Corporations

Performing humanitarian activities would less likely be mandated as they normally come from the deep convictions for better community thus CSR could only be deemed to be a choice rather than treating the same as legal obligation of the company. In relation to this, J&J claims that its program of giving is inspired by its company Credo responsibilities to the communities. By its philosophy, the company management and employees are working together and living harmoniously with community around the world.

Thus to see that company’s primary focus lies in making long-term differences in human health as it targets the major health-related issues world should not be surprising. As proof of its efforts in gift giving, the company claims to have contributed $544. 8 million cash and products to charitable causes around the world in 2006 (Johnson & Johnson, 2008). More than the money it bestows to beneficiaries Johnson & Johnson has also focuses on three key strategies that under a wide range of programs.

Declaring to fulfil this and other benevolent efforts, through community –based partnership, the company could do much in helping: to save and improve the lives of people especially of women and children, to educate them to build the skills of people for health needs and to prevent diseases and to reduce the shame and disability created by the disease. Most noticeable is the fact that company do good things where is has a high potential for impact or where their contribution could be felt (Mohr and Webb, 2001; Borbely, et.

2005;Luo,2006). J&J and the Environment As stated earlier, the company’s Credo has been written 60 years ago from it concern for the environment may be deemed to have been in the minds of person or persons who dreamt how J&J would look even up to his point. Not surprisingly, since it guided by its Credo, the company declares in the same Credo that is must maintain in good order the property that the company is privileged to use, by protecting the environment and natural resources.

In relation to this, the Johnson & Johnson Family of Companies is committed to environmental excellence through its policies, as it puts in place high environment values in employees, and uses the best environmental practices in all its products sold. This is of course done by its operating companies numbering now not less 250 around the world in about not less than 57 countries thus sustainable development could be attained (Johnson & Johnson, 2008).

Sustainability of business is directly linked with environment as it is the environment that nurtures almost everything including where the business gets is raw materials, the health and well of the people who will work for the production, sale and distribution of the company’s products and even the very health of its customers who will really buy the company’s products and services. There could therefore no way that one is wrong if the activity is directed to protecting and preserving the environment. Johnson & Johnson (2008) also declares that “the environment is the ultimate human health issue.

” Being then one the world’s largest healthcare companies, J&J recognizes the critical working together or symbiosis between human health and the health of the planet Earth. It declares that it must understand the fact about environment degradation, which really poses short and long-term threats to human health. Feeling special sense of responsibility for this, company could only be given due recognition as it tries to protect the environment and to practice living the values as called by its Credo. As proof of its valuing the environment, the company declares Johnson & Johnson Pharmaceutical Research & Development, L.

LC, for having installed a “zero” discharge cooling tower water treatment system. The company is proud that project has saved 4. 8 million galloons of water per year and generated $ 29,000 annually as cost savings. The company also claims that system had decreased the burden on the local water authority and government owned treatment works. This contribution of the company to help government projects are in most case tax deductible and hence this could be a great way of reducing taxable income from the company while trying to help people in their own way as they see fit in accordance with the company’s Credo.

For this, the company got recognized with the Pennsylvania Governor’s award for environmental Excellence (Johnson & Johnson, 2008). The company must be strategic in helping to protect by environment through its various CSR activities and taking care of environment has an effect of sustaining economic productivity (Carroll, Thomas, 1983; Slavin, 1996; Samuelson and Nordhaus, 1992) that will make long term grow of the company possible. J&J’s role in HIV/AIDS cure and prevention

The company also claims that as a global company it has dedicated it business to human health for more than 120 years. For this reason, J&J has profound and long-lasting commitment to call upon its skills and resources to help address what is surely one of the most important health issues of the present generation in the word –the HIV/AIDS/. It has therefore become its priority to develop health care for people who have HIV/AID that it even claimed that it is inherent in is duty to the global community as expressed in its Credo.

The company’s objectives in making a difference in the lives of those infected and affected by the HIV/AIDS lies in knowing and doing: how to develop and effective new medicines and how to make a diagnosis against said HIV disease and its related infections; how to enhance access to company’s projects as well as how to provide needed patient’s care support; how to provide contributions so as to help communities and individuals especially the most susceptible ones to HIV/AIDS; and how to make it workplace programs delivered by its employees to the community (Johnson & Johnson, 2008).

As proof of its accomplishment under this category, it is claiming credit to the accomplishment of Tibotec Therapeutics, one of its members of Family of Companies. The company has recently received approval for its first antiretroviral medicine for HIV/AIDS and hence this must be a big accomplishment for the J & J since many people and even from the scientific community is waiting on how to attack this dreaded disease.

The company also claims to sponsor HIV/AIDS charitable programs in locations around the globe and that the company’s scheme will build on this portfolio and will merge financial, medical and human resources to address the problem. The act of extending help to the community such as this program is also in a way, a kind of marketing strategy (Churchill, Jr. and Peter, 1995; Cooper, L. , 2000; Kotler, 1994) of being closer the company to the customers.

By so doing charitable works, the company is endeared to the community and customers would have the feeling that the company is not just for profits but that it is also interested in proving problems to the community. In all probability, this must be a perfect move for the company since it is just utilizing its resources to keep people alive and health and who would in turn buy the company’s products when they get well.

Business then in the minds of the stockholders is not just making money and getting more wealth, it is rather the act of providing the most responsible products and services to customers and in the process by rightfully doing so, one would have profits as rewards. This must be placing well in proper perspective since investors all go into business with their cost of doing business that must be compensated by returns. 2. 2 Resolution of second issue: Has the company benefited from these CSR activities?

J&J has been performing and accomplishing its CSR activities well and it appears to be beneficial to the company investors as measured in terms of increasing sales, increasing profits, earnings diluted earnings per share and even increasing dividend per share over the last few years as evidence from the following graphs. Increasing sales despite the millions of dollars spent on CSR is valuable to the company, hence in these sense CSR activities could not only be helping the economy in the short term but is actually helping it sustain its long-term business.

The graphs below show increasing sales and profitability. Source: Annual Report, Johnson and Johnson, 2007 Source: Annual Report, Johnson and Johnson, 2007 The company was also able to translate its increasing sales and profitability (Droms, 1990; Meigs and Meigs; 1995; Plunkett and Attner (1985) and CSR activities accomplishment in terms increasing earnings per share and dividend per share as indicated below: Source: Annual Report, Johnson and Johnson, 2007 The company’s embracing and living in accordance with its Credo has in fact opened the door for more business opportunities as indicated below:

Source: Annual Report, Johnson and Johnson, 2007 3. 2 Conclusion It is can be concluded that J&J CSR policies speak for the company’s conviction to have chosen CSR activities more than being compelled by any law to do what it has started doing to do and continues to do at present. That Johnson and Johnson has benefits from the use of CSR activities in its business is simply undeniable as shown in better profits, better earnings per share and dividends per over the years. These benefits may just be fruits of the application of it Credo principles as translated into company policies over the years.

This paper therefore found that there is good relationship to practicing CSR and the long term success off the company and for John CSR may be considered as strategy (Brays, 1991; Pearson, 1999; Porter, 1980) that is adopted by the company as the company believes the concept is beneficial to its business from economic, social and legal sense of the word. This supported by the fact that it has opened a door of more business opportunities for the company in the near future. Appendix A:

References:

Bernstein (1993) Financial Statement Analysis, IRWIN, Sydney, Australia Borbely, et. (2005) Sixth Graders’ Conflict Resolution in Role Plays with a Peer, Parent, and Teacher ; Journal of Youth and Adolescence, Vol. 34, 2005 Brays, L. (1991) Strategic Management Formulation and Implementation- Concepts and Cases, New York: HarperCollins Brigham and Houston (2002) Fundamentals of Financial Management, Thomson South-Western, London, UK Carroll, Thomas (1983) Microeconomic Theory Concepts and Applications, St.

Martin Press ,New York , USA Churchill, Jr. and Peter (1995) Marketing, Creating Value for Customers, IRWIN, Sydney, Australia Cooper, L. (2000) Strategic marketing planning for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp. 1-15. Droms (1990) Finance and Accounting for Non Financial Managers, Addison-Wesley Publishing Company, England Helfert, Erich (1994), Techniques for Financial Analysis, IRWIN, Syndey, Australia Johnson ; Johnson (2008) 2007 Annual Report, www document} URL http://www. investor. jnj.

com/fin-reports. cfm? textOnly=false, Accessed March 12, 2008 Johnson ; Johnson (2008) Company Website, {www document} URL, http://www. jnj. com/community/index. htm, Accessed March 12, 2008 Kotler, P (1994) Marketing Management, Analysis Planning, Implementation and Control, London, UK Luo (2006) Political Behaviour, Social Responsibility, and Perceived Corruption: A Structuration Perspective ; Journal of International Business Studies, Vol. 37, 2006 Meigs and Meigs (1995) Financial Accounting, McGraw-Hill, New York, USA

Mohr and Webb (2001) Do Consumers Expect Companies to Be Socially Responsible? the Impact of Corporate Social Responsibility on Buying Behaviour; Journal of Consumer Affairs, Vol. 35 Ocasio (1999) Institutionalized Action and Corporate Governance: The Reliance on Rules of CEO Succession; Administrative Science Quarterly, Vol. 44 Pearson, G. (1999), Strategy in Action, Prentice Hall Financial Times. Perry (2001) Why Political Reliance on Religiously Grounded Morality Does Not Violate the Establishment Clause; William and Mary Law Review, Vol.

