Introduction to Strategic Management Essay Example | Topics and Well Written Essays - 2000 words

Introduction to Strategic Management - Essay Example The report discusses the different priorities that need to be balanced while working on an implementation plan. The report also discusses the feedback mechanisms and legal and ethical issues in setting up an overseas business. Every organization needs to have a unique identity. Obringer (2009) says that "clearer your overall business identity is, the more likely your business is to survive and thrive". The identity also needs to be nurtured and developed to present a consistent image of the business to the outside world. At the outset, this involves understanding the positioning and capability aspects of the organization. While positioning is concerned with external factors like customer needs, competitors, legislation, environment, etc, capability covers internal factors like technology, culture, processes, skills, etc. (Thompson, 1995). These two interrelated aspects help an organization to understand where it came from, where it is now, and where it wants to be in the near future. This requires understanding of segmentation of the customer by the firm's common capability, the firm's competitive stance, and its organizational classification. This will help Able Corporation narrow down on its broad posit ioning, i.e., technology leadership, low cost leader, etc.. The specific positioning can then be worked out based upon its product features and benefits. Once a specific positioning is decided for the organization, the company's identity needs to be communicated to its stakeholders, which includes customers, employees, and suppliers. This involves creating a company culture, creating a visible brand, and creating its vision and mission statements. A clear mission statement acts as an "invisible hand" that guides people in the organization so that they can work independently and yet collectively toward overall organization goals (Kotler & Armstrong, 1996). The statement should be market oriented; it should not be too narrow or too broad; its should be based on its competencies; and should be motivating. Missions are best when guided by a vision, an almost impossible dream. The mission statement should give a clear direction for the company for the next ten to twenty years. Such statements are typically developed after brainstorming. Able Corporation is a successful US manufacturing company located in Tennessee that builds machine tools for home use, and sells its products through large retail chains. It is currently trying to break into the global marketplace. Accordingly, its mission statement could be developed as "to be amongst the top ten home tool makers of the world in terms of reliability, technology, and safety as perceived by our shareholders and customers". Prioritizing Implementation Steps: Once the strategic objectives are defined, proper implementation is critically important. The processes of designing and carrying through the changes must be managed, monitored and controlled (Thompson, 1995). For proper implementation a few organization control systems like a hierarchical

What does it take to build a collaborative highly effective team Essay

What does it take to build a collaborative highly effective team - Essay Example 2. The team has a lot of discussions in which everyone often participates and freely speaks their minds without any form of fear, but within the objectives of the team. All members’ ideas are heard and none of the team members fear mentioning any creative ideas they may have. It does not only take the leader to make an effective team. Likewise, the team members must also put in an effort to ensure that the team functions effectively without any problems. First, it is important as a team member to try and understand each of the other team members potential. This helps one to clearly understand what role they play in the team. Secondly, it is important to understand what role one plays in the team. Once you do, you can simply focus on your own job as part of the team. Third, after understanding your role in the team, it is easier to identify whether there is any need of improving your skills in order for one to perform better in the team. Lastly, trust among all the team members is crucial. This implies that helping each other out would be highly beneficial to the effectiveness of the team. In case one of the team members is falling behind, other members should be willing to help. The leader plays an important role on how the team operates, and it is therefore important to open up to the team members in order to make them feel like they can trust you and freely speak their mind within the group (Woodcock, 102). Secondly, it is important to realize that what works for one person may not necessarily apply to someone else. Allow the tea members to express themselves in the way they most feel comfortable. Lastly, come up with team building strategies in order to improve communication within the team and build trust among team members. The leader in the team sets the example for the other team members and it is most likely to be expected that the team members will likely mimic what the team leader does. It is important to come up with the

Daily Assignment 8&9 Example | Topics and Well Written Essays - 250 words

