Case Study

Introduction

Corporate Social Report (CSR) is one of the ways to check how well developed accounting is in the company. Oliver Dubigeon in its article discerns two kinds of companies: the one who begin to account for their social, corporate and environmental responsibility to improve the impression of their reputation and acceptability to civil society and the second who understands that it is a response at this very moment to the ‘right to knowledge and participation’ that civil society is demanding, if not to eliminate the risks to their daily life and to future generations, then at least to control and master them.

First and second parts of this report will be analyzing an insurance company AVIVA, who like one of international community member, has its corporate responsibility. So it is necessary to find out whether this company belongs to the first or second category of discerned companies. Moreover, it is important to look how accountability is pursued in AVIVA company and how it takes responsibility in solving global warming problem. The second part of the report also considers the impact of professional accountancy bodies in global warming, how they deal with global warming issue in reporting. The third part will evaluate the role of global Socially Responsible Investment on the development of accountability. This section will not be specifically concerned with AVIVA company, but it will be considering about the increase of accountability and social and environmental accounting and of course the behaviour for companies.

Part 1 – accountability

Accountability is a concept that relates to flows of information, where those controlling resources provide accounts to society of their use of those resources. So, corporate accountability can be defined as the systematic and public communication of information that is designed to justify an organization’s decisions and actions to various stakeholders.The other definition of accountability made Gray, Owen and Adamsshows that there are two duties: responsibility to take actions and responsibility to account for those actions.

The best feature of accountability is that it can show the external verification of the company’s performance – how well they minimize the social impact of a company’s activity, provide good working conditions for employees and contractors, and create an acceptable arrangement for the distribution of benefits and services. It also can show that company does not carry out with its duties properly. Social Reporting(CSR) is one of the biggest challenges for company on CSR and lack of understanding how properly to do this can be the main problem in bad reporting. Sometimes the content of a report do not reflect actual performance, or it may be incomplete. The problem is that many organisations do not really understand the meaning and purpose of CSR. It is a mistake to think that it is simply engaging in philanthropic activities or making donations. It involves much more than this. Companies do the reporting because of very different reasons. Ones wants to reveal all the information about company’s acts to society, other want to create a “positive” look about the company, and the thirds just do not really know why they do this, but just tries to follow the “model” companies’ example.

Annual report and the financial statements are as a mechanism for discharging accountability. It also includes financial and non-financial information to improve transparency and understandable information enabling users to assess a firm’s performance. AVIVA is an insurance company in which CRS involves a strong organisational commitment to social obligations and the internalization of these obligations in the culture of the organization as well as the mobilization of employees to execute these obligations in their day-to-day actions. But is it all like it soundsAVIVA looks like a big company which seeks to be the leading one in insurance industry, but there can be very contradictory reasons for doing this: the ones which company wants to tell in public and the others which it wants to keep inside the company.

The reasons AVIVA company is so active and responsible in such reporting is because it feels responsible for being an example of correct behaviour for all other beings, this company cares about planet and people. These non – financial reasons shows about companies universal responsibility. There are and financial reasons, which are promoted in CSR, such as reducing risks and increasing profits, because of an improved reputation in various markets.This company reacts to its customers, colleagues and everyone where they operate and takes positive actions towards climate change that shows good level in listening and dialogue with the society around it.

Although, AVIVA makes an impact to accountability, they improve their skills and experience every year and this can be easily seen in their reports. Company was one of the first companies who helped developing and started using the HRH Prince of Wales’ Accounting for Sustainability (A4S) connected reporting framework for their performance report.Using this framework AVIVA reported about greenhouse gas emissions, waste, resource usage, customer advocacy and investing in communities. AVIVA is a very good example for other organisations who wish to connect sustainability performance with business strategy. This company has a very valuable case study, which explains how following Connected Reporting Framework reaches good sustainability reporting practice. AVIVA also put their CR Report to a separate shareholder vote at the 2010 AGM and they are the first company in UK by doing this.

All this proves about Aviva’s active and valuable contribution to CSR, because even being a right example for other companies it already helps for better and clearer understanding in CSR area which is still found difficult for organisations to understand and make valuable reporting.

Part 2 – accounting for global warming

Today’s actions will affect future generations, and nowhere is this more evident than in our approach to climate change and the environment. Global warmin is long lasting problem in the world. There are a lot of different opinions about this, but it is clear that some part of the world is trying to do something on behalf of the environment. The insurance industry has the most to lose from the increasingly extreme weather that scientists agree is the result of global warming. Aviva’s strategy is to control their own impacts and resources, including water, gas, waste and electricity. The main impact on the environment is Aviva’s total carbon dioxide emissions. There is a small number of companies, who are carbon neutral, but AVIVA was the first insurer to offset emissions on a global basis and become carbon – neutral, this company is a good example for all other companies, who used more to talk than to act. AVIVA is a signatory and responding company to the Carbon Disclosure Project (CDP), moreover, in 2009 it was ranked eighth in the Carbon Disclosure Leadership Index for the FTSE350, third in the financial services sector and 38th overall in the FSTE Global 500.

The results of emission reducing is best seen now, when in 2008 company reduced 6,6% of CO2 emissions and further 5,2% in 2009. Companies aim is to reduce their carbon emissions by 30% till 2020, from their 2006 baseline, which is 120000 tones of CO2. Company also encourages others to do the same, to manage and reduce the CO2 output, because CO2 is the principal ‘greenhouse’ gas contributing to global warming.

AVIVA has invested in cutting-edge tropical storm research, revamped its flood models to incorporate global warming, publicized the need for action and encouraged reduced vehicle usage with pay-as-you-drive insurance.

During the period of 2005 – 2010 AVIVA company continuously improved and reported of their direct and indirect environmental impacts. In all these years AVIVA company is trying to develop products and services that provide a positive link between climate change and premium paid. In 2005 AVIVA established a climate change forum to coordinate related activities across their businesses. In the same year, company involved in including flood research, flood mitigation and prevention work, sponsored a pan-European flood project. 2008 was the year, when AVIVA concentrated on water: they helped people to prepare to deal with a flood and shared the information how to limit the damage. Company is encouraging others to make responsible choices and tries to promote good environmental practice among their colleagues, customers and suppliers. In fact, Norwich Union is playing a leading role helping to mitigate the effects of global warming. The other offer made, seeking to provide right decisions for environment was in 2006, by offering reduced premium insurance for drivers of hybrid and flexi – fuel Ford cars.

2007 was the year of projects. During this time, AVIVA made a progress on three strategic areas to combat climate change: carbon reduction, carbon offsetting and enhanced employee education and engagement. Biogasproject, wind turbineproject, “Green cement”project, treadle plumps and other projects where AVIVA company participates, shows that this company is very active in environments protection, it belongs to various organizations, sponsors projects and also takes valuable actions inside the company, such as signing a ‘green’ service level agreement with Hewlett Packard (HP) in 2009, for the provision and running of two data centers which are ran by ‘eco friendly’ or renewable power sources.

AVIVA is an independent auditor, which uses the guidance of rules made of International Federation of Accountants’ (IFAC). This organisation made a contribution to global warming by considering this problem from a strategic perspective: it explored the enterprise governance model which encourages organisations to view governance as having a performance as well as conformance perspective. The aim of this model was to consider why corporate governance often fails in companies and, more importantly, what must be done to ensure that things go right.

It still seems like the professional accountancy bodies are not involved in global warming problems as they could be.This proposition is wrong, because a professional accountancy body keeps an eye to global economy. Issue of sustainability is not an exemption too. In the company accountants might also become involved in the development of environmental and social accounting, by doing this, accountants would be involved in the organization’s management of environmental performance at all points of the company.Environmental accounting, accurate global warming, shows the interaction between the world and the company.

Part 3 – socially responsible investment

UK Investment Forum, describes socially responsible investment (SRI) as ‘‘investments enabling investors to combine financial objectives with their social values’’.Miller A. SRI equates to Ethical investments and explains them as the contribution towards particular social and environmental aims. So, socially responsible investment seeks for two benefits: social good and financial return. The problem arises when this investment becomes more money making than improving social, ethical values, becoming eco – friendly company. Of course, it can not be said about all organisations that they look just for profit for themselves, in many companies it is more a positive issue – they help environment, takes care of it and also helps other companies as being a right example. That shows that positive and negative criteria’s can be made analyzing SRI market.

In recent years, SRI has experienced an explosive growth around the world. The growing increase in global SRI determines the better and wider understanding about companies ethical values in environment. Without good environmental management company would not achieve the maximum of profitable green investing. It is understandable why companies want financial profits of all investments, but it is important to seek more for the positive aspects of the green investments. So, there are negative and positive aspects investing in SRI. Ethical investments have financial returns, but unfortunately very small ones. Anyway, the SRI is expected not to stop growing, because it does not matter that there will be less companies, who aims to get non-financial utility from investing in SRI, it is important that at least some investors would care less about financial performance.

Crisis has led to the increase of financial accounting. One of the reasons for such close accounting implication can be that a company can show very positive ‘success’ indicators to the environment by doing this. Moreover, the information made by accountants is needed for profitable shareholders decisions in global socially responsible investments. Social accounting (social reporting) provides all stakeholders with information about the social and environmental activities and impacts of the organizationit is necessary because it is the way for stakeholders to decide for themselves if a company was really socially responsible or not.Firms ignoring social responsibility may destroy long run shareholder value due to reputation losses and/or potential litigation costs.

Issue like global warming has gained attention by governments and investors around the world. This means that increase in SRI will not stop growing. Environmental reporting is one of two areas where environmental agenda has encouraged the greatest development in organizational practice.The good thing is if the company gets non-financial benefits from SRI, because in that case the investors would not care so much about the money, financial profit, which they can get from these investments. Otherwise the problems with personal or societal values can arise. The question needed to answer is whether the stakeholders care about the values mentioned aboveUnfortunately, social disclosure and social performance are the subjects shareholders care about just in how they affect the financial performance. The ethical positions of organizations, takes just a little part of the things shareholders cares about.

The ethical norms which characterize a company are fundamental to any green investment analysis. They include the integrity of the vision and leadership of top management, and a company’s openness and accountability to its employees and to the outside world.

