. UCC owned 51% of the plant, whereas the Indian Government-owned 49% of the plant. Even though the Indian Government-owned 49% of the plant and its revenues, the responsibility for all the techniques and the design totally lied with the UCC, because they had the expertise in this domain. (Polonsky, 2005).
After the leakage took place, investigations were held in the plant, which revealed that the two parties which were responsible for the contribution to this disaster and for the large magnitude of the disasters were none others but the owners of the plant, is Union Carbide Corporate and the Indian Government. To some extent, the Government of Madhya Pradesh was also held responsible but that was on a very limited scale. (Charter, 2001).
One of the aftermaths of the plant leakage was that 49% of owners of the corporation, that is, the Indian Government had closed the plant to outsiders, even to the second owner that is Union Carbide Corporation. This was strange and thus contributed further to the confusion. UCC has still not done any public release of their own personal research on the leakage that took place. (Madu, 2001).
The above-stated facts show that the relations between the Indian Government and UCC were very strong and closely knitted, as they both had their stakes in the well-being of the plant and thus they had to work with collaboration and coordination for the betterment of the plant. Even so that the design of the Bhopal plant of UCC was Indianized by the UCIL engineers so that the user is made of the products and materials which are natural and made in India only. This would save the expenses of both parties. Moreover, the Indian Government had even restricted the use of any kind of sophisticated technology and processes in the Indian plant. The UCC was famous for these sophisticated techniques only and they had to restrain from using them in their Indian plant. Moreover, India was deprived of many electronic parts and thus to save themselves from the time and energy of importing electronic parts when repair had to take place, the UCC engineers preferred to use pneumatic instruments. (Rainey, 2006).
The Indian Government immediately passed the Bhopal Gas Leak Disaster Act that gave the government the right to represent all the victims of this gas leakage, whether within India or outside it.
The Union Carbide Corporation offered a whopping US$ 350 million, which was the sum of the insurance. Moreover, the Indian Government demanded US$ 350 billion from the UCC, which is a very big sum of money (Crane, 2001). A civil and criminal liability case was filed against the Union Carbide Corporation India.
How They Overcame the Situation
To this date, UCC denies the allegations that were thrown on the company after the gas leakage. The company says in its defense that the gas leak was the result of sabotage and not because of any sort of non-activation of the safety systems. They claim that the safety systems were active and worked as well. Moreover, the company also says that it did all it could to relieve the people that had suffered from this gas leakage.
In 1989, after a period of 5 years, Union Carbide Corporation and the government did a settlement where UCC paid US$ 470 million, which was the insurance sum plus the interest that had accrued over it for the past 5 years. This was considered the full and final settlement of the case that was filed against UCC. The Indian Supreme Court even ordered the UCC to give finances so that a hospital could be set, all dedicated to the survivors and the victims of the Bhopal Gas Leak only. UCC abided by the Court and financed a hospital that contained 500 beds. The name of the hospital was Bhopal Memorial Hospital and Research Centre (BMHRC) and it was started in 1998. After the set up of this hospital only, the company UCC was able to sell its shares in the UCIL. This led to the sale of 50.9% of the interest that UCC had in April 1992. The sale of the shares of UCC led to a gain of $90 million, the whole of which was given to the making of the hospital. (Lascu, 2004).
On December 4th, 1984, which was the immediate next day following the leak, the company also sent various kinds of aid to the medical centers in Bhopal. Moreover, they also made sure that medical experts from international places reached India as soon as possible to assist in these medical facilities that were ailing the victims.
UCC even donated around $ 2 million to the relief fund which was made by the then Indian Prime Minister on 11th December 1984. The corporation even made efforts to establish an Employees Bhopal Relief Fund, which ultimately generated more than $5 million. This was very important in providing immediate relief to the suffering. (Depoe, 2006).
