MW Petroleum Corporation: A Valuation Approach on Real Assets

MW Petroleum Corporation: A Valuation Approach on Real Assets.
Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010). Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise. This case attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and the issues surrounding such, as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are:
1. Evaluate Amoco’s and Apache’s corporate objectives and strategies. Is it reasonable to expect that the MW properties are more valuable to Apache than to Amoco? What sources of value most plausibly account for the difference between buyer and seller? 2. Structure and execute a DCF valuation of all the MW reserves. How much are the reserves worth? Is your estimate more likely to be biased high or low? What are the sources of bias? 3. How would you structure an analysis of MW as a portfolio of assets in place and options? Specifically, which parts of the business should be regarded as assets in place and which as options? What kinds of options are present? Should this approach yield a higher or lower value that the DCF approach? 4. Execute the analysis you structured in Question 3, beginning with assets in place. How risky are the assets that underlie the options; i.e. how would you estimate SD for each? How much is the whole portfolio worth? 5. Assuming a sale goes through, how does Apache exercise each of the various options? When should it do so?
BACKGROUND

In a case prepared by Barbara Wall at the Harvard Business School, entitled MW Petroleum Corporation A, (doi:9-295-029; 1994), she stated that the 1980’s had been a difficult decade for the oil industry. Profitability of oil companies declined due to low prices; and most of these firms responded with cost-cutting measures. Many top companies divested their marginal properties, seeking to consolidate and rationalize their productive assets- one of which was Amoco Corporation. Amoco Corporation conducted an extensive review of its cost structure and profitability (p.2), leading to major restructurings to better focus on its core businesses.
The result of this was a divestment of the middle section of its assets along marginal curve. Morgan Stanley advised and assisted in the process, creating MW Petroleum Corporation – a new, free-standing exploration and production oil and gas company. MW was offered to a number of targeted international petroleum concerns, but the most attractive offer came from Apache Corporation. Apache Corporation was an independent oil and gas company based in Denver, Colorado engaged in exploration, development, and production of oil and natural gas. Their strategy, “rationalize and reconfigure” involves acquiring producing properties whose operations Apache could quickly control and make more efficient, producing significant cost-saving opportunities for the company. The sale of MW Petroleum provides such an opportunity for them. However, Apache must first carefully evaluate MW’s value to come up with a proposal that would be attractive for Amoco and profitable for Apache as well. CRITICAL ANALYSIS
1. Evaluate Amoco’s and Apache’s corporate objectives and strategies. Is it reasonable to expect that the MW properties are more valuable to Apache than to Amoco? What sources of value most plausibly account for the difference between buyer and seller?
AMOCO
APACHE
Growth Stage

MATURE
5th largest oil company in the U.S.
GROWTH
Operator of small-to-medium sized properties
Objectives
To increase profitability
To increase size/growth
Strategy

Divestment: major restructuring to better focus on its most attractive properties and opportunities (includes selling assets regarded as non-strategic)
“Rationalize and reconfigure”
-Acquiring producing properties whose operations they can control and quickly make more efficient
Yes, considering Amoco’s and Apache’s corporate objectives and growth stage, I can say that MW properties are more valuable to Apache than to Amoco. Amoco is already at the mature stage, and its current strategy is aimed at divestment (major restructuring to better focus on its core businesses) – MW properties no longer form part of such core businesses. Amoco is merely interested in selling MW for a profit, where as Apache sees it as an opportunity for growth and geographic diversification, to add further stability to the company, and to increase its reserves. Furthermore, Apache’s revenues are highly dependent on natural gas (current portfolio has an oil-gas ratio of 20-80), and with the increased volatility in natural gas prices, Apache would benefit from acquiring properties with a large concentration of non-gas assets. 2. Structure and execute a DCF valuation of all the MW reserves. How much are the reserves worth? Is your estimate more likely to be biased high or low? What are the sources of bias? At first, WACC and CAPM was attempted to be used as a source of cost of capital. However, for WACC, there is no available proportion of debt and cost of debt for MW. For CAPM, no available data seems to support the acceptable market return as compared to the 10-year government bond yield of 8.03%. Thus, the 13% discount rate used to compute the terminal value of MW petroleum was
used (line notes to MW Petroleum Projections #20).
ASSUMED COST OF CAPITAL: 13%
Using above assumed cost of capital, below DCF valuation shows the total value of all MW reserves. A separate DCF valuation was conducted for each reserve, with the total value summing up to MW’s total PV of 473.5M (refer to Exhibit 1 for complete details of DCF analysis). DCF of all MW Reserves
Proved Developed Reserves
383.84
Proved Undeveloped Reserves
40.79
Probable Reserves
41.47
Possible Reserves
7.42
Total Value of Reserves
473.51
DCF of Aggregated MW Projections
The sources of bias pertain to:
1. Cash Flow estimates were prepared by Amoco
2. Correct discount rate to be used (assumed rate was 13%, but it could be higher, which would then result to a lower PV for MW, and vice versa).
3. How would you structure an analysis of MW as a portfolio of assets in place and options? Specifically, which parts of the business should be regarded as assets in place and which as options? What kinds of options are present? Should this approach yield a higher or lower value than the DCF approach? MW can be thought of as a combination of assets-in-place and options. Assets-in-place pertain to properties that already provide cash flow. In this case, proved developed reserves would be most appropriate. The other reserves (proved undeveloped, probable, and possible reserves) are options. Currently, the firm has an option to delay until it is profitable to develop the reserves. Refer to Exhibit 2 for detailed Options Valuation computation.
Black-Scholes formula used is:
Real Options (@7years)
DCF
Proved Developed Reserves
383.84
(same value as DCF)
383.84
Proved Undeveloped Reserves
44.68
40.79
Probable Reserves
41.84
41.47
Possible Reserves
11.67
7.42
Total Value of Reserves
482.03
473.51
Real options valuation using the Black-Scholes model yielded a higher value compared to the DCF approach, since there is a real value attached with the firm’s ability to delay development. 4. Execute the analysis you structured in Question 3, beginning with assets in place. How risky are the assets that underlie the options; i.e. how would you estimate SD for each? How much is the whole portfolio worth? Refer to Exhibit 2 for Volatility computation
(weights of oil-gas ration given in the case and volatility taken from Exhibit 8 of MW Petroleum Case). 5. Assuming a sale goes through, how does Apache exercise each of the various options? When should it do so?
CONCLUSION
With the computed real option and DCF values, Apache should proceed with the purchase of MW Petroleum Corporation.
REFERENCES:
Equity Asset Valuation (Pinto, Henry, Robinson, Stowe; 2010)
MW Petroleum Corporation A, (9-295-029; 1994)

MW Petroleum Corporation: A Valuation Approach on Real Assets

Is It Moral for Corporations to Test Cosmetics on Animals?

Is It Moral for Corporations to Test Cosmetics on Animals?.
Is it moral for corporations to test cosmetics on animals or to use animals for medical experimentation? Pain is pain, and the importance of preventing unnecessary pain and suffering does not diminish because the being that suffers is not a member of our own species. (Peter Singer, Animal Liberation) Human beings….. who are we? Are we Gods or we are just the top of the food chain on Earth? Do we have rights to harm other nonhuman species? These and many other questions I have in my head when I see how cruel we are sometimes to each other and even harsher toward the other nonhuman beings.
Personally, I treat animals with respect because I consider them to be reasonable creatures that are in many perspectives similar to us, human beings. I am confident that animals have emotions; they can feel pain and happiness like we do. As we can see this is not enough for us to consider them our “little brothers. ” From ancient times, many animals are being used for satisfying human’s different needs, such as food, transportation, and materials. Nowadays, human beings use animals not only for abovementioned purposes, but also for cosmetics and medical experiments.
All these experiments definitely cause harm to animals. Majority of human population believes that all these experiments are the required attribute for all pharmaceutical and cosmetics companies. They believe that these practices can prevent many people from suffering by testing all new medicine and cosmetic products on animals first. According to this I can say that animals’ sufferings caused by people became moral issue for our last generations. In my essay I will use the work of Peter Singer “All animals are Equal,” because his work covers most of the aspects that I agree with.

