Category: Texas

Introduction

The world is changing fast due to the challenges of climate change and global warming. More people are experiencing the negative impacts associated with increasing levels of temperatures and pollutants. These issues could explain why human beings need to pursue environmentally-friendly initiatives and activities. The proposed sustainable city would be located in Texas City. In the country, this urban center remains of the pioneers of green construction and sustainability efforts. Texas is characterized by one of the best climatic conditions capable of supporting human life. The existing conditions and policy initiatives continue to offer the best ideas for investing in this region.

The proposed concept of sustainability means that more people will be required to remain responsible if they to make Texas City successful and capable of supporting the needs of future generations. The intended urban center will allow all residents to rely on renewable solar energy, promote a zero-waste model and reduced pollution, support equality, address poverty, and promote recycling.

Sustainable Development Goals

Reduce Poverty

The concept of the sustainable development goals (SDGs) is informed by the climatic challenges and issues affecting the global society today. The United Nations (UN) presented 17 SDGs with the aim of protecting the planet for posterity purposes. The first goal to guide the development of the proposed hypothetical city is that of reducing poverty. The main objective is to ensure that the poor and middle class members of this city survive by more than $1.25 a day (Meerow et al., 2019). The involved partners will go further to reduce the number of people living in poverty to fall below 14.2 percent (United Nations, 2016). These key achievements indicate that the need for additional resources would reduce, thereby being in a position to remain sustainable. Additional objectives under this goal include improving social protection systems and promoting equal rights. Key stakeholders will ensure that additional resources and basic services are available to the vulnerable and poor.

The second sustainable is to reduce hunger in the selected Texas City. This objective will guide the planners of the proposed city to identify how people can formulate their personal aims and record positive economic gains. In this urban center, it will be possible to encourage individuals to consider the power of equality to maximize the overall level of empowerment. Most of the companies located in this urban area would ensure that both men and women have access to equal opportunities. This approach would empower them to pursue their goals and eventually be in a position to lead high-quality lives (Guarini et al., 2022).

By empowering both men and women, the city will be in a position to record meaningful gains in the area of sustainability. This objective will play a positive role towards ensuring that more people have access to food, engage in agricultural production, and focus on small-scale economic activities. The effort will eventually ensure that Texas City has sustainable systems for maximizing food production and ensuring that hunger is no longer a challenge in this city.

The third key objective for the identified city is the reduction of inequalities. Under this sustainable goal, the involved professionals will consider the best approaches to promote social and economic inclusion for all citizens. People in the country will find it easier to access equal opportunities and eventually help minimize inequality. The strategy will result in reduced discriminatory practices and ensure that timely results are eventually recorded (Monteiro et al., 2020). This goal is sustainable and resonates with the global aim of improving the overall level of sustainability.

The fourth to guide the development and promotion of the intended urban neighborhood is that sustainable cities. This goal has been critical since it has made it possible for urban planners in different parts of the world to create better neighborhoods whereby more people can pursue and realize their goals. Some of the key issues these professionals need to take into consideration include reduced pollution, using renewable energy, promoting transport efficiency, and meeting the demands of all people. This goal will offer additional ideas for locating building, creating inclusive parks, taking the needs of disabled individuals into consideration, and engaging in green reporting (Marzouki et al., 2021).

This goal will guide all key stakeholders to consider how they can take planning to the next level while ensuring that the needs of the beneficiaries are met. The final outcome is that the city will continue to identify emerging sustainability opportunities and integrate them to transform people’s experiences. Expansion of public transport, support of vulnerable populations, and empowerment for all would become evidence-based approaches for delivering timely results.

The fifth goal revolves around the power of climatic actions to help fight environmental degradation. This goal encourages agencies and citizens to promote the use of clean and affordable energy. In this location, the available amount of daylight sun would support the use of solar energy for lighting and industrial operations. This source is renewable and has minimum negative impacts on the natural environment (Pijawka & Hagen, 2017).

More city dwellers would be connected to the designed grid relying on the proposed source of energy. This initiative will reduce costs for electricity while making it possible for different companies and individuals to pursue their goals (Swain & Yang-Wallentin, 2020). Buildings and institutions would be required to rely on solar energy and other renewable options that can meet their needs. These aspects indicate that national strategies, policies, and strategies will ensure that climate change actions are the guiding principles.

Urban Fabric

To achieve the intended objectives of an ideal Texas City, the proposed public spaces, workplaces, shopping areas, homes, and streets will be laid out in accordance with the demands of all stakeholders. This key objective could be achieved by redesigning the existing public spaces and ensuring that most of the buildings are sustainable. This SDGs outlined above are intended to guide the initiative whereby the issues of water harvesting, renewable energy, and drainage would be taken into consideration. By establishing a smarter and more sustainable Texas City, most of the people will be able to choose and live in the best places. They will rely on the available amenities, transportation needs, and the ease of accessing their workplaces, thereby being able to achieve their aims (see Image 1).

The planners will ensure that individuals have access to public spaces and parks for recreational purposes (Leavesley et al., 2022). By ensuring that all these features are properly laid out, chances are high that more people would use pathways to reduce transportation costs while engaging in physical exercises.

To develop the proposed city, the planning strategy would be influenced by the famous Brasilia city, one of the modern urban centers in the world today. The designers were able to include key transportation systems, green infrastructure, and buildings in such a way that they would take sustainability to the next level. This city’s innovative and architectural features compelled UNESCO to identify it as one of the heritage sites in Brazil (Holmes, 2019). The urban neighborhoods has unique feature that facilitate life and meet their needs. By integrating all key attributes associated with sustainable living, the planners of this city were able achieve their goals (Leavesley et al., 2022).

Modern scholars examine the aspects and green living attributes associated with Brasilia to pursue their goals of having more sustainable cities (see Image 2). The hypothesized city would, therefore, be planned in accordance with the features associated with Brasilia.

The integration of the identified strategies and SDGs will support the outlined vision for the targeted sustainable city. For instance, the consideration of the attributes associated with Brasilia could present useful insights regarding the best ways to plan streets, integrate parks, and support people’s transportation needs (Leavesley et al., 2022). The model will allow all key stakeholders to understand how they will support energy production, plant more trees in a convenient manner, construct reliable infrastructure, and promote disability inclusion. The outlined SDGs will encourage more people to address most of the possible challenges and identify emerging ideas for taking sustainability to the next level (Bravo, 2022).

The concepts of sustainable energy, efficient drainage systems, reduction of poverty, and promotion of equality will encourage more inhabitants to focus on the best ways to achieve the much-needed goals. These attributes will work synergistically to deliver positive results for the city within the shortest time possible.

The planners will implement practical strategies to reduce environmental and social equity issues. First, the identified SDGs will be critical towards ensuring that most of the people have access to the available resources and ideas to fight poverty irrespective of gender and age. The involved professionals will promote equity in the manner in which people access energy and water. The urban planners should sensitize more inhabitants about the importance of addressing emerging challenges and empowering one another in the areas of equality, job performance, and sustainability (Leavesley et al., 2022). Environmental equity issues could be reduced by ensuring that more people have access to farmlands or gardens while remaining responsible for their wastes and recycling efforts. The involvement of all key partners and community members will ensure that the proposed city eventually becomes a reality.

The outlined vision emerges as a unique philosophy that is founded on the outlined SDGs. The model is designed in such a way that all inhabitants and stakeholders appreciate the challenges of global warming and climate change. This understanding will guide them to stop relying on nonrenewable energy sources and avoid polluting the natural environment (Marzouki et al., 2021). The consideration of rain harvesting would ensure that the level of sustainability improves (Holmes, 2019). The created drainage systems and ideas of recycling and reusing will help minimize some of the health issues affecting many cities today. The created parks, proposed gardens, and infrastructure systems will meet more people’s needs while at the same time taking the idea of sustainability to the next level.

After implementing the proposals in accordance with the case of Brasilia, the urban planners, project managers, and architects will have to consider all the other SDGs and identify some of the guidelines that can deliver results. An aspect of continuous improvement would be essential whereby majority of the individuals would receive timely guidelines to pursue their goals. The beneficiaries will be encouraged to promote the notion of sustainability at a personal level if greater outcomes are to be recorded (Marzouki et al., 2021). The identification of other renewable energy sources, recycling technologies, and work-life balance for more people could support the city’s future objectives.