Daily 8 - Assignment Example They claim that paternalism is essential when preferences do not match the choice frame and paternalism is guided by the failure to validate the preference of welfare to liberty. According to Thaler and Sunstein, Paternalism occurs when organizations or planners adopt policies or decisions that have positive impacts on the options of the non-planners. They argue that paternalism is inevitable since people do not want to make their own decisions even after being coerced by planners to do so. People are also unable to assess the benefits of the decisions they make and the planners are always benevolent such that if two options are available and only one is beneficial to both parties, they will adopt that one. Thaler and Sunstein believe that paternalism should not be coercive and morally demeaning. They assume that individuals behave according to the expectations of the economic models and do not act voluntarily and rationally for their own benefit. The argument that 60% of Americans are either obese or overweight shows that they believe that people do not make beneficial decisions. Every human being knows that obesity poses risks to heart attacks, and it would be misguiding if one assumes that most of the Americans choose their diet optimally. They argue that peoples choices are influenced by the legal and organizational

Poverty and the US Economy Essay Example for Free

Poverty and the US Economy Essay Today, there are developed, emerging and developing countries in the world. A larger percentage of people live under extreme poverty in most developing countries. In most developed countries poverty exist, but a lower proportion. Most developing countries formulate policies either monetary or fiscal to reduce the prevalence of poverty. However, there is no country without a policy options for elimination poverty. In a broader sense, poverty cannot be eradicated, but can be reduced to a certain level. This is why countries are pursuing various polices that could help reduce poverty in their region. Fiscal and monetary policies are the main tools used in formulating various strategies, actions that aim to reduce poverty. This issue leads us to poverty issue in the United States of America. Then, what are the various policies that can be used to eliminate poverty in the country. Should the policy makers make use of fiscal or monetary policy? Subsequently, what policy tools will be used, fiscal or monetary? In this write up there will be a comprehensive analysis on what policy option that should enacted to eliminate poverty in the USA. To begin with, understanding what fiscal and monetary policy entails is necessary. Then, what is fiscal policy? In a simple term, fiscal policy refers to an effort by the government to manage, influence and guide the tempo or direction of the economy by using its major tools taxation and its total spending. There are two major tools of fiscal policy, which are taxation and government spending. In addition, there could be contractionary or expansionary fiscal policy. Expansionary fiscal policy here means when there is increase in government spending or reduction in taxation. This normally leads to budget deficit and vice versa. While, monetary policy refers to an effort by the government to change the pace of the economy by influencing or controlling the money supply and interest rates. These various policies are pursued by government in other to achieve the basic economic objectives of full employment, stability in price level and growth of the economy. However, in the US the fiscal or monetary policies have to be enacted in other to reduce or eliminate poverty. In performing this task, different things have to be put in their rightful place. Even though, poverty cannot be eliminated from the country yet with a very good fiscal and monetary policies it proportion could be reduce. The reason why I believe poverty cannot be completely eliminated is because of the way economy and nation evolves. From time immemorial, there have been some certain classes of people in the economy. They range from upper, middle and lower classes. In any economy, there will always be the lower class and this comprises of the people living below the poverty line. In addition, there will always be those at the receiving end. Africa can be a very good example of this issue. Therefore, there is way how we would not have poverty in any nation. What can only be done is to reduce drastically the number. In country like the US, the poverty rate can be reduced to a small level if government pursues good monetary and fiscal policies. The government could enact fiscal, monetary policies and both together in the economy to reduce the poverty rate. These would be explained as follows: Firstly, we are going to consider the fiscal policy. Since, our main aim is to reduce the level of poverty. The government could pursue both the contractionary or expansionary fiscal policy. However, global financial crises have an overall effect on the nation’s economy. Moreover, the US government could enact contractionary policy to reduce the level of inflation. Since, the tools of fiscal policy are taxation and government spending. The government should reduce its spending and increase the tax of the elite and the upper class in the nation only. When this is done, the government will have more funds, which could be spent on increasing the aggregate demand of the lower class or people living below the poverty line. In a way the real income of the lower class will be increased through this policy, since the funds will be redistribute from the rich to the poor. In a way, there is the effect that fiscal policy has on the nation at large and on the individual as a whole. In as much as our focus relates to individual then, we pursue those action that will be beneficial to the individual rather than the whole nation. In addition, when government pursue budget deficit the economy is receiving less than what its expend. In this case, the government will have to finance this deficit using different approaches. They could borrow the populace or sell assets. Sale of asset may include the sale of bonds