Companies economic behaviour can be seen in the works it done. The increase in SRI is one of the factors which can determine and reveal whether the company has positive or negative behaviour in investing. Heinkel et al. (2001) suggests looking if company investors are green or neutral investors and whether they have a clean or a polluting technology. The other problem is that the company which is pursuing social and environmental goals can suffer in competitive market. So, both of the profits need to be balanced. SRI must be an investment where part of the returns is donated to good causes.Corporate governance have to reflect the positive screening of the company, it is preferred that company would be focused on social welfare in addition to value maximization.

Conclusion

AVIVA company is one of these companies who cares about their customers, employers and tries to be the right example for everyone in reporting, activities related with environment, behavior which can be called representative for other organizations in successful development. Being the leading organization in Corporate reporting this company seeks to concentrate to positive values and behavior. AVIVA company makes a lot of good works in global warming issue, it is active inside and outside the organization, tries to “infect” the other organizations and people by environmentally friendly behavior and the results is already seen. Of course, only positive and valuable works showed in Aviva’s Corporate reporting makes human doubts about good faith of this company, but otherwise by having a good name this company gain confidence of customers, shows a good example for other insurers and of course the same logics asks a question why such company would harm and disparage its reputationSo, it can be said that this company is the one who understands that it is responsible to control and master the ‘right to knowledge and participation’ which civil society is demanding for.

Bibliography

Books:

Dave Owen ‘Green Reporting: Accountancy and the challenge of the nineties’ Chapman & Hall 1992

Gray, R., Owen, D. and Adams, C., Accounting and accountability: Changes and challenges in corporate social and environmental reporting, London: Prentice Hall Europe, 1996

John Houghton ‘Global Warming : the complete briefing ’ 2nd edition, Cambridge University P., 1994

Jose Allouche, Corporate Social Responsibility Volume 1 Concepts, Accountability and Reporting, Basingstoke: Palgrave Macmillan, 2006

Rob Gray, Dave Owen, Keith Maunders Corporate Social Reporting: Accounting and accountability 1987

Rob Gray, Jan Bebbington Accounting for the environment 2nd edition, Rob Gray with Jan Bebbington 2001

Journal articles:

Anne Ellerup Nielsen, Christa Thomsen ‘Reporting CSR – what and how to say it?’ 2007 Aarhus School of Business, Denmark Volume: 12 Issue:1 pp. 25-40

Ainscough, T., Hill, R.P., Shank, T. & Manullang, D. 2007, ‘Corporate Social Responsibility and Socially Responsible Investing: A Global Perspective’, Journal of Business Ethics, vol. 70, no. 2, pp. 165-174.

Experts who put a premium on expecting the worst and working out what it costs NON-FINANCIAL RISK: Mike Scott looks at the mechanisms employed by the insurance industry to minimise the impact of risk on its balance sheet: SURVEYS EDITION 2007, , London (UK).

Garry Booth, ‘Climate change: Talk needs to turn into action’, 2008 Reactions.

Janet M Epps and Fiona L Solomon, ‘Adding Social Value Through Accountability in Mineral Development’ 2000 The AusIMM Annual Conference, Sydney, [online]. Available from: http://www.minerals.csiro.au/sd/CSIRO_Paper_Accountability.htm [accessed 20/03/11]

Jean Raar ‘Reported social and environmental taxonomies: a longer-term glimpse’ 2007 Deakin University, Burwood, Australia Volume: 22 Issue: 8 pp. 840-860

McGuire, D. & Garavan, T.N., ‘Human Resource Development and Society: Human Resource Development’s Role in Embedding Corporate Social Responsibility, Sustainability, and Ethics in Organizations’, 2010, vol. 12, no. 5, Advances in Developing Human Resources, pp. 487-507

Ter Horst, J., Zhang, C. & Renneboog, L. 2008, ‘Socially responsible investments: Institutional aspects, performance, and investor behavior’, Journal of Banking & Finance, vol. 32, no. 9, pp. 1723-1742.

Reports and On-line sources:

Aviva plc Annual Report and Accounts 2009, 2008, 2007, 2006 and 2005 [online]. Available from: http://www.aviva.com/corporate-responsibility/reports/?category=All [accessed 01/03/11]

Accounting for Sustainability. [online]. Available from: http://www.accountingforsustainability.org/output/Page136.asp [accessed 01/03/11]

Climate care. Treadle pumps in India. [online]. Available from: http://www.jpmorganclimatecare.com/projects/countries/treadle-india/ [accessed 14/03/11]

Climate friendly Hebei Kangbao Wind Project Project Profile [online]. Available from: https://climatefriendly.com/projects [accessed 20/03/11]

International Federation of Accountants [online] Available from: http://www.ifac.org/ [accessed 13/04/11]

Insurance company AVIVA web page [online]. Available from: http://www.aviva.co.uk/ [accessed 20/02/11]

Going green [online]. Available from: http://www.lowcarbonconcrete.ie/documents/ScanofarticleJan2009-smallOCR.pdf [accessed 20/03/11]

Practical Action. Biogas: power from cow dung. [online]. Available from: http://practicalaction.org/biogas [accessed 14/03/11]

Special English development report. ‘The Importance of a Simple Water Pump’[online]. Available from: http://www.youtube.com/watch?v=A36hUKNPy-Q [accessed 20/02/11]

Introduction

Barclays Bank believes that university students are an extremely valuable segmentation for business banking markets, but the business of banking services is intensely competitive. In order to Barclays Bank attract more university student customers and to keep them in a long term, Barclays requires understanding the target market, what are universities students in the UK “needs and wants”. By describing the research process, the objectives of this market research will be notified. Following with the research questions and research design and method details will be formed. In addition, this research proposal is helping Barclays to increase its market share, and using market research to ensure Barclays provide the right product and services to the UK students target market.

I. Research Objectives

The main objective of this research proposal for Barclays Bank is to achieve the target which can provide the right products or services to university students in the UK and understand what are their “needs and wants” for bank account. Otherwise, we will add value propositions to attract more students for Barclays and keep these customers over time.

This has divided into the following objectives:

• To understand the reason that students choose Barclays as their first bank account.
• To investigate what feature would be considered when university students start a new bank account.
• To inspect the property for Barclays banking services can attract new university students.
• To increase university student account market.
• To ensure the graduate students will continue obtain their bank account.

Research Process

According to Kumar (2005), a well managed severe, systematic, reliable, demonstrable, experimental, and critical is substantial research. In the next parts, it will describe the following research process for Barclays Bank.

The following research will be chosen some parts for the proposal.

II. Research Questions

Defined the Research Questions

According to Saunder et al. (2007) research design questions are related for many aspects:

• What intrigues me?
• Why am I doing it? (Is it a contribution to knowledge?)
• What models, frameworks, etc?
• How am I going to collect data?

Research Questions for this Proposal

In this research, the title “Barclays Bank and targeting University Students” is being chosen the object of research and analysis. Otherwise, the questions are to understand student customers’ needs and wants. By using questions can get information that can utilise on market decision. There are four main research questions that can be developed and easily to understand this research objective.

• Which bank is your first account
• What bank features would attract university students
• What bank services would customers need
• What reason would affect customers to continue their account

III. Methodology

Grinnell (1993) has pointed out that the word “research” can define as ‘a structured inquiry that utilises acceptable scientific methodology to solve problems and creates new knowledge that is generally applicable’. Methodology sections will separate into two factors which are research philosophy and research method.

Research Philosophy

In research philosophy area, the research methods are discussed ontology and epistemology commonly. According the theory, both of methods are related to philosophical perspectives.

• Ontological perspective: The researchers can discover the essence of knowledge which exists in the world (Snape & Spencer, 2003).
• Epistemological perspective: The perspective is to discuss what knowledge can be believed (Bryman & Bell, 2007).

Research Philosophy for this Proposal

For this research, it utilises the epistemological aim to help the proposal to find out the right services, which may provide Barclays Banks to attract more university students. In addition, to understand the purchased behaviour by students, it may use EKB model on research survey to realise Barclay’s customers.

EKB model: Engel et al. defined EKB model in 1978. EKB model will be the method for survey, and it can help to realise customers buying behaviour on decision-making.

Research Method

In order to find out the value propositions for Barclays Bank, the main two research methods which are qualitative research method and quantitative research method will be considered in this proposal. Quantitative and qualitative research methods are the two ways usually use in the research area.

• Quantitative research method: This method is to collect quantifiable data and make it from objective views to produce the final results (Bryman & Bell, 2007).
• Qualitative research method: This method is focus on understand and describe peoples’ perspectives to create a logical outcome (Snape & Spencer, 2003).

Creswell (2003) point out that how to choose a research method in the analysis research, which is based on the target audiences or past experiences.

In addition, customers’ behaviour may affect their purchase decision. According to Engel, Kollat and Blackwell theory, EKB model is the basis of decision-making process for customer behaviour, and this process is referred to the actual consumers’ cognitive thinking when they purchase products. That is to say, EKB model is one of important elements to understand what customers’ thinking when they have decision-making situations.

Research Method in this Proposal

• Quantitative research method was identified to be more suitable for this research.
• Quantitative questioning will be used in the proposal. All quantitative questions will be shown in Appendix.
• Using EKB model in questionnaires and it will be shown in Appendix as well.
• Likert scale will be one of the parts in the questionnaires, Likert scale will be used in most of questionnaires. The typical five levels for Likert item are: Strongly disagree, disagree, neither agree nor disagree, agree, strongly agree.

IV. Research Design

Defined Five Research Design

There are five kinds of research design different purposes such as,

• Experimental design: This main concept of design is to analysis of qualitative or quantitative research which can examine the differences and form the foundation (Bryman & Bell, 2007).
• Cross-sectional design: This design is usually used in quantitative research (Kumar, 2005).
• Longitudinal design: Longitudinal design is a study to determine the amount of changes (Bryman & Bell, 2007).
• Case study design: Only single instance will be studied in the most case, and details related to that case will be collected. This model is suitable for qualitative research (Bryman & Bell, 2007).
• Comparative design: The research can be seen as the comparative design which has consisted of more than one case and to compare or evaluate the differences or similarities (Bryman & Bell, 2007).

Research Design for this Proposal

As for Barclay’s research, the aim is to add value propositions that can utilise in marketing decision. To consider of this research design, this research is to find out the customers behaviour for university students in the UK and to the collect a certain number of different information is needed to support for this research.