Conclusion

The envisioned Texas City is achievable since it is founded on a model that has worked effectively in different parts of the world. The presence of clear SDGs becomes the best foundation for implementing and pursuing the idea. The inclusion of key stakeholders and citizens who appreciate the current challenges of climate change could make the concept practical and viable. By selecting Texas City as the geographical location, it would be easier to benefit from the available natural resources, inclusion sunlight, to pursue the sustainable city dream. The outlined vision and subsequent attributes make it realistic and achievable.

The consideration of Brasilia as the best case study could present a good starting point for creating the best urban fabric. The commitment of all stakeholders, provision of resources, and a clear understanding of the outlined SDGs are critical requirements for delivering the intended city. These attributes show conclusively that the intended urban neighborhood is achievable and capable of transforming people’s lives.

References

Bravo, E. (2022). Brasilia, the smart city of the past. Tomorrow City. Web.

Guarini, E., Mori, E., & Zuffada, E. (2022). Localizing the sustainable development goals: A managerial perspective. Journal of Public Budgeting, Accounting & Financial Management, 34(5), 583-601. Web.

Holmes, D. (2019). What’s trending in today’s community park landscape design & planning. World Landscape Architect. Web.

Leavesley, A., Trundle, A., & Oke, C. (2022). Cities and the SDGs: Realities and possibilities of local engagement in global frameworks. AMBIO: A Journal of the Human Environment, 51(5), 1416-1432. Web.

Marzouki, A., Chouikh, A., Mellouli, A., & Haddad, R. (2021). From sustainable development goals to sustainable cities: A social media analysis for policy-making decision. Sustainability, 13(15), 8136-8157. Web.

Meerow, S., Pajouhesh, P., & Miller, T. R. (2019). Social equity in urban resilience planning. Local Environment, 24(9), 793-808. Web.

Monteiro, R., Ferreira, J. C., & Antunes, P. (2020). Green infrastructure planning principles: An integrated literature review. Land, 9(12), 525. Web.

Pijawka, D., & Hagen, B. (Eds.) (2017). Sustainability for the 21st century pathways, programs, and policies. Kendall Hunt Publishing.

Swain, R. B., & Yang-Wallentin, F. (2020). Achieving sustainable development goals: Predicaments and strategies. International Journal of Sustainable Development & World Ecology, 27(2), 96-106. Web.

United Nations. (2016). The 17 goals: Sustainable development. Web.

The responsibility of the electricity supply in Texas lies on the Electric Reliability Council of Texas (ERCOT) that supplies about 85% of electricity use in the state (State Impact, 2013). The areas not covered by ERCOT are supplied by western connection and eastern connection. The ERCOT was created in 1970 to succeed Texas Interconnected System (TIS).

The ERCOT occupies a unique position in the sense that it is not connected to the national power grid but operates as an Independent System Operator (ISO).

The ERCOT avoided joining the national grid due to the nature of the electricity generation in Texas. Electricity supply in Texas traces its origins on the need to smelt aluminium and light towns. In this context, small power plants had sprouted to generate electricity within Texas for their specific uses in their locality.

It is these small power plants that interlinked within Texas to form TIS which was the predecessor of ERCOT. At this time, Texas was self reliant and didn’t need to import electricity from neighbouring states. By the time the federal government formulated rules governing interstate electricity transmission, Texas already had its own self reliant intrastate electricity grid and didn’t see the need to join the national grid.

Texas is a heavily industrialized state and endowed with energy intensive industries demanding high usage of electricity. In this context, Combs (2013) notes that:

Texas produces and consumes more electricity than any other state, accounting for more than one-tenth of total U.S. energy use. Texas’ energy use is tied to its large population, hot climate and extensive industrial sector. As compared to the U.S., Texas has a high concentration of energy-intensive industries, including aluminium, chemicals, forest products, glass, and petroleum refining. Industry accounts for 50 percent of all energy used in Texas, compared to a 32 percent share for the U.S. as a whole (p.1).

Texas power demand was at over 60,000 Megawatts (MWs), in the years 2009 and 2010 experiencing the second highest power demands ever at 63,400 and 65,776 MWs respectively (State Impact, 2013). Wind production of electricity has continued to form an integral part of electricity generation in Texas. Indeed, in 2006 Texas State was the highest wind producer of electricity in the US, a spot previously reserved for California State.

Power Outages in Texas

The unique position that ERCOT occupies as an ISO means that it can’t tap into the national grid as it is not connected to it (ERCOT, 2013; Texas Government, 2013). This has sometimes occasioned power outages, especially during the peak hours. In order to avoid a full power blackout, the ERCOT initiates rolling power outages on a basis of the need.

A rolling power outages refer to a situation in which the power supply company such as ERCOT shuts off power in different regions of distribution to avoid total black outs. Sometimes rolling power outages have been conceived as load shedding as it reduces the load in the power grid.

Over the years, Texas region has experienced several rolling power outages. In 2011 Texas suffered one of its worst rolling power outages that lasted for more than 8 hours (Souder, 2011; Giberson, 2011). According to Souder (2011), the rolling power outages that lasted sometimes to periods of 45 minutes were occasioned by the cold weather causing “…7000 megawatts of generating capacity to trip” (p.1). The Texas power outages are generally produced in two scenarios: very cold weather or very hot periods.

The cold weather causes some power plants to freeze and break down hence producing less energy to the Texas grid. On the other hand, a hot season leads to an increase in power demand due to increased use of fans for cooling purposes. In this context, Texas electricity outages are tied to the weather pattern. Sometimes Texas has been forced to import electricity from Mexico. This wouldn’t have been the case had Texas been linked to the national grid.

Problem Statement

There are several problems facing the ERCOT ability to avoid power outages in Texas. These problems include increasingly small power reserve margins, evolving regulation in energy sector, weather patterns and profitability of power generation amongst other issues.

According to Galbraith (2011), power reserve margin which is the “…safety buffer the state uses when there is a shortage…” is increasing under the current expanding power demands (p.1). Indeed, state impact (2013) makes the following observation in regards to growing population and the effect of the same to the electricity reserve margin.

Texas’ population is set to double over the next fifty years, and companies are flocking to set up shop in the state. By 2015, the reserve margin is set to dip below its target, even with the new generation factored in, and it isn’t clear if the new plants needed to get above the line will fire up in time for the peak of summer 2014. But the updated forecast does potentially give the market and regulators more time to come up with more solutions to the state’s power crunch beyond simply raising prices (p.1).

The solution to this particular problem lies in the construction of more power plants in order to increase the reserve margin (UPDATE 3-ERCOT sees another tight summer for Texas power supply, 2013). This way with an increased power reserve margin, the ERCOT would be in a better position to respond to the increasing power demands.

However, consumer advocacy groups have opposed such moves based on the fear that construction of more power plants would increase the prices of electricity. This has the effect of discouraging construction of power plants since they would want to recoup the finds utilized in the construction through increased prices of electricity. On the other hand, environmentalists have also joined the fray demanding energy saving measures as opposed to producing more energy.

The unique position in which Texas power grid is not connected to the national grid has also contributed significantly to the risk of outage. This is because it implies that whenever there is a need such as is the case with power demand peak, ERCOT can’t tap into the national grid in order cover its shortfall.

Increasingly regulatory directives from the federal authorities are further complicating the ability of ERCOT to adequately supply the Texas users. A good example is the Environmental Protection Agency (EPA) regulation which seeks to limit the air pollution from power plants. This has the effect of discouraging power plant construction which is what is badly needed.

Changing weather patterns and the challenges associated with them in regards to electricity production or consumption as outlined above is another challenge to ERCOT. Another emerging concern has been the water utilization that is sometimes occasioned by droughts. Coal and gas plants need massive amounts of water to act as coolant. In drought seasons the water for this may not be sufficient for cooling purposes leading to a situation where plants are not running at full capacity.

Another challenge associated with availability of water is the construction of new coal plants. Service providers are increasingly unable to supply the existing power plants and any other that may be planned. This has hugely been demonstrated by the decision of Lower Colorado River Authority not to supply a proposed power plant (White Stallion) with water.

Knowledge Management in solving Texas electricity challenges

Knowledge management is a concept that has emerged from early 1990’s. Davenport (1994) and Duhon (1998) are some of the noted authorities who have given formal definitions of knowledge management (Koenig, 2012).