The main purpose of this essay is to emphasize that nonhuman beings have many similarities with human beings and they need to have basis rights for life without pain. It means that human beings must understand that all species are equal and it is immoral to make them suffer. There are similarities between human beings and animals that can be taken into account. In this case, I consider that main feelings that are possessed both by human and by nonhuman beings are pain and happiness. It is obvious that animals that surround us can experience pain. Just imagine if you kick a dog with your leg, the dog will moan and probably will un away with its tail between its legs. If this dog would not suffer from that kick it would not try to prevent that pain from occurring. On the other hand, imagine the same dog running towards her master, spinning her tail and running around him, licking his hands, jumping and sending many other positive signals that represent happiness. By visualizing these two images you can easily understand that animals have basic feelings like we do. For some people this might sound like nonsense if I say that people are equal to other species that are inhabiting our planet. I will not take into consideration some biological features of the beings.
I want to look at this problem from the moral perspective. Today it is acceptable by many developed countries around the world for women have equal rights with men. We consider that this is a right thing, but think for a moment that essentially males and females are not the same. I mean they have equal rights but not all rights applied for both men and women, due to physiological differences or other factors. For example, P. Singer mentioned in his work that women have right to abortion so in order to make them equal to men, males also must have the same right to abortion (P.
Singer, p. 172). However, men do not need this right since those instances never occur. According to this example, equality does not particularly mean that men and women have all the same equal rights. It means that they have the same rights in regards with to what they have in common. Concerning cosmetics and medical experiments on animals I can definitely say that it makes animals suffer. Let’s take medical experiments of new drugs. Nobody knows what is going to happen when any external substance is implemented on an animal.
There are certain medications tested on animals and that caused the death of the animals. For example, one of the scandal cases is the sheep Dolly that died because of the cloning experiment. Obviously there is a big chance for the animals to die after certain tests are performed on them. Nevertheless, human beings still accept the fact that some species other than humans can justifiably suffer in order to possibly save some human being’s lives. However, animals that are involved in those experiments will receive nothing in return but suffering because the only purpose of those experiments is to help people.
So, regarding cosmetic experiments, those animals suffer not for the sake of saving some human’s life, but for the sake of helping a number of people to look more beautiful. For instance, before introducing a new cosmetic product such as shampoo to the market a product should go through the series of tests, the part of which is animal testing. Even this single product can harm a large number of animals. Looking more attractive, in my mind, is not worth causing pain to other species. I want to say, that the number of animals’ suffering is greater than the pleasure that human beings receive.
In other words the degree of harm is higher than the degree of happiness. Some people might say let’s think about the morality that animals have. The main principal of their lives is to survive. Most of them survive by killing and eating other animals. Let’s take lions as an example; they kill other animals to feed their prides. In other words, they hurt other species to make their own lives flourish. If we can call this their “morality”, then medical experiments are the right thing to do, because human beings are the part of the same biosphere as lions and other animals are.
As a result of these experiments many lives of the human beings were saved. Without the experiments on animals it would be impossible to reach the constant improvements and developments in medicine. If we talk about equality with animals in this perspective then we are equal to them, since we act according to their “morality. ” All these arguments are related to utilitarianism. Utilitarian theories are dealing with selection of the action that will result in the maximum good for the greatest amount of individuals (Encyclopedia Britannica).
Regarding animal testing from utilitarian point of view I can say that this is not right thing to do. Since it can be moral only if it delivers the greatest good to greatest number of individuals I can calculate how many individuals are better off in this case. For example only in France in 2005, 12,117,583 animals were used for medical experiments (Andrew Knight, p. 651). Taking in account that this number represents the quantity of animals that were used by only a single country, I can definitely say that the total number of animals used for experiments in the whole world is much greater than human population.
Moreover, not all people received benefits from those medical experiments, but all animals tested suffered or died. Talking about the previous example of analyses of lions’ morality I want to mention that in that case lions kill not more than two zebras to feed more than ten lions. On basis of this, greater good delivered to greater number of individuals. The professor of Oxford and Warwick universities and also the former head of Medical Research Council Colin Blakemore states that many irredeemable human diseases like Alzheimer’s multiple scleroses would never be possible to vaccinate without using all possible tools.
In this case, experimental animals are one of the tools that are needed for the research of those diseases (Colin Blakemore). This claim proves that animal testing is one of the main research attributes. Therefore, in order to provide seriously ill people with quality medications, pharmaceutical companies have to test new drugs on animals. It is obvious, that fifty years ago it was normal for researchers to use animals for medical and cosmetics experiments, because they did not have any alternatives. It is known, that today’s technologies have features that can substitute usage of animals.
If it is possible to use other means than animals why people do not do that? It seems to me that until animal tests are regarded as moral by human beings this practice will continue. Moreover, there will be a lot of different arguments that will support the idea of animal experiments. Yet, the fact that we can do medical experiments in 21st century without torturing animals is obvious. It is immoral to cause pain to a human by another one. The main reason for that is that human can suffer. Everyone in his or her life experienced pain and know what it is.
So, it became immoral thing to harm other people. Moreover, every person has a right to not experience pain from other individuals. In other words people are bounded by their rights and morality from making other people suffer. We are protected by rights and by laws not to be harmed, but animals are not protected by those rights and human morality. Nevertheless, they can suffer like we do. In this case both human and nonhuman beings experience relatively the same feeling of pain. Since the pain is the one factor that makes us similar to animals, why other species do not have rights to not suffer?
One of the reasons why animals do not have some equal rights with people is probably because all those concepts of equal rights were created by human beings. It becomes obvious that human beings are selfish in this perspective. If you are the man it does not mean for me that you can decide for others what to do with their lives. What about the fact that human beings are the part of the biosphere of our planet. I think this is immoral to not take into account that animals can suffer like we do. In these circumstances I agree with P. Singer as he introduced an example about an orphaned infant.
He said that “would be experimenter ready to make his experiments on orphaned infant if it would the only option to save many lives. If experimenter would be against using orphaned infant for experiments, then his readiness to use animal is simple discrimination. ” But many adult animals are more receptive to pain than human infants. (P. Singer, p. 176). This is not good and people must understand why they have to do something about it. I agree that this practice is hard to change. Still, looking back in the history there were many practices that were accepted to be moral.
For instance, I want to mention slavery and discrimination of African American or women. All of these cases were perceived to be normal at those times, but now moral values have changed. It means that there is a chance that people will comprehend the pain that we cause to nonhuman beings. People cannot decide for animals what to do with their lives. It is not moral to benefit one by harming another one. In this case all experiments on animals must be reformed. However, it is rooted deeply in our moral values system, so this values need to be changed as they were changed in other cases similar to this one.
Human moral issues are changing all the time. Just recall the time when all people we classified by skin color or other signs. It was normal to discriminate black people only because they have a different skin color. Going back we can see that white people at those times would never accept that they are born equal to black people. It took a lot of time to change those beliefs. Now Barak Obama is the president of USA while a century ago this fact would appear implausible. It means that it is possible to change moral believes of human beings by giving them enough arguments for that.
According to this I can definitely say that there are enough arguments that can be used to prove that animal experiments can be reformed. I want to conclude that the problem of animal experiments is related to each individual. According to utilitarian theory the animal experiments are not a right thing to do, because harm of these experiments is greater than the positive outcome. Number of ruined animals’ lives, is much greater than the number of saved human beings’ lives. The only way to prevent animal usage is to persuade people that this is inapplicable in our modern community.
As I mentioned there are many ways, including technological improvements, to not use animals for medical experiments. The technology of 21 century allows constructing virtual models of live organisms that are able to predict a reaction of a tested medicine. This argument can cause the change in human beings’ morality, and animals will get equal rights with humas, by taking into consideration their abilities to experience pain and happiness like we do. Moreover, our morality is the subject that can be changed, as we can observe by looking back in the history.
We need to start doing it, because we are the most intelligent creatures on the Earth and the future of many animals is in our hands. Work cited 1) Blakemore, Colin. “Should We Experiment on Animals? Yes. ” The Telegraph. Telegraph Media Group, 29 Nov. 0028. Web. 22 Feb. 2012. <http://www. telegraph. co. uk/science/science-news/3353960/Should-we-experiment-on-animals-Yes. html>. (I trust this web site, because the author seems to me very intelligent, since he is the professor of Oxford and Warwick universities and also the former head of Medical Research Council Colin Blakemore) 2) Knight, Andrew. Systematic Reviews of Animal Experiments Demonstrate Poor Human Clinical and Toxicological Utility. ” ATLA -NOTTINGHAM- 35 (2007): 641-60. Print. 3) Peter Singer, “Chapter 14: All Animals are Equal” in Hugh LaFollette (ed. ), Ethics in Practice. 171-180 4) Singer, Peter. Animal Liberation. New York, NY: New York Review of, 1990. Print. 5) “utilitarianism. ” Encyclop? dia Britannica. Encyclop? dia Britannica Online Academic Edition. Encyclop? dia Britannica Inc. , 2012. Web. 22 Feb. 2012. <http://www. britannica. com/EBchecked/topic/620682/utilitarianism>.