This research would follow case study and collection data in order to have a deeper understanding of the impact on value propositions from the research, obtaining the appropriate strategy by the UK university students’ requirements. Moreover, the EKB model and Likert scale discussed previously will be the fundamental theories to analyse the survey data.

V. Data Collection Design

Defined the way of Data Collection

According to Kumar (2005), data collection can be use in observations, interviews, and questionnaires these possible ways. The advantages of interviews are that when researchers are helpless to fulfill participants, researchers still can see specific information from interviewees, and interviewees can describe “history” which is suitable to the research case of topic to wider and deeper understanding (Creswell, 2003). In addition, researchers can be more flexible by asking questions which is comparing with interviews questionnaires (Bryman & Bell, 2007).

For research, the direction we need to see is the students’ consideration when they opening a new account. Qualitative research strategy in interview is too unstructured than in the quantitative research design. Researchers can an unstructured interview, which is more like a general chatting and more similar to having conversations with interviewees; researchers have to make a discussion guide with which has listed questions to understand (Bryman & Bell, 2007).

Data Collection Design in this proposal

The collection of the information is to be the first step of data collection. The data focus on the bank services and marketing decision. In addition, there are three methods that will be use to collect the require data.

• First approach: Face-to-face
• Second approach: Telephone
• Third approach: Mail by post or email

However, using three methods are too complicated to this research.

After the compare evaluation, the mail survey approach is most appropriate to investigation of this study, these reasons are:

• This study research has budget consideration and restriction. Mail by post may be the lowest cost for the required questionnaires.
• The mail or email address from interviewee is easy to obtain.
• The questionnaires cannot be too long, but it is clear to see on mail.
• The validity by mail questionnaire is low.
• The mail questionnaires may have a high rate of non-response bias, but it can improve by send more mails. This action may help to reduce the rate of return non-response bias.
• The mail survey, takes a long time, but it may not influence the data results.

VI. Sampling

Sampling method

According to Patton (1990), the sampling method can be defined like ‘criterion sampling’ and the sampling is adopted in this research. It will find samples from criteria that receive research objectives. This sampling method also can ensure that the interviewees are supplied with complete information feedback that is required in the research (Patton, 1990).

Using the Sampling method in the qualitative research can be same as in quantitative research, for instance, random sampling method. Most of the samplings in qualitative researchers are with some purposes or criteria since sampling may affect the outcome significantly (Coyne, 1997). However, the sample size is required in qualitative research; the result is not larger than quantitative research. Researchers are using purposeful sampling to acquire sufficient knowledge interviewees who can present the related research topic, and help researchers to get wider and deeper view points from interviewees (Patton, 1990).

Sampling method used in this proposal

There are several sampling methods that can adopt in survey research. For research, random sampling will be chosen as the research method.

Following elements are the approaches for sampling:

• Element: Target market , all the UK university students.
• Population: Estimate 5000 university students.
• Sampling Units: Collection of about 5000 survey elements from the population.
• Frame: A frame is a list of sampling units, same as 5000 sampling units.
• Select sampling methods: Random sampling.

Questionnaire Design in this proposal

SNAP is an assistance software tool that can create questionnaires.

This questionnaire will divide into three sections:

• First part: Personal information for Interviewees

University students in the UK or not.
Demand for the services.

• Second part: Interviewees’ personal bank.

First bank account.
Bank name, it is Barclays or not.

• Third part: Using EKB model to design questionnaire (Likert scale will be used).

Banking service satisfaction.
Bank Loyalty.

VII. Collection Data

Defined the method of data collection

The approaches to collect data have mention in front of part. That is, there are kind of ways can use in interviews. Interviews can be face-to-face, through telephone, or gather a lot of people to do the interview at the same time, which is also known as priority group (Creswell, 2003).

Data Collection in this proposal

• Collection data will follow the front part which decides to choose mail by post method to collect to necessary data.
• There are 5000 surveys will be sent by mails and emails.

(2500 mails by post, 2500 by emails)

Following data collection time divided into two main stages. Collection time will be a month. First stage is to collect post mail will from 1st of June 2011 to 16th of June 2011. Although first stage is to collect post mail, email questionnaires feedback may return as the same time. Moreover, this period of time will continue collection data until 30th of June 2011.

VIII. Data Analysis Process

Defined Data Analysis

In the qualitative research validity can be seen from three ways, which are descriptive validity, interpretive validity, and theoretical validity; or to consider from another aspect which can be classified as internal validity and external validity (Johnson, 1997).

Validation of research

Validity is divided into three types, including content validity (Content Validity), criterion validity (Criterion Validity) and construct validity (Construct Validity).

• Content validity: The primary purpose is to systematically check the appropriate of questionnaires; the questionnaires consider the samples and conduct appropriate proportion.
• Criterion validity: It is outside test criterion with the assessment based on the correlation coefficient. Criterion validity refers to test data which has been found, also name as the statistical validity.
• Construct validity: It refers to the test the measure theoretical construct or common quality level which observed variables and other theoretical consistency.

Data Analysis in this proposal

In this research, SPSS will be use in data analysis. As for the collect data, all questionnaires will be recorded and transcribed. The benefit of doing transcription is to help researchers who can get all details mentioned and to re-examine the data afterwards. The process of data will firstly help researchers to organised and it enabled to rethink and restructure the following analysis stages. At the same time the second stage data were collected and filed.
In this data collection, the clearer idea information between data and final findings will be formed, and it will shown data analysis to support results.

IX. Budget

With the research process, the budget will come with it. Higdon& Topp (2004) has pointed that, to reach the project objectives of timeline and methodology, the research proposal budget is intertwined with its development. Therefore, the detail of the budget will be notified. The budget of details required to expense to a complete itemized accounting list for the project (Higdon& Topp, 2004).

The research plan will spend one month.

X. Recommendations

Here are some reasons that our team should be chosen.

• Our research team provides complete the research methodology and Data Collection.
• The objects reflect the goals and orientations of the organisation.
• Our agency wish to submit Barclays Bank with a compelling demonstration that has effectively represents.
• The research results will reflect new projects and interests, and provide for both current clients and new in customers.
• We can discuss this plan at your convenience.

Conclusions

The valuable segmentation for Barclays Bank business banking markets is university students, however, the business banking competitive. Barclays Bank wants to attract more student customers and keeps them in over time. This research proposal starts from research process. Quantitative research method is adopted and the data collection is through by mail interviews. Then, the secondary data is from journals, articles, books. Finding of the research will help Barclays to increase its market share, and the market research will ensure Barclays provide the right product and services to the UK students target market.

References

1. Bryman, A. and Bell, E. (2003) Business Research Methods, Oxford University Press.
2. Cresswell, J.W. (2009) Research Design: Qualitative, Quantitative, and Mixed Methods Approaches, 3rd ed. Sage Publications.
3. Coyne ,I .T. (1997 ) Sampling in qualitative research. Purposeful and theoretical sampling; merging or clear boundariesJournal of Advanced Nursing , 26(3),623–630.
4. Engel, J. F.,R. D. Blackwell & P. W. Miniard (2001 ) Consumer Behavior 9th ed. Fort Wort: Drvden Press.
5. Higdon,J.and Topp,R. (2004) How to Develop a Budget for a Research Proposal. Western Journal of Nursing Research, 26(8) 922-929.
6. Johnson ,R. B. (1997)Examining the validity structure of qualitative research. Research Library 118 (2) 282.
7. Kumar, R. (2005) Research Methodology: A Step-by-step Guide for Beginners. London: Sage Publications.
8. Patton, M. Q. (1990) Qualitative Evaluation and Research Methods, 2nd ed. Newbury Park, CA: Sage Publications.
9. Patton, M. Q. (1990). Qualitative evaluation and research methods ,2nd ed., Newbury Park, CA: Sage.
10. Saunders, Lewis & Thornhill (2007) Research Methods for Business Students, FT Prentice Hall
11. Snape, D. and Spencer, L. (2003) Qualitative Research Practice: A guide for Social Science Students and Researchers, London: Sage Publications.
12. Barclays Bank
13. Website http://www.barclays.co.uk/PersonalBanking/P1242557947640
14. Online Survey Software: SurveyMonkey
15. Website http://www.surveymonkey.com/MySurveys.aspx

1. INTRODUCTION

1.1 . MEDICINES MANAGEMENT

Medicines management can be defined as;

“…a system of processes and behaviours that determines how medicines are used by the NHS and patients.”

(National prescribing centre,2002, P1).

According to Dr Michael Dixon chair of the NHS alliance, Medicines management services are the processes for designing, implementing,

delivering and monitoring patient-focused care, based on need, and include all

aspects of supply and therapeutic use of medicines within healthcare settings.

“Poor medicines management within organisations can lead to low public confidence in health services, unaddressed health needs and unsatisfactory patient outcomes and can lead to unscheduled emergency admissions or failure to maintain independence in the community leading to re-admission to hospital and other acute care settings. It can also lead to organisational issues such as, unmet targets, inappropriate allocation of resources, inefficient services, and risk.”

(Calderdale pct, 2004)

“Good medicines management means that patients receive better, safer and more convenient care. It leads to better use of professional time and enables practitioners to focus their skills where they are most appropriate. Effective medicines management also frees up resources which means that NHS money can be used where it is most effective. Good medicines management benefits everyone.” (http://www.npc.co.uk/mm/index.htm)

1.2 . NON-MEDICAL PRESCRIBING

“Non-medical prescribing is prescribing by specially trained nurses, optometrists, pharmacists, physiotherapists, podiatrists and radiographers, working within their clinical competence as either independent or supplementary prescribers.” (http://www.npc.co.uk/prescribers/resources/NMP_QuickGuide.pdf)

The Department of health recognised that non-medical prescribers are a large and growing workforce. They found that by the end of 2009 there were over 14,000 nurse prescribers, 1700 pharmacist and supplementary prescribers and many community nurse prescribers and allied health professional prescribers that had qualified to prescribe within their competence. (DOH, London, 2009).

1.3 . CASE STUDY

This piece of work is a case study of a service user from the authors practise placement area at the time of writing. The case study incorporates three key elements within it;

The service user
Three medications prescribed to them
The legal and professional issues surrounding the above

The case study will look at these three elements in detail within the report.