Davenport (1994) as cited by Koenig (2012) defined knowledge management as “…the process of capturing, distributing and effectively using knowledge” (p.1). On the other hand, Duhon (1998) offers a more comprehensive definition. Duhon (1998) as cited as by Koenig (2012) defines knowledge management in the following way:

Knowledge management is a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers (p.1).

Knowledge management is critical in resolving Texas electricity challenges in four critical ways; identifying the problem (as done above), getting an appropriate solution to the problem, implementation of the solutions and funding the programs.

Solutions, implementation and funding of the solutions to Texas electricity challenges

Several solutions can be conceptualized and implemented in order to reduce the load on the Texas electricity grid while addressing the challenges identified in the problem statement above. The ensuing paragraphs will discuss in detail the suggested solutions, the rationale for the suggested solutions, execution of the solution, as well as funding of the same. Knowledge management which involves effective management of knowledge will be used in linking the suggested solutions to similar cases practiced worldwide.

A majority of the heavy companies utilizing electricity are the industries that cause an over load to the power grid leading to power outages. In Kenya, some industries that consume a lot of electricity have opted to generate their own electricity in order to avoid the cost associated with the national grid power failure.

According to Electricity Regulatory Commission (ERC) (2012), such companies include “…James Finlay, Sotik Tea Company, Sotik Highlands Tea Estate, Oserian Development Company, Pan African Paper Mills, Unilever Tea Kenya Ltd and Tiomin” (Energy Regulatory Commission, 2012, p.1). Indeed some of these companies apart from using the generated electricity for their use are selling off the excess to the national grid.

Some of the Texas industries can be encouraged to generate their own electricity through state subsidies and offering of critical knowledge expertise from other countries and states. Some of these companies, especially the ones utilizing steams such as the smelting firms, may generate their own electricity.

They can use knowledge management from similar entities to find out how they may integrate the steam engine to generate electricity with the rest of their operations. If individual companies are in charge of their own electricity generation, this would have the effect of reducing the load from the national grid. They can also sell any excess electricity to the national grid and even to staff houses and offices.

Funding of such ventures can be construed from a cost cutting view. Companies in Kenya that have been able to generate their own electricity incur far less cost in generating the same as opposed to if they bought the same from the national grid. Thus own electricity generation is not only a means to cut costs but also to make some extra profit. Some firms have undertaken initial public offerings in order to construct their own power plants.

Ultimately construction of more power plants leads to a direct solution to the electricity shortage in Texas. Given the consumer advocacy group concerns on the possibility of passing the costs to the consumers, there is need for a new way to fund such constructions. There is need to fund the construction from sources that will not necessitate passing such costs to customers.

One such way is through an infrastructure bond that enables getting funds from the public and the public owing the constructed power plants. In this context, the consumers will eventually be charged a high price for the consumption of the power plants but they will also gain through dividends derived from the profitability of the power plants.

Infrastructure bonds would be ideal for this particular kind of expansion due to several advantages. Infrastructural bonds are a long term debt instrument that entitles the investors a certain returns on a periodic basis. Power supply generation is a product with ready consumption.

By the virtue of public participation through infrastructural bonds, power supply generation is likely to be prudently managed. In this context, by having the local community to participate by pricing the bonds in affordable prices per share there is likely to be less resistant to construction of more plants.

In the context of the concerns from the environmentalists, there is need to give incentives to power plants that produce clean energy. In this context, power plants that generate power from non renewable energy and other energy forms that pollute the environment ought to be adequately penalized. In this context, the penalties in monetary terms would be used to promote activities that clean out the environment and fund environment friendly initiatives.

There is also an increasing need for Texas to link its own power grid to the rest of the nation in order to tap from the power grid should there be need. Texas need to actively reconsider to what extend linking to the rest of the national grid would impact on the power supply of the state.

While the same will put the state electricity supply under federal electricity regulatory authorities, there is need to re-examine on what would be the dangers of doing the same. This discussion need to be put in the public arena with the view of determining on whether the shortfall in electricity during peak hours can be adequately catered by the national grid. This would be with a view of understanding on whether the same is a better deal than having to buy electricity from Mexico as has been the case.

Conclusion

Knowledge management is thus critical in examining the viable options of action given a detailed analysis of the concerns available in relation to the electricity problems. Disseminating the information to the public after an internal discussion with various stakeholders enables the public to buy into the ideas producing a win-win situation.

References

Combs, S. (2013). Texas energy quick facts. Web.

Energy Regulatory Commission. (2012). Electricity supply industry in Kenya. Web.

EROCOT. (2013). Erocot. Web.

Galbraith, K. (2011). Electric Grid in Texas faces multiple challenges. New York Times. Web.

Giberson, M. (2011). Texas Power Outages: A Preliminary Analysis (Cold snap brings failure–isolated ERCOT an issue). Web.

Koenig, P. (2012). What is KM? Knowledge management explained. Web.

Souder, E. (2011). ERCOT may initiate more blackouts Wednesday night, Thursday morning. Dallas News. Web.

Texas Government. (2013). Electric Reliability Council of Texas. Web.

UPDATE 3-ERCOT sees another tight summer for Texas power supply (2013). Reuters. Web.

What Is the Electric Reliability Council of Texas (ERCOT)? (2013). State Impact. Web.

Executive Summary

The business environment is often characterized by dynamics that require financial planning and rationale in making decisions. Specifically, a business in the music industry is dependent on perception and preference of the target clients.

Texas Religious Music Promotion Company is a non-profit sole proprietorship business that will revolve around planning music events and offering logistic support to private events within Texas City. The company’s long-term goal is to be the leading company in the music promotion services in public and private events within Texas in the next three years. On the other hand, the short-term marketing goal will be to acquire ten clients per week for the first six months.

Besides, the company will have a mission of adding value to the target consumers by offering free consultancy services for event planning.The company will strive to ensure that consumers continue benefiting from the music promotion services at all time. The business targets public and private events where music promotion services are required.

Through re-branding and ‘good better best’ pricing strategy, the target segment is projected to increase their demand for the company’s music promotion services. Therefore, applying the costing strategy, the company will reduce the prices to a certain minimum in order to attract customers from this segment and achieve the aim of the quantity maximization by the increasing number of services sold at low prices to cater for administrative costs.

The key success factors will be affordable prices, reliability, and quality of music promotion services. Personal saving and equity will form the main sources of funding for this business. It is projected that the business will break even in six months. The opportunity in the establishment of the business will permit penetration into the abandoned small events market segment.

Essential Elements of the business blueprint

Knowledge of the music industry is necessary to ensure sustainability of the business.Market demand will determine the returns against any investment in the business.Having knowledge of the business start up cost is critical in drawing realistic financing options and planning for expenditures on running the business.Financing options available is important to make the business idea into a reality since there must be a source of funds for investment in the business (Cheverton, 2004).

It is necessary to review the market in order to understand the weaknesses and the number of competitors to draw an ideal business survival strategy.The business should be in a strategic area in order to attract more customers and self advertise. In this case, Texas City forms an ideal location since several music events occur here annually.

Components of the business actualization

The business must acquire or hire the necessary equipment in order to stage any concert. The concert area must be rented prior to the music concert to divert any inconvenience.The deejay will be the main engine controlling the flow of activities during the concert.Ticket sales will form the part of direct returns in the business of music promotion. Budgeting of funds will be necessary to ensure that funds used to organize the concert are accounted for when reconciling the accounts after the concert.

Through printing of burners and fliers, the public will be made aware of the upcoming events. Research will be critical in gaining substantial knowledge of what to expect of the concert, in terms of sales, turnout, and performing artists (Winchester, 2006).

Business Environment Analysis

It is important to review the business environment through a SWOT analysis in order to position the business within its industry. Thus, it is necessary to review the strengths, weaknesses, opportunities, and threats of this business.

Strengths

The majority of theTexas Religious Music Promotion Company’s competitors rely on local consumers. This company will have an advantage since it will create consumer awareness through its promotions and advertisements. Besides, the business will charge affordable fees for its services. The company will use strategies like consumer education on how to get the best from the services by using it appropriately since its has the capacity to quickly expand its network.

Weaknesses

The catchment area for this company is narrow since it targets to serve a small geographical area. Besides, competition from established business may make it difficult to win clients who have established loyalty to other companies offering the same services.