42 Plunkett and Attner (1985) Introduction to Management, PWS-Kent Publishing Company, Boston, Massachusetts, USA Porter (1980) Competitive Strategy, Free Press , London,UK Samuelson and Nordhaus (1992), Economics, McGraw-Hill, Inc, London, UK Slavin (1996) Economics , Fourth Edition, IRWIN, London, UK Wilkins (2003) Reliance on Income Support in Australia: Prevalence and Persistence ; Economic Record, Vol. 79, 2003; Collections: Entire Library

Abstract

The doctrine of separate legal entity is a doctrine which has gained increasing importance in the analysis of company law. The importance of this doctrine and its relevance in the analysis of laws relating to companies is evident in the case of Salomon v A Salomon and Co Ltd [1897] AC22, the leading case which gave effect to the separate entity principle (Macintyre 2012).

This case has formed the basis of company law and corporate theory. Not only is this case often quoted in textbooks and journal articles, but also, its principles have found their way to English courtrooms and law firms (Karasz 2012)

Aligning with the above, this paper explains the following statement made by Lord Halsbury in Salomon’s case

“Either the limited company was a legal entity or it was not. If it was, the business belonged to it and not to Mr. C Salomon. If it was not, there was no person and nothing to be an agent at all; and it is impossible to say at the same time that there is a company and there is not” (Roach 2012).

Attempts will be made in this paper to analyze courts’ approach to the separate entity principle. Criticism against the decision made by the House of Lords in salomon’s case will also be examined. Statutory and judicial exceptions to Salomon shall also be explored on.

Introduction

Corporate theory has certain principles which practitioners and academics have struggled to define. Some of these principles seem somehow unsuitable for strict and permanent delineations given that their construction often change with time (Karasz 2012). The case of Salomon V. Salomon and Co. Ltd which has formed the basis of company law globally is one such example.

Not only is this case often quoted in textbooks and journal articles, but also, its principles have found their way to English courtrooms and law firms (Karasz, 2012). The doctrine of ‘separate legal personality’ laid down in Salomon’s case has received increased recognition and is often cited in court today.

In this paper we explore on the following statement made by Lord Halsbury L.C. in Salomon’s case and analyze the courts’ approach to the separate entity principle.

“Either the limited company was a legal entity or it was not. If it was, the business belonged to it and not to Mr. C Salomon. If it was not, there was no person and nothing to be an agent at all; and it is impossible to say at the same time that there is a company and there is not” (Roach 2012).

We will also try to find the basis under which courts may decide to disregard the separate personality of a company. A delve on this topic will not be complete without exploring on Salomon’s case.

Salomon v Salomon & Co Ltd

The case of Salomon v Salomon revolves around Mr. Salomon, a businessman who incorporated his business; and given the requirements put forth in the Companies Act 1862 which require the presence of at least seven shareholders, he made his family members as business partners issuing one share to each of them (Keenan & Riches 2009).

The business was bought at ?39,000. Mr. Salomon held some 20,000 shares and since ?10,000 was not paid for, he was paid the remaining amount by debentures and granted a floating charge on the company’s assets as part payment (Keenan & Riches 2009). Soon after the business had been incorporated, the shoe industry witnessed a series of strike which led to the government’s decision to split contracts with several other firms with the aim of diversifying and reducing the risk of its few suppliers, given the ongoing strikes (Keenan & Riches 2009).

Since the company was in need of more funds, they sought ?5,000 from Broderip. Salomon’s debenture was then assigned to Broderip and secured by a floating charge (Keenan & Riches 2009). In the end, however, the business failed and Broderip sued to enforce his security.

Given that, at the time, the company was indebted to unsecured creditors; an action against the appellant was brought by the company’s liquidator and the case tried before Vaughan Williams, J. of the high court (Keenan & Riches 2009). Vaughan Williams J declared Broderip’s claim to be valid arguing that the signatories were just but mere dummies and that Mr. Salomon was acting as an agent of the company (Keenan & Riches 2009). Thus the company was entitled to indemnity from the principal who in this case was Mr. Salomon (Keenan & Riches 2009).

The ruling made by the Court of Appeal further confirmed the earlier decision made by Vaughan William. The Court of Appeal ruled that Broderip’s claim was valid on grounds that the Appellant had abused the privileges of incorporation (Macintyre 2012). According to the Court of Appeal, the incorporation of the company was improper as the Act only contemplated the incorporation of independent bona fide shareholders with the will and minds of their own and not mere puppets (Macintyre 2012)

This decision was, however, unanimously overturned by the House of Lords and the arguments of fraud and agency rejected (Macintyre 2012). They held that the Act had to be the sole guide for determining whether a company had been validly constituted. According to the Companies Act 1862, just a share was enough for one to be named as a member. It was therefore not in order to label shareholders as dummies or mere puppets since the company had been duly constituted by law and thus had a separate legal entity (Macintyre 2012).

The House of Lords remarked that it was improper for the judges to read into the statute limitations based on their personal opinion (Macintyre 2012). The House further noted that while the company remained precisely the same even after being incorporated with the same hands receiving profits; by law, the company was not an agent nor a trustee of the subscribers and the subscribers were also not liable for any of the company’s liabilities (Macintyre 2012).

Since then, legislatures and courts have followed the separate entity principle. This principle which is enshrined in article 16 of the Companies Act 1997 have since been followed in company proceedings in court. Salomon’s case has become a landmark company case law in the UK and is often cited in most cases within the area of company law.

The principle established in Salomon vs. Salomon & Co Ltd has stood the test of time, given that this doctrine has formed the basis of company law (Puig 2000). As noted in Salomon’s case, a company is at law a legal entity separate from its members and can neither be an agent nor a trustee of the subscribers.

The decision made by the House of Lords in Salomon’s case confirms Gooley’s observations that the doctrine of separate legal personality was a ‘double-edged sword’ (Puig 2000). While this decision was good as it promoted capitalism, the decision also extended the benefits of incorporation to private businesses thereby providing for fraud and evasion of legal obligations (Puig 2000). This criticism will be examined in detail in the next section.

Criticism against Salomon’s case

Despite having been cited in court, Salomon’s case has met considerable criticism. Much of the criticism has been based on the fact that corporate veil may at times lead to injustice. For example, in the article 7 Modern Law Review 54, Kahn-Freund described the decision made in Salomon’s case as “calamitous”. Kahn-Freund further called for the abolition of private companies.

Criticism is also mounted against Salomon’s case on the basis that priority is given to the separate identity principle over the economic reality of a one-person company. In the article, The Law Quarterly Review, Goulding explains that criticism laid against Salomon’s case is two-fold. First, the unanimous ruling made by the House of Lords in this case gives incorporators the benefit of limited liability even in situations where it may be deemed unnecessary. Second, this decision affords unscrupulous promoters opportunities to abuse the privileges provided for under the Corporations Act.

Piercing of the corporate veil

Despite the seemingly categorical statement made by Lord Halsbury in Salomon’s case, a few years later, the English court held that in certain situations it was permissible to disregard this principle and to ‘pierce the corporate veil’ (Mugambwa 2007). In this context, ‘piercing of corporate veil’ describes situations wherein the separate entity principle may be deemed unfair and the courts may make decisions contrary to this principle on various grounds. The court often does this so as to reach the person behind the veil and to reveal the true nature of the company (Mugambwa 2007)

It has however become a hard task for academics and practitioners to find a basis in which courts may lift the veil. This is an area which is said to be ill-defined, inconsistent and quite unpredictable. In Briggs v James Hardie & Co Pty Ltd, Rogers AJA point out to the lack of a common and unifying principle underlying the court’s decision to lift or ignore the corporate veil (Macintyre 2012).

In determining when to disregard the separate entity principle, commentators have often divided their instances into several distinct categories and often there is no consensus as to the number or type of categories, with some similar cases being placed in different categories. The ultimate policy for lifting the veil also remains elusive with some arguing that it depends on ‘policy’ while others arguing that it depends on ‘justice’ (Mugambwa 2007).

Attempts have been made by commentators to categorize cases with the view of predicting the outcome of future cases but this has proved difficult largely due to the fact that this is an area where case facts have significant influence on the outcome. It has also proved difficult to rationalize and categorize cases since this is an area in which the personal views of judges have a bearing on what justifies lifting the corporate veil (Karasz 2012).