Is It Moral for Corporations to Test Cosmetics on Animals?

Microsoft Corporation Argumentative Essay

Microsoft Corporation Argumentative Essay.
Java is an object-oriented programming language that is developed to be used on the Web, other intranet processes, and other applications. Nowadays, the network-computing environments are evolving from the old back-end systems to more modern dynamic interfaces on the web. Java, being purely object-oriented unlike C++, becomes well-matched to today’s progression. Since some of the software development companies today are shifting to Java-based application development, Sun Microsystems (developers of Java) and Microsoft Corporation agreed to create a development platform that incorporates Java to the Microsoft .
Net framework. Sun Microsystems’ release of Java to the public as open source in 2007 is considered by some experts as an action that is “a little too late” since its rival companies had already established platforms, like Microsoft’ . Net Framework. With the reputable rival technologies, the popularity of Java has lessened. The report that Greiner made tackled the past conflicts between Sun Microsystems and Microsoft Corporation. She also presented what are the current happenings in terms of the development of Java as a software development platform.
Greiner also described, with all the agreements and developments of Java, what will happen to Java during the next years. The author has given a description on what the software development community should expect with regards to incorporation of Java to the Microsoft . Net platform. The agreement of two of the most successful corporations in the software development industry will have a big impact to the community. Nowadays, many organizations chooses on whether to use Java as their platform or other rival technologies based on the preferences, skills, knowledge, and familiarity of their IT staff members.

Implementing a platform by which the programming staff of a certain organization is knowledgeable and familiar with will assist to lessen the development duration. The familiarity will also decrease the costs for staff training and may improve the quality of the finished software product. We all know that Java excels in some areas in the software development industry, but there are also other practical options around that any software developer may use in order to complete his projects.
Other than deciding to deploy Java, another significant decision that a particular organization will have to make is on choosing what platform to use: JavaEE or Microsoft . Net. Currently, most software developers prefer to use Java than . Net but in terms of the usage of the platforms, Java EE and Microsoft . Net are becoming more leveled. Java first became more popular with respect to capability than . Net, but since . Net has been able to narrow down the capability space between .
Net and Java, the popularity gap is becoming a little narrower. There are some factors that greatly affect on the decision on whether to use Java EE or Microsoft . Net. If an organization will choose the . Net platform, the choices of development tools will be limited to Microsoft Visual Studio. On the other hand, choosing Java EE platform will give a much wider range of software tools. If a developer is not comfortable with Visual Studio, . Net’s problem of limited development tools will be a problem.
Greiner argues that other than choosing whether what platform should be adapted, a significant consideration on choosing between the development tools required by respective platforms should be made. The critical part is choosing what development tools are familiar to the IT staff of a certain organization. The author suggests that organizations and companies that have homogenized on using Microsoft technology will have better results if they use the Microsoft . Net platform. Reference: Greiner, Lynn. 2008. Java-Based Application Development Technology. Faulkner Information Services.

Microsoft Corporation Argumentative Essay

Essay on Multinational Corporations

Essay on Multinational Corporations.
Globalization The liberal economic theory Is based on the fact that not all state’s territories include the blessing of various natural resources. Therefore, state economies over the years have established several laws that make economic global trade a rather fair transaction. In its core trading was created to facilitate the gaining of products for territories in which producing a specific good might be limited due to their natural resources from those with comparative or absolute advantage.
Economic liberalizes believe that governments should not interfere in the markets, because international elate Is maximized when states practice comparative advantage and specialize in certain products. It makes more sense for a country with easier and cheaper ways to produce a specific product do so in abundance and share it through global trade with the world, rather than it be extremely difficult and costly for a single state to do it alone.
Through foreign direct investment, multinational corporations are able to invest in other countries by establishing their own facilities in foreign territories. This is the base of globalization. Through FED and Mans companies are locating closer to customers and Introducing themselves In the same area as competitors, meanwhile they hire local manufacturers and employees to assist the production of their product. By doing so, they not only fuel the international economy by creating a larger amount of production for trade, but they also are creating Jobs for people where they are most needed.

They usually establish foreign facilities and plants in countries where wage is extremely cheap- indicating that these countries are probably home to extremely poor human beings, who would have trouble finding a Job In the first place. Yet they also search to Invest In states that have attractive resources. FED Is good for developing countries because they make their economies stronger. By paying taxes and training personnel, they enrich their host territories economy and development.
Economic liberalizes believe that Mans can serve as a peace keeping potential during trying times between two countries. That interdependence globally would cause powers to be more understanding and hesitant before creating a war. However stating that underdeveloped nations cannot Lully control the Mans because of lack of proper enforcement of human right laws, there is a chance that the workers may be exploited, but through safety and health standards, this situation is usually controlled. I strongly believe that developing states should allow Mans to house facilities in their territories.
It’s clear that for development, you must establish a strong economy, and FED and Mans without a doubt assist lesser-developed countries in reaching development. They create Jobs for those who are uneducated and therefore disqualified from many Job technological advancement of local companies. I do, however, support that specific tariffs and laws should be set against the Mans goods being sold in that state’s market, because local producers could not stand a chance next to mass productions.
Also, the dangers of human rights being violated are possible when establishing an NC in a state with an unrecognized government and must be highly investigated for proper activity. In regards to those issues I believe that as long as the General Agreement on Tariffs and Trade (GAIT) enforce and practice their trade principals the global trade market will be a safe place. The prevarication and liberalizing of trade and foreign direct investment are the best way to go about developing a state.