2. PATIENT OVERVIEW

(In order to uphold confidentiality, during this report the service user in question will be referred to as ‘Mary’. (NMC, Code, 2008)

Mary is a seventy three year old lady who was admitted to the inpatient practise placement area on the 02/04/2011. Mary has a diagnosis of Alzheimers Dementia and was presenting with increased confusion and according to her care givers (Mary was a resident in a nursing home) had been showing signs of depression and aggression over the last few months culminating in a series of aggressive outbursts which ended in a serious attack on a member of her care home staff. The decision had been made that a hospital admission to the organic illness assessment ward (Older people’s services) was necessary to manage risk, assess the progression of Mary’s condition and reassess her package of care. Mary was initially resistant to all interventions from the ward team and displayed high levels of agitation and aggression. The consultant and nursing team felt that medication would play an important role in the management of Mary’s initial presentation. However Mary’s resistance to any therapeutic interventions meant that alternative approaches were felt to be the only option at the start of treatment. John was also given a capacity assessment and found to lack capacity which allowed the ward staff to treat Mary effectively in her best interests.

(For Mary’s pen story see appendix 1)

3. DIAGNOSIS

Mary has a diagnosis of Alzheimers Dementia.

The Alzheimer’s society explain the term dementia describes a group of symptoms these include a decline in memory, reasoning and communication skills a gradual loss and decline in the skills needed to manage the individuals activities of daily living , confusion and a change in behaviour or personality. These symptoms are caused by the physical impact of disease or injury on the brain. There are a number of different conditions that lead to dementia including Alzheimer’s disease.

(http://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=160)

3.1 . DIAGNOSTIC TOOL

“Making a diagnosis of dementia is often difficult, particularly in the early stages The time it takes to make a diagnosis can vary. If scans and other investigations are required, it could be 4-12 weeks. If the person is in the early stages of dementia, a 6-12 month period of monitoring may be required before a diagnosis can be made.”

(http://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=121)

“The Mini Mental State Examination (MMSE) is the most commonly used test when a diagnosis of Dementia is being considered The MMSE is the test that the National Institute for Health and Clinical Excellence (NICE) recommends for deciding whether a drug treatment for Alzheimers Disease should be prescribed.”

(http://guidance.nice.org.uk/DT)

However NICE do stress it should not be relied on as the only means of assessment alone as diagnosing dementia involves careful monitoring and assessment.

3.2. TREATMENT RECCOMENDATIONS

“Treatment for Dementia should only be initiated and supervised by a specialist experienced in the management of Dementia.” (BNF, 2009, P280)

4. MEDICATION

“Being prescribed a medicine is arguably the most frequent intervention in the NHS” (Shepherd, 2002).

Mary’s medication was reviewed on admission to the inpatient ward due to her aggressive and volatile presentation. For the purpose of this report three of the medications Mary was prescribed will be discussed in detail.

4.1. GALANTAMINE

“Acetylcholinerase inhibiting drugs are used in the treatment of Alzheimers disease, specifically for mild to moderate disease.” (BNF, 2009, P280)

Galantamine is a medication used to treat moderate Alzheimers dementia disease. Alzheimers occurs as a result of atrophy of the cerebral cortex. The disease causes changes in central neurotransmitter function especially the cholinergic system. It is linked to a lack of sufficient acetycholine levels. Evidence also points to raised levels of glutamate (a neurotransmitter).

Galantamine is one of the centrally acting inhibitor of acetylcholinerase. It is a reversible acetylcholinerase inhibitor medication which works by increasing levels of acetylcholinerase in the synaptic cleft of central nervous system neurons. Galantamine is used to ‘slow’ neuronal degeneration by impeding further atrophy of the cerebal cortex. Evidence for the drug relates to an individual’s cognitive enhancement, however there is no cure for Alzheimers dementia and so medication is purely palliative. (Aarbakke, J et al, 2006)

Interactions of Galantamine from a patient safety perspective include:-

Warfarin effects are enhanced.
Antipsychotics and barbiturates effect is reduced (Johns dose of Zuclopenthixol increased to counteract this)
Muscle relaxants effects are modified.

Dosage of Galantamine must be carefully considered and the individual’s renal functioning and Creatinine levels must be checked prior to treatment.

Side effects of Galantamine include:-

Nausea
Sleep disturbance
Headache
Dizziness
Drowsiness and fatigue
Depression (Treated with Mirtazapine in Mary’s case)

(BNF, 2009, P281)

Mary was prescribed Galantamine Hydrobromide (Reminyl XL) a prolonged release medication. The Scottish medical consortium state Reminyl XL is recommended for the treatment of moderate Alzheimers dementia and allows a reduction in dose frequency and is as cost effective as immediate release forms of Galantamine. (http://www.scottishmedicines.org.uk/files/reminyl_XL_Summary_Advice__FINAL__for_website.pdf)

4.2. MIRTAZAPINE

Mirtazapine is a medication used to treat depression. Theories explain the cause of depression as a neurobiological change resulting in too little Noradrenaline and 5HT in some central nervous synapses. Mirtazapine is an Atypical antidepressant. It is a presynaptic alpha2 adrenoreceptor antagonist and increases central noradrenergic and serotonergic neurotransmission which then increases the release of noradrenaline. Mirtazapine has an antihistamine effect with sedative effects and so is beneficial to Mary due to her agitation and restless presentation. Mirtazapine is also suitable for older adults due to its anticholinergic effect. (Aarbakke, J et al, 2006)

Interactions of Mirtazapine from a patient safety perspective include:-

Alcohol – Sedation increased
Warfarin – Enhances anticoagulant effect
Anxiolytics and hypnotics – Sedation increased. Mary is also prescribed Lorazepam at present and this is monitored closely when given for over sedation.

Withdrawl from Mirtazapine must be staggered due to side effects of withdrawing. (http://www.medicinenet.com/mirtazapine/article.htm)

Dosage – Mary is on a titrating dose of Mirtazapine and so may be experiencing side effects which she is not used to and may cause her further distress. It was important that Mary be monitored closely and reassured during this time.

Side effects of Mirtazapine include:-

Increased appetite and weight gain (regular weight assessed and diet chart commenced)
Oedema
Sedation (Mary is monitored closely for over sedation due to her other medications sedative effects)
Dizziness and headache
Postural hypotension (Mary’s blood pressure is checked daily)

“Mirtazapine causes few antimuscarinic effects and is therefore recommended over Trycyclic antidepressants” (BNF, 2009, P215).

4.3. LORAZEPAM

Lorazepam is an Anxiolytic. Benzodiazepine anxiolytics are indicated for use short-term in anxiety states. However they are also used as an adjunctive therapy at the beginning of anti-depressant treatment to ease the initial worsening of symptoms, as in Mary’s case.

Interactions of Lorazepam from a patient safety perspective:-

Respiratory Depression- (Mary was monitored and physical obs taken post dose)
Sleep apnoea syndrome (Mary was on arms length observation levels anyway)
Severe hepatic impairment
Myasthenia Gravis

Side effects of Lorazepam include:-

Drowsiness
Lightheadedness
Confusion
Ataxia
Headache
Hypotension (Mary’s bp was taken on a daily basis)

Confusion and Ataxia may be particularly apparent in elderly and should be closely monitored. (BNF, 2009,P189)

5. LEGAL, ETHICAL AND PROFESSIONAL ISSUES

Therapeutic interventions which involve the prescribing and administration of medications have legal, professional and ethical implications. In Mary’s case these included the following issues.

5.1. ADHERENCE

One of the problems with medication administration as part of planned care was Mary’s resistance to all interventions from the ward staff.

“People with dementia often have problems taking prescribed medication. They may forget to take it without prompting or supervision, and can lack awareness of their health problems. Some believe they do not need medication as they think there is nothing wrong with them.” (Stapleton, L. 2010)

Medication adherence can be improved by applying some simple measures:-

Ensure patients know what drugs they are taking, why they are taking them, and when. Also check that they are aware of any possible side effects, and what to do if they experience them.
Check that all patients with dementia are able to take their medication safely by organising dosette systems, and ensure carers can help patients where necessary.
Give all patients and their families’ information about how to contact the clinic nurse by providing verbal information and written leaflets.
Ensure patients have a written treatment plan.

(Stapleton, L. 2010)

According to Cheesman (2006), adherence is an approach to achieving the best use of medication involving the sharing of information between healthcare professionals and patients. The prescriber can promote an effective therapeutic relationship by building a patient’s confidence in their ability to self-manage their condition.

5.2. MENTAL CAPACITY

“The Mental Capacity Act 2005 provides a statutory framework to empower and protect people aged 16 and over who lack, or may lack, capacity to make certain decisions for themselves because of illness, a learning disability, or mental health problems. The act was fully implemented in October 2007 and applies in England and Wales. If someone is unable to make a decision for themselves at the material time because of an impairment of the mind, then that person can be said to lack the mental capacity to make that decision.” (Alzheimers society, 2011).

According to the law, a person is defined as being unable to make decisions for themselves if they are not able to undertake at least one of the following:

understand information given to them
retain that information long enough to be able to make a decision
weigh up the information available to make a decision
communicate their decision by any possible means, including talking, using sign language, or even through simple muscle movements such as blinking an eye or squeezing a hand. (Rethink, 2010)

Mary was found to lack capacity as she was unable to retain or weigh up the information given to him to make a decision. Mary lacked any insight into her recent worsening of symptoms, changes in behaviour and aggression. This is often the case with dementia disease.

“The act encompasses five main principles:

1 A presumption of capacity ? Every adult has the right to make their own decisions and must be assumed to have capacity to do so unless it is proved otherwise.
2 The right for individuals to be supported to make their own decisions ? All reasonable help and support should be provided to make their own decisions.
3 It should not be assumed that someone lacks capacity simply because their decisions might seem unwise or eccentric.
4 If someone lacks capacity, anything done on their behalf must be done in their best interests.
5 If someone lacks capacity, before making a decision on their behalf, all alternatives must be considered and the option chosen should be the least restrictive of their basic rights and freedoms.” (Warren, L. 2010)

“When considering a person’s views and wishes it is important that they are given weight, and are carried out, unless the effects would be detrimental to that person.” (National archives, 2010)

The multi-disciplinary team worked to all these principles in Mary’s case by:-

1. Presuming capacity by letting Mary make decisions until the capacity assessment had been done and a formal plan of care put in place. Mary was also supported to continue to make decisions on a daily basis which she was deemed to have capacity to make e.g. what to wear that day.
2. Support was provided in the form of an Independent mental health advocate (IMHA).
3. Mary was found to have capacity to make certain decisions even if they seemed strange to the ward staff. Staff supported her in this.
4. Mary had a best interest assessment and the findings were used to formulate a comprehensive care plan for Mary.
5. The MDT sought input from the deprivation of liberty safeguarding team (DOLS) around the intervention decisions with Mary to ensure they were applying the least restrictive care.