Statutory and judicial exceptions

Despite being enshrined in the Companies Act 1997, significant exceptions have been made to the separate entity principle (Macintyre 2012). In other words, there are certain situations in which the courts can legitimately disregard the separate legal entity principle. According to Bourne (2001), there are two main exceptions to the separate entity principle. These are statutory and judicial exceptions.

In this context, statutory exceptions include provisions that penalize office holders by imposing personal liability. Several statutory provisions have introduced exceptions to the separate legal entity principle. One such statute is the Insolvency Act 1986 which involves fraudulent or rather wrongful trading (Roach 2012). In pursuant to the ‘fraudulent trading’ provision, if it appears that fraud has been used in carrying out business transactions, the court may on application of the liquidator declare any of the parties to the business liable for making contributions as may be deemed necessary by the court (Roach 2012).

Judicial exceptions, on the other hand, are concerned with the company’s separate legal personality. These exceptions have, however, proven hard to define. Justification for making such exceptions also differs greatly. Sealy & Worthington (2010) gave an example wherein court may make such exceptions. They argued that members can be declared by court liable where their acts constitute them as ‘principals’ and the company acting as merely an agent.

This example, however, does not encompass all the judicial exceptions. One major group to this type of exception relates to fraud. In this respect, Linklater (2006) identifies three cases where fraud had significant influence on the court’s decision to lift the corporate veil: Kensington International Ltd v Congo, R v K and Trustor v Smallbone.

A common feature in all these cases is that they would all have passed Salomon’s test that – ‘either the limited company was legal entity or it was not’ (Linklater 2006). There is, however, one element in all these cases which set them apart from Salomon: the fact that all the three cases were being used for fraud and to disguise the true state of affairs rather than being used for legitimate trading (Linklater 2006).

Another group encompassing judicial exceptions relates to a group structure, wherein both the parent and subsidiary company are viewed as one. This can be seen in the case of Adams v Cape Industries Plc. The court of Appeal ruled that the subsidiary company acted as an agent to the parent company and thus had to be indemnified by the parent company.

Another practical example wherein courts can disregard the doctrine of separate entity can be seen with certain court cases. In UK, courts may disregard Salamon’s precedent especially when public funds are at stake. In such cases, courts may decide to impose financial liability on the shareholders and directors of the company.

While these exceptions have been viewed by many as undermining the doctrine of separate legal personality embodied in Salomon’s case, it should be noted that these exceptions serve to further define the doctrine by narrowing its scope and stipulating additional guidelines.

Conclusion

There is no doubt that the decision in Salomon’s case established the separate legal personality of a company, allowing shareholders to carry on trading with minimal exposure to the risk of personal insolvency in the event of a collapse. There are, however, exceptions to this principle wherein the court may justifiably disregard and make rulings contrary to this principle.

It remains, however, a daunting task for academics and practitioners to find a basis in which the courts may be justified to lift the corporate veil. This is largely due to the fact that this is an area where case facts and personal views of judges have a bearing on the outcome. Nonetheless, the principle in Salomon case is widely recognized and followed in courts. This principle which is enshrined in article 16 of the Companies Act 1997 have since been followed in company proceedings in court. Salomon’s case has become a landmark company case law in the UK and is often cited in most cases within the area of company law

Reference

Bourne, N., 2001. Bourne on Company Law. 5th edition, Oxon, Routledge

Gooley, J., 1995. Corporations and associations law: principles and issues. 3rd edition. Sydney: Butterworths

Kahn-Freund, O., 1944. Some reflections on Company Law Reform. 7 Modern Law Review, page 54-66

Karasz, A., 2012, Corporate world today: courts respond to limited liability and board’s decision making – a fight for a justice or rather prosperity at stake

Keenan, D. and S. Riches, 2009. Business law, 9th edition. Harlow, Pearson Longman.

Linklater, L., 2006. ‘”Piercing the corporate veil” – the never ending story?’ Comp. Law 27 (3), 65-66

Macintyre, E., 2012. Business law. 6th edition. Harlow: Pearson Longman.

Mugambwa, J.T., 2007. Commercial and business organizations law in Papua New Guinea. Routledge-Cavendish

Puig, G.V., 2000. A two-edged sword: Salomon and the separate legal entity doctrine. Corporation law. Vol.7 (3)

Roach, L., 2012. Card & James’ Business Law for business, accounting and finance students. 2nd edition. OUP Oxford.

Sealy, L. and S. Worthington, 2010. Sealy’s Cases and Materials in Company Law. 9th edn, Oxford, Oxford University Press.

Stephen, J., 2008. Business organisations and the veil of incorporation. In: Q & A: Company Law. Oxford university press.

Wal-Mart is the largest retailer in the world, specializing in the operation of mass merchandising stores. It is an irresistible retail force that has yet to meet an immovable object. Bigger than Carrefour, Metro AG, and Royal Ahold combined, it is the world’s #1 retailer, with about 6,400 stores, including some 1,200 discount stores, 2,000 combination discount and grocery stores (Wal-Mart Supercenters in the US and ASDA in the UK), and 565 warehouse stores (SAM’S CLUB). Nearly two-thirds of its stores are in the US, but Wal-Mart is expanding internationally; it is the #1 retailer in Canada and Mexico. It owns a majority stake in Japanese retailer SEIYU. Wal-Mart also has operations in Asia, Europe, and South America. The result of the operation in the Income Statement of Walmart Corporation shows that for the fiscal year 2006, the company recognized a gross revenue of $ 315. 6 billion with corresponding cost $ 240. 4 billion which results in a gross profit of $ 75. 26 billion. Operating expenses for the fiscal period was recorded at $ 18. 53 billion and Operating Income was computed at $ 18. 53 billion. After considering other expenses and extraordinary items, Walmart’s net income stands at $ $11.23 billion.

On the other hand, Target Corporation is a US company focused on general merchandise retailing. The company provides general discount merchandise through 1,250 stores across 47 US states, including more than 100 SuperTarget stores, 880 pharmacies, 250 optical centers, 150 Portrait Studios, 1,000 Photo Labs, and 25 multi-level stores. For FY 2006, Target Corporation registered a gross income of $ 52. 62 billion with a cost of revenue amounting to $35. 7 billion, resulting in a gross profit of $ 16. 9 billion. Operating expenses amounting to $ 13.06 billion was deducted from gross profit resulting in an operating income of $ 3. 86 billion. Income tax of $ $ 1. 45 billion was deducted from operating income giving rise to a net income of $ 2. 4 billion dollars. Looking at the two corporations, we can say that Walmart has a bigger profit than Target but if we analyze this in terms of financial ratios, the Net Profit margin of the latter is higher than the former. Walmart’s net profit margin is only 3. 66 percent (%) while Target has 4. 58 %. This means that for every one (1) dollar of revenue, Walmart earned $ 0. 036 while Target earned $ 0. 045 as net income.

Another measure of profitability is the Operating Margin which indicates the amount of Operating Income per dollar of sales. Walmart and Target Corp have an operating margin of 5. 87 % and 7. 36 % respectively. This shows that the operating income of Target base on sale is higher than Walmart Corp. The financial position of a business at a certain date as reflected in the Balance Sheet shows that Walmart Corp. has total assets of $ 138. 187 billion dollars while Target has only $ 34. 995 billion worth of assets. Likewise, the former has total liabilities of $ 85. 016 billion and total equity of $ 53. 171 B and the latter has a total of $ 20.79 B of liabilities and $ 14. 205 billion dollars of equity. It is obvious that Walmart Corp. is bigger than Target in terms of assets and capitalization The Rate of Return on Assets was computed at 8. 95 % for Walmart and 7. 16% for Target. This shows that both companies earn profit for the use of their assets. The efficiency in the use of the property is measured through the use of Plant Turnover. For Walmart Corp., it is 3. 98 and 2. 76 for Target. The Equity/ Debt Ratio(EDR) measures the margin of safety to creditors, it gives the proportion of invested capital as against the borrowed capital.

The computed EDR of Walmart which is 62. 54%, is lower than the 68. 33 % EDR of Target Corp. Current Ratio indicates the ability of the company to pay current obligations, it shows that Walmart can only pay $ 0. 90 for every one (1) dollar of its current liabilities while Target can pay $ 1. 50 for every 1 dollar obligation. Furthermore, The Acid Test Ratio that measures the ability to pay current obligations from the more liquid assets reveals that Target has more capacity to pay its current debt than Walmart. The cashflow of both companies consists of Cash from Operating, Investing, and Financing activities. Walmart registered an increase from operating activities amounting to $ 17. 63 billion while Target is $ 2. 4 billion. In Investing and Financing activities, Walmart experienced a net decrease of $ 14. 18 B and $ 2. 42 B respectively. In the same manner, Target’s cash also decreases to $ 4. 15 billion and $ 899 million from investing and financing activities.