What They Are Doing for the Future
Union Carbide Corporation sold its Indian subsidiary to Eveready Industries India Limited. This Indian subsidiary was the very one that had operated the Bhopal plant and this sell-out took place in 1994. In 2001, UCC was purchased by The Dow Chemical Company for $10.3 billion, whether its equity or debt. Thus, the Dow Chemical Company was free of any liability to fulfill the expenses on behalf of Carbide that had resulted because of the Bhopal Gas Leakage. (Kolk, 2007).
The UCC has done many things for the future betterment of Bhopal. Firstly, it has collaborated with the Arizona State University and given it around $2.2 million so that it would use its expertise and set up a vocational-technical center in Bhopal. This center was constructed by the Arizona State authorities and was even opened but then the Government later closed it down, due to reasons unknown.
The Indian Red Cross also received a donation of $5 million from the Union Carbide Corporation. Apart from this, the most major contribution that the company has made to the future is the development of the Responsible Care system. This was done in coordination and collaboration with all the other chemical companies in the chemical industry. This was totally in response to the Bhopal crisis and this project was the initiative of the Union Carbide Corporation only. This project will ensure that such accidents do not take place in the future and the work through which this will be ensured will be very vast and will touch various disciplines. Firstly, community awareness will be increased so that people around the plant know any measures that they should take if they are residing in such an area. Secondly, the project entails the teaching of emergency preparedness which would teach the people of the vicinity that if a leakage takes place, what should be the first thing that they should do. And thirdly, it would set up process safety standards, which would be important to counteract any sort of leakage and harm that could be done to the employees of the plants as well as locales. (Green, 2001).
The above mentioned were the initiatives which were taken by the Union Carbide Corporation to ensure betterment and prevention for the future.
Conclusion
In conclusion, it can be said that it was the fault of both the Union Carbide Corporation as well as the Indian Government in the gas leakage which took place. The Union Carbide Corporation should not have let go of its sophisticated methods, processes, and machines. They should not have given to the decision of the Indian Government to Indianize the processes. This was even harming the corporate identity that UCC carried and then ultimately when the gas leakage did take place, further harm was brought to its name.
The Indian Government should also have had done some relief provided to the victims of the Bhopal disaster. All they did was put the blame on UCC and tried to collect funds from them. All the Government did was passed an Act through which it represented all the Bhopal disaster victims.
Such accidents can be very well curbed through the usage of environmental safety measures as well as awareness among the people, whether it is the public sector or the Government, or the corporate sector.
Works Cited
Banerjee, S. Corporate Social Responsibility: The Good, the Bad and the Ugly. Edward Elgar Publishing. (2007).
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Charter, M. Sustainable Solutions: Developing Products and Services for the Future. Greenleaf Publishing. (2001).
Crane, A. Marketing, Morality and the Natural Environment. Routledge. (2001).
Depoe, S. The Environmental Communication Yearbook. Routledge. (2006).
Driesen, D. The Economic Dynamics of Environmental Law. The MIT Press. (2003).
Graham, J. International Marketing. Irwin McGraw Hill. (2002).
Green, K. Ahead of the Curve: Cases of Innovation in Environmental Management. Springer. (2001).
Matten, D. The A to Z of Corporate Social Responsibility. John Wiley and Sons. (2008).
Hancock, J. Investing in Corporate Social Responsibility. Kogan Page Publishers. (2004).
Bose Corporation is a well-known producer of technically advanced and high-quality audio equipment. It is famous for professional audio systems, noise-canceling technology, and continuous R&D. Bose has a premium brand image driven by its objective to release devices that customers cannot buy anywhere else. The corporation used to improve speaker quality through research, giving less attention to design and other odd features (Dolan, 2019). Although it is a small company, Bose is an international company that operates in Europe, South America, the United States, Canada, and Asia. It also strives to sell products directly to the customer applying e-commerce and closing their retail locations.