Essay on Multinational Corporations

Corporations Concluded

Corporations Concluded.
For federal tax purposes, royalty income that is not derived in the ordinary course of a business is classified as: (Points : 5) portfolio income. answer active income. passive income. None of the above 2. (TCO F) When comparing corporate and individual taxation, the following statement is true: (Points : 5) Unlike individual taxpayer, corporate may not have a long-term capital loss carryforward. Both types of taxpayers have percentage limitations on the charitable contribution deduction, coupled with a carryover of the excess contribution. All taxpayers may carry net operating losses back two years, forward 20 years.
All of the above. answer 3. (TCO H) Al and Amy file a joint return for the 2012 tax year. Their adjusted gross income is $80,000. They had net investment income of $7,000. In 2012, they had the following interest expenses: Personal credit card interest: $4,000 Home mortgage interest: $8,000 Investment interest (on loans used to buy stocks): $10,000 What is the interest deduction for Al and Amy for the 2012 tax year? (Points : 5) $8,000 $15,000. answer $12,000 $18,000 4. (TCO B) A contribution made to the following donee is not deductible. (Points : 5) Boy Scouts of America Oxford University, England. answer
Society for the Prevention of Cruelty to Animals Michigan State University California State Fair (an activity of the State of California)

(TCO A) The following taxes were paid by Tim: Real estate taxes on his home: $2,000 State income taxes: $900 State gasoline tax (personal use of automobile): $150 In itemizing his deductions, what is the amount that Tim may claim as a deduction for taxes? (Points : 5) $2,000 $2,900. answer $3,050 $0
(TCO F) Hoover, Inc. had gross receipts from operations of $230,000, operating and other expenses of $310,000, and dividends received from a 45 percent-owned domestic corporation of $120,000.
Hoover’s tax position for the year is: (Points : 5) $8,000 taxable income. $56,000 net operating loss. answer $40,000 taxable income. $80,000 net operating loss.
(TCO G) All of the outstanding stock of a closely held C corporation is owned equally by David Smith and Steve Bufusno. In 2012, the corporation generates taxable income of $30,000 from its active business activities. In addition, it earns $20,000 of interest from investments and incurs a $40,000 loss from a passive activity. How much income does the C corporation report for 2012?
(Points : 5) $10,000 of portfolio income $0 $20,000 of portfolio income. answer None of the above
(TCO G) Bob, who is single, has $90,000 of salary, $25,000 of income from a limited partnership, and a $30,000 passive loss from a real estate rental activity in which he actively participates. His modified adjusted gross income is $90,000. Of the $30,000 loss, how much is deductible? (Points : 5) $30,000. answer $10,000 $25,000 $0
(TCO F) Jen owns a sole proprietorship, and Steve is the sole shareholder of a C (regular) corporation.
Each business sustained a $14,000 operating loss and a $3,000 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners? (Points : 17) A sole proprietorship is taxed through the business owner’s personal tax return. Therefore Jen would enter the $14,000 operating loss from the proprietorship on Schedule C of Form 1040 or one of its variants. This reported loss would offset any income Jen reported from any other source on her personal income tax filed. As a noncorporate taxpayer Jen can also deduct the $3000 capital loss for the year.
As the sole shareholder of a C corp Steve will see no effect on his taxable income as the shareholder. Income from a C corporation is reported when the shareholder receive dividends. C corporation losses are not reported by the shareholders.
(TCO G) Briefly (1) define and (2) discuss the purpose and impact of each of the following: a. at-risk rules b. suspended passive activity losses c. material participation (Points : 18) a. at-risk rules Definition: Losses from a business operation are limited to the amount of money you can actually lose in the business.
You are subject to at-risk rules if you are filing Schedules C, E, or F. Tax laws limiting the amount of losses an investor (usually a limited partner) can claim. Only the amount actually at risk can be deducted.
Suspended passive activity losses Definition: A capital loss that cannot be realized in a given tax year due to passive activity limitations. These losses are therefore “suspended” until they can be netted against passive income in a future tax year. Suspended losses are incurred as a result of passive activities, and can only be carried forward.
Suspended losses that are incurred as a result of the disposition of a passive interest are subject to an annual capital loss limit. Suspended losses can, however, be used to offset income realized in a later year that is generated from material participation in the activity that initially produced the loss. For example, if a taxpayer incurs a $5,000 suspended loss in one year from a passive activity and then materially participates in the activity the following year and earns $10,000, then the suspended loss may be applied against $5,000 of the earned income, leaving the taxpayer with $5,000 of declarable income for the year.
Material participation. Definition: A set of criteria that determines whether a taxpayer is a material participant in a business venture. The material participation test will determine whether business income received by the taxpayer is active or passive. Material participation is determined each year. The IRS has seven tests to determine material participation: The taxpayer works 500 hours or more during the year in the activity. The taxpayer does substantially all the work in the activity.
The taxpayer works more than 100 hours in the activity during the year and no one else works more than the taxpayer. The activity is a significant participation activity (SPA), and the sum of SPAs in which the taxpayer works 100-500 hours exceeds 500 hours for the year. The taxpayer materially participated in the activity in any 5 of the prior 10 years. The activity is a personal service activity and the taxpayer materially participated in that activity in any 3 prior years.
Based on all of the facts and circumstances, the taxpayer participates in the activity on a regular, continuous, and substantial basis during such year. However, this test only applies if the taxpayer works at least 100 hours in the activity, no one else works more hours than the taxpayer in the activity, and no one else receives compensation for managing the activity. Determination of “material participation” is complicated, and lack of material participation can result in passive loss rules. If you think lack of material participation may be an issue in your business, check with your tax adviser.

Corporations Concluded

Diversity Action plan for Wal-Mart Corporation

Diversity Action plan for Wal-Mart Corporation.
In today’s business world, a company that lacks a policy on diversification is unlikely to compete effectively. The growth in Information Communication Technology and globalization means that the world has increasingly become a smaller place and what happens in on end of the world will influence actions and decisions in far-away places. Hayes (2004) notes that most US companies have tried to address the issue of diversity after noticing the impact it has on business.
Consequently, companies have tried to appear more inclusive in their recruitment policies. Yet the issues run deeper than just staff recruitment. As companies are out to satisfy the needs of their customers, they need to understand the needs of the customers. This can only be done by understanding the customer’s cultural nuances (Hayes, 2004). For companies with global operations, the need arises then to understand the cultural needs of the various groups in the different countries of operation.
Hayes (2004) has noted the importance of understanding this because issues of race, ethnicity and minority rights vary from country to country. Proper diversification has a direct impact on the performance of a business. Some of the direct results of properly executed diversification plans include “connection with the customer, employee motivation and employee innovation” (Diversity Return on Investment, 2003). The sheer size of Wal-Mart’s operations makes diversity a critical consideration for the company.