and treasury bills in other to offset the deficit. Treasury bills and bond are example of government tools use to reduce the money in circulation. Government sells these to the public in other to remove money in circulation. This money needed will be gotten from the upper class or the rich by increasing their tax. On the other hand, an expansionary fiscal policy could also be enacted. Here, the government should reduce the tax of the lower class and government should increase their spending on economic activities that could increase aggregate demand of this lower class and result in increased productivity. When government takes this action, the real income or the disposable income of this class of people would increase and thereby increasing their purchasing power. Given that, disposable income is the income that is left for spending when tax has been removed from income. In addition, when government increases their spending they pursue budget deficit. Here, they should incur these funds on economic activities that could increase the productivity and aggregate demand of the lower class. When there is increase in government spending, it means that the government is redistributing its asset to its populace. Thereby increasing total productivity in the economy and leading to increase in total income. This increase in total income will trickle down to the lower class and increase their disposable income. In essence, when government pursues the basic economic objective, they will be solving the issue of eliminating poverty indirectly. Therefore, the government could use fiscal policy in reducing the level of poverty in the nation However, the government in pursuing this objective of eliminating poverty can also use monetary policy. They could also use expansionary monetary policy. In a way, contractionary monetary policy will not be effective in achieving this objective. When they wish to use expansionary policy, the government should influence the interest rate by reducing it using its various tools. When this happens, investment will increase leading to increase in productivity that will trickle down to the lower class. Since, increasing productivity more labor effort would be require in achieving this. Then, there will be increase in employment that will trickle down to the lower class. In a way, more people will be employed and this will include the lower class. This situation will increase the real income of the lower class and will enable them live above the poverty line. However, the contractionary monetary policy will not be effective in this case. Since, under this policy there will be reduction in the rate of interest and consequently leading to decrease in productivity. When productivity is reduced, it means inventory is reducing and companies are sacking workers and this most times affects the lower class. Therefore, this will further worsen poverty situation in the country and contributing to increase in the level of unemployment. In another way, the government could combine both fiscal and monetary policies in other to achieve their objective of eliminating poverty in the country. What is needed is the right combination in other to guide against inflation. The government could influence the interest rate and at the same time enact policy that would make lower income earners pay reduce tax or used to offset the feedback from these policy option. The government could also combine expansionary monetary and fiscal contractionary policies in a way to offset any feedback from this policy options. In conclusion, there are ways the government of the United States of America could use to eliminate poverty. However, we should have it in mind that poverty cannot be eliminated permanently in the country. It could only be reduce to its barest minimum. In a way, the government actions are very vital. The two main policies to be enacted are the monetary and the fiscal policy. Finally, I think the global financial crises have a way of influencing the way these policies will work.

Cognitive Interventions Essay Example for Free

Cognitive Interventions Essay The only thing that tells everyone apart from everyone else is each person’s genetic make-up. And there is only one exception and that would identical twins, because no two people are the same. This can be said true about the way we all think. There is no one person that thinks the same as the next person. People believe that we are all born innocent and that we are pure in thoughts and in behavior. There are many different factors that can and sometimes do influence how a person is controlled by his/her cognitive ability to think before acting. There are people who do a better than others can. There are people who have certain psychological problems that seek out help from a therapist to get a handle on their problems. One of most popular therapy would be cognitive behavior therapy (CBT). The base of this theory is that some of the behaviors are caused by a person’s inner thoughts or by mental inability to deal with problems or events in our lives. In this paper, I will summarize the article â€Å"Abuse-Focused Cognitive Behavioral Therapy for Child Physical Abuse,† that describe Abuse-Focused Cognitive Behavioral Therapy (AF-CBT) and the use of AF-CBT in adolescent anger management. Article Summary Childhood anger can be tiger by many different factors, thoughts or even events during a child early life. A young child is not able to express their feels in a correct way, so they have problems in dealing with their anger. This could also be that they were never taught by his/her parents how to handle their emotions. A good example would be a friend of mine that has a child with some deep rooted problems, When Sam get angry he will not able to