Information About the Project
The company used to enjoy commercial success and a leadership position in the industry. Nevertheless, the last decade saw the rapid growth of the new major competitor-Beats Electronics. Although experts and consumers still rank Bose products higher than Beats devices, the privately held corporation lost its market share to the former. In 2017, Boses market share dropped to 8%, while Beats captured the headphone market, reaching a 25% market share (Frantell, 2019). As for 2019, the most preferable brand among wireless headphones producers was Apple (57%, their Beats brand got 26%). Bose finished second (39%), beating Samsung and Sony (Niu, 2019). In 2020, the corporations annual sales dropped by $0.4 billion. Hence, the new marketing strategy aimed to expand the client base and increase awareness is necessary. Better sound through research slogan accompanied with text-heavy press advertisement campaign loses the competition to more appealing rivals strategy. The new social media-based (Facebook and YouTube) ad campaign will last half a year, requiring a $2 million budget. Three months are needed for preparation: collaboration with celebrities, filming the video, posters, designing a slogan, and social media posts.
Target Audience Analysis
Boses primary target group ranges from young adults to middle-aged Americans representing middle or upper class. Thus, clients are not price-sensitive, value high quality of sound, and ready to pay for innovations. They are usually interested in technologies and enjoy a stable life. Audiophiles, travelers, musicians, and professionals (aviators, home builders) usually choose Bose. The secondary audience is millennial businessmen between 30-40 years. On the contrary, athletes, teenagers, and fans of celebrities prioritize Apple (Beats) over Bose due to better advertising and more appealing design.
Target Area Analysis
The campaign will mainly target business people who highly value their free time and quiet space, especially when they travel by train, plane, or subway. The focus is on middle and upper-class representatives that strive to avoid boisterous places using noise-canceling headphones. However, the project also aims to encourage athletes and young adults to buy Boses products due to its cool innovations. The majority of purchases currently occur in online mode, especially in pandemics; hence, the focus would be on social platforms.
Competitor Information
The biggest competitor of Bose is Apple, which acquired Beats back in 2014. The American teach giant provides its customers with a wide range of electronic solutions, including tablets, watches, smartphones, laptops, and wireless headphones. The company is known for its superior design and innovations, playing a trendsetter in the tech industry. For instance, the AirPods introduction in 2016 created an entirely new category of hearables and established a new market. Now Apple dominates the market having a whopping 54.4% share (Niu, 2019). Following the acquisition, Beats Electronics improved the quality of its products and increased its presence.
Current Positioning
Today, Bose management positions its products as high-end, highly technological devices with incredible noise-canceling technology. According to the FCB Grid above, customers decide on buying Boses products after receiving accurate information, highly involving thinking. The hi-fi manufacturer wants its customers to make the considered choice after analyzing the options offered in the market. The proposed positioning and differentiation belong to Quadrant 2 that requires highly involved feeling. In that case, self-esteem and personal ego will cajole them into buying. The promotional campaign strives to highlight superior technology and the status of the new product.
Slogan: Tuning the rest of the world out.
Targeting Strategies & USP
The modernized strategy will combine both rational and emotional appeal. Although advertisements in social media will still highlight headphones technical benefits, companies scientific credentials, they will be more focused on eliciting pride and self-esteem. USP: Bose Corporation offers the best noise-suppressing headphones in the industry. The proposed slogan reinforces the main benefits customers may enjoy choosing this particular product. Those who use Bose devices can easily separate themselves from the external noise and enjoy a high-quality sound. During the pandemic, when individuals more often stay together at home, the Bose earpieces allow every family member to enjoy their music, film, and other media entertainment separately. The products are costly because they are luxury and high-quality. The campaign targets medium and upper-class adults between 25-40 years old. Bose management should engage celebrities such as Ed Sheeran or Sam Smith instead of its regular educational advertisements in popular magazines (Fantell, 2019). New product designs will be promoted using social media and videos on YouTube to attract younger audiences and athletes.
Conclusion
Bose Corporation produces one of the best headphones and audio equipment in the world. The company is highly centered on research and development, gradual and ongoing innovation. Although it has superior technologies, the company loses its position to Apple and Beats due to inferior marketing strategy and advertisement. The proposed slogan and social media campaign will reinforce its luxury status and attract more customers.
References
Dolan, R. J. (2019). Bose Corporation: Communication strategy for challenging Apples Beats by Dr. Dre. HBS No. 518-036. Web.