Wal-Mart has close to 8,000 stores globally and serves more than 100 million customers annually (About us, 2009). This raises the need to understand the different cultural needs of the diverse communities that the company serves in addition to undertaking recruitment procedures that guarantee that the company hires people who will satisfy different customers’ needs. Sound diversity programs are inevitable for companies with long-term growth plans because of the change in demographics in the US.
Changing demographics are accompanied by new customer needs which companies need to adapt to. Results from the 2000 census, (Diversity Return on Investment 2003), show a changing demographic field that growth-minded companies must adjust to for future survival. According to these statistics, the people considered minorities are actually the majority “in six out of eight largest metropolitan areas of the US” and “the combined Black, Hipic and Asian buying power is more than $750 billion” (Diversity Returns on Investment, 2003).
Hayes (2003) notes that while Whites constitute the biggest percentage of the US population, population growth trends indicate that, as a percentage of the whole population, their numbers have fallen from 76% in 1990 to 69% in 2000. Yet, in this same period, Hipic numbers have been on the rise and the projection is that they will be the biggest minority group by 2005. Asian Americans have also been increasing in numbers and, since 1990 their population has increased by 100% so that by 2000 they were 4. 2% of the total population. (Hayes, 2004).
Owing to the enormous size of the company and the diversity of its areas of operation, Wal-Mart has special communication needs. This, in addition to criticism leveled against the company for failing to effect measures that show commitment to diversity, made the company establish a communication plan in 2007 (Wal-Mart’s Communication plan, 2007). This program was created to address a number of problems but primarily to reduce staff turnover and to understand customer needs. Overall, the program was meant to improve communication within and outside the company.
To implement it, Wal-Mart hired 300 human resource managers to work in the field. By doing this, the company hoped to get all the workers, whatever their location, moving in the same direction in pursuit of profit and growth for the company (Wal-Mart’s New Communication Plan, 2007). In appreciation of the relationship between communication, growth and profit, the new communication plan was launched together with an ethics hotline on which employees of the company could report disturbing issues.

Diversity Action plan for Wal-Mart Corporation

Kmart Corporation

Kmart Corporation.
Kmart Corporation Calandra Kimbrough BUS 692 Strategies in Human Resource Management Dr. Lao January 21, 2013 Kmart is an American chain of discount stores headquartered in the United States. The chain purchased Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. Increasing productivity is one of the most critical goals in organizations such as Kmart. In this paper I will be assessing the technology requirements relevant to employee productivity, staffing systems, career development systems, and training systems used by Kmart. Training Training is essential when hiring new people to an organization.
Training refers to the methods employers use to give new or present employees the skills they need to perform their jobs. Training is one of the most profitable investments an organization can make. No matter what business or industry you are in the steps for an effective training process are the same and may be adapted anywhere. The first step is establishing a needs analysis. Training needs analysis is a systematic method for determining what caused performance to be less than expected or required (Blanchard 2010). An effective training needs assessment analysis will help direct resources to areas of greatest demand.
The assessment should address resources needed to fulfill organizational mission, improve productivity, and provide quality products and services. This step identifies activities to justify an investment for training. The techniques necessary for the data collection are surveys, observations, interviews, and customer comment cards. Several examples of an analysis outlining specific training needs are customer dissatisfaction, low morale, low productivity, and high turnover. The objective in establishing a needs analysis that is used at Kmart is to find out the answers to the following questions: – “Why” is training needed? “What” type of training is needed? – “When” is the training needed? – “Where” is the training needed? – “Who” needs the training? and “Who” will conduct the training? – “How” will the training be performed? By determining training needs, Kmart can decide what specific knowledge, skills, and attitudes are needed to improve the employee’s performance in accordance with the company’s standards. Training is necessary if you notice a need for performance improvements and operational problems and changes. The second step is developing training programs and manuals (Infande, 2012).

This step establishes the development of current job descriptions and standards and procedures. Job descriptions should be clear and concise and may serve as a major training tool for the identification of guidelines. Once the job description is completed, a complete list of standards and procedures should be established from each responsibility outlined in the job description. This will standardize the necessary guidelines for any future training. The final step is evaluating your training program after you have initiated it. This step will determine how effective and profitable your training program has been.
Methods for evaluation are pre-and post- surveys of customer comments cards, the establishment of a cost/benefit analysis outlining your expenses and returns, and an increase in customer satisfaction and profits (Infande, 2012). There are several obvious benefits for evaluating a training program. First, evaluations will provide feedback on the trainer’s performance, allowing them to improve themselves for future programs. Second, evaluations will indicate its cost-effectiveness. Third, evaluations are an efficient way to determine the overall effectiveness of the training program for the employees as well as the organization (Infande, 2012).
Staffing Staffing systems involve complex processes and decisions that require organizational direction, coordination, and evaluation. Most organizations must create mechanisms for managing their staffing system and its components. Such management of staffing systems requires consideration of both administration and evaluation, as well as legal issues. Staffing factors may also cause problems. Some examples of why poor staffing can be a problem are too heavy a workload, an under staffing can cause people to make mistakes.
Hiring people who are inexperienced to do the job which may have them making costly mistakes. Also hiring people who are lazy, or have bad attitudes can cause low morale among the workers that can lead to good people quitting. Career Development Providing ongoing career development programs is one strategy a business can use to retain employees and reduce turnover. It’s in the best interest of a company to ensure all employees are properly trained, kept up-to-date on the latest trends and developments in their field, and are generally interested in furthering their individual careers.
The task of overseeing training programs and working with employees on assessing and improving their skill levels, as well as ensuring workers are in the position best suited to them is left to the career development manager. Kmart is becoming much more proactive in its training of employees. A great deal of importance has been placed on training and development. Kmart is starting to commit to helping its employees develop the skills needed to succeed in its retail and corporate environments. Conclusion The need for training your employees has never been greater.
As business and industry continues to grow, more jobs will become created and available. Customer demands, employee morale, employee productivity, and employee turnover as well as the current economic realities of a highly competitive workforce are just some of the reasons for establishing and implementing training in an organization. To be successful, all training must receive support from the top management as well as from the middle and supervisory levels of management. It is a team effort and must be implemented by all members of the Kmart corporation staff to be fully successful.
For a training program to be successful, the trainer should be conscious of several essential elements, including a controlled environment, good planning, the use of various training methods, good communication skills, and trainee participation (Infande, 2012). ? References Infande, D. A. (2012). The Four Basic Steps in the Training Process. Retrieved July 23, 2012 Blanchard, P. N. & Thacker, J. W. (2010). Effective Training: Systems, Strategies, and Practices (4th ed). Upper Saddle River, N. J: Prentice Hall. ISBN: 9780136078326

Kmart Corporation

KFC Corporation – Introduction Strategy in Malaysia

KFC Corporation – Introduction Strategy in Malaysia.
KFC corporation is one of establish company in Malaysia. This company served a yummy snack of fast food to people in the world. A delicious fried chicken is becoming everyone’s favorites from it first introduce until now. KFC also known as Kentucky Fried Chicken is a brand and operating segment called a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo. KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches while its primary focus is fried chicken, KFC also offers a line of roasted chicken product, side dishes and dessert.
KFC has come up with several strategies to position its company. The strategies are marketing mix. Marketing mix is generally accepted as the use and specification of the four P’s describing the strategic position of a product in the marketplace. The 4 P’s are product, Price, Place, and Promotion. Product is divided into categories like Product variation, Product differentiation, product innovation and product elimination. For the price it is subdivided into cost recovery pricing, penetration pricing and price skimming. For the place, the categories are distribution channel, direct sales, indirect sales and E-commerce. Promotion is categorized into individual communication, mass communication, brand management and corporate identity.
Product is anything that can be offered to a market to satisfy. In term of KFC, the main product is fried chicken served in various forms. KFC’s primary product is pressure fried chicken made with the original recipe. The other chicken offering garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type machine. KFC served its product according to geographic needs of customer. In India KFC focuses how geographically its customer demand different product. In North India Chicken is the main selling product while in the South Vegetables items sell more than chicken.