REFERENCE

1. Books Mejorada, Nenita. (1999). Business Finance ( 2nd ed).
2. Philippines: Goodwill Trading Co., Inc. Thomsett, Rob (2002).
3. Radical project management. Prentice-Hall PTR. Web site http://www.google.com/finance
4. http:// www.walmartstores.com

Introduction

There are various of interpretations to what Trans-national Tourism Corporation means. However, this essay will suggest that Trans-national Tourism Cooperation (TNC) as Hampton (2011) suggested that it has been defined as large firms with subsidiaries in 2 or more countries. Hall suggested that TNCs are where the organisational behaviour ideas are an approach for marketing and promotion in the global market. Mowforth and Munt states that 80% of mass tourism is dominated by TNCs and around 80% of tourists who travel by air to a less-developed country (LDC) will stay at hotels owned by TNCs. (Britton, 1991) TNCs benefits from vertical integration as it helps to reduce transaction cost because there is no ‘middle-man’ to deal with and the size of TNCs also mean that they will benefit from economies of scale. TNCs are also known as multinational companies. Tourism for the Trans-national co-operation is the centre point, and specifically more focused on Less Developing Countries.

The first advantage of a TNC according to Mowforth and Munt Japanese Tourist arriving there from Tokyo. The tourist is transferred with a luxurious car Honda from the airport and stays at the Japanese owned Hotel as well as eats all the authentic Japanese food. However, travels back to Tokyo in the Hondo and explains that Japan is a good Third World destination. Furthermore, there could have been a BMW and an international hotel- but the point is argued that it is the main ownership that has made the benefit for the Tourism Industry.

This now means that only the small proportion of the money is spent in the country itself so this connects to leakage as Mowforth and Munt adds that this does not just mean the purchase goods by the tourist in a destination also looks at goods and services by hotels and all other organisations. Leakage is not the main d of disadvantage for all financial aspects as Tourists itself but it is highly in use of Third World Countries.

Mowforth and Munt say that the level of leakages is highly important the reason for this is this affects the economic power which is held by the TNCs for all local communities and government. What should be taken into account that due to not having a relevant collective data it is very difficult to calculate the leakage in a Tourist destination.

Second advantage for a TNC in a poor country is having a TNC is powerful for the industrialisation especially for all the Asian countries where there needs to be rural development. Therefore, the government makes the farming prices quite low- and saves money; takes cheap food so the workers do not demand high wages. With the positive side to having a TNC this creates a good form of power for the poor people in LDCs as the TNCs clearly know the wants and the basic needs of the poor people and making sure they are getting what they deserve. (Madeley, J. 2003)

A general advantage for the TNCs is having more a Foreign Direct Investment (FDI) as this heavily benefits the Tourism factor. Nusa Dua in Bali is encouraging the TNCs to develop their restorts. FDIs are usually very good for funding for local or government projects that the country wants to run. This benefits Bali, by having a better economy, better jobs for the locals making Bali a better destination. This has helped Bali to succeed to be a better destination and improve its roads. This would mean more Tourists would now come into Bali and this will benefit them as a flourished economy.

An disadvantage of a TNC reported by Pattullo in Mowforth and Munt (2005:51:-2)- this shows that there is a high level of leakage it is an overall of 50-70% but it states that for Jamaica it is 37% as this is known as more of a assorted economy therefore, the leakages here can be a lot lower then anywhere else. So this in general states that the money paid into the country never actually reaches the Third World Destination itself therefore, this is not a successful way for the country to expand economically.

Another disadvantage is that all the First World Tourists who fly to a Third World Tourist destination- are mass tourists. The reason being for this is that they fly and possibly stay in a hotel which is TNS owned- these tourists may not form a mass or alternative tourism and may not be seeking for, adventure, wildlife and authenticity. This is not a huge factor but, mass tourism is becoming more of a straight focus however, they are being affected by the new, sustainable and alternative forms of tourists.

An disadvantage of having a monopoly firm and the TNC being in control of this is being in contention with the mass tourism being contend of the Third World Tourism which often is different, and causes a lot of problems of dependency, and exchange leakages with under-developed economies by foreign owned enclaves. (Brohman, J 1996)

So the important aspect of this is that the TNC must address the issue of sustainability. Carothers in Mowforth and Munt (1993:15) quoted that the final touches of the Earth Summit (agenda 21) the main focus was to remove the TNCs from the text of the Agenda 21. Agenda 21- is when there is aware of the environment being eco-friendly as well being sustainable. In the Third World Country it had to be clear that they knew what the term “multinational operate”. All the governments also needed to know what a Trans-national cooperation did for them was to gain more stability and have an increase in the legal rights. (Hamed, D 2005)

The impact on all the human resources is an encouragement in employment and as the TNC has an increasing wage levels. The local firms- which are Tourism related (TNCs) make more connection with the suppliers and the distributors which makes a good business when they make the effort to have a better connection with the local suppliers and the distributors. However, there is no proof of how the TNC if they are crowding over the local firm.

(Hamed, D 2005)

Advantage of a TNC is that they are usually very small in most of the developing economies, because much of the involvement takes the non-equality forms. Some of the government assists the main development of the infrastructure itself. The new technology that can be introduced in a developing country and different management skills can make the Less Developing Country a lot better.

(Hamed, D 2005)

Another disadvantage stated by Mowforth and Munt is that the British tour operators are not aware of visiting Burma the reason being for the unawareness is purely the ethical reasons. As hotels were being built by the TNCs- Asia countries of: Japan, Malaysia, Singapore, South Korea and Thailand, with also French and Swiss Interests were very involved. Tourism in Burma is a good example of with a lot of interest to the government itself. But in many Less Developed countries the government and the TNCs and the case of Burma itself (SPDC) enlisted the assistance of this body.

However, the clarity of the human rights and the nature and the culture Tourism and the leaflets of the tourism companies will praise all its virtues.

Mowforth and Munt acknowledge that it is very important that the understanding and the issue of power is transparent strong if the destination wants a development. The TNCs commonly under the impression that the community has a strong and that the locals are in work by the power for the rest of the national government. This is a case some but not all. But the policies of the national government itself are in some situations influenced by the external organisations. The policies for the development of tourism are largely suitable for profits and for First World investors rather then the communities and the government itself.

Another strong case study to support this essay is that the FDI- has been considered towards a strong factor of the economic development. The TNCs in the imports industry especially for Argentina and Brazil, there has been a strong relation of the TNCs being involved in the manufacturing industry just before the recent FDI boom took place. (Chudnovsky, D and Lopez, A 2004)

The TNCs in Argentina and Brazil showed a significant amount of performance with a high level of technology and the productivity which was related to the TNCs. But, for the domestic market they wanted to take advantage of their own domestic markets itself. However, the TNCs did its best and used its own strategies for all different areas for all its economic development for the host country itself.There had been a huge number of arrivals of the FDI itself for all the presences of the TNCs as the economies increased in the 1990s. In this particular case Argentina and Brazil gained a very strong level with all the TNCs which were present.

All the investments made by the TNCs aimed to increase all the assets, and with a better market. ( Chudnovsky, D and Lopez, A 2004)

As competition becomes more of a wider spread- the TNC then has simple integration strategies. All the TNC searches are done very effectively with a range of assets in all the different locations.

More than 50% of the TNCs sales In Brazil as compared with the number of sales itself as these were hardly even 25% the figure seems significantly low. Since the Brazilian Industry- it is not a major surprise to find that the TNCs in the country are more of an export orientated then of Argentina itself.

The TNCs within the groups are Tourist operated with a much of a generally larger coefficients in Argentina and Brazil. ( Chudnovsky, D and Lopez, A 2004)

( Chudnovsky, D and Lopez, A 2004) suggests that the Brazilian Tourist Industry itself has much of a widespread the reason being for this is due to the number of linkages between the elements of being spread around than Argentina. In general this suggests that the TNCs have looked at the domestic market itself rather than the any of the human resources itself. This means that the TNCs have their goods that are more strategic in relationship to the firm’s performance at all national and regional level.

In Argentina the TNCs clearly affect the imports and the exports. This is due to the relationship of all the sales and a result of a down side in the negative foreign trade balances. In Brazil similarly the TNCs for all the domestic firms are at a higher rate and grow incredibly faster.