5.3. ETHICAL CONCERNS

When working with people with dementia ethical practise should be considered as dementia is a long-term illness with no cure. Treatment is purely palliative and the evidence for the benefit versus drawbacks to treatment is not fully understood. (www.mind.org.uk)

Foot Anstey solicitors explain that Advance directives and lasting power of attorneys put in place can ensure that the service user receives the treatment and care they want when they are no longer able to voice their requirements themselves. (www.repod.org.uk)

Healthcare professionals must make the service user the centre of care decisions in the service user’s best interests to uphold ethical practise.

6. REFERENCES

Aarbakke, J et al, (2006) Illustrated Pharmacology for nurses. Hooder Arnold, London.

Alzheimers society (2011). Diagnosis and assessment. [Internet] Available from: [Accessed on 5/4/11]

British National Formulary (March 2009) Galantamine, pg 281-282, BMJ and RPS, London.

British National Formulary (March 2009) Mirtazapine, pg 215-216, BMJ and RPS, London.

British National Formulary (March 2009) Lorazepam, pg 188, 190 BMJ and RPS, London.

Calderdale pct, (2004) Improving health, improving lives: commissioning strategy for Calderdale. [Internet] Available from:

[Accessed on 6/4/11]

Cheesman S (2006) Promoting concordance: the implications for prescribers.Nurse Prescribing; 4: 5 205-208.

Dixon, M (2010) Modernising medicines management. A guide to achieving benefits for patients, professionals and the NHS, Executive summary. National prescribing centre, (2001) [Internet] Available from: [Accessed on 10/4/11]

Fittock, A. (2010) Non-medical prescribing by nurses. National prescribing centre [Internet] Available from: [Accessed on 6/4/11]

MedicineNet.com, Mirtazapine index. [Internet] Available from: [Accessed on 30/1/11]

Modernising Medicines Management. A guide to achieving benefits for patients, professionals and the NHS. National Prescribing Centre, (2001). [Internet] Available from: [Accessed on 6/4/11]

The National Archives (2010) Mental Capacity Act, 2005. [Internet] Available from: [Accessed on 10/4/11]

National prescribing centre (NHS) Medicines management [Internet]. Available from: [Accessed on 9/4/11]

Non-medical prescribing programme, (2009) DOH, London. [Internet] Available from: [Accessed on 5/4/11]

Nursing and Midwifery Council. (2008). The code: Standards of conduct, performance and ethics for nurses and midwives. [Internet]. Available from: [Accessed on 10/4/11]

Rethink National Advice and Information Service. (2010). Mental Capacity Act 2005. [Internet] Available from: [Accessed on 12/4/11]

Scottish medicines consortium (2004) NHS Scotland, Treatment for Alzheimers dementia [Internet] Available from: [Accessed on 13/4/11]

Shepherd, M. (2002). Medicines. Nursing Times, VOL: 98, ISSUE: 15, PAGE NO: 43 [Internet] Available from: [Accessed on 12/4/11]

Stapleton, L (22 Nov, 2010) Can nurse prescribing improve medication concordance in people with dementia?. Nursing Times, 106:46 [Internet] Available from: [Accessed on 11/4/11]

Warren, L (2010) Mental capacity Act, 2005 Factsheet. [Internet] Available from: [Accessed on 5/4/11]

In a nutshell, the greater providence deposit and trust is a financial institution that specialized in the depository and having the liquid money which is most tempting and can easily slip away without quick noticing, a weakness that Guisti capitalized and started scheming on how to siphon out this money. One thing which must be noted in advance is that these monies do not belong to the trust nor does it belong to the one who borrows so what we say in either way there is interest that must be paid. Failure to do so will be liquidating the bank on experience that the providence report and trust experienced may find it impossible to repay it at the expiry of the period.  So the issue of giving out this money without a collateral security was dangerous.  Securities should be emphasized so that there is a sure promise to recover the money, incase of failure to honour the loan in full.

As a matter of fact greater providence and trust should separate duties.  The fact that Guisti was authorized to prepare consumer loans up to a certain dollar limit without the approval of the committee was completely wrong. Greater Providence should put in place lines of authorization between departments which should prove the transaction and that their limits of authorization should be specialized.

Another measure that Greater Providence should consider; is the recruitment of competent and professional people to work for the institution. A very poor indicator from the customer representative, who had an assumption that everything, was okay. This is a very wrong assumption. A professional should prove documents beyond reasonable doubt be fine.

The other measure that greater providence should look into seriously is the installation of high powered computers to assist in major transactions so as to minimize intentional manipulation or accidental error. In what ways does this case indicate lack of proper segregation of duties?

1. Consist originated the loans and whenever one was due he would take a new one or remit the old to pay the principal and interior due. Some of which had been remitted more than five times.
2. Relatives and friends and even non existent individuals with wrong social services numbers when given all the authority list to consist without involvement of the financial committee.
3. The authorization and approval of loans was entirely left to Consist without involvement of the financial committee.

Loans were given out without proper documentation, no collateral securities were submitted and all the transactions were undertaken by consent.

To improve the loan review procedures, Greater Providence management needs to review the whole process right from customer to the top that is management itself. In fact I can term it as a total overhaul of the whole systems not only at the headquarters, but since the final discussions are made at the banks headquarters than the following measures are to be taken appropriately.

1. All loan applicants should apply with proper documents fully recommended by the state on attorney and proved beyond any reasonable doubt to tune nature of the applicant. This will minimize the misrepresentation of individuals as it was in the case of Venesse.
2. To every loan processed, there must be an accompanying audit rating his story. This will give the banks’ headquarters prove that the customer has a clean history and is able to service the loan.
3. To every loan applicant the bank headquarters must ascertain that the collateral security is attached. This could be a sure prove that in case of failure to repay the bank would sell an asset to recover its own money.
4. It is my opinion that this agreement be made official under the rules of the state. In this case the applicants’ forms must be verified and signed by the state attorney so that it can be binding and prosecuting under the state laws incase of misconduct.
5. The bank must at all not set the audit limit beyond which a further investigation to these limits should be specified. No one person should be responsible of a complete transaction.
6. The bank should take the transaction as a priority. Money belongs to Hasile and liquid. It should be highly protected. With an invention of modern computers, making one of them would be more secure and appropriate other than clerks who would be tempted to steal.

To my opinion, the rational assignments of the loan review clerks were a good idea. In fact I can term it strength to the management. The major reason to this is to avoid intentional manipulation of records with customers in order to fraud the branch. Another good reason for this is to countercheck one another such that if a crime was committed by one clerk sometime, it will be easily and quickly detected by another as he/she takes over at quick intervals. And finally this does not allow them to make strong relationships that will generate ideas on how to defraud the bank.

According to SAS 300 and ISA 400, the Archton are required to:

1. Obtain an understanding of the accounting and interval control systems, sufficient to plan the audit and develop an effective audit approach.
2. Obtain and document on understanding of the accounting systems and control environment sufficient to determine their audit approach
3. To rely on their assessment of control risk to reduce the extent of their substantive procedures. They should make preliminary assessment of control risk for material, financial statements assertions and should perform and tests of control to support that assessment.

On the other hand arching in concerned with the verification of accounting data and with determining the accuracy and reliability of accounting statements and reports. Verification in this sense means working for sufficient evidence to satisfy oneself as auditor that the accounts show a time and a fair view (SAS 400, ISA 500 audit evidence).

Now based on the above, I don’t understand what was difficult to detect and normalize for the period five years and above. It is my opinion that this was a total laxity; the auditors took their duty lightly and ignored the embezzlement as a small matter and concentrating on other issues

Embezzlement is declined as an act of appropriating dishonestly and fraudulently of a trust fund to ones own us (Webster 1997) while deficient is declined as lacking some element or characteristics, insufficient or inadequate (the random house dictionary) combining the two meanings above Greater Providence and trust control environment could have contributed to this scenario of fraud to a greater extent.

As far as Millchemp, (2002) is concerned; control attitude, awareness and actions of directors and management regarding internal controls and their importance should be emphasized. The control environment encompasses the management by sight and corporate culture and valued by all employees (pg. 99).

Surely as a banking institution how could the directors allow Consists to make consumer loans up to a certain dollar limit without a loan committee approval, which was AN illegal industry practice; how would he extends loans to customers without the credit history or the credit limit and how could these loans be serviced without a collateral security, how could the customer service representative consign checks without doing proper verification on who are the rightful owners and the modalities to Guisti to prepare, to sign, and even cash out these checks without proper procedure or question for the whole period of more than five years. This shows a total disgrace and disrespectful of duty and lack of control measures within the entity and because of the above discrepancies Guisti found it easy to embezzle the funds for a long period for his own benefit.

References

1. Millichamp A. H (2002) Auditing 8th edition, Thomas learning London
2. Woolf, E. (1995) Auditing to day prentice hall 1995
3. Auditing (manual for ACCA level II) (2000) BPP publishing (UK)2000
4. Grey and Mansons (2005) The Audit Process: Practices and cases 3rd Edition: New York, Thones Learning
5. Porter, B, Simon D. J. (2003) Principals of External Auditing 2nd Edition

Case Study-Student: Zach; Patrick age 10.10;11.4 Grade :5th Grade, 2nd semester;5th grade ,2nd semester scenario

Critical Goals for Patrick

1.      He should not disrupt the class by teasing other students

2.      He should not give unrelated inappropriate info during class discussion when called on.

Strategies to be used to address the listed goals

a) He can be assigned as a teacher’s helper in charge of keeping peace and order in the classroom. (Rationale: He enjoys being in the limelight and would delight in being a teacher’s helper)

b) He can be given a classroom rules and regulation with its corresponding graduated consequences for each behavioral infraction. (Rationale: Since he is into sports, he knows that for every sport there is a set of rules and regulations to be followed and so does his classroom)

c) He could be given positive reinforcement like compliments and recognition for his achievements in softball community sports (Rationale: By being recognized, he will feel good about himself and it can positively affect his emotional well-being)

d) The teacher could try to get in touch with the softball coach of Patrick and try to see Patrick in one of his practice to see if his behavior in the field is the same as his behavior in the classroom. Then try to see if it is possible to enlist the help of the softball coach in giving feedback on how Patrick’s behavioral problem in the classroom could be solved.(Rationale: Patrick thinks highly of his coach otherwise he wouldn’t be joining the community team . If the coach could say that discipline should always be maintained not only during practice but also incorporated in his daily activities, it could be a tremendous help in curbing his behavioral problem.