express how he feels so he acts out towards anyone that is near him. At Christmas time I brought him a soccer ball that he wanted and when he opened it he just threw it to one side, so he was punishment, sent to his room, when he came out the looks in his eyes just plain scared me. I have seen that look in a person who just committed a murder. Cold and dark look is what this child has. Most children with this type of problems, it could be a result of abuse in the home by one or both parents, and the type of abuse could be physical or sexual. At the time of the abuse the child may feel that they could not fight off the person who is abusing him or they are so scared to tell anyone. When this time of situation has occurred the child is not able to handle so they will out and get into trouble. They may start getting into trouble at school, start handling out with the wrong crowds and getting into serious trouble with the law. The child may become involved with sex, alcohol and drugs, sometimes the child could turn out to be an abuser also. Children will do this to get away from their home life and the pain. If the abuse was discover at an early age, and then the child can be remove from the home and has a better chance to get therapy and could turn out to normal. This way the hate and anger can be redirected to a more positive avenue. It difficult for a child to understand why things happened to them and but to be able to speak to someone that can be able to help them understand that it was no their fault and help them heal their emotional wounds. Unfortunately, the affective of the abuse may follow the person throughout their life in many different forms. It can affect their children and even their partners. They may became have problems like becoming overweight so they will not be attractive to men. They also can be very sexually active. Being in therapy as a child they can be with other children that have been threw the same as the child and could help to release their anger, it could also help them from staying away from trouble and from hanging out with the wrong people. This would help the child to focus more on school and what is important to the child. The cognitive behavior theory is known to help child that are victims of abuse cases whether it is physical or sexual and the parents that are the abusers, that may help them to reestablish a relationship between parents and children. Abuse-Focused Cognitive Behavioral Therapy  The main usage of the Abuse-Focused Cognitive Behavioral Therapy (AF-CBT) is working with children and their families that have suffered sexual or physical abuse; the environment is very hostile, the child may be subject coercion and are aggression when the family is present. AF-CBT is also used for children with behavioral problems such as Conduct Disorder and Oppositional Defiant Disorder. AF-CBT is right for children who are the ages of 5-15, who exhibit some level of behavioral or emotional dysfunction and for parents or caregivers who may resort to uncomfortable or unsafe levels of physical punishment. The goal of this therapy is to reduce the level of physical abuse risk factors of the caregiver or family and to reduce the consequences of these experiences for the children. The primary focus is behavior management, social skills, training, cognitive restructuring, problem-solving skills, and communications skills for the caregiver’s level of anger and promote nonaggressive discipline strategies, to enhance a child’s coping skills, and encourage problem-solving and communication. There are three stages of AF-CBT process, each of the steps consisting in multiple steps that involve the child and the parent(s) separately and jointly. This type of treatment would be taken place as outpatient or in a setting that ongoing contact with the caregiver and the child. The treatment should take place twice a week for approximately three to six months. Abuse-Focus Cognitive Behavioral Therapy in an Adolescent Anger-Management, the important part is to be able know how to control anger. Everyone can control their anger and being angry is a normal part of life. Just like everyone else, adolescent are no exception. The only exception is that adolescent can take their anger to the extreme and their action may not be called normal when angered. There is one way to help the adolescent to control their anger is by cognitive therapy. Cognitive behavioral therapy can occur in many different ways, the most common is the one-to-one talk with the adolescents. Once the problem is out in the open, the therapist may give the adolescent advice and to show how to control or redirected their anger. It is a success when one discovers the problem using the cognitive behavioral therapy. Now that the adolescent is able to control their anger it more benefit for those who are around the adolescent, it does benefit both parties. With aggressive or violent behavior the AF-CBT will target in three ways in which people can deal with the situations: 1) Cognition (thinking), 2) Affect (feeling), and 3) Behavior (doing). AF-CBT use many different techniques that are used by practitioners, such as behavior and anger management, problem solving, social skills training, and cognitive restructuring. All programs require proper training in different areas, especially with psychological skills so that enhancing interpersonal effectiveness and self-control is maintained. Conclusion The article explains to us how to deal with child and adolescent in dealing with their anger due to physical or sexual abuse to them and to be able overcome their anger and to deal with feelings as well as their families. The primary goal of AF-CBT is to reduce other behavioral problems in children and adolescent when they grow-up.