In Argentina and Brazil there has been an FDI (Foreign Directive Investment) which has helped the TNCs become more recognised as a main leader in Argentina and Brazil. The key linkages between the Foreign Directive Investment and The Foreign Trade show that the TNCs have had a bigger contribution than all the national firms itself. However, there is a higher chance for the imports with the local enterprises. From, the whole research of Brazil and Argentina the TNCs have had a lot less linkages with the local community itself then the domestic firms. From the research Brazil and Argentina has TNCs but with a reduce amount of linkages with the local community itself than the domestic firms. ( Chudnovsky, D and Lopez, A 2004)

In conclusion to this essay despite the fact the concerns over TNCs on the Less Developed Country having TNCs are very beneficial for a host country. Additionally, the government has to make sure that they are fully in power with this and this situation should not be changed around as the government should be powerful enough to help a host country. Every point that was discussed in this essay has some understanding to the aspect of the impacts and the implications of the TNCs in some LDCs. From the understanding of the TNCs it is felt that International Tourists tend to understand better to what TNCs do and how they will profit the Less Developed countries- due to the complications in an Less Developed Country not having enough educated people therefore, the International Tourists will look at the wider focus of the capitalist mode as the product if recognised can not be in separation. (Jenkins, R 1987)

References

Brohman, J (1996) New Directions in Tourism for Third World Development (Online), 23 (1), 48-70 Available from: http://www.stepuptravel.org/downloads/library/new_directions_for_tourism_in_third_world.pdf (Accessed 23 March 2011)

Chudnovsky, D and Lopez, A (2004) Trans-national Corporations Strategies and Foreign Trade Patterns in Mercosur Countries in the 1990s (Online), Cambridge Journal of Economics 28 (5), 1-18, Available from: http://www.law.wisc.edu/gls/documents/foreign_investment_recommended2.pdf (Accessed 21 February 2011)

Hamed, D (2005) What is Agenda 21(Online). Avaliable from: http://www.lbhf.gov.uk/external/la21/index.htm (Accessed 20 March 2011)

Hampton, M. (2011) Lecture Slide 6 on Trans-national Tourism

Jenkins, R, Fist Edition (1987) Trans-national Corporations and Uneven Development. London

Madeley, J. 2003 Transnational Corporations and Developing Countries Big Business Poor Peoples (Online) The Courier ACP-EU no 196 January-February 2003 Available from:

(http://ec.europa.eu/development/body/publications/courier/courier196/en/en_036_ni.pdf) [Accessed 30 March 2011]

Mowforth, M., and Munt, I Third Edition (2008) Tourism and Sustainability Development, Globalisation and New Tourism in the Third World War. Routledge, London

Scheyvens, R. (2002) Tourism for Development. Prentice Hall, London.

Harrison, D., (2001) Tourism and the Less Developed World. CABI, Wallingford.

Introduction

The courts have been notoriously strict[1] in their interpretation of “variation” of class rights both under s.630 of the Companies Act 2006 and under its predecessor, s.125 of the 1985 Act[2]. Case law under s.630 is yet to develop so it is to the historical interpretation of “variation” which must be examined taken with, as Gower and Davies point out, a presumption that the courts will continue in the same vein as there is nothing in s.630 which permits a radical departure from s.125[3].

The above statement is mostly true as the central concerns which have been exposed by the section in subsequent Acts, namely that where the courts have perceived the formal rights of shareholders to be unaffected they have been unmoved by any adverse effect on the value of the class rights to hold that the “variation” protection applies, have been balanced by the ability of a company to amend its articles to circumvent or amend the “variation” protection mechanisms, the s.22 entrenchment mechanism and s.633 review applications. A balance needs to be struck between the protection of class rights and the proper conduct of business and s.630 does achieve this albeit with some imperfections such as the status of preference shareholders in unquoted companies.

The purpose of s.630 is to protect shareholders who belong to a certain class, giving them, in the words of Gower & Davies, a “veto over the change proposed, even if the company’s constitution provides them with no right to vote on the issue”[4]. Thus when any proposal to alter the articles may vary their class rights[5] either the consent of that class of shareholders is required, usually with an extraordinary 75% majority at a separate meeting of that class[6] unless the articles specify otherwise, or a written resolution having the support of 75% of holders of the nominal value of that class[7] is required in order for the proposal to have any validity. The statute provides the default position but as will be examined later s.630 (2) of the 2006 Act allows the companies’ articles to set either a higher of a lower standard.

The concerns arise where the class is adversely affected by the proposals but not to the degree which the courts would consider constitutes a “variation” for the purposes of the 2006 Act or in that companies articles of association: thus the narrow interpretation mentioned above could be cited as an example of how the section could be bypassed altogether. If it is only the value of the rights and not the rights themselves which are adversely affected then the courts have been unwilling to extend the protection afforded by s.630 or in the articles and shareholders are deprived of their veto to prevent such changes[8]. The classic example of this would be the House of Lords decision in Adelaide Electric Co v Prudential Assurance[9] where the payment of dividends being moved to Australia along with the business resulted in a lesser payment given the relative strengths of the Australian and British currencies of the time but the underlying right, to receive the dividend, was unchanged.

Permitted variation of one class of share affecting another indirectly has also exposed reluctance by the courts to increase the scope of the term “variation”. In Greenhalgh v Arderne Cinemas[10] a subdivision of one class of shares deprived the holder of one class of his power to block a special resolution. Lord Greene MR, delivering the leading judgement, said that the preference shareholders in light of the wording of the articles “are affected, as a matter of business. As a matter of law, I am quite unable to hold that, as a result of the transaction, the rights are varied; they remain what they always were.”[11] However, he also conceded that if the right of one vote per share was changed this would constitute a variation but in the present case it had remained constant throughout despite the subdivision[12]. Nevertheless, the court held that this could not come under the meaning of “variation” and echoes to some extent the decision in White v Bristol Aeroplane[13] where an increase in one class of shares was also held to fail the variance test in respect of another class “notwithstanding that the result was to alter the voting equilibrium of the classes”[14].

Although on the face of matters this would seem to be a major concern Lord Greene’s rationale makes sense in that his solution is clearly designed to protect businesses from being vetoed every time they make an approved decision which would affect the class rights of other shareholders. Logically speaking it would be a barrier if in a free market society every time one set of class rights were varied and another was affected albeit indirectly that class would have a veto on the proposal: this would stifle business and freedom to contract.

Another main concern is preference shares but this has been alleviated somewhat by a contractual solution called the “spens formula”[15]. The case of Dimbula Valley (Ceylon) Tea Co v Laurie[16]saw a capitalisation of undistributed profits realised in a bonus issue to ordinary shareholders. The effect of this was to deny the preference shareholders future profits on winding up or reduction. The court held this did not constitute a variation of the preference shareholders’ rights where they were non-participating with respect to dividends but participating with respect to capital[17]. The converse situation to the above, in House of Fraser v AGCE Investments Ltd[18], saw the preference shareholders being deprived of valuable dividend rights. Gower and Davies have highlighted this as being unfair on the preference shareholders though they do point out that under the “spens formula” preference shares which are non participating in a winding-up are protected by the provision of a guarantee that any redemption or return of capital will be linked to “the average quoted market price of the shares in the month before”[19]. They conclude though by warning that this contractual solution applies only to listed companies. Consequently preference shareholders in unquoted companies remain a concern in that the ratios of Dimbula Valley and House of Fraser will still expose them to risk either losing valuable dividend rights or denying them the participation in the profits on winding-up or reduction.

Finally there are issues of ranking to be discussed. The courts have flatly rejected any moves to invalidate a proposal which either ranks new share issues on an equal basis with existing shares or which ranks new ordinary preference shares ahead of ordinary shares but behind existing preference shares[20]. Of course the latter case would be different if the new shares were to be ranked ahead of both existing preference and ordinary shares and that would indeed constitute a variation under the companies’ Memorandum of Association which stated:

“cl. 5…indicated that the preferences conferred on the holders of preference shares were to be preserved, and only modified, affected, varied, extended or surrendered with the sanction of an extraordinary resolution of the members of the class”.

It is important to note that many cases above do not default to the statutory position but include protection against variations in their respective articles of associations or memorandums of association which can be more demanding, for example, in terms of the level of approval required. Such provisions balance out many of the concerns addressed above in respect of the courts’ interpretation of the term “variation” though it should be noted that such clauses cannot impose a lower standard of procedure. S.630(2) of the 2006 Act notes that the default rules contained in the statute may be superseded by provision for variation contained in the articles of association. S.630(5) provides further protection however by ensuring that any alteration of the variation procedure itself in the articles attracts the protection for class rights.

Thus any concerns that a company could simply alter a high variation procedure to a much lower one by as.21 procedure are defeated by the inclusion of s.630(5). Gower and Davies do sound a cautionary note here though: “This [a simple s.21 alteration of the variation procedure] will not be possible as a result of s.630(5), unless, presumably, the articles themselves expressly provide a less demanding way of amending the variation procedure than the default rule in the statute”[21]. So it is possible for a company to escape many of the provisions of s.630 but they must still deal with the narrow interpretations given to variation regardless of the actual wording they choose.

Palmer[22] made some observations on both White v Bristol Aeroplane Co and John Smith’s Tadcaster Brewery Co Ltd as being examples where the interpretation of the articles was unsatisfactory. He expresses some scepticism about the construction of the word “affected” but notes that firstly s.630 is of little help where the articles contain such wording and secondly that there may be a remedy available in the form of the unfairly prejudicial conduct remedy[23].