Other than that, KFC also has come up with strategy like product innovation, dedifferentiation, and product variation. To promote the customer with their product, KFC always create a new product or they make an innovation to the old product. For example, in a time people is crazy about K-pop, KFC realize the chance then they innovate old recipe fried chicken into a new recipe. K-pop Fried Chicken is pored with a spicy sweet sauce. The taste is very delicious and customer make want it again after try it for very first time.
KFC has strengthen its marketing strategy with location as part of their strategy. They had choose a strategic location for their franchise or outlet. The strategies of KFC are ‘Free Home Delivery Strategy” where they target on people who is very busy or having a hectic life. They provide free home delivery to offices and homes. Another target areas of KFC are country of hectic lifestyle and individual who are going for fast food. KFC has target to the people in urban areas.
Urban areas are more populated therefore help with attracting higher revenues. Urban people tend to choose higher quality of food compare to people from rural areas. KFC has strategy to place its outlet. All the outlet of KFC is near to the school, offices, colleges, cinemas and market and mostly populated by the young and those who are in hurry. The benefits of the location make KFC enjoys a large number of footfalls everyday. In addition they also have outlets close to non vegetarians customer.
Price is any amount of money that customer have to pay while purchasing the product. More broadly, price is the sum of all the values that consumers exchange for benefits of having or using the product or services. The price is depend on the demographic factors, and economically factor. For demographic factor, the key factor is age, gender, and Household size. Generally there is no age limit focus by the KFC. The target and focus is on each and every individual in a society KFC find its largest demographic in the young of any society.
The price is affordable for from upper class to middle class or to a student of any society. Household size play a vital role in the demographic factor. Generally they target whole families rather than single persons . This being the reason for the Family Meals which are basically bundled item served at a nominally cheaper rate. Economic factors has several factors to be consider. They are income and consumption behavior. Income is an important key factor for KFC. This factor decides which class is to be targeted. In the early rise of KFC, they focused on the upper class but slowly are introducing economy meals that attract the lower to the middle classes. For consumption behavior, it estimates the behavior of people liking and disliking towards the pricing of the product.
KFC has implemented several pricing strategy like market skimming, competition, and cost based. KFC globally enters the market using market skimming. Their product are priced high and target the middle to upper class people. Gradually they trick down the price focusing on the middle to lower class people to penetrate both sides of the market. Pricing base competitor is focus on the price of competitor product. If competitor sell the same product with much lower price, they also need to lower the price. In the case of KFC, FIED Chicken is its main selling point controls a monopoly over the Indian fast food market. It prices its burgers, French fries and soft beverages with relation to its competitors.
Cost based is the pricing strategy to keep their product in different point of view. Pricing of the product includes the government tax and excise duty and then comes the final stage of determine the price of their product. The products are bit high priced according the market segment and it is also comparable to the standard of their produc . In the cost based method we include the variable fixed method.
To place the position of its company, KFC has advertise and promote the product through Sales promotion, Advertising, Public Relations, Events and Experiences, Coupons, Discounts, and Bundled Packages. Promotion is the method used to inform and educate the chosen target audience about the organization and its product. At KFC, promotion is the main tool to bring all chicken lovers towards its delicious one of a kind product, the Fried Chicken. KFC has using reminder advertisement. The company has use a slogan of finger linking good” as a wake up call to the consumer to remind them how good they felt the last time they ate KFC chicken.
Sponsorship is another important tool to strengthen an organizations image. KFC has become a sponsorship man to Australia Cricket Team and the colonel logo can be seen on their uniform throughout the matches. Other tools used by KFC to enhance their sales are premiums, exhibits, coupons and entertainment. All KFC outlets offer its customers with various form of incentives to buy its Chicken. Using coupon that one acquire after spending of fixed time, customers can enjoy the benefits of free meal or add ons. Additionally they provide meal vouchers and exciting offers in their print ads which bring the customer must cut and bring along.
Other great advertising of KFC is the logo of Smiling Colonel. The logo is probably the moist recognized face in the world. Everyone knows the logo. When see the logo , we surely think about KFC. The logo of finger licking good is always appear on TV, billboards, flyers and radio. The concept of showing a customer deeply involved in devouring his piece of chicken usually turns on the drool factory in everybody mouth and makes them rush to the nearest KFC.

KFC Corporation – Introduction Strategy in Malaysia

Multi National Corporation

Multi National Corporation.
“On balance, multinational corporations provide more positive outcomes for society than negative ones”. Multinational corporations are practically in every sphere of modern life, from policy making to the environment and international security; from problems of identity and community to the future of work and nation state. (Gabel and Bruner, 2003, VI) A multi-national corporation (MNC) is a business organisation which has its headquarters in one country but conducts and controls productive activities in a range of different countries.
There are numerous examples of such organisations, car manufacturers like Ford, Toyota, Honda , Volkswagen; oil companies like Shell, BP, Exxon Mobil ; technology companies like Dell, Microsoft, Hewlett Packard ,Canon ; food and drink companies such as Coca Cola, Interbrew, McDonalds, FMCG companies like P&G and banking companies like Yes bank, Hsbs, etc.
According to Bartlett and Ghoshal (1998), the multinational organisation is defined by the following characteristics: ‘A decentralized federation of asset and responsibilities, a management process defined by simple financial control systems overlaid on informal personal coordination, and a dominant strategic mentality that viewed the company’s worldwide operations as a portfolio of national business. In a multinational organisation, the decisions, obviously, are decentralised. ’ Generally speaking multinational corporations are a boon to this world.