       Critical Goals for Zach

1.      He should not disrupt the class with emotional outbursts.

2.      He should not engage in any physical contact (pushing) with other students.

Strategies to be used to address the listed goals

a)      He can be given a classroom rules and regulation with its corresponding graduated consequences for each behavioral infraction.(Rationale: Informing him of the consequence if he engages in physical contact like pushing other students will not be tolerated and would have a corresponding punishment can make him stop doing it)

b)     He could be given positive reinforcement like compliments and recognition for his efforts in feeding the guinea pig. (Rationale: putting him in the limelight will boost his self esteem which has been damaged due to his learning disability)

c)      He could also be given a souvenir photograph of him with the class guinea pig.(Rationale: Positive reinforcement can encourage him to keep doing positive actions)

Recommendation:

     If I were the teacher, I would first give them positive reinforcement on Patrick’s involvement in the community sports program and also give positive reinforcement in Zach’s initiative to feed the guinea pig. Then I would tell them that I think they are responsible individuals otherwise Zach could just waste his time being a couch potato and do nothing instead of joining the community softball team and Zach was quite responsible in feeding the class pet without being told.

     In my research, I came across an article “Positive Reinforcements-Fix Behavior Problems with Positive Reinforcements” in About.com by Ann Logsdon. It said that recognition and compliments are rewards that can encourage children to keep doing good deeds.

     After giving them positive reinforcement, I would probably discuss with the two boys my classroom rules and regulation.  I would inform them of positive classroom behavior and inform them of the graduated penalties for wrongful behavior.  Then I would assign them as classroom helpers in helping me maintain classroom discipline and order.

 As a precaution, they might not want to work together but having told them that both of them are responsible individuals, the probability of them cooperating is higher. However, in extreme case, they could be asked to take turns being my classroom helpers.

Abstract

This proposal seeks to conducts a critical assessment of the risk management framework in Nigerian banking industry. A case study approach has been chosen for the proposed dissertation. While examining the overall banking sector, the study will devote particular focus to Fidelity bank in Nigeria as a case study. A review of literature on risk management in the banking environment is going to be conducted in order to provide the necessary background information for this study. The researcher also intends to combine both qualitative and quantitative methods of data collection in order to achieve triangulation. The data obtained will then be analyzed using simple percentages. In addition, chi – square (x2), a non-parametric statistic will be used to test the two hypothesis generated in the study.

Introduction

In the recent times, risk management has become a necessity. This is especially the case in banking which is a high risk business. The recent global financial crisis caused by the so called ‘house bubble’ in the US had adverse impacts on financial markets and institutions across the world (Awojobi et al. 2011). It triggered a capital management crisis across various commercial banks. Financial institutions suffered a severe shock in their capital and liquidity status and some had to close down their operations.

As a result of the crisis, Nigerian banking sector has suffered an historic retrogressive trend, both in capitalization and profitability (Abdullahi 2013). More recently in 2010, only 3 out of 24 banks in Nigeria reported having made profits. 8 banks were found to be in grave situation, adversely affected by liquidity and capitalization problems (Onaolapo 2012). The capital market has declined and banks have had to recapitalize in order to meet the regulatory directive (CBN 2010). The drama that has hit Nigeria’s banking sector has eroded public confidence with depositor funds experiencing a sharp decline of 41% in between 2007 and 2009.

On a lighter note, however, the Central Bank of Nigeria (CBN) moved in to rescue the situation which was quickly escalating, triggered by global events. The CBN had to inject N620bn of liquidity in order to stabilize the system and return confidence to the stock market which had already collapsed by 70% (CBN 2010). Further, the apex bank had to replace leadership in the 8 banks which had been adversely affected.

Problem statement

The core function of commercial banks is to manage risks and increase their returns to shareholders. The global meltdown has exposed the failure of banks to attend to their core business functions (CBK 2010). Had banks been attending to risk management, then there wouldn’t have been the flood on the US market of cheap short-term interest rate mortgages which resulted in mortgage crisis and subsequent downturn (Onyeka 2013). Although the CBN intervened in Nigeria to save a number of commercial banks that had been adversely hit and while there seems to be an improvement, risk management in most banks is still fundamentally no different today than it was prior to the credit crunch and recession (Onyeka 2013)

Credit risks remain an issue of great concern in Nigerian banking sector. Most of the commercial banks in Nigeria still do not have a framework for effectively managing risks. Despite some few notable improvements, following CBN interventions and subsequent reform measures; risk management practices still remain at a rudimentary stage (Garuba 2010). In view of these concerns, this proposal seeks to conducts a critical assessment of the risk management framework in one of Nigerian commercial banks. While examining the overall banking sector, the study will devote particular focus to Fidelity bank in Nigeria as a case study.

Overview of Fidelity Bank

Fidelity Bank Plc is one of Nigeria’s largest commercial bank based on market capitalization of 2nd July 2013 (N86.34 billion). This commercial bank provides a range of products and services including consumer and commercial loans, mortgages, trade finance, project finance, money market and treasury services, and financial advisory services among other services. With a workforce of around 4,000 employees, the bank operates a network of more than 170 branches in Nigeria.

Fidelity first started operating as a merchant bank in the late 1980s but was converted to a commercial bank in 1999 and to a universal bank later in 2001 (Annual report 2011). In May 2005, Fidelity bank joined the list of commercial banks in the Nigerian Stock Exchange and in December, it merged with FSB international Bank and Manny Bank to form the currently enlarged Fidelity Bank.

Significance of the study

Despite the challenges that have hit the fragile banking industry, financial performance of Fidelity Bank shows remarkable growth. However, with the current economic expansion in Nigeria, Fidelity bank is likely to be faced with an increasing demand for loans. And given the rapidity of loan defaults in the past, it is worthwhile to examine the risk management framework and to critically evaluate its effectiveness.

The findings that will be obtained from the proposed dissertation are expected to help Fidelity Bank Plc to strengthen their risk management strategies and enlighten the management and staff about the importance of having in place an effective risk management framework. Further, this research will contribute to the body of knowledge on risk management and inform development of policies and best practices in the banking industry

Research objectives

The proposed dissertation seeks to address the following research objectives:

1. To examine the usefulness of risk management in the banking industry
2. To analyze the nature of risk inherent in Fidelity Bank and highlight existing systems of control.
3. To investigate the risk management framework at Fidelity Bank PLC and evaluate its effectiveness.
4. To find out whether profitability of Fidelity Bank has improved as a result of its risk management strategy.
5. To ascertain the extent to which Fidelity Bank has been able to restore depositor confidence, in the wake of the financial meltdown.
6. To propose recommendations that would enhance the functions of risk management at Fidelity Bank

Literature review

A review of literature on risk management in the banking environment is going to be conducted in order to provide the necessary background information for this study. The literature review section will begin with an exposition of risk management followed by analysis of the various risks inherent in the banking industry.

As suggested by Athanasoglou et al. (2005), risk refers to a situation occasioned by internal and external factors which create obstacles to achieving objectives in an entity. Risk management can be defined as a systematic process of identifying, evaluating, monitoring and controlling risks facing an entity or organization (Raja 1998). The banking business by its very nature is a high risk business (Owojori et al. 2011). This is particular the case because the banking business is the only business in which the proportion of borrowed funds far exceeds that of owners’ equity. As pointed out by Ferguson (2003) and Umoh (2002), only a few banks can withstand a persistent run. As depositors withdraw their funds, banks hemorrhages and if the bank does not receive liquidity support, it may collapse (Owojori et al. 2011).

The risks that commercial banks may face can either be endogenous or exogenous. Endogenous in the sense that it is associated with the nature of the banking business itself, and exogenous in the sense that it is found outside the financial system and banks have no control over (Owojori et al. 2011). Endogenous risks may include liquidity risk, credit risk, operational risk, legal risk, reputational risk, information technology risk, leadership risk and customer satisfaction risk. Whereas risks that are exogenous to the bank include industry risk, regulatory risk, market risk, sovereign risk and government policies risk. Umoh (2002) added other important risks which include the human resource risk, competition risk and fraud risk.

Bank operational activities often give rise a number of these risks including market and technology risk, liquidity risk, concentration risk, reputational risk and other risks with credit risk exposure occupying the centre stage (Onaolapo 2012).

These risks pose a major threat to their success and survival. Credit risks are particular of great concern. A recent study by CBN (2010) showed that bad loans and advances contributed most to the distress of commercial banks, indicating that credit risk was the greatest threat. Two prominent studies, Onyiriuba (2004) and Fatemi & Fooladi (2006), recommended five C’s for managing credit: borrower’s character, capacity, capital, collateral and conditions. When making credit decisions, most banks employ the Five C’s of credit. However, this risk management approach is subject to certain constraints. The five C’s are performed by human beings who can be inconsistent and subjective in their assessments (Onaolapo 2012). As such, it is often difficult to conduct objective assessment with the 5 C’s. There are, however, a range of other credit assessment tools which include rating systems and credit scoring models.

Lending is one of the core functions of commercial banks and is considered one of the highest income generating assets. Whilst lending of finance to the deficit economic sector is intended at maximizing shareholder’s wealth; such lending is often at the expense of a risk – return trade – off. Attention thus needs to be paid to risk management. In fact, risk management is a necessity in the banking sector.

More recently, there has been an emphasis on integrated risk management, a risk management strategy that involves the identification of collective risks and implementation of a firm-wide strategy to managing the identified risks. In this regard, Meulbroek (2002) argues that integrated risk management has only recently become a practical possibility owing to the advancements in IT and development of sophisticated and globally-tested legal and accounting infrastructure which has enabled for the use of contractual agreements on large scale and at a low cost.