The Court of Appeal in John Smith’s Tadcaster Brewery noted that more explicit wording would be needed to allow the clause in the articles protecting preference shareholders to be extended to a bonus issue to ordinary shareholders. Many articles do include specific protection of preference shareholders. In Northern Engineering Industries Plc, Re[24]a clause in the articles which stipulated that a reduction in capital would require the consent of the company’s preference shareholders was upheld and enforced when a proposal to cancel their shares was tabled[25] .

Finally under s.630(3) and s.633 a company could firstly conceivably make use of the entrenchment mechanism of s.22 in light of s.630 being “without prejudice to any other restrictions on the variation of rights” and secondly also apply to a court to review a majority decision. S.22 empowers a company to set an even higher bar for amendments to the variation procedure in the articles, the example given by Gower and Davies being raising consent levels to 100%.

S.633 provides a further safeguard in that it enables a court review of the majority’s decision[26]. The criteria for review is quite high though, requiring that dissenting members of a class hold 15% of the shares of that class and that they exercise the right to challenge within 21 days. Once the application is made the variation does not have any effect until it is either confirmed or cancelled in light of the courts decision on whether there has been unfair prejudice to the shareholders’ in question[27].

In conclusion the interpretation of “variation” in the Companies Act s.630 is very narrow yet the statement is mostly true because any concerns which the section has exposed have been alleviated by the review procedure under s.633, the ability of companies’ to alter their articles and the s.22 entrenchment mechanisms. Problems persist with preference shareholders in unquoted companies but the inclusion of carefully worded protection in the articles goes some way to ending any notable concern and striking the correct balance between the protection of holders of class rights and the protection of business practice.

Part 2

(a)The question here is covered by the Sale of Goods Act 1979. S.19(1) empowers the seller to make a reservation of title and is a logical consequence of the rule that property in the goods passes when the parties intend it to pass. The clause in our contract is an “all sums” clause which was held to be valid in Armour v Thyssen[28] in the House of Lords. The reference to indebtedness means that the property will remain with the seller until all such debts and obligations owed to the seller are discharged. Atiyah[29] points to the two requirements here for such a clause to operate: The pallets of paper have not yet been touched and they are on Wye’s premises: the conditions have been fulfilled.

The purchase price has been paid and the contract concluded under s.27 of the 1979 Act but we do not have any information regarding any other outstanding debts or obligations upon Wye. Obviously if there was any kind of security or charge this would have to be discharged before any thoughts of selling the property on could be entertained. Assuming there are no outstanding debts and the purchase price has been fully paid then title in the property has passed to Wye and accordingly the option open to Linda is to sell the paper for a good price.

If there are still debts outstanding then s.25(1) of the 1979 Act may be of assistance: a buyer in possession of goods which are still owned by a seller may give good title to those goods to a third party purchaser, provided that the third party is in good faith and has no notice of the rights of the seller in the goods. This section can effectively defeat the retention of title clause in the original contract. Regarding the final part of the clause: the contract not being registered in the Registrar of Companies is no barrier to any subsequent sale as noted by s.62(4) of the 1979 Act and Atiyah[30].

(b) The legal position regarding John is contained in s.11 of the Company Directors Disqualification Act 1986[31]. Breach of this section attracts criminal liability as well as potentially attracting personal liability for the company’s debts though as Gower and Davies note this may not be of much use given that John probably has little funds[32]. Most importantly this matter is an automatic disqualification and he can be removed from the payroll with immediate effect thus minimising his potential claim as a preferential creditor on the liquidation.

Martin has been acting in the management of Wye Ltd even though he has been prohibited from doing so under s.1(1)[33]. Ss13 and 14 outline the criminal penalties but more important in Martin’s example is the personal liability for debts and liabilities of the company incurred while he was in breach of the order under s.15(1)(a). This could be a very good way minimising the debts to be paid back though it would depend on the time he has been managing in breach of the order.

(c) There is no formal contract between the two parties here. The essentials of English contract law need firstly a promise, secondly consideration for that promise and thirdly the offeror’s promise must be made to induce the consideration (Elliot contract law). The half-hearted promise made by Barchester could well be unenforceable as an unequivocal promise is required. If we can prove that there is a contract in place then Linda can sue the law school for breach of contract since they have clearly not fulfilled their part of the contract.

The promise made by Barchester is one which looks to the future and could be interpreted as a statement of intention. If there is any element of misrepresentation then there would be a clear breach of contract and Linda would be able sue them to swell the assets of the Wye Limited.

(d) Does this charge have to be registeredIt is secured over the property of Wye and would come under s.860(7)(a) of the 2006 Act. The requirement to keep a register of all charges created by the company is found under s.876(2) of the Companies Act 2006.

S.876(3) and (4) state that a fine will be imposed if there has been failure to comply with this requirement but the case of Wright v Horton demonstrates that the validity of the charge will not be affected in any way. Care has to be taken with the timing of the registration as well as it must have been registered within 21 days of the creation of the charge: failure to do so would render the charge invalid against the liquidator of the company. The loan of ?150,000 would then be immediately payable under s.874(3) should any part be void. As for the unsecured creditors trying to claim the prescribed part s.176A of the Insolvency Act 1986 confirms that they are entitled to this and recent case law Airbase (UK) Limited[34] has established that neither fixed or floating charge holders may share in the prescribed part.

Linda should register the charge in Wye’s own register as quickly as possible to avoid a fine. The charge over property could well come under a substantial property transaction under the Companies Act 2006 s.190 as the asset here (the warehouse) could be worth over ?100,000. If this is true then the transaction is voidable at the instance of the company as shareholders must give their consent.

(e) The Insolvency Act 1986 governs floating charges. That the ?75,000 was paid 37 minutes before the execution of the charge document is not important. The timing of the floating charge may be significant though as s.245 of the 1986 Act will strike down any charge to an unconnected person within 12 months of a winding up order. This suggests invalidity of this floating charge as it was created within 10 months of the winding up date although arguably it could slip outside of the technical insolvency dates. Linda should challenge the floating charge under s.245.

There is also no mention of its registration as required by part 25 of the Companies Act 2006. s.860(1) of the 2006 Act requires floating charges to be registered at Companies House within 21 days of creation. If there has been no registration then this security is void against Linda the liquidator anyway.

The absence of a negative pledge clause means that the floating charge will rank behind fixed securities made real rights before attachment of the floating charge. So Bee Bank plc will be at a disadvantage when the floating charge crystallises. Furthermore, competing floating charges rank in order of registration. The floating charge, if registered, will already have crystallised due to the liquidation and will have already had the effect of depriving Wye Ltd of all the assets under the floating charge although ranking behind fixed securities which are real rights. Again since the registration of the floating charge is the responsibility of Wye Ltd the loan would be immediately payable if the charge was later held to be invalid under s.874(3).

(f) This is a creditors voluntary winding up under the Insolvency Act 1986 There could, by piercing the corporate veil, be liability for the directors if the company sold to was a company which was controlled or owned by a director in this transaction and was a sham company[35]. It all depends on the nature and composition of the company which has received the corporate assets in question and indeed the inclination of the court in question.

The assets belong to the company and liquidators have a duty to ensure that the interests of creditors are protected under s.107 of the 1986 Act. If an asset has been sold at below value either in the six months before liquidation or 2 years if a connected person, the liquidator can challenge the transfer and claim against the recipient and/or the directors, making the transaction void. S.238 (4)(b) is the relevant section[36].

The timing aspect comes close to the wire: it should be noted that the date of the winding up order is 15th October 2010 and the date of the sale is 23rd April 2010 which places this transaction just under 6 months before the winding up of the company so whether the person is connected or not is irrelevant. The relevant date though is when the company is technically insolvent which is presumably long before the winding-up order is granted. Regardlessly, this transaction, if it should transpire that it was sold for an under value, can be voided by Linda and she can make a claim against the director(s) involved. The property might be able to be returned and vested in the company under s.241 but there are safeguards for third parties acquiring in good faith and this is not guaranteed. If the person sold to was a connected person with knowledge then the antique clock will be vested in the company again.

Bibliography

Atiyah (2005) Sale of Goods Pearson: UK

Griffin, Steven (2006) Company Law: Fundamental Principles Pearson: UK

Gower and Davies (2008) Principles of Modern Company Law Sweet & Maxwell: London

Palmer (2010) Company Law Sweet & Maxwell: UK

Sealy & Worthington (2008) Cases and Materials in Company Law Oxford University Press

Cases

Adelaide Electric Co v Prudential Assurance [1934] A.C. 122 H.L

Airbase (UK) Limited [2008] EWHC 124(Ch)

Armour v Thyssen [1991] 2 A.C. 339

Cumbrian Newspapers Group Ltd v. Cumberland and Westmorland Herald etc Ltd [1986]

All E.R. 816

Dimbula Valley (Ceylon) Tea Co v Laurie [1961] Ch.353

Gencor ACP Ltd v Dalby [2000] 2 B.C.L.C

Greenhalgh v Arderne Cinemas Ltd [1946] 1 All ER 512

Hodge v James Howell & Co [1958] C.L.Y. 446, CA, The Times

House of Fraser plc v. ACGE Investments Ltd 1987 SLT 421 (HL)

Re Hellenic and General Trust Ltd [1975] 3 All ER 382

Re Northern Engineering Industries plc [1994] BCC 618

White v. Bristol Aeroplane Co. Ltd [1953] Ch.65

Statute

Companies Act 2006 & 1985Sale of Goods Act 1979

Insolvency Act 1986Directors Disqualification Act 1986

n money or money’s worth, of the consideration provided by the company.”