The company depends on three persons as the workforce hence may not maximise its gains in the market. The company has the disadvantage of unreliability in service delivery since the triowill have to do all the work. Apparently, they cannot keep up with the demand even if they work for more than 60 hours per week.

Threats

The services offered by this company are very sensitive to changing client preference. For instance, a bad report or an unfortunately incident during music promotion may alter the perception of its clients. This may discourage them from visiting the business in the future. Thus, the business must create a waterproof public relations exercise to survive in this industry.

Opportunities

With a typical well organized commodity pool, this business is geared to quickly increase its market share since the beneficial interests can be distributed across the commodity users. This strategy will facilitate the restructuring effective sales and public awareness to develop product knowledge. If well merged with appropriate market mix, the strategy will secure a continual quantitative increase of the market by constantly maintaining relatively fare prices of the services it is offering as well as the maintenance of up to per competition levels from other competitors.

Financial Projections

Before deducting expenses

Texas Religious Music Promotion Company. Balance sheet statement As at 30 July 2014

Texas Religious Music Promotion Company

Income statement As at 30 July 2014

Texas Religious Music Promotion Company. Statement of changes in equity As at 30 July 2014

After deducting expenses

Texas Religious Music Promotion Company. Balance sheet statement As at 30 July 2014

Texas Religious Music Promotion Company. Income statement As at 30 July 2014

Texas Religious Music Promotion Company. Statement of changes in equity As at 30 July 2014

Evaluating the business

Reviewing the profitability, liquidity, and efficiency ratios

Profitability ratios give an indication of the earning capacity of an entity. The ratios measure the effectiveness of a company in meeting the profit objectives in the long term and short term. It summarizes the returns for every unit of investment resources. The ratios used arethe returns on resources rationally and marginal ratio. Thus, when the profitability ratios are positive, the music promotion business will go on.

Efficiency ratios focus on the internal operations of the company. These ratios show the company’s level of efficiency. That is, how adequately a company pays creditors, how efficiently the company receives payment from debtors, and how frequently the company purchases merchandise.

Reflectively, some of the efficiency ratios used includes turnover ratios and days in receivables. Besides, the creditor payment period isused. At the end of the three months, stable efficiency ratio will mean that the business is sustainable (Kennedy & Ehrenberg, 2001).

In the event that the music promotion is unsuccessful, the business will not be shut down because it is prudent to analyze the finances of a company after the close of a fiscal year. A firm should only shut one when the profit generated cannot cover the fixed costs incurred in running a business.

Businesses often follow the growth hypothesis. In the first few years of operation, profit is likely to be low due to the high cost of operation. However, after some period, the business is likely to pick and earn higher profit. Thus, it is not prudent to close down a business after a few years of operation. However, when the under-performance persists for long, then it would be necessary to close down the business.

References

Cheverton, P. (2004). Key Marketing skills:strategies, tools, and techniques for marketing success. London: Kogan Page.

Kennedy, R., & Ehrenberg, A. (2001). Competing retailers generally have the same sorts of shoppers.Journal of Marketing Communications, 7 (2), 19-26.

Winchester, M. (2006). Positive and negative brand beliefs and brand defection/uptake. European Journal of Marketing, 42 (6), 553-570.

Target markets

Market targeting is one of the most important elements in marketing of products and services. Target market entails a distinct segment of the total market that is comprised of a group of potential customers that a firm intends to capture and market its products and services to (Abramson, 2009). In its initial market entry phase, Texas Religious Music Promotion Company will focus on developing strong market recognition within Texas before venturing into other regions in the country.

The firm will target individual and institutional customers. Some of the institutions that the firm intends to market its services to include churches, Christian institutions and annual conferences organized by renowned gospel music groups such as the Women of Faith and T.D Jakes MegaFest.

The firm will also target major Christian festivals and Theme Parks. Currently, Christian festivals in the US are attracting thousands of fans. Some of the festivals that the firm will target include the Freedom Festival, Cornerstone and the Spirit West Coast festivals. These events attract a large number of gospel music fans annually.

Decision to target individual and institutional customers was informed by increase in demand for gospel music in the US. The firm projects that it will achieve its profit maximization objective by marketing its services in the two market segments.

Positioning

Market positioning is one of the most important aspects that organizations should take into account in an effort to deal with the competitive nature of the market (Russell, 2009). This arises from the fact that it makes a particular brand to be entrenched in the customers’ mind hence increasing the likelihood of customers purchasing the product (Russell, 2009). Texas Religious Music Promotion Company intends to position itself as the best gospel music promotion company in the US.

In order to achieve this, the firm will ensure that its services contribute to development of a unique experience amongst its consumers. One of the aspects that the firm will focus on developing and sustaining is quality. Texas Religious Music Promotion Company will ensure that a high level of professionalism and customer focus are maintained.

To achieve this, the firm will provide adequate training on its employees on how to offer services to customers. Additionally, the firm will design performance standards that employees will be required to adhere to in the course of executing their duties. This will play a significant role in developing a high level of customer loyalty.

Marketing mix

Product strategy

Texas Religious Music Promotion will specialize in planning and promoting public and private music events. The firm will also provide logistic support to its clients. This will be achieved by offering free consultancy services on how to organize events.

In the course of its operation, the firm will deal with promotion of all genres of gospel music such as classical, jazz and other forms of contemporary Christian music. Moreover, the firm will ensure that music by diverse artists is integrated in the events. This will increase the likelihood of the firm attracting a large customer base and enhancing the level of customer loyalty.

Pricing strategy

Price is one of the most important factors that consumers take into account in their decision-making process (Bartlett, 2008). In an effort to attract a large number of customers, the firm will adopt the good, better, best pricing strategy. This will be achieved by integrating three main price tiers hence giving customers an opportunity to select their preferred tier.

An acceptable price differential will be integrated in the various music categories. The price differential element will also be determined by the artist of the music being played. The price of playing music by famous gospel artists will be set at a relatively higher point compared to that of emerging gospel artists.

By incorporating the good, better, best pricing strategy, the firm will be able to influence the customers’ decision-making process. This arises from the fact that they will perceive the firm’s services to be fairer compared to competing profits. Consequently, the likelihood of customers consuming the firm’s services will be increased. As a result, the firm will be able to achieve its quantity and revenue maximization objectives.

Promotion strategy

Texas Religious Music Promotion Company intends to create awareness to a large number of customers. Consequently, the firm will integrate diverse market communication methods. Some of the methods that the firm will utilize include advertising, public relations, sales promotion, and personal selling. The firm will advertise its services through traditional mediums such television, radio and print media.

The firm will post adverts informing potential customers of the services it provides on national dailies and various entertainment magazines. Additionally, the firm will also design catchy banners which will be posted on billboards that are strategically located. Brochures and fliers will also be issued to customers. This will increase the likelihood of creating awareness to the older generation.

On the other hand, public relations and personal selling will be achieved by integrating the concept of direct marketing. To achieve this, the firm will enter into a contract with renowned gospel music promoters in the country. This is underscored by Abramson (2009) who asserts that Music promoters are very effective in creating public awareness regarding concerts and festivals due to their experience and hard work.

The firm will also incorporate emerging Information Communication Technologies such as the Internet in its advertising process. To achieve this, the firm will design an official website on which information regarding its products and services will be posted. This will give customers an opportunity to develop a comprehensive understanding regarding the firm’s operations. Social media will also be integrated in firm’s advertising processes.

Some of the social media platforms that the firm will utilize include Facebook, Twitter, You Tube, MySpace and blogs. Currently, a large number of consumers are utilizing social media to interact with family and friends.

By integrating these social networks in its advertising processes, the firm will be able to create awareness to a large number of customers. Moreover, these mediums will provide a platform for the firm to interact and bond its customers. As a result, the firm will be able receive market feedback hence developing a better understanding of the customers’ tastes and preferences.

Distribution strategy

In an effort to reach a large number of potential customers, the firm will establish offices in different parts of the US. This will play a significant role in improving the convenience with which the customers access its products. Additionally, the firm will develop a call center through which it will offer free consultancy services with regard to event planning.

People and process

Texas Religious Music Promotion Company is committed towards developing a high level of customer loyalty. As a result, the firm will educate its employees on how to be courteous to the customers. Moreover, the firm will employ professionals in order to ensure a high level of accuracy in the process of offering services.