Examining Related-Party Transactions And Corporate Fraud

Examining Related-Party Transactions And Corporate Fraud Related parties represent a link where one party can exercise control (direct or indirect) or significant influence over the operating policies of the other party. According to FRS 8 and IAS 24, a related party includes an entitys subsidiaries, associates, joint venture interests, directors and family members of  directors. Related-party transactions are legitimate activities and serve practical purposes such as: They are recognised in corporate and taxation laws. They have their own standards for accounting treatment. Systems of checks and balances have been built around them to make sure they are conducted within these boundaries. The following parties are not considered as related parties in IAS 24: Parties which have normal dealing with an entity. Examples include providers of finance, trade unions, government agencies and public utilities. Parties such as customers, suppliers, distributors and franchisors on which the entity is economically dependent. Two venturers sharing joint control over a joint venture. Two entities having a common directors or other member of key management personnel are not considered as related parties. Related Party Transactions Related party transactions (RPTs) are defined in IAS 24 as any transactions made between the related parties irrespective of whether a price is charged or not. The transactions include transfer of resources, services or obligations. In other words, RPTs are transactions between a company and its management, board members, principal owners, or members of the immediate families of any of these groups. Examples of RPTs under IASB include rendering or receiving of services, purchase or sales of goods, leases, provisions of guarantees or collateral, purchase or sale of property and other assets, among others. Moreover, FASB (1982) states that RPTs include transactions between a company and its affiliates. Affiliates refer to entities which control the company, they are controlled by the company or they are controlled by another entity which also controls the company. Examples of RPTs under FASB include services received or furnished, borrowings and lendings, guarantees among others. Scenarios under related party transactions When an individual purchases a stock, bond, note or mutual fund from a family member or related party entity, he becomes entitled to the related party rules and under these rules, the individuals cost basis will actually depend on whether he ends up selling it at a gain or a loss. For example, the individuals sister owned stock of XYZ Corp which she bought for $20,000.   It had declined in value to $10,000 when he bought it from her.  Ã‚   Therefore, she is  not allowed to claim a  capital loss when she sells it to him because he is a related party. Gain scenario: If later the individual sells the stock to a  third, unrelated party  for $22,000, he will experience a true gain of $12,000 on his own acquisition cost of $10,000. However, he only have to declare  a capital gain of $2,000 for  income tax purposes because  he is allowed to use a carryover basis from his sister, since she was not able to claim the previous  disallowed loss.  Ã‚   Loss scenario: If the individual sells it later to a  third, unrelated party  for $8,000, he will have a true loss of $2,000 on his own acquisition cost of $10,000,  and he can only declare  a capital  loss of $2,000 for  income tax purposes.   However, he is not allowed to use a carryover basis from his sister, even though she was not able to claim the previous  disallowed loss. The tax savings from the previous disallowed capital loss are wasted and no one claimed them. Disclosure The objective of IAS 24 is to ensure that an entitys financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties. The IAS 28 requires the following to be disclosed: Relationship between parents and subsidiaries: The entity should disclose the name of its parent company or of its ultimate controlling party irrespective of whether there have been any transactions occurred between them. In the case where neither the parent company nor the ultimate controlling company produces financial statement for public use, then the next most senior parent that does so must also be disclosed. Management Compensation: The compensation of the key management personnel must be disclosed in total and for each of the following categories: Short-term employment benefits Post-employment benefits Other longer benefits Termination benefits, and Equity Compensation benefits. Related Party Transaction: If transactions have been made between the related party, then for each categories of the related party, the following should be disclosed separately: The amount of the transactions The amount of the outstanding balances including terms and conditions and guarantees Provisions for doubtful debts related to the amount of outstanding balances Expenses recognised during the period in respect of bad or doubtful debts due from related parties. Types of RPT that lead to corporate frauds Many high profile companies have made an abuse use of related party transactions to succeed in involving in fraudulent activities. These include companies such as Enron, Adelphia, Tyco and others. Sales to ( or purchases from) related parties of goods and services According to Pesaru (2002), a related-party sales transaction represents the link between the company and the customer. In this particular transaction, it is usually difficult to identify the related parties. Thus, companies use this technique for boosting revenue. As