They have made this world a better place to live in. There are numerous positive outcomes of a MNC. These corporations have brought this world together and have connected the whole mankind. They have developed the underdeveloped countries through their investments and improving their economy. MNC, by their very nature, are large organisations. Their size means they often have considerable power and influence and as a result have come in for some criticism of their actions. It is also assumed that MNCs tend to locate operations in poor countries only.
This, of course, is not the case. Honda and Nissan have both invested heavily in production facilities in the UK but are Japanese companies. (Bized, 2007) Multinational Corporations are believed to play a major role in improving the economy and lifestyle of the developing country. MNC have made this world a global village and connected people from all parts of the world and made them work together in a state of harmony. Due to these transnational corporations, the working of people from different origin, caste, and race is possible.
These corporations are the reason that we can now live together with any type of human. They have made it possible for us to think globally and live globally. It is believed among many economists that MNCs fill various gaps within a host country’s economy. The first and most often cited one is that, when domestic investment and savings doesn’t meet the required rate of growth in the economy, the gap in investment is filled by the MNCs’ investment because these corporations have large funds and so can help in building an economy benefitting the whole world.
Secondly when the targeted foreign exchange is not met by the net foreign exchange derived from imports and exports together with net public debt, the gap is constituted by MNCs’ net exports and capital inflow. These giant enterprises also fill the gap between targeted government tax revenues and locally raised taxes. Lastly the gap of management skills, entrepreneurship and technological skills are believed to be filled by the MNCs. They bind all sorts of people together because these are huge agencies and so require works of all type.
Engineers use technological skills to make a product which is sold by entrepreneurs using management skills and lastly the whole all account is managed by managers. So everyone works together filling up the gap between them. (Financial times, 2001) According to A. K. Cairn Cross, ‘It is not possible to buy development so cheaply. The provision of foreign capital may yield a more adequate infrastructure, but rarely by itself generates rapid development unless there are already large investment opportunities going a begging. That is why the intervention of multinational corporations is imperative in the context of the economic growth and modernisation of developing economies where ample investment avenues lie open and yet due to lack of capital and technical know-how, these potentials remain unexploited. Multinational corporations help in reorganising the economic infrastructure in collaboration with the domestic sector through financial and technical help. These corporations build huge buildings and factories which improves the infrastructure of a developing country to a huge extent. Multinational organisations (MNO) have helped in he increase of employment in the host nation as well as in the other countries where it functions. Let us assume that a company manufactures and supplies raw material for making furniture. To this firm, the contract to supply the raw material for the new plant might be worth ? 35000. If the plant was not built then the firm will not generate that order and not receive that work. For workers working in the plant, the order helps to maintain the flow of orders and can keep them in employment. It can also be expected that the additional income will find its way through the local economy.
If additional people are hired, they will receive an income which they spend. For existing workers, increased orders might equate to job security and they too might feel more confident in spending on new items – furniture, house extension, new white goods, holidays and so on. Inward investment therefore can act as a trigger to generating wealth in the local economy. If a MNC is attracted to an area then this might also lead to other smaller firms in the supply chain deciding to locate in those areas. Other firms providing services to these firms are then attracted to the area and so on. (Bized, 2007)
MNCs provide immense resources and investments, technology, innovation and expertise to the host societies. A culture of research and development is encouraged and human resources are developed, at least within the organization. MNCs also contribute significantly to the national treasury by paying taxes. As these organisations have huge revenues and profits so the amount of tax paid by these organisations is also large, this in turn lifts up the economy of the country. MNCs bring with them new ideas and new techniques that can help to improve the quality of production and help boost the quality of human capital in the host country.
Many will not only look to employ local labour but also provide them with training and new skills to help them improve productivity and efficiency. In some cases this can prove a challenge but in others it can lead to improvements in motivation and productivity. The skills that workers build up can then be passed on to other workers and so this improves the supply of skilled labour in the area which makes it more attractive to new industry as it helps to reduce the costs of training and skilling of workers. In addition to the investment in a country in production and distribution facilities, a multinational orporation might also invest in additional infrastructure facilities like road, rail, port and communications facilities. This can provide benefits for the whole country as in building road or port one requires labour, therefore eradicating the problem of unemployment. If people are employed they will like to buy different products which will lead to increase of production and supply leading to making of new factories to meet the demand and therefore uplifting the whole economy. Peter Drucker (1975) remarks that multinationalism and expanding world trade are two sides of the same coin.
He points out that the period of most rapid growth of multinational trade was in the fifties and sixties. Indeed, during this period the world economy grew faster than the fastest growing domestic economy of Japan. India has always been facing the issue of brain drain since the past few decades where  Indian students go to developed economies like United States for higher studies and never return back. But the above statement highlights a new trend, even though not as prominent as the earlier one, entrepreneurs migrating to other emerging economies for better business prospects.
But due to liberalization in 1991 many multinational corporations are allowed in our country which has reduced brain drain to a much greater extent, as students get the opportunities to work in a better environment that is matching their level of education, in their home country itself as these corporations give the skilled employees a good amount of money which was missing before the globalization. So they come back after the higher education to work in their home country instead of settling in foreign nations. In short it causes Brain Gain instead of Brain Drain.
Good governance, organizational transparency, clear command structures, and performance-based evaluation and incentives programs for employees encourage the merit system. MNCs introduce a professional working environment and culture for local organizations to emulate, thereby promoting sound management and business education. In some cases, large-scale economies, quality control and a healthy competition lead to price cuts and other benefits for the end-user. People have more access to the comforts of life with a large variety of choices.
Today a person is available with many choices if he goes to buy a handbag or a shoe. There are ten brands offering the same material so the company is forced to use the best quality materials for their product reducing the amount of prices. Earlier before liberalization there was no competition so as there was a single local company selling a product which gave that local company full authority over the prices and the material used in making the product. These local companies used low quality material and increased the prices of the goods.
But this drawback has been fulfilled by these multinational corporations. MNCs help boost cross-boundary interaction among people. Even education, particularly, business education, has taken on a global perspective. The global perspectives and opportunities for cross-cultural understanding increase the adaptability of students to alien environments. This leads to the mixing of cultures and practices and encourages pluralism as well as competition which helps in overall learning of the student and makes him capable of working in any environment. (Khalid Rahman, n. d. The enormous resources of the multinational enterprises enable them to have very efficient research and development systems. Thus, they make a commendable contribution to inventions and innovations. They also work to equalize the cost of Factors of Production- Land, Labour, Capital and Entrepreneur-around the world. MNCs also stimulate domestic enterprise because to support their own operations, the MNCs may encourage and assist domestic suppliers. So they help in increase completion and break domestic monopolies.
Today fun and entertainment have become a refuge for man from their misery, tension and daily hectic routine. A good level of Media Company can provide that kind of entertainment that will help the common man to relax. A good show can only be made if the company has enough funds to afford it which is only manageable by a multinational corporation. Due to the globalization we are able to enjoy the fun of the animated movies, thrill of James Bond and Romance of Twilight. We have been able to enjoy the 3D effects and the shopping mall life due to these corporations.
The luxuries offered by the Grand Hayat or Radisson are not possible without MNCs. Reliance is a perfect example for a MNC which provides entertainment to all sorts of people worldwide. From theatres to producing a movie, from channels to televisions, reliance provides everything related to entertainment to the rest of the world. The ‘khushiyon ki home delivery’ of dominoes or the yummy Mc veggie burger of McDonalds was not even believed to be possible in your home town thirty years back. In this world of skyscrapers and travelling to mile long distances for work, one requires transport.
I don’t think one can travel by foot twenty kilometres to your office. One has to possess a vehicle or travel by public transport. These vehicles are manufactured by the MNCs like Ford, Mahindra, Honda, Tata and many more. Multinational companies have made your easy and comfortable. In a survey carried over all over the world the most important, unavoidable and most needed service or profession is the field of medicine. To answer the question of MNCs having more positive outcomes than the negative ones, why not take this important field as an index, Particularly in India.
This is a proven fact that medical professionals trained in India are amongst the best in the world. A large percentage of doctors in NHS UK (National Health Scheme) 26 % to be exact, and in United States are doctors of Indian origin. This so called brain drain was primarily because of lack of availability of infrastructure and facilities for specialized training and treatments in India. With the advent of Multinational corporations the best of the training facilities, knowledge equipments and medicines are now available freely in India at affordable cost. Health commission of India, London) We take a particular example in the field of orthopaedic surgery, particularly joint replacements. The Dr. C S Ranawat– Atal Bihari Vajpai episode- is not far away when India or India trained doctors replaced our prime ministers knee joint with an artificial joint made by a foreign MNC which was designed and invented by Dr C S Ranwat himself. Incidentally who is from Indore and an old Dalian. To take a company in particular as an example DEPUY, this was previously owned by Johnson and Johnson but now merged with Synthes.
They are the largest manufactures of artificial joints of hip and knee in the world. As their operations are now very well established in India the best, latest joints are available freely to us. As these companies have access to the most modern training facilities and so the faculty Indian doctors can get trained in India and abroad at affordable expenses and with ease. The Depuy academy in Chennai, the Ethicon institute in New Delhi and many others are amongst the best training institutes in the world set up by these huge multinational enterprises.
As these corporations have associations, sponsorships with the faculties who are in the fore front of research, the Indian doctors now have better opportunity to gain knowledge with the leaders in their field. The sessions held in many cities held in India of the American Academy of Orthopaedic Surgeon (AAOS) and annual meetings of IGOF Indo German orthopaedic foundations are possible only because of the logistic and financial support of these corporate. Similarly the British orthopaedic society is having a special autumn session in the national conference of the Indian orthopaedic association in Chennai.
So now we have a situation where the best of the medical professionals with world class training and knowledge armed with all the latest equipments and implants available at our door step. Now a common man who previously could not afford to have such modern operations or surgeries now can have access to them. One do not have to go abroad to have these procedures. Agreed that some profit goes to the multinational giants but the ultimate beneficiary is the common man. As the number of these high end surgeries increases the local hospitals, doctors, infrastructure, paramedical staff have their own benefits.
Looking to the huge population of India and as the number of these surgeries are growing rapidly, the Indian doctors are also now becoming opinion at world level and the Mncs are designing the implants to special Asian needs. And as the experience of the Indian MNCs are supplying same products to the world. So the product used in its home country will be same as the product it has supplied to the rest of the world. One cannot deny the fact that, today multinational companies have become part of our lives.
With all the above glamour and luxuries offered by these corporations they provide a lot of economic help to the developing countries. There are some negative aspects of multinational companies but there are more positive outcomes. They have made our lives worth living. The technological advancements and business growth is the result of working of these corporations. MNCs have connected the world as a whole. Some will say that globalization has ruined the culture of a country, say India. But what MNCs have eradicated is not our rich traditions but our false believes.
One still celebrates Diwali with the same enthusiasm as he used to do ten years ago. But due to globalization today women have the right to vote, the literacy rate of our country has increased, female foeticide and infanticide is banned, untouchability has been banned, caste system is eradicated. Today people have started following their own dreams, not doing what others say. Education system of the country has developed. Number of students going into higher education is increasing year by year.
This all is possible only because MNCs have brought Globalization which has led to change in the narrow minded mentality of the people to a realistic logical one. Today’s generation is grown up and does not live in a world surrounded by superstitions. Imagine a world without MNCs where we don’t have all the big companies and your favourite brands. From coca-cola to KFC, from Reebok to Adidas, from Starbucks to Barista, CK to UCB, and Louis Vetton to Gucci “You Are Living It”. REFRENCE LIST 1. Gabel M and H Bruner, 2003. Global In, New York: The New Press. 2.
Peter drucker, management, Bombay, Allied publishers Pvt. Ltd. 1975, p. 733 3. Christopher A Bartlett and Sumantra Ghoshal, Managing Across Borders, Boston, Harvard Business School Press, 1998 4. Bized, 2007, Economic Notes- Multi-national Corporations, http://www. bized. co. uk/learn/economics/notes/multi. htm (date accessed: 16/10/2012) 5. Dinithi Thanthiriwatte, 6th June 2004, MNCs – bane or boon for development? Financial Times, Sunday Times. 6. A K Craincross, 1953, Home and Foreign Investment, 1870-1913: Studies in Capital Accumulation, University Press . Khalid Rahman, MNCs and TNCs: Their Role and Socioeconomic Impact on Host Societies, Policy Perspectives, Volume 4, No. 2, http://www. ips. org. pk/globalization/1007-mncs-and-tncs-their-role-and-socioeconomic-impact-on-host-societies. html (date accessed: 18/10/12) 8. Health Commission of India, London, Biotechnology and Healthcare, http://hcilondon. in/biotech. php (date accessed: 20/10/2012 ) 9. American Academy of Orthopaedic Surgeons, http://www3. aaos. org/education/international/courses/prev_courses. cfm? evt_year=2012 (date accessed: 21/10/2012)