This is due to the fact that the level of satisfaction amongst consumers is influenced by the nature of contact created between the customer and the service provider. By creating effective customer contact, Texas Religious Music Promotion Group will increase the likelihood of succeeding in the US market.

Reference List

Abramson, H. (2009). How not to promote concerts and music festivals. Chicago: Concert Promotion Manual.

Bartlett, D. (2008). Recent trends in US services trade, 2008 annual report. New York: Cengage.

Russell, E. (2009). The fundamentals of marketing. London: AVA Publishing.

Executive Summary

Texas Religious Music Company is a non-profit making company that shall market and promote gospel music genres and Christian activities and festivals. The Company will also offer free consultancy services on logistics. It is a sole proprietorship company.

The Company will open its main office in a suburb location within Texas City, Corpus Christi Texas.

The Company will target individual musicians and institutions. These include religious organizations and renowned personalities in Christian faith like T.D Jakes.

Texas Religious Music Company will use market research to leverage all elements of marketing mix in order to achieve its marketing and sales objectives.

The Company’s key success factors include nationwide consumer awareness, affordable services, consumer education, free consultancy services, and professional services and customer experience.

Texas Religious Music Company’s short-term goals include creating awareness and acquiring at least ten clients every week. The Company intends to spread to other states within three years after inception.

Texas Religious Music Company will recruit professionals and train them on their respective jobs. This would ensure that employees provide the best services to customers. The Company will provide adequate resources and leverage on modern technologies in order to deliver superior services to the market.

Texas Religious Music Company has different sources of funds, which include bank loans and overdrafts, share capital, contributions from families, friends, and other associates, who may opt for shares in the Company.

The Company’s financial projection indicates that it would be able to sustain itself over the years.

Income statement. As at 30 July 2014

The Company shall ensure smooth management and operations. It shall recruit only qualified employees and reward them based on their performances. Texas Religious Music Company will create a supportive work environment that minimizes employees’ stress and turnover. All employees will adhere to the Company’s code of conduct and ethics. The Company strongly advises its employees to avoid conflict of interests and consult when in doubt.

Texas Religious Music Company will operate within the state and federal laws. The Company will protect itself against unscrupulous businessmen. It will avoid risks associated with pirated music and other illegal activities within the music industry.

General Company Description

Texas Religious Music Company (The Company) is a non- profit marketing company located in Texas City, Corpus Christi Texas. The Company’s mission is to provide the best professional marketing services to the gospel music industry and religious institutions. Its goal is to be a successful company with leading professional services.

The Company would market gospel music, related services and products for institutions like Christian churches, conferences, and gospel singers. It targets renowned personalities and groups like the Women of Faith and T.D Jakes MegaFest. Other potential clients would also include major Christian festivals and Theme Parks.

The Company will aim to market such products and services to the Freedom Festival, Cornerstone, and the Spirit West Coast festivals. Texas Religious Music Company decided to pursue both individual artists and institutions because of an increasing demand for gospel products in its target markets.

Texas Religious Music Company would be located in Texas, but it will spread to other states after three years in operations. It shall achieve this through promotion of music in both private and public events. The Company’s short-term aim is to acquire ten clients per week for the first six months.

The Company believes that gospel music and Christian services require professional marketing in order to reach many potential consumers and audience.

In the recent past, the gospel music industry and other related Christian services have grown significantly with a large fan base and followers. The number of gospel artists has increased. These musicians and other evangelists require professional marketing services for their products and services. The Company would take advantage of emerging technologies in order to promote its services in Texas and other regions.

Texas Religious Music Company believes that excellent customer service and professionalism in provisions of services would be the key to its success in a competitive music industry of the US. Moreover, the Company will work with professionals in order to create best and unique customer experiences.

Texas Religious Music Company is a non-profit sole proprietorship business. Therefore, it will not plan music events and offer logistic supports to private events within Texas City with the aim of maximizing returns on investments.

Products and Services

Texas Religious Music Promotion will provide services and products related to planning and promoting public and private music events. In addition, the Company would also offer logistic services to its customers. In particular, Texas Religious Music Promotion would provide free consultancy services on issues related to events planning and executing.

Promoting gospel music genres could also form a part of marketing services that the Company could provide. Music composition would be classical jazz and contemporary popular Christian music.

In order to acquire a large market share, Texas Religious Music Promotion shall promote gospel music from several artists with different types of music genres. This is a strategy of providing services to a large number of potential customers. Texas Religious Music Promotion aims to grow its market share through mixed approaches in services and products.

Texas Religious Music Promotion will have competitive prices for its products and services.

Marketing Plan

Texas Religious Music Promotion will engage in effective marketing activities in order to ensure that it succeeds. Therefore, it would conduct a careful, systematic market research in order to understand prevailing conditions in the gospel music industry, events, and concerts. Market research would allow the Company to understand its position within the industry (Cheverton, 2004).

The Industry

The gospel music industry has grown steadily since 1970s. In fact, there are big firms like Word Records, CBS, ABC, Priority Records, and MCA. Analysts note that the market has grown steadily since 2005 by 30 percent (Price, 2003). However, the overall sales of albums have declined due to effects of recession (Geil, 2009). A lack of huge profits has driven away profit-focused organizations. This is favorable for Texas Religious Music Promotion because it is not profit-driven venture.

The Target Market Share

Texas Religious Music Promotion aims to control 20 percent of the market share within the next three years. The Company believes that its professional services and excellent customer services would make it a major player in the gospel music industry and other Christian services.

Current demand in target market

The demand for gospel music genre has grown steadily due to the use of popular lyrical techniques. Analysts have recognized a boom in the industry (Feinberg, 2000). Consumer preferences and trends have facilitated the growth in the industry. In fact, many marketing firms have targeted youths with gospel music, concerts, and other Christian events.

Marketing Objectives

Texas Religious Music Promotion marketing objectives are:

• Increase services and product awareness among the target clients by 20 percent in the next three years.
• Create awareness about its competitive services and products, and free logistic services for music events, concerts, and other religious activities with the aim of improving sales by 10 percent every quarter.

Marketing Strategies

Target markets

Texas Religious Music Promotion would target the fastest growing markets. In this case, the Company shall target individual musicians and institutions. These are segments with a wide fan base across the US. Institutions would include churches, Christian institutions and annual conferences. Texas Religious Music Promotion Company aims to target institutions of renowned personalities and institutions like the Women of Faith and T.D Jakes MegaFest.

The Company would also concentrate on major Christian events, festivals, and Theme Parks. These events and festivals attract thousands of potential consumers (Gonzales, 2004). Specifically, Texas Religious Music Promotion will target the Freedom Festival, Cornerstone, and the Spirit West Coast festivals.

These events attract a large number of gospel music fans annually. The Company decided to pursue both institutional clients and individuals because of the increased demand for gospel music genres in the US. These segments of the market would ensure fair returns on investments.

Target marking would provide a clear approach to marketing activities of the Company (Abramson, 2009). The Company will strengthen its target market segments in Texas before focusing to other states.

Positioning Strategies

Texas Religious Music Promotion would position itself as the best professional marketing company for gospel music and religious events in the US.

The Company would ensure that it offers superior and unique services and products to its customers. It will also promote high standards of professionalism and customer service. Hence, employees shall receive adequate training to ensure that this positioning strategy is successful.

Texas Religious Music Promotion aims to create high rates of customer retention and recruitment.

Positioning strategy is a fundamental aspect of marketing that all firms must consider in their strategies (Russell, 2009). This is a method of developing Texas Religious Music Promotion brand in a competitive music industry of the US.

Product strategies

Texas Religious Music Promotion will promote and plan both public and private music, events, and festivals.

The Company shall also offer free consultancy services with regard to logistic supports in organizing events and festivals.

Texas Religious Music Promotion will promote all genres of gospel music, such as jazz, classical, and latest music on the billboards. This combination would include music from different artists. It would appeal to fans of all ages in the US.

Pricing strategy

Texas Religious Music Promotion is a non-profit making organization. The focus of the firm is not to maximize profits. Nevertheless, the Company would set favorable prices for all its target markets. The Company would consider different tiers and other factors that could influence its prices.

In most cases, many consumers consider a price factor before making a decision to purchase any product or service (Bartlett, 2008).