such, the undisclosed related-party transactions may be used to fraudulently inflate earnings. Companies use accounting trick to mislead the users of financial statements. Presenting a series of sales, which are executed with an undisclosed related-party and which are insignificant is an example of accounting trick used by companies. Moreover, sales made to related party transactions can also lead to corporate frauds if the sales transactions are categorized under fictitious sales. Fictitious sales include round-trip sales. SEC 2003 defines round trip sales as simultaneous pre-arranged sales transactions often of the same product in order to create a false impression of justifying those fictitious sales transactions of falling under the normal ordinary course of the business. This type of transactions inflates sales figures and thus leads to overstatement of revenues. On the other hand, the purchase of goods or services from related parties is another type of RPT. This type of RPT may lead to fraud when the purchases are not disclosed or when they are considered as unauthorised transactions. Companies create fictitious purchases of services from related party to conceal a misappropriation. For instance, in the Tyco case, it was found that the company failed to disclose a finders fee paid to an outside director in connection with an acquisition. Besides, one of the principal owners of PNF Industries, Inc. created fictitious records to conceal a misappropriation by claiming that he was owed consultation fees. Since the payments were considered as unauthorised, he falsified a minutes of a directors meeting to authorize the fees. Non-reported purchases from a related party understate expenses and the effect of the understated figure of expenses is reflected in an overstated sales figure. On the contrary, non-reported revenues and fictitious purchases lead to understatement of income. This whole scenario is summarised in the following diagram. First scenario: Effect: FICTITIOUS SALES OVERSTATEMENT OF REVENUES SMOOTHING INCOME NON-REPORTED PURCHASES Second scenario: NON-REPORTED REVENUE FICTITIOUS PURCHASES UNDERSTATEMENT OF INCOME Genuine sales can be made to the related party in such a way that this transaction transfer wealth to the related party. This can be done if genuine sales are made below its market price to the related party. Another way of transferring wealth to the related party would be unnecessary purchases of goods and services or even purchases above its market price by the company. The other side of the coin will be transferring wealth from the related parties to the company. This is possible when actual sales are transacted to related party at above market prices or when purchases are made below market prices from the related party. The situation of genuine sales being transacted in a manipulating way can have two impacts: Firstly, if the company is already facing a crisis in terms of low profits for instance, then the latter can opt for transferring wealth from the related party to itself. And, if the company is transferring its wealth to the related party, this will lead to misappropriation of companys assets. Both of these impacts will lead to fraudulent financial reporting. To better understand the picture, a diagram is illustrated below: Scenario of sales: GENUINE SALES Made to related parties under market prices Made to the company over market prices LEADS TO TRANSFER OF WEALTH To the company To related parties Scenario of Purchases: PURHASES MADE TO Related parties over market prices The company from related parties under market prices LEADS TO TRANSFER OF WEALTH To the company An example of a company which uses this to involve in fraudulent activity is Livent Inc., Humatech Inc. and Enron. Livent Inc has mischaracterised certain receipts as revenue. In fact, the receipts were actually borrowings since there were side agreements obligating the company to repay the funds. The counterparty companies were related parties since the top executive of Livent Inc were a member of their boards. In the case of Humatech Inc, the CEO and the CFO secretly controlled the improper recognition of revenue which was actually sale to a foreign distributor. Indeed, the foreign distributor was a related party but however no disclosure has been made of the transactions. Furthermore, Enron has made a payment to one of its employees of around $ 10 million and the CFO took it as a SPE. The employee then via a payment to the CFOs family members, share a portion of its fees to the CFO. Loans to and from the related parties The provision of loan to and from the related parties is another major type of RPT. Lack of transparency involved in recording the following transactions outlined below of a company leads to understatement of its liabilities: Non- recognition of borrowings by the company to the related parties Non-disclosure of obligations incurred for the related parties in terms of guarantee Disclosure of loan transactions to related parties If loans are given to the related parties by the entity are reported accordingly in the financial records of that firm, the issue that arises is in terms of the collateral which is used as a medium to get the finance. In fact, what usually happens is that in case of related party transactions companies tend to overstate the value of these collaterals. Manipulating interest rates Wealth are transferred to related party by either borrowing from a related party at above-market interest rates, or lending to a related party at below-market interest rates. If the related parties borrow from the company at an interest rate which is above the market interest