Multi National Corporation

Profile prepared by Management Analysis Corporation

Profile prepared by Management Analysis Corporation.
Do you believe that the diagnosis and resulting profile prepared by Management Analysis Corporation was a necessary step in the process of finding potentially successful general managers? Explain
The profile prepared by Management Analysis Corporation is the first step in the process of finding a potentially successful of general managers, but it is not the only step. Actually, after MAC has understood very clearly the needs of Dancey Electronics, they could picture the perfect leader. Once this was done, they could see what skills must be innate and what skills can be learned to become a leader. Then, MAC could propose one more interview to the candidates. For example, the candidates are faced to a concrete leadership problem, and they need to solve it very quickly.
MAC should analyze reactions of the candidates and pick the best one. This means picking the person who has the best ability to change and to adapt to a new situation. So, I do not know yet if Joe Morris could be the good candidate for leading Dancey Electronics.

Moreover, I think that the analysis done by MAC is a good way to find a potentially successful group of general managers because it accually describes the ideal qualities of being an effective general manager and at the same time gives us ideas about the relationship and task orientation of each candidate along with analysis of some important environmental factors that might have some effect on their leadership style, such as the company’s expectation and the subordinated expectation for the behavior of general managers.
However, I think Management Analysis Corporation should analyze the behavior of the followers more. This way, MAC will know what leadership style would be the best for the group.
What alternatives are available to modify Joe Morris’s potential effectiveness in the new general manager position?
Joe Morris has a high task orientation it means he can apply an initiating structure focused on goals and results. But it is not enough to lead a team. Joe Morris has to be more relationship oriented. We know that Joe Morris has low skills in relationship orientation. But a leader needs to communicate with his team to have an influence on the behavior of the individuals. If Joe Morris does not change, he could only be a manager, but not a leader. As we learnt in class, “leaders do the right things, managers do things right”.
According to the Fielder theory, Joe Morris can make changes to be more relationship-oriented. He can spend more informal time (lunch, leisure activities) with his subordinates. He can also request particular people for work in his group. He can be a volunteer to direct difficult or troublesome subordinates. He can suggest or affects transfers of particular subordinates into his unit. Finally, Joe Morris can raise morale by obtaining positive outcomes (special bonuses, time off, attractive jobs) for subordinates.
Moreover, Joe Morris should follow a training session to discuss and analyze his leadership situation. This way, he can understand his performance and improve it. If Joe Morris increases his position of power, he could be a better leader because he would repair his lack in relationship orientation.
Why will it be difficult for Joe Morris to modify his style of leadership?
Joe Morris knows how to organize and define the relationships in the group and he establishes well-defined patterns and channels of communication, and spells out ways of getting the job done. So it is a good start. But it would be difficult for him to modify his style of leadership because it is very hard to change him. Moreover, he does not have an overall insight of the company. He needs to fit in the group to eventually change. Considering that Joe Morris is far away from a good relationship orientation, it might be very difficult for him to understand what changes he has to do to modify his style of leadership.
It also may be hard for Joe Morris to change his style of leadership due to the argument against the path-goal theory whereby subordinates play a rule in the leadership style of the manager. In that, Joe Morris has a low score in relationship orientation which means that his relationship with the employees may not be as effective and efficient. As a result, although Morris my want to change his leadership style type, employees may not be as willing to change given his low relationship orientation which therefore makes it hard for him to change his leadership style.
But on the other hand, according to the Leader-Member Exchange Approach, there is no consistent leader behavior across subordinates and Joe Morris can behave in different ways with his future followers than he used to. So he may not have to change his style of leadership and still be appreciated by his followers. Therefore he will become a good leader.

Profile prepared by Management Analysis Corporation