Promotion strategy

Texas Religious Music Promotion targets many customers in the US. The Company shall use different communication channels in order to reach these customers. These would include:

• Advertising
• Public relations
• Sales promotion
• Personal selling

It will also use traditional media, such as:

• Television
• Radio
• Print media

Texas Religious Music Promotion would advertise regularly on newspapers and other entertainment magazines.

The Company shall use new communication media and technologies in its promotional activities. It shall have a Web site with links to social media networks, such as:

• Facebook
• Twitter
• You Tube
• MySpace
• Popular blogs

Distribution channels

Texas Religious Music Promotion must use large distribution channels in order to reach all its target clients across the US. In this regard, the Company plans to open several offices across all states and provide optional call centers for customer convenience.

It will also work closely with religious bodies in order to reach many potential customers.

Customers

Texas Religious Music Promotion focuses on the largest and fastest growing gospel music consumers in the US. These are mainly youths. The Company shall ensure customer loyalty and retention. It will train its sales team and customer care about professional best practices within the industry.

All contact channels with the customer would guarantee positive customer experiences.

Competition

Texas Religious Music Promotion will have to compete with well-established firms in the US gospel music industry. These include Word Records, CBS, ABC, Priority Records, and MCA among others.

Sales Forecast

Texas Religious Music Promotion intends to grow its total sales every month. The Company targets an increment of 20 percent in sales per annum. Sales team must keep records of all their activities and generate reports for total sales volumes and trends.

Sales strategies shall include:

• Direct (mail order, Web, catalog)
• Agents
• Sales force
• Independent representatives

Key Success Factors

• Nationwide consumer awareness
• Affordable services
• Consumer education
• Free consultancy services
• Professional services and customer experience

Income statement. As at 31 December 2014

After three months, stable earnings and efficiency ratio will imply that the Company is financially stable (Kennedy & Ehrenberg, 2001; Sirman, Hitt & Ireland, 2003).

Operational Plan

Operational management would be critical for the success of the Company (Janus, 2008; Longenecker et al., 2009).

Production

The Company would offer best promotional and logistic services beyond the industry standards.

Quality Control

Texas Religious Music Promotion would ensure that its products and services meet the best standards in the industry. The Company will assess, review, measure, and improve service delivery to customers.

It would also reduce costs through quality control.

The Supply Chain

Texas Religious Music Promotion shall use its supply chain to ensure application of effective strategies and business sustainability.

Texas Religious Music Promotion will sustain its market share through active marketing activities by ensuring seamless operations.

All processes will be efficient and proactive. The Company aims to establish a strong relationship with its potential customers.

Customer service

The Company would offer the best customer experience within the industry through its trained professional team.

Inventory control

Texas Religious Music Promotion shall ensure effective inventory control through record keeping and communication.

Product and service development

Texas Religious Music Promotion would engage in continuous product and service development.

Location

The Company will open its main office in a suburb location within Texas, Corpus Christi Texas. The office shall be easily accessible and spacious.

Legal Environment

Texas Religious Music Promotion would be a legally constituted company. It will operate within the state law and federal law. Hence, Texas Religious Music Promotion would have required permits, music copyright, and other relevant documents. The Company will also protect its logos and trademarks.

The Company shall not deal in illegal gospel music (pirated copies). Moreover, Texas Religious Music Promotion would rely on the law to protect against dishonest and unscrupulous businessmen.

Personnel

Texas Religious Music Promotion would have at a sales team, marketing manager, logistics officer, business coordinator and business manager for at the start of the business.

All these employees shall have the right skills and training for their respective jobs.

Plan for Hiring Employees

Management and Organization

Texas Religious Music Promotion Business Manager would ensure effective management of the business and usages of resources for meeting the Company’s mission and objectives. The Business Coordinator would supervise activities of General Managers and report to the Business Manager. It is the responsibility of the Logistic Officer and the Marketing Manager to coordinate all business activities of the sales team within the organization.

Professional and Advisory Support

Texas Religious Music Promotion would have the following professional and advisory teams:

• Board of directors
• Management advisory board
• Banker
• Company lawyers
• Accountants
• Insurance companies
• Mentors

Employee Policies and Work Ethics

Texas Religious Music Promotion shall apply some policies to guide its workforce while at work and outside the Company.

• Performance management through regular reviews to improve employee’s actual performance
• Use professional skills, qualifications, interrelations skills, qualifications, and job attitude for employ recruitment, promotion, and retention. This is a method of ensuring that the Company encourages performance and rewards employees fairly.
• All available job opportunities would be presented to all current employees first before engaging in external recruitment
• The Company shall conduct thorough interviews in all recruitment processes

Work Ethics

• All employees must adhere to the Company’s values
• All employees must avoid conflict interests and consult when in doubt
• Employees must have positive attitude and high-levels of self-esteem

Workplace Environment

Texas Religious Music Promotion would ensure that the work place environment is organized, healthy, and motivating to employees. The Company would strive to reduce work-related stress in order to enhance performance and retention of employees.

Texas Religious Music Promotion would be located a suburb area (Corpus Christi Texas) in order to minimize challenges employees may experience because of the office location. The place has an adequate space and a serene environment for the business.

Financial Plan

Internal Sources

Texas Religious Music Promotion would rely on internal sources of funds, such as retained earnings and share capital. This would facilitate expansion activities in other states. It will also use share capital for expansion activities. This is the major source of funds for many organizations after their inception (Vance, 2003).

Texas Religious Music Promotion shall continue to make sales and generate adequate revenues and profits to cater for its expansion plans. Shareholders would still control major stakes in the Company.

External Funding Sources

Texas Religious Music Promotion shall also get funds from external sources.

Bank loan or Overdraft

Texas Religious Music Promotion may get financial aid from banks for the agreed amount, rate, and time. Hence, the Company shall have to pay interests on the borrowed amount. Interest rates may vary based on different economic factors.

Texas Religious Music Promotion may also use bank overdrafts to fund its short-term projects. Bank overdraft shall provide a quick source of funds for the Company (Haber, 2004). They are more flexible and may be simple to process than loan facilities. Texas Religious Music Promotion could use bank overdrafts whenever it has shortages in cash flow.

Outside Investors

Texas Religious Music Promotion may also get capital from interested external parties like families, friends, and others. These contributors may become shareholders with the Company based on the extent of their contributions (Atrill, 2009).

Initial investment outlay $491,000

Annual cash flow $90,000

Therefore, the payback period is 491,000/90,000 = 5.4 years.

Cash Flow Projections

Cash flow projections are important for getting the net present value of the business against future projections. This is indicated in the table below.

Total revenue (P * Q) = total cost [Variable (C *Q) + fixed cost]

Price per unit (P) = $112.5

Units produced (Q) = to be estimated

Total fixed cost = $34,000 (as shown in the table below)

Net present value for the business

The table below shows the marginal cost statement at the break-even units of output.

Financial Projections

Before deducting expenses

Texas Religious Music Promotion Company. Balance sheet statement. As at 31 December 2014

Texas Religious Music Promotion Company. Income statement. As at 31 December 2014

After deducting expenses

Texas Religious Music Promotion Company. Balance sheet statement. As at 31 December 2014

Texas Religious Music Promotion Company. Income statement. As at 31 December 2014

Texas Religious Music Promotion Company. Statement of changes in equity. As at 31 December 2014

Return on investment = Gains – Investment costs

Investment costs

References

Abramson, H. (2009). How not to promote concerts and music festivals. Chicago: Concert Promotion Manual.

Atrill, P. (2009). Financial management for decision makers. Alabama, AL: Prentice Hall.

Bartlett, D. (2008). Recent trends in US services trade, 2008 Annual Report. New York: Cengage.

Cheverton, P. (2004). Key Marketing skills:strategies, tools, and techniques for marketing success. London: Kogan Page.

Feinberg, M. (2000). Modern Worship is Exploding. Christian Retailing 46(8), 45–56.

Geil, M. (2009). Music in Recession. Christianity Today.

Gonzales, R. (2004). Wide range of music inspires Project 86. Albuquerque Journal, 2, 2.

Haber, R. (2004). Accounting demystified. New York, NY: American Management Association.

Janus, P. (2008). Pro Performance Point Server 2007: Building Business Intelligence. New York: Press Intel.