Research questions

The primary aim of this study is to conduct critical assessment of the risk management framework at Fidelity Bank Plc. This is going to be addressed through the following research questions:

1. What risks are inherent in Fidelity Bank?
2. How effective is the Bank’s risk management framework?
3. Has the resultant risk management framework translated to economic gains?
4. To what extent has Fidelity Bank been able to restore depositor confidence especially considering the impact of the recent global downturn?
5. What can Fidelity Bank Plc do to enhance the functions of risk management?

Hypotheses

The study also intends to test the following two hypotheses:

Fidelity Bank Plc formally takes risk analysis into consideration in their investment decisions.
The risk management framework employed by Fidelity Bank Plc has enhanced the bank’s profitability and investment performance

Research design

As pointed out by Babbie & Mouton (2004), research design focuses on the end product. The point of departure for this study will be to identify the research problem and research objectives. From the objectives, it will be necessary to conduct a literature review that would provide the necessary background information for the study. An appropriate research approach will then be employed to address the research questions adequately.

Research philosophy

The aim of this study is to critically assess the risk management framework of Fidelity Bank in Nigeria. The conceptual framework identifies risk such as liquidity risk, credit risk, reputational risk, operational risk, leadership risk and industry risk among others. The success of Fidelity bank Plc in managing these risks may be hypothesized. But since it is the effect of Fidelity’s risk management framework that is to be investigated, a realist approach will be more appropriate to this study than a positivist.

With positivist research paradigm, an assumption is made that the reality is fixed, knowable and directly measurable. On the other hand, realism combines both positivist and interpretivist positions. Realists take the view that things have to act in a certain way and that certain factors may moderate their actions (Saunders et al. 2007). Realist paradigm is thus more concerned with understanding and explanation as opposed to prediction. Based on these, a realist research paradigm is more suitable for this study.

Research strategy/approach

Addressing the objectives of this research will require gaining an in-depth understanding of the academic enquiry at hand. Consequently, this necessitates a methodological approach that would facilitate in-depth understanding and enable the research to critically explore on the research topic. In this view, a case study approach has been chosen for the proposed dissertation. A case study strategy has been chosen as it allows the researcher to focus on a specific context and allows for in-depth investigation into the academic enquiry at hand.

Data collection

The researcher intends to combine both qualitative and quantitative methods of data collection in order to achieve triangulation. The primary data will thus be obtained through semi-structured interviewing and administration of questionnaires to the selected sample of respondents. As pointed out by Saunders et al (2007), semi structured interviews is important in the collection of data as it facilitates better understanding between the interviewer and interviewee. Semi-structured interviews allow the participants to respond freely and express their views in their own terms. Further, the interviewer is able to probe into questions that may need further clarity, thereby allowing for in-depth research. However, the effectiveness of interviews is dependent on the communication skills of the interviewer including the ability to listen attentively, clearly structure questions and probe appropriately as well as encourage the interviewee to respond freely.

Similarly, questionnaires have their own advantages and disadvantages as well. Advantages include the low cost of data collection and being free from the bias of the interviewer. Disadvantages include the low response rates and inability to probe responses. Clearly, each method of data collection has its own strengths and weakness. As such, the researcher has chosen to use both methods in order to achieve triangulation, wherein the inherent weakness of one method will be reinforced by the strengths in the other method (Saunders et al 2007).

Purposive sampling

Purposive sampling method will be used in selecting respondents for the interviews. This form of non-probability sampling technique is often used synonymously with qualitative research. In purposive sampling, the decision to select individuals to be included in the sample is based upon a variety of criteria such as the specialist knowledge on the research topic. Participants chosen to participate in the study will include branch managers, enterprise risk managers, project managers and operation managers. These participants have been purposely selected given their knowledge and experience in managing risks. Five Fidelity bank branches from Lagos Nigeria will be chosen randomly and purposive sampling technique used to select the interviewees.

Data analysis

The data obtained will then be analyzed using simple percentages. In addition, chi – square (x2), a non-parametric statistic will be used to test the two hypothesis using data obtained from responses in the questionnaires. The chi – square formula is as follows:

X2 = ? (O-E)2 /E

Where O = Observed frequency

E = Expected frequency

? = Sign of summation

The value obtained will be compared with the Chi – Square table value using the selected levels of significance. If the computed value is found to be less than the table value, it will imply that the null hypothesis holds and is thus accepted (Ayodele 2012). But if the computed value is found to more than the table value, then the implication is that the null hypothesis is rejected.

Limitations of the research study

Whilst positive that the objectives of this study are going to be achieved; the researcher recognizes that the study may be subject to the following constraints.

Participants may not be willing to reveal certain crucial information due to the sensitive nature of such information and the impact that it may have on them.
Difficulty in retrieving information due to bank’s obvious tendency to classify most of their information
Time constraints and financial impediments that may hinder the success of this dissertation. Fidelity Bank operates a wide network of over 170 branches in Nigeria. Given the time and funds constraints, it will not be possible to conduct a risk assessment on each branch.

To surmount the reluctance of respondents, the researcher is going to assure them of their anonymity. That is, the respondents are not going to be directly identified in the study. In addition, the researcher intends to conduct a follow-up on the responses. Further, the researcher will make the best efforts to optimize on the available resources without allowing these limitations to affect the depth and quality of research. Whilst these limitations are significant, the researcher will endeavor to ensure that the constraints mentioned do not impinge on the validity of the work.

Conclusion

Most banks are still more concerned with returns and pay little attention to risks, despite the fact that the latter accompanies the former. Whether Fidelity Bank Plc maintains a robust and effective risk management framework is subject to investigation.

References

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3. Allen, L., 2002. Credit risk modelling of middle markets. Zicklin School of Business
4. Annual report, 2011. Fidelity bank Plc 2011 annual report and accounts. Fidelity Nigeria
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[pic] London School of Commerce MBA E BARCLAYS PLC AND ABN AMRO CASE STUDY ASSIGNMENT London UK As one of the world’s leading banks, with 135,000 employees in more than 50 countries, Barclays plays a significant role, from working with governments on major infrastructure projects to bringing banking to customers in emerging markets. Barclays is made up of two major businesses: Global Retail and Commercial Banking (GRCB) and Investment Banking and Investment Management (IBIM). There strategy is to achieve growth through time by diversifying their profit base making their growth relevant to their customers at all times.

This case study will seek to examine the bid and intended acquisition of ABN AMRO, and the early acquisition of Banco Zaragozano by Barclays, the differences in performance of these two banks based upon the strategic a economic motives, focusing on the merger acquisition, and strategy implemented to effect improvements to reflect the results from 2002- 2006. 1. Evaluate Barclays strategy over the period of the case and prior to the ABN bid, paying particular attention to the global industry drivers and the group? s performance from 2002-2006.

In order to understand the context that helps to formulate the strategic performance changes at Barclays PLC over and prior bid for ABN AMOR. Barclay? s’ origins can be found back in 1690 to John Freame and Thomas Gould. The named changed to its present form when James Barclay became a partner in 1736. Presently, Barclays is the third largest bank in the United Kingdom. The institution’s primary focus is in retail banking, investment banking as well as investment management. Barclays operates in 60 countries with major point of interest in Europe, the United States, Asia, and Africa.

Barclays is one of the ten largest banks global when measured by market capitalization (Barclays PLC, 2004). The institution’s core business revolves around retail and investment banking, and it is the later that is being impacted by forces acting upon liberal market economies in varied European Union member states as a result of the aforementioned introduction of the Euro as well as globalization. As a result of the preceding, Barclays services the United Kingdom market as well as providing services to multinational companies located in differing market models. Barclays strategy.

The bank’s strategy is to offer a full portfolio of services worldwide, providing a wide range of cross-selling opportunities, in order to achieve good growth through time by diversifying its business base and increasing its presence in markets and segments that are growing rapidly. This is driven by the Group’s ambition to become one of a handful of universal banks leading the global financial services industry, helping customers and clients throughout the world achieve their goals. Moreover, the strategy of the bank is based on the principles of earn, invest and grow.

Aligning business drivers with strategic options. The strategic options examined by Barclays were further direct investment or outsourcing to a ‘partner’ bank and these were considered in the context of the bank’s key business drivers. These were:improving their operating model for trade processing; reducing the costs of their trade business in relation to people, infrastructure and services; improving their trade service capabilities and establishing a workable, non-competing, long-term ‘partnership’.

After considering all of the options, including a Joint Venture partnership, Barclays decided to outsource the processing aspect of its trade services offering to ABN AMRO and to focus on delivering enhanced client service. Performance Nowadays, the proliferation of banking consolidation within the industry is and has created a new era of international banking conglomerates in the global industry. The preceding is causing European based banks to appear small in terms of relative comparison. Barclays? peration in a liberal market economy means it competes with equity financing for corporations and as such, this does not represent a strength concerning its overall performance base. According to group? s performance from 2002-2006 identifies that Barclays? performance underpinnings are represented by its strategy of acquiring other banking (such as ABN Amro and Banco Zaragozano) concerns to expand its retail as well as other banking services through representation in international markets as represented by the bank’s presence in 60 countries.

This provides Barclays with the means to sell its highly profitable investment banking services as well as be positioned to service the cadre of multinational companies that utilize its diverse banking financial service packages. On the other hand, ABN AMRO bank has a presence in 76 countries and territories. Using its worldwide network the bank provides universal banking services consisting of commercial and investment banking products to corporate nationally and internationally operating clients as well as personal and private banking customers.

In 2007, Barclays announced the proposed acquisition of ABN AMRO bank, in order to expanded their distribution base. The deal was valued at €67 billion. On October, the RFS consortium led by Royal Bank of Scotland, bidding for control of ABN AMRO, formally declared victory after shareholders, representing 86 percent of the Dutch bank’s shares, accepted the RFS group’s €70bn offer. Barclays is known a consistent performer delivering steady profitability results, 20% increase in profit before taxes in 2003, and again in 2004, and one of the lowest cost to income ratios with regard to banks in the UK.