The U. S. market is the largest single consumer of medical equipment and supplies in the world. Similarly, U. S medical technology equipment manufacturing companies are the global market leaders in medical device production. The domestic external defibrillator market has been segmented into primary and secondary segments. Primary markets include; hospitals, pre-hospital, the public access markets, and the alternative health care markets. Hospital market is further subdivided into the acute care hospitals, non-acute centres, the non-treatment areas, and military care areas.

Within these areas, there are unique defibrillators purchasing patterns which have developed distinct solutions for combating sudden cardiac arrest (SDA). The end users in this market are the doctors and nurses. Pre-hospital markets are the first responders or the initial medical personnel on the scene. Emergency response e. g. ambulances, also, the professionally medically trained personnel are the primary users. Also targeted are paramedics who have advanced life-saver training or the emergency responsive teams with the basic life saver training (BLS).

Others in this category are fire-fighters and the police who usually are the first to arrive at the scene of emergency. 2. 0 Situational Analysis U. S. external defibrillator market was uniformly divided in 2004, between the pre- hospital at 29. 9 percent, hospitals at 30. 2 percent, and the public access markets at 29. 5 percent. The alternative care sector had 10. 3 percent. The public access sector will however overtake the other segments by 2006, and with forecasts of 36. 2 percent by 2011. The conventional hospital and pre-hospital segments external defibrillator markets are expected to shrink from 33.

1 and 38. 6 percent market allocation in 2001 respectively, to a low of 26. 2 and 25. 2 percent market share correspondingly. Public access market is the latest and potentially largest frontier for the automated external defibrillators devices which consists of all non- public facilities. This are meant to ensure the defibrillator devices are located within easy reach of the general public or any potential victims, hence minimize the response time. All the emergency response teams are also targeted.

Penetration of this market by automated external defibrillators has been made possible due to the portability of the devices, the ease of use, and affordability. Public members like the untrained co-workers, passer-by, and a family member are the intended end users. However, in some public places, trained professional personnel are usually the intended end users. The last segment is the alternate health care market. This encompasses the ambulance services which include the doctor’s offices, dentists, outpatient surgical centres, medical diagnostic laboratories and hospices.

2. 1: Environment Approximately 450,000 people die from sudden cardiac arrest (SCA) in USA alone. This has led to rapid expansion of the external defibrillator market from the early 1990s. Defibrillators are handy electronic devices that mechanically treat sudden cardiac arrest (SCA). They detect potentially mortal cardiac arrhythmias of ventricular fibrillation and ventricular tachycardia in a trauma victim and are able to treat the same through defibrillation or the application of a controlled electrical therapy which ‘arrest’ the arrhythmia.

This has led to rapid expansion of the external defibrillator market from the early 1990s. The devices were initially set up in hospitals in the 1960s. Using monophasic waveforms, the early technology were set up in health centres in the form of crash carts. This technology was only changed in the 1990s, when the biphasic waveforms were initiated. This new technology allowed for less power shocks while stabilizing and even improving shock effectiveness. Even with this improvements studies showed that the slow response by the emergency teams were still contributing to high mortality rates.

The industry is therefore still under pressure for improvement in technology development and expanded device placements in order to improve the survival rates. This has made the external defibrillators market to be of high growth, with the potential of revolutionizing the emergency resuscitation treatment. 2. 2: Industry The U. S. external defibrillator market penetration is dependent on the specific market and device segment. Initially defibrillators were only located at medical treatment areas however, the public access market was largely neglected.

The seven firms engaged in the automated external defibrillators development in the U. S. can be categorized into three segments according to size. The first segment is composed of the firms not confined to the automated external defibrillators only, but further engages in other medical equipment devices development. The other group is composed of the firms which mainly deal with automated external defibrillators, and lastly the small defibrillator company start up firms. The first group is composed of Medtronic Emergency Response; Philips Medical; Zoll Medical and Welch Allyn.

The second segment has Cardiac Science, while the last grouping is made up of Defibtech and Heartsine. The market leader is Medtronic Emergency Response with a 42. 9 percent share, with Philips next at 24. 0 percent and Zoll at 21. 3 percent. The balance is held by Cardiac Science which has 5. 2 percent and Welch Allyn at 4. 7percent. Heartsine and Defibtech have minimal share of the market. Medtronicshare of the market has slipped from the high of 47percent in 2002 with the entry of Heartsine and Defibtech in the market coupled with the acquisition of MRL by Welch Allyn.

These changes seem insignificant in view of the tremendous growth in the external defibrillator market. The market share equation is expected to remain uninterrupted if no new technology is unveiled in the near future. 2. 3: Organization Zoll Medical Corporation is one of the major resuscitation solutions providers. Its principal activities are to design, manufacture and market non-invasive cardiac resuscitation devices and related software. It’s a financially stable public company which has a reputable product and reliable record.

Zoll develops comprehensive resuscitation technologies that include external defibrillators, pacemakers, disposable electrodes and other accessories. This are sold in mainly in the US market and more than 140 other countries. The company has direct operations, distributor networks, and business partners throughout the US, Canada, Latin America, Europe, the Middle East and Africa, Asia and Australia. Zoll Corporation is the third largest manufacturer and distributor of automatic and non-automatic external defibrillators

To be the market leader, it needs to have diverse market strategies. 2. 4: Market Strategy Zoll Medical Corporation has being steadily diversifying its products by acquiring several additional resuscitation technology developing companies. This has enhanced its potential to be granted large contracts in the medical professional sector, with its enhanced product portfolio, for example, hospitals and similar emergency medical services center. A product, Infuse has penetrated the lucrative military market.

Its CPR focused product line has the new additions like AutoPulse Resuscitation System and the ResQPOD Circulatory Enhancer. Zoll also has acquired device patents, which are integral to its future technology development with defibrillators. Zoll is the third largest company in the U. S. market for defibrillators. Zoll market strategies are clearly geared towards further market penetration, but the firm has yet to really challenge the market players in the lucrative hospital segment and the potentially high growth public access markets.

Its market strategies should be more focused on the mass market segment with its new CPR aligned devices. 3: Problems Found in Situational Analysis 3. 1: Statement of Primary Problem: Targeting the Wrong Customer Zoll has mainly been focusing on the non-AED devices market rather. This market is dominated by Medtronic with Phillips second and Zoll. Zoll Medical focus on non-AEDs is misplaced in view of the projected future market forecasts. (Frost and Sullivan – 2005) With the AEDs market expected to dominate the market reaching a high of 92.

5 percent of all unit shipments by 2011, the AEDs will be dominating the market in the future. 3. 2. Statement of Secondary Problem: Producing Premium Products for a Commodity Market Zoll should re-focus on development of production cost effective models that will sustain its revenue. The company’s AEDs products are too expensive to the company in terms in terms of their production costs. The high production costs erode the company’s revenue base. The company should produce devices that are less cost effective while maintaining its high quality. 4.

Strategic Alternatives for Solving Problems 4. 1: Alternative 1 Zoll Medical can initiate the following alternatives. The company should focus on designing and developing a device that has low production costs. This is due to the fact that the main problem affecting manufacturers of the AEDs is low unit price due to the price sensitive nature of the market. The new device can incorporate a feature for administering cardiopulmonary resuscitation (CPR) as there is an ongoing debate on whether CPR should be administered first rather than use of AEDs.

Zoll already has a similar device in the market, hence will only need redesigning. By concentrating on a unique product aimed at minimizing the manufacturing cost, Zoll will have a clear competitive edge over the firms in the market. The product must however maintain the company’s excellent reliability, durability, and easy to use. The more advanced high end products should therefore be limited to the expensive non-AED devices. The projected new devices will enable the company enter the high growth markets in private and public institutions.

Defibtech’s LifeLine AED is an example of such a device. A firm like Zoll Medical with larger distribution channels, high reputation, and vast resources can have huge success by coming up with an efficient reliable device, aimed at mass market. By virtue of being able to minimize costs, the company will realize higher revenues hence concentrate on even better designed mass market products. The potential for the public mass markets which includes homes, health clubs, police cars, shopping malls, theatres etc is very huge and represents the future for the AED manufacturers.