rate, this leads to a transfer of wealth to the company. Similarly, if the company is financed out by the related parties at below-market rates or off-market, this would again leads to a transfer of wealth from the related parties to the company. According to Freidman et al. (2003), this kind of practice is referred to as propping. On the other hand, if the company lends the related parties at an interest rate which is lower or even off the market interest rate, this will lead to a transfer of wealth from the company to the related parties. The scenario of manipulating interest rate can be easily understood through the diagram below: Scenario: transfer of wealth to the company: COMPANY Borrows from the related parties at a lower market interest rate Lends to related parties at a higher market interest rate Leads to transfer of wealth to the company If borrowings from a related party are not recognised, this will result in an understatement of liabilities. Moreover, over-estimating the collectability of loans to a related party leads to an overvaluation of assets. These situations are known as loan related misstatements and this may eventually leads to frauds. Several companies adopted this technique when preparing their financial statements. For example, Adelphia understated its liabilities by $1.6 billion. It failed to report its obligation under the credit facility by claiming that its obligation was merely a guarantee which did not require disclosure. In addition to this, Adelphia has netted $ 1.351 billion related party receivables with against related party payables, which has enable them to hide $ 1.348 billion of related party payables. The netting has also allowed them to hide the amount of transactions between the Adelphia and the company owned by Rigas family which was Adelphias controlling shareholders and management team. Indeed, the SEC has stated that the Rigas family has illegally excluded over $2.3 billion in bank debt by deliberately shifting those liabilities onto the books of Adelphias off balance sheet, unconsolidated affiliates and created sham transactions backed by fictitious documents to give the false appearance that Adelphia had actually repaid debts when, in truth, it had simply shifted them to unconsolidated Rigas-controlled entities. Moreover, PrintontheNet.com did not disclose that it had guaranteed $7.3 million in related parties loans. In the case of Tyco, Mr Kozlowski, who was the former Chief Executive Officer of Tyco International borrowed $ 242 Million from a Tyco program, with the intension to facilitate the executives to pay taxes on restricted-stock grants. However, instead of utilising the funds for that purpose, he spent the finances on yachts, fine art, estate jewelry and luxury apartments. In the same way, Mr Swartz, Tycos former Chief Financial Officer took a lo an of $72 Million from program and made personal investment and business ventures with that money. In the Enron case, Mahonia, a special purpose entity (SPE) which was controlled by a financial institution was employed to make some of the Enrons transactions disguised a borrowing of $ 2.6 billion from the financial institution as forwards contract. Hence, as a result of the disguised loans, cash flowed from the financial institution to Mahonia and then from Mahonia to Enron. Investment in related parties It is crucial to disclose investments in related parties in order to prevent frauds from occurring. Managers tend to manipulate earnings via tunneling actions in order to maintain the companys stock performance. As a result, investment decisions would be expropriated if such decisions are determined based on the financial disclosure. If investment in the equity of a related party is not reported correctly, this will lead to an overstatement of assets and hence will mislead investors about insider activity. Several companies had inflated their assets with RPTs. For example, an investment of $2.5 million in a venture capital fund by Hollinger was not disclosed. Moreover, in the Enron case, using the special purpose entities (SPEs) the managers was able to hide unfavourable performance of their investment decisions. Tonka is another example of a company which involve in fraudulent activities. The CFO of the company secretly owned a company and he misappropriate assets of Tonka by making the corporate funds to be improperly been invested in his company. Hence, it can be seen that many companies has misused related party transaction to involve in fraudulent activities. However, the Sarbanes Oxley Act 2002 has prohibited only one type of related party transaction which was loans to related parties. Indeed, in a study by Henri et al. (2007) which examined 83 SEC enforcement actions involving in related party transaction and fraud, it was found that the most frequent type of related party transaction was loan to related party. RPT: A cause for concern Many accounting frauds such as Enron, Adelphia, Tyco, Refco, Hollinger, Rite Aid have occurred during the past years and have shown concern towards related party transactions. This is because in one way or the other, related party transactions were involved, creating concern among regulators and other market participants about the appropriate monitoring and auditing of these transactions. However it has been pointed out that research has provided a mixed picture of the role of related party transactions in fraudulent financial reporting. For example, research has shown that related party transaction disclosures are quite common (Gordon et al. 2004a; Wall Street Journal 2003). However, since fraudulent financial reporting is relatively uncommon (Lev 2003), and furthermore most frauds2 apparently do not involve related party transactions (Shapiro 1984; Bonner et al. 1988; SEC 2003), it is reasonable to assume that most disclosed related party transactions are not fraudulent. According to Gordon et al. (2004), RPTs play a fundamental role in a firms corporate governance environment. It is said that RPTs are an aspect of corporate governance because these transactions are complex issues between a company and its managers, directors, subsidiaries and major shareholders. RPT is considered as an issue to corporate governance because of the problems of asymmetric information between the firms manager and external capital markets. Additionally, RPTs result in higher agency costs. This is due to the alignment of decision-making and monitoring rights. Moreover, according to Johnstone and Bedard (2004), RPTs are difficult to audit and these transactions represent a potential audit risk. When examining the financial statements of companies, auditors do not have adequate information on related party. Is it fair to blame only bad corporate governance for corporate failures? Bad corporate governance is one of the reasons which account for the corporate failures. Corporate governance issues, like those with related party transactions, crop up because of the existence of asymmetric information between shareholders and the firms managers. Existing research has shown that certain board characteristics and CEO pay-performance sensitivity are useful governance mechanisms which help to improve managerial agency problems. For example, large board size, which is observable and disclosed in proxy statements, has been found to be negatively correlated with firm value and interpreted as indicative of weak corporate governance (Yermack, 1996). However, this does not conclude that corporate failures arise only because of bad corporate governance. There are multitude reasons behind the corporate scandal. For instance, it has been seen that a lack of regulations is one of the reasons. It is believed that the erosion of accounting practices begun in the 1980s as firms tried to balance strict standards with a desire to please clients and increase consulting business. Research has shown that a lack of government regulation was one of the major causes of the huge energy trading firm Enron. This firm reported profits of hundreds of millions of dollars ($979 million in 2000, alone) before collapsing in 2001. Other examples include poor management structures, lack of independence and objectivity by auditors as well as poor business ethics. Ethics can be defined as moral philosophy. It is basically the discipline concerned with what is morally good and bad, right and wrong. The term is also applied to any system or theory of moral values or principles (Ethics, Encyclopedia Britannica Online, 2000). However, when this term is applied in the business context, it is said to be the study and evaluation of decision making by businesses according to moral concepts and judgments (Business Ethics, The Columbia Encyclopedia, 2007). For instance, in the Enron case, the auditors applied reckless standards to do their audit because they were receiving significant consultation fees from the company.

The Character of Okonkwo in Chinua Achebes Things Fall Apart Essay

The Character of Okonkwo in Things Fall Apart What makes a successful man? This, in itself, is a culture bound question because it can vary from culture to culture. However, in the perception of Okonkwo, the main character in Chinua Achebe's novel, Things Fall Apart, the measure of a man's success is based on two elements, material acquisition and growth, and physical prowess. This is ironic for Okonkwo since his people's typical idea of success seems to be constructed of a complex, strong spiritual culture, seemingly able to deal in traditional ways with any challenge in nature and human experience. (Ravenscroft 9) Although Okonkwo is undoubtedly an important member of Umuofian society, he is not a typical representative of that society. (Taiwo 115) It is this basic dichotomy between Okonkwo and his own culture that directly lead to the tragic fall of Okonkwo, and ultimate disgrace. I feel that it is important to note at this time that Things Fall Apart is a tragedy, and Okonkwo is a tragic hero. For TFA to be a tragedy, it must follow the following pattern... "A tragedy .. is the imitation of an action that is erious, has magnitude, and is complete in itself; in language with pleasurable accessories, each kind brought in separately in the various parts of the work; in a dramatic, not in a narrative form; with incidents arousing pity and fear, wherewith to accomplish it catharsis of such emotions" Aristotle, Poetics Okonkwo is a tragic hero because he is superior to the regular people of the tribe, "Okonkwo was well known throughout the nine villa... ...up perfectly in the last lines of the book when an entire culture, all of its oral traditions, customs, ceremonies, lives, the very essence of the Ibo people merited a "reasonable paragraph" in the white man's book, The Pacification of the Primitive Tribes of the Lower Niger. BIBLIOGRAPHY Achebe, Chinua. Things Fall Apart. Portsmouth, New Hampshire: Heinemann Educational Publishers, 1986. Aristotle. Aristotle: The Poetics. "The Longinus: On the Sublime." Cambridge, Mass., Harvard University Press, 1960. Ravenscroft, A. Chinua Achebe. Great Britain: Longmans, Green & CO LTD, 1969. Serumaga, Robert. "A Mirror of Integration." Protest and Conflict in African Literature (1969) 76 Taiwo, Oladele. Culture and the Nigerian Novel. New York: St. Martin's Press, 1976.