Kennedy, R., & Ehrenberg, A. (2001). Competing retailers generally have the same sorts of shoppers. Journal of Marketing Communications, 7(2), 19-26.

Longenecker, G. J., Petty, J.W., Palich E. L., and Moore, W.C. (2009). Small Business Management: Launching and Growing Entrepreneurial Ventures. Alabama: Cengage Learning.

Price, D. E. (2003). Praise and Worship Genre Blessed With Global Growth. Billboard, 115(7).

Russell, E. (2009). The fundamentals of marketing. London: AVA Publishing.

Sirman, D., Hitt, M., & Ireland, R. (2003). Dynamically managing firm resources for competitive advantage: creating value for shareholders. Washington, DC: Seattle Academy of Management Publication.

Vance, D. (2003). Financial analysis and decision making: tools and techniques to solve. New York, NY: McGraw-Hill.

Introduction

The Texas State Board of Public Accountancy was formed with an aim of “protecting the public by ensuring that persons issued certificates as certified public accountants possess the necessary education, skills, and capabilities and that they perform completely in the profession of public accountancy” (Texas State Board of Public Accountancy, 2012a). The board is mandated to “initiate proceedings to determine the eligibility of a person for examination, certification, and registration or licensing. The board may also initiate disciplinary action against a person” (Texas State Board of Public Accountancy, 2012b). The Texas State Board of Public Accountancy is divided into a number of committees that handle various issues. Some of the board committees are the behavioral enforcement committee and technical standard review committee (Texas State Board of Public Accountancy, 2012a). This part of the paper summarizes enforcement actions taken by the board for the year 2011.

Impression of the cases and actions taken by the Texas State Board of Public Accountancy

The Texas State Board of Public Accountancy has a variety of actions on a variety of offenses. These offenses focus on malpractices in accounting and auditing practice. The table below summarizes some of the offenses and actions that were taken by the Board.

Table 1.0 – Examples of offenses and actions taken by the board

Source of data – Texas State Board of Public Accountancy, 2012b

From the sample of offenses and cases shown in table 1.0 above, it is evident that the Texas State Board of Public Accountancy carries out in-depth investigations on the clients’ practices before charging them. Further, from the table above, it’s clear that the Board’s enforcement action revolves around communication from the board, return of original documents that the client provides the Certified Public Accountant, unauthorized practice or use of protected terms, renewal of licenses, and CPE requirements (Texas State Board of Public Accountancy, 2012b). The functions carried out by the Board are quite significant. They ensure that there is proper and adequate control and regulation over the accounting profession. In addition, they minimize the exploitation of the public.

Accounting and Moral Dilemmas

Ethics in accounting

Background of accounting ethics

Ethics can be applied in any profession. Basically, ethics denotes a set of laws or a moral system that provide a basis for discerning whether an action is correct or erroneous (McGraw-Hill Higher Education, 2007). Therefore, members of a profession can come up with ethical principles that guide them when carrying out their duties. Luca Pacioli introduced accounting ethics. The ethics he introduced were further built by the state and other professional groups. For instance, the American Institute of Certified Public Accountants came up with the first five ethical principles which Certified Public Accounts must comply. These ethical principles are independence, integrity, responsibilities and practices, competence and technical standards, responsibilities to clients, responsibilities to colleagues, and other responsibilities and practices (McGraw-Hill Higher Education, 2007).

Transformation of the code of ethics

Ethical principles have gone through a lot of metamorphoses over the years. For instance, Michael Josephson reclassified the ethical principles in ten. In his view, the ethical principles were “honesty, integrity, promise-keeping, fidelity, fairness, caring, respect for others, responsible citizens, the pursuit of excellence, and accountability” (Smith & Smith, 2003). Several other scholars have also attempted to come up with such classification and better analysis of the ethics. In addition, the collapse of several multi-billion corporations, such Enron Company, and the wider range of accounting services, such as auditing, fraud investigation, risk management among others, have created the need for improved ethics and stringent regulations to oversee the accounting profession. These changes in accounting ethical standards are aimed at improving public confidence in the accounting profession (Smith & Smith, 2003). It is inevitable to point out that excellent ethics does not always imply fine business practices. The aim of ethics in business is to guide people conducting business to comply with the code of conduct. They also aim at encouraging the confidence of the entire public and the commodities or services they offer. Considering the significance of the ethical standards, only the certified professional bodies are mandated to formulate or change the existing ethical standards. This exercise is carried out in liaison with the Certified Public Accountants and other interested persons. This acts as good control over the process of formulating and amending the ethical standards (Mintz & Morris, 2011).

How professional bodies improve awareness of code of ethics

The professional bodies have improved awareness of the code of ethics by incorporating them into the syllabus of the professional courses. Ethics are taught as part of the accounting course. The main aim of ethics education is to create a sagacity of moral responsibility of Certified Public Accountants at the earliest time possible before they join the field to practice as accountants (Smith & Smith, 2003). Further, ethics education enables them to have knowledge on how to handle ethical dilemmas that they may face when practicing. Apart from teaching the course in learning institutions, the regulating body also organizes seminars and workshops. In such forums, the body educates the accountants on the code of conduct and other emerging issues. Also, the body gets feedback from the professionals on how to improve the accounting profession. This ensures that there is constant review and improved awareness of the code of ethics (Smith & Smith, 2003).

Benefits of ethics

The accounting profession is vital for the well-being of the economy. It is because accountants play a significant role in the economy. Most importantly, they produce financial reports which are a form of communicating with the stakeholders of the organization about the financial and economic condition of the entity. The stakeholders of the entity especially investors and creditors depend profoundly on the annual statements of the entity (Mintz & Morris, 2011). This enables them to make informed decisions about their association with the company. This creates the need for close monitoring and regulation of the Certified Public Accountants. Ethical standards improve the professional environment. It makes the Certified Public Accountants act in a moral manner when executing their duties. Besides, companies always carry out periodic reviews to very that their employees abide by the ethical principles (Rachels, 2009).

Secondly, ethical standards increase the reputation of the accounting profession. Companies that completely embrace ethical standards have improved reputations. This improves their presence in the market hence increasing returns. Improved reputation also helps in maintaining the financial stability of the organization. This can be observed in stable or improving share prices. Thirdly, ethical standards help companies to instill discipline in employees. The code of ethics can help companies to come up with disciplinary rules. Finally, the use of a code of ethics reduces the number of litigations that a company may have at a given time. It is because the use of ethical principles minimizes the possibility of the company being on the wrong side of the law at a given time. In addition, it minimizes the possibility of a company facing regulatory investigation or sanctions (Rachels, 2009).

Moral dilemmas

Description of moral dilemmas

McGraw-Hill Higher Education (2007) an ethical or a moral dilemma is a “situation in which an individual or group is faced with a decision that tests the code of ethics” (McGraw-Hill Higher Education, 2007). More than often, ethical dilemmas are easy to distinguish and unravel. Just like any other profession, accountants face numerous dilemmas while carrying out their duties. Some of these dilemmas are multifaceted and extremely tricky to unravel such as the Enron and WorldCom scandal (McGraw-Hill Higher Education, 2007). Also, an ethical issue can also be a disagreement with the clients on ways of preparing the books of accounts. Such situations call for an elevated level of ethical behavior for those in the accounting profession. As mentioned above, the codes of ethics are educative and useful. Conversely, the decision to act ethically is personal. This decision cannot be motivated with a reward or catalyzed by punishment for not obeying the code of ethics (McGraw-Hill Higher Education, 2007). Table 1.1 below summarizes the framework for analyzing an ethical issue.

Table 1.1

Source of data – McGraw-Hill Higher Education, 2007

Analysis of moral dilemmas

Chartered Institute of Management Accountants (2012) states the moral dilemmas that accountants face can be related to the essential ethical principles which a professional accountant must uphold, these are integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. The moral dilemmas are not specific. They depend on the case an accountant faces while carrying out duties. The Enron Scandal shall be used to analyze moral dilemmas. In addition, two hypothetical case studies on insolvency and insolvency information are used to discuss moral dilemmas (Chartered Institute of Management Accountants, 2012).