Unlike the heavily crowded hospital market, the mass market penetration is largely un- chartered territory. Defibtech a start-up company has managed to cut a niche targeting ‘small’ markets as dentists offices, physician offices etc. The current defibrillator technology requires high power hence appreciating the manufacturing costs. Developments of a pioneering device aimed at cutting down on the cost of production will dramatically lower its cost price and guarantee Zoll Medical high returns.

It would also benefit from the present consumer awareness and positive drive towards sudden cardiac arrest (SDA) and early defibrillation that are the major drivers in the external defibrillation market. A manufacturing company like Zoll can actively campaign for the enactment of legislation process while supporting the lobbying organisations like the American Heart Association to help hasten the passage of favourable legislation. This includes the adjustment of the Good Samaritan legislation to allow a manufacturer to only follow the laws of the state where it is domesticated.

Lobbying for legislation to requiring placements of the AEDs in specific areas like health clubs. 4. 2: Description of Strategic Alternative 2 Another alternative a firm like Zoll Medical can use is in enhancing its revenues and market share is the development of dual-mode AEDs. These are devices designed to have the capabilities of the basic AEDs plus the more advanced non-automatic external defibrillators. This hybrid device will be the balance to counteract the inexpensive basic AEDs which are pulling down the manufacturers profits, by incorporating the more advanced manual features employed in the non-AEDs.

This dual-mode device will be moderately priced hence ease the pressure on the manufacturing firms, while at the same time not be too primitively expensive for the semi-professional consumers. These groups include the police, hospitals, EMS, and fire departments that can be equipped with these dual-mode devices. These dual-mode devices can be aggressively marketed to the specific institutions to encourage greater sales for the companies. The strategy of using dual-mode devices should also ensure the continued use of the basic AEDs to help sustain the current market and similarly the expensive non-AEDs to also maintain that market.

The development of the dual-mode devices should therefore be complimentary to the other existing defibrillators and enact a fresh market segment thereby enhancing the manufacturing firm’s revenues. Phillips’ HeartStart FR2+ device is an enduring example of this market model. This alternative should be coupled with manufacturers enhancing and maintaining their distribution lines. By using the distributors who already have established programs, they will be able to assist Zoll Medical in the fitting, maintenance of the devices and instruction on use with the consumers.

The distributors, who have other equipment on site, will be in a better position to extend the same maintenance services to the AEDs devices. This is after also undergoing own training with Zoll Medical. This service integration will benefit both Zoll Medical by reducing costs and the distributors as the latter will have a better value preposition with their clientele. To improve revenues, Zoll market strategy for the firm should be focused mainly on the AED market in the public sector. In 2001, non-AED was the major revenue earners with a market segment of 59.

7 percent. Since then, the growth of the AED market has been more rapid and prediction is that it will surpass the non-AED sector by 2005. Public awareness of SCA has driven the growth patterns towards the AED with the need for early defibrillation gaining prominence. Although this sector has less revenue returns, the ability to offload large shipments counteracts the sectors negative price elasticity. It is therefore prudent for a firm to concentrate on this mass market with its tremendous growth potential to secure and enhance its market share.

By 2011, the AED market share is forecasted to be at 57. 3 per cent. (Frost and Sullivan, 2005) 5. 0: Selected Strategic Alternative The first alternative involving concentration on the mass market as the company’s market driver is obviously the better alternative to be used by a firm like Zoll Medical. By emphasizing on its superior technological development and renovation, the company will be able to re-enter the AED market with a low cost, specialized device that will be available easy to use but capable of upstaging other AEDs in the market.

The main objective is to ensure penetration and capture of a unique niche in the public sector. High volume sales for the device which with low production costs will radically improve its market share and revenue. However, the company will still keep its other production lines intact but utilize the same distribution channels. The firm will also lobby for more favourable legislation through the various agencies like American Heart Association (AHA) and state legislators to ensure more public access to its products. Summary The U. S. external defibrillator market has very good prospects for growth.

This is evident in the widespread public awareness of the importance of application of defibrillator to offset sudden cardiac arrest (SCA) to trauma victims. The implication of litigation against public institutions has also led to the urgency of the installations of the AEDs. There is also pressure on the legislators to enact appropriate laws concerning the AEDs across the country. Zoll Medical Corporation as one of the manufacturing firms in the AED market needed to implement appropriate marketing strategies towards exploiting the favorable demand market for the AEDs by initiating the right mix of marketing strategies.

References

Medical Equipment Industry, Paddock, Richard, Hein, Matthew DOC/ITA/MAS/OHCG, (202; C/ITA/MAS/OHCG, (202) 482-5014) 482-3360 Medical Device Daily, The Daily Medical Technology Newspaper, June 23, 2004 Vol. 8 No. 120 Special report, Defibtech gains a niche in very competitive AED Market Johnson, Holland (2004) Cardiac Science Announces Exclusive Partnership with the City of San Diego To Outfit Automated External Defibrillators Throughout The City, www. cardiacscience. com American Heart Association: Learn & Live, available from, www.

amaericanheart. org (Retrieved October 21, 2008) American Red Cross: Saving a Life is as Easy as A-E-D available from, www. redcross. org (Retrieved October 21, 2008) FDA Heart Health Online: Automated External Defibrillator (AED), available from, www. fda. gov/hearthealth/treatments/medicaldevices/aed. html (Retrieved October 21, 2008) State Laws on Heart Attacks, Cardiac Arrest & Defibrillators, available from, www. ncsl. org/programs/health/aed. html (Retrieved October 21, 2008)

Introduction

There is a high level of interaction and interdependence between the business, the government and the society. As business organizations draw their resources from the society and as their actions have a considerable impact on the environment there is a feeling that they should be more socially responsible. Corporate social responsibility is the ability of the corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and the society. World Business Council for Sustainable Development has defined corporate social responsibility comprehensively as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”  In broad summary it is the ethical behavior of a company towards society.

Approaches to Corporate Social Responsibility

Business organizations adopt different approaches to corporate social responsibility. Some organizations adopt the obstructionist stance and are not involved in any form of social responsibility. They avoid accepting responsibility for their actions or charges of wrongdoing. Other organizations adopt the defensive stance and follow all legal norms as specified by the government and other authorities with respect to the social responsibilities but nothing more. For example if a law stipulates a minimum investment in pollution control equipment then the companies following this approach will make investment in only what is required and may not go in for a slightly higher investment even though it may be much more effective in controlling pollution. However more and more organizations today are being accommodative and proactive. Some adopt the accommodative stance and not only follow all the legal norms but will go beyond in meeting their social responsibilities on a case to case basis when convinced of their merit. Others adopt a proactive stance and voluntarily seek opportunities to contribute to the welfare of society. An organization’s approach towards social responsibility evolves through experience and the changing ideas of the public about corporate roles and responsibilities. Major corporations in the world are adopting different approaches in being socially responsible. Here the corporate social responsibility approaches of two major corporations headquartered in two highly developed economies and operating in two different sectors are discussed

Efforts of Time Warner Inc. at being Socially Responsible

Time Warner Inc. is a leading global media and entertainment company with businesses in filmed entertainment, interactive services, television networks, cable systems and publishing. The major divisions of Time Warner Inc. are AOL, HBO, New Line Cinema, Time Inc., Time Warner Cable, Turner Broadcasting System and Warner Bros. Entertainment. It is headquartered in New York in the United States and all its divisions maintain great reputations for creativity and excellence. Time Warner is committed to being a world-class corporate citizen and is guided by the highest standards of ethics. The company believes in working hard to deliver attractive returns and exceptional value to its shareholders and at the same time strives to make the world a better place. The company aims to minimize its environmental footprint and give back to the communities where it operates. Its ultimate aim is to continuously review its practices to ensure that it remains a leader not only in creative excellence, but also in corporate social responsibility. The efforts of Time Warner Inc in being socially  responsible is focused on six key areas namely customers and content, ethics and corporate governance, employees and their place of work, the physical environment, supplier diversity and the general community.

The first focus of Time Warner in its social responsibility initiatives is in the area of customers and content as it believes that its greatest impact on society is as a creator and distributor of news, information and entertainment. It is being socially responsible by entertaining and informing audiences, spotlighting important issues, provoking debate and self-examination and providing relief from stressful daily life. Time Warner strongly supports the free flow of information to all parts of the world. It adheres to a high level of journalistic integrity in reporting, analyzing and delivering the. In its creative businesses of film, television, print and online it highlights on relevant social, political and environmental issues. For example Time Warner works hard to conduct itself in a responsible manner regarding the depiction of smoking in films. The company makes use of the latest technologies to ensure that its content is easily accessible to people with disabilities. Time Warner companies provide parents the information and tools they need to make smart decisions about what their children view and read, online and off and also comply with voluntary rating systems in television, film and video game industries. The company devotes significant resources to protect the privacy of consumers of all its divisions and is committed to being open about how it collects and uses consumer data. The program content is culturally diverse with the company’s networks providing multiethnic and foreign language programming from producers throughout the world.

The second focus of Time Warner in its social responsibility initiatives is ethics and