The preceding indicates that Barclays is well managed. Barclays? focus on internal administrative consolidation as well as the acquisition of banking concerns represents its recognition in order to maintain growth in revenues, return on equity, dividends and profits in response to maintaining a high market capitalization that tends to make it a relatively unattractive takeover target as a result of the high premium required to acquire it Barclays? retail banking arm is clearly supported by the huge success of its Barclaycard division that has set industry standards in terms of innovations in customer utility. Barclays? resence in 60 countries further strengthens the utility of this card providing business and retail customers with access to their financial accounts globally (Barclays PLC, 2004). The aforementioned diversity in operations is a result of the economic strength of global industry market based economies that have fully recovered from the global recession events of 2002. Barclays? banking acquisition strategy is a direct outgrowth of the foregoing in keeping with the consolidation mania initiated by U. S. based banks. According to ABN AMRO bank performance, financial results in 2006 added to concerns about the bank’s future.

Operating expenses increased at a greater rate than operating revenue, and the efficiency ratio deteriorated further to 69. 9%. Non-performing loans increased considerably year on year by 192%. Net profits were only boosted by sustained asset sales. From 2002 to 2006, the further progress being made as a result of understanding the corrective measures that were and are needed to be taken. Barclays ? performance throughout this period has remained consistent and steady as the bank has not lost sight of the competencies that helped it achieve acceptable historical performance. . Compare and contrast the intended acquisition of ABN with that of the earlier acquisition of Banco Zaragozano, paying particular attention to the merger rationale and the motives in each case and the likely synergy gains resulting from the integration of ABN. According to the drivers of the bidding war that preceded the intended acquisition of ABN AMRO bank and the acquisition of Banco Zaragozano by Barclays in 2003, it is important to understand why merger and acquisition (M) take place and the potential gains of doing so. But first some definitions.

Mergers and acquisitions. Mergers and acquisitions (M) are considered as consolidation strategies where a change of control takes place through a transfer of ownership. A merger is the combining of two or more companies into a single corporation. This is achieved when one company or business purchases the property or some other form of assets from another company. The result of this action is the formation of one corporate structure. This new corporate structure retains it is original identity. An acquisition is a little different from a merger n that it involves many problems being dissolved, and an entirely new company being formed. The main theory of merger and acquisition is synergy, that is, one and one makes three. Through synergy, managers create greater value with the integration of two companies, rather than that of their individual parts. Strategic and economic motives. The strategic of Barclays with the intended acquisition of ABN AMRO bank was to created a big opportunity with the purpose to deliver a new period of faster growth for shareholders in general.

Moreover the intended investment would be implemented at a reasonable price slightly below the recent market trading price. The merger for Barclays was focused in a strong financial performance provides clear strategic advantages as well as stature on the world business state. The proposed merger with ABN AMRO, offered a unique opportunity to become a leading force in global retail and commercial banking with an stimate 47 millions customers, in order to increase financial returns to their owners beyond the rate of the stand-alone entities.

And the fact that this merger, combining the strengths and values of both businesses, gives them confidence in delivery, both in terms of synergies, and determined in considerable detail by ABN AMRO bank and Barclays, in terms of a clearly defined and transparent management structure that we are putting in place. In terms of growth for shareholders, the combined entity would offers a diversified portfolio, both by geography and by business. Exposure to high-growth developing markets represents about a quarter of the enlarged pro forma profit base.

Business segments such as investment banking and investment management, which have as we know strong growth opportunities driven by demographic trendS represent about half of profits For Global Retail and Commercial Banking, the merger would create the fourth largest retail and commercial bank worldwide by market share, and in a world where the needs and buying behaviours of retail and commercial customers are growing more similar, this will create economies of scale.

Furthermore, the benefits generate by the merger between both banks would be: complementary networks, a strong presence in attractive European markets; significantly enhanced positions in high-growth developing markets; a much larger distribution network; and the opportunity to deliver considerable economies of scale. The main reason behind Royal Bank of Scotland (RBS), has trumped Barclays? offer for ABN Amro. The for each ABN AMRO share, 79 per cent of which will be in cash, with the remainder in RBS shares. The cash element was higher than expected and the bid, valuing ABN at E71bn (? 8bn), beats Barclays? agreed all-share offer, worth E64. 5bn. The deal offers better value for ABN AMRO bank shareholders. And price is not the only factor, Royal Bank of Scotland (RBS) also combined cost savings would reach E4. 23bn by the end of 2010, easily beating Barclays? estimated savings of around E2. 8bn. In essence the driving force behind the success of the Royal Bank of Scotland (RBS) bid over Barclays was in fact the higher share price expectations offering the perfect icing. That partly reflects the radically difierent strategic visions of the two banks.

Barclays is looking to build a huge universal bank where cross-border synergies could be limited. But the Royal Bank of Scotland (RBS) consortium wants to generate a type of “in-market synergies”, by breaking-up ABN AMRO. On the other hand, in 2003, Barclays announces the completion of its acquisition of Banco Zaragozano, at a cost of ? 788 million which fit nicely into Barclays’ strategy to grow its business in Europe. Barclays has been present in the Spanish market for 25 years and it the most profitable foreign-owned bank in the country.

The acquisition of Banco Zaragozano to its arsenal makes Barclays the sixth largest private bank in Spain (much of the market is dominated by publicly-owned banks) and triples Barclays customer base and branch network. Barclays aimed to be one of the top five banks in the world and for that it would consider acquisition to achieve the goal. Further, Barclays believes that a physical retail and commercial banking presence is a significant enabler of investment banking growth. The acquisition of Banco Zaragozano, shows that strong retail presence generates ood new business opportunities for global businesses such as investment banking and credit cards. The success or failure of a deal also depends on the time horizon over which evaluation is done. Normally, in the short term, stock reactions to merger announcements tend to raise the target’s stock price, while the stock of the acquirer stays about the same. This is normally attributable to the expectation that there will be a bid that is successful and involves a premium above the current market price of the stock.

Acquirer prices stay the same, in general, as the market reacts conservatively, depending on the specifics of the deal. 3. Identify what you believe to the key success factors necessary to sustain competitive adavantage in the global financial services industry and briefly discuss the implications for the firm? s competencies, structure, and ehical/corporate governance. Critical success factors (CSFs) have been used significantly to present or identify a few key factors that organisations should focus on to be successful.

As a definition, Critical success factors refer to “the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organisation” (Rockart and Bullen, 1981). Identifying CSFs is important as it allows firms to focus their efforts on building their capabilities to meet the CSFs, or even allow firms to decide if they have the capability to build the requirements necessary to meet Critical success factors (CSFs).

The main keys success factors for Barclays in the case study are, with over three hundred years of history and expertise in banking Barclays has seen and has gained a reputation for being a trustworthy and a reliable institution to bank and invest with. This reputation has seen it grow into over 50 countries and become truly universal bank providing loans, investments and protecting the money of over 42 million customers and client worldwide. Another reason for the success of Barclays would be that it follows a simple strategic premise; ‘anticipates the needs of customers and clients and serve them by helping them achieve their goals. Part of Barclays recent success has been their ability to target and identify upcoming emerging markets for example: India, parts of Asia and Africa, namely South Africa, expanding its retail network and cash machine availability. Despite being a truly global corporation from a basic bank account to funding Governmental projects, Barclays focus has always been to meet the needs of the individual customer. Furthermore, competitive advantages are difficult to create. It is even more difficult to sustain. Community banks usually can not achieve a cost advantages, especially in head-to-head competition with larger, high-volume institutions.

That leaves differentiation as their primary method for creating Competitive advantages. But that approach is also problematic. It is clear that technology is playing a bigger and bigger role in banking. But today most banks are using functionally identical systems to develop and deliver products and services. This uniformity of technology has resulted in commoditized banking – the antithesis of differentiation. So while emerging technology can create a temporary advantage, sustainable differentiation based solely on technology is virtually impossible.

To make matters worse, technology has actually eliminated some of the historical advantages enjoyed by community banks. Thanks to CRM, personalized service – once the sole province of community banks – is now possible for even the largest institutions. Sustainable Competitive advantages is created by leveraging organization’s unique blend of attributes – brand equity, reputation, geographic footprint, specialized knowledge – and articulating it clearly and consistently to your market. Barclays is an excellent example of a bank that has achieved Competitive advantages through specialized knowledge.

On the other hand, on the global financial services industry corporate governance is essential to the wellbeing of an individual company and its stakeholders, particularly its shareholders and creditors. But sound corporate governance is not just a vital factor at the level of the individual corporation. It is also a critical ingredient in maintaining a sound financial system and a robust economy. And that is why governments have taken such an interest in recent examples of corporate governance failures.

It is also why banking supervisors are placing greater emphasis on the role that corporate governance can play in promoting financial stability. In the financial system, corporate governance is one of the key factors that determine the health of the system and its ability to survive economic shocks. The health of the financial system much depends on the underlying soundness of its individual components and the connections between them – such as the banks, the non-bank financial institutions and the payment systems.

In turn, their soundness largely depends on their capacity to identify, measure, monitor and control their risks. Barclays have designed good corporate governance policies and practices in order to ensure that they are focused on their responsibilities to shareholders and on creating long term shareholder value, and ensuring that behaviour is ethical, legal and transparent. In firms, structure is basically the best way to organize it, in order to accomplish it is objectives. It acts as the medium that facilitates the accomplishments of the organizational goals.

It also helps to identify the key activities of the organizational processes and how they are coordinated. Moreover, successful strategy implementation depends to a large extent on the firm’s primary organizational structure. A primary organizational structure comprises the firm’s major elements, components, or differentiated units. Other means of getting organized are through reward systems, coordination terms, planning procedures, alliances, information, and budgetary systems. Geographical structure It is common in firms that have grown by expanding the sale of their products of services to new geographical areas.

In these areas, they frequently encounter differences that necessitate different approaches in producing, providing or selling services or products. The key strategic advantage of this structure is responsiveness to local market conditions, a clear example of that is the intended acquisition of ABN AMRO and the early acquisition of Banco Zaragozano. To conclude, after being satisfied with its progress in the United Kingdom, Barclays decided to make its name international by going abroad which was another great move.

In the United Kingdom, Barclays had acquired many other small banks, such a Banco Zaragozano, gained large market and profits with each acquisition. As a result of this growth, this company had reached its maturity stage within UK itself; it has reached its peak of growth. Further, Barclays, performance throughout 2002-2006 has remained consistent and steady as the bank has not lost sight of the competencies that helped it achieve acceptable historical performance. Bibliography • Barclays PLC. 2004. Annual Report. Barclays PLC, London, United Kingdom. • Calmfors, Lars, Driffil, John. 1988. Centralisation of Wage Bargaining.

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