Case study one: A real case study

Moral dilemmas in the Enron Scandal

Enron Company was an American-based energy company. It was the largest supplier of natural gas in America in the early 1990s. The company had a stunning performance in the 1990s. The share prices traded at about 77 times the value of the company. Shareholders and analysts viewed the financial statements of the company as very complex (Stuart & Stuart, 2004). The ethical dilemma in the case is that the top management of the company used the complex nature of the financial statements and the weaknesses in the accounting standards to manipulate the financial records to enrich themselves. This was characterized by manipulating the balance sheet to reflect high performance. Specifically, they inflated the asset values, overstated the reported income and cash flow, and eliminated the liabilities from the financial records. In addition, the top management negotiated dubious investment contracts for the company. These investments incurred losses that were never reported in the books of account of the company (Stuart & Stuart, 2004).

The crime committed by the three top management involved can be categorized into five these are conspiracy, securities fraud, false statement, insider trading, and fraud. Based on the code of ethics, it is clear that the management breached all the ethical principles. The managers involved in the scandal were competent but they did not exercise professional due care and apt professional behavior. In addition, the three managers did not exercise integrity when preparing the financial statements. They also lacked integrity in running the organization. Further, the three managers lacked objectivity. They deviated from the main goal of the business and failed to take into consideration the shareholders’ interests (Stuart & Stuart, 2004).

Impact of the moral hazard

The moral dilemma in the Enron case resulted in a massive loss that had never been experienced in the history of the United States of America at that time. First, shareholders of the company lost about $74billion as a result of the falling share prices in four years. Secondly, Enron’s creditors and energy entities incurred hefty losses. Finally, over 20,000 jobs were lost. The employees also suffered losses resulting from the loss in value of the shares because over 50% of the amounts in the savings plans were used to purchase the company’s shares. The total market failure that resulted from the Enron scandal amounted to over $100billion (Stuart & Stuart, 2004).

Case study two: Hypothetical case study

Possible insolvency

Consider a situation in which “The Chief Financial Officer of a manufacturing company is aware of a situation where the sales manager is unlawfully declaring fuel benefits as the taxable value is soaring” (Chartered Institute of Management Accountants, 2012). This has resulted in higher profits than the true position and if it is declared the margins might go down. This unlawful practice creates a possibility of the company going into insolvency. The insolvency might result in the loss of over 6,000 jobs. Further, the chief financial officer has informed the other directors of the company and they have indicated their reluctance to reveal the wrong tax bill to the public. Besides, he is aware that the law requires him to inform the tax authorities of the unlawful tax bill (Chartered Institute of Management Accountants, 2012). A summary of possible solutions based on the ethical code of conduct and the consequence of the actions is shown in table 1.2 below.

Table 1.2

Source of data – Chartered Institute of Management Accountants, 2012

Case study three: Hypothetical case study

Takeover information

The Chief Financial Officer of a large multinational entity has privy information concerning a takeover bid to take over a rival firm. His friend owns shares in the rival company and would like to sell these shares. He has approached the CFO for advice on the matter. A summary of possible solutions based on the ethical code of conduct and the consequence of the actions is shown in table 1.3 below.

Table 1.3

Source of data – Chartered Institute of Management Accountants, 2012

References

Chartered Institute of Management Accountants. (2012). Ethical dilemmas: What would you do. Web.

McGraw-Hill Higher Education. (2007). Ethics in accounting. Web.

Mintz, S. & Morris, M., (2011). Ethical Obligations and Decision Making in Accounting: Text and Cases. Boston: McGraw-Hill.

Rachels, J. (2009). The Elements of Moral Philosophy. Boston: McGraw-Hill.

Smith, T., & Smith, L. (2003). Business and accounting ethics. Web.

Stuart, I., & Stuart, B. (2004). Ethics in the Post-Enron Age. Mason, Ohio: Thomson- South-Western.

Texas State Board of Public Accountancy. (2012a). General Information. Web.

Texas State Board of Public Accountancy. (2012b). Texas State Board Report. Web.

Executive Summary/Overview

Ceka Bar strives to become the most popular sports bar in San Antonio, Texas. The bar projects that its flagship location in San Antonio will have a gross profit of more than $4 million in the first year. In addition, the projected net profit of the first year would be more than $3 million. The expansion will help in fuelling the growth of the bar. The bar will strive to open new locations in San Antonio and other neighboring cities.

Mission Statement

Ceka Bar strives to be the most popular sports bar in San Antonio and the entire state of Texas. The bar endeavors to have a competitive edge in the market. In addition, Ceka Bar aspires to ensure that its customers enjoy their free time watching the game of their choice in the bar. The bar will have many televisions that will broadcast various sporting events. Ceka Bar will strive to create a suitable atmosphere that will enable the customers to have a sense of “place” while in the bar. This will help in retaining customers.

Market Analysis

San Antonio is one of the largest cities in Texas. It has a population of 1.3 million people. 30.8% of the population of the city is between 25 and 44 years old. Ceka Bar will target this group. People in this age group spend more money on alcoholic drinks. However, the choice of alcoholic drink may vary from one individual to another. Beer will be one of the major drinks in Ceka Bar. However, the bar will also serve other drinks.

Time spent in a bar is usually directly proportional to the amount of money that customers spend in the bar. Therefore, Ceka Bar will strive to ensure that customers spend more time in the bar. It will create a good atmosphere that will encourage customers to spend more time in the bar.

Description of the Company

The concepts of Ceka Bar will have three major elements. This would improve the competitiveness of the bar. The concepts include sports-based themes, location, and quality service. Ceka Bar will have various sports-based themes that would attract sports enthusiasts. The location of the sports bar will help in attracting customers. Demographic indicators will help in determining the most suitable location of the bar. The bar will also provide high-quality services to its customers. This will enable the bar to build a good image and reputation. These elements will be complementary to each other. This will ensure the ultimate success and profitability of the Ceka Bar.

Organization and Management

Ceka Bar will be a sole proprietorship business. Jeyhun Seyidli will be the sole owner of the bar. He will be the CEO and president of the bar. Ceka Bar will strive to open bars in various locations in Texas. During the initial phase, Seyidli will undertake all operations of the bar. However, after opening five more locations, the bar will hire a director of store operations, a full-time accountant, and a marketing director who will oversee the future expansion of the bar. The bar will also hire three attendants in each location to help in serving the customers.

Marketing and Sales

Ceka Bar will use both local media and event marketing to improve its competitiveness. The bar will give special emphasis on local radio since it is the most efficient means of advertising. Local print media is also one of the major advertising channels that the bar would use. The bar will mainly focus on local channels of advertising during its first year. However, after establishing a significant number of bars in Texas, the bar will use broader advertising channels.

Opening new locations will enable Ceka Bar to increase its revenue. This is the major sales strategy of the bar. The bar will ensure that the individual locations strive to increase their customer base. The goal of the company is to have annual sales of $5 million for each location. The company will consider a location as mature when its annual sales surpass $3.5 million.

Description of Product or Service

Ceka Bar will strive to price all items on its menu favorably. On a normal day, customers would spend between $10 and $20 in the bar. However, during game days, customers would spend more money in the bar. The bar will strive to create an atmosphere that will encourage the customer to spend more time in the bar. This will ensure that the customer spends more money in the bar.

Ceka Bar will strive to use an identity-oriented marketing strategy to improve its competitiveness. The bar will strive to ensure that sports enthusiasts associate themselves with the bar. This will enable the bar to retain more customers.

Funding

The bar requires $1 million to be operational. Seyidli will invest $500,000 in cash. A bank loan will provide additional funding. Equity and debt infusion of 1 million will facilitate the rapid expansion of the bar. Reliance on only cash flow would not facilitate the rapid expansion of the bar. Outside investment capital would enable the bar to acquire a buffer of excess cash flow. This would enable the bar to revise its expansion plans on short notice. Therefore, outside investment capital would provide the company with financial stability.

Expansion is the major business strategy of the bar. Therefore, the management of the bar will strive to seize every available opportunity to accelerate the expansion of the bar. The management would use excess cash to fuel expansion. The expansion will ensure the future profitability and financial stability of the bar.

Financials

Income Statement 1st Year

Income Statement 5^th Year

The projected average annual growth of Ceka Bar due to continued expansion of the bar into new locations is 20%. This will increase the total revenue. The projected annual increase in advertisement costs is 10%. On the other hand, the projected annual increase in rent is 20%. This is due to the establishment of new locations. The projected annual increase in costs of all other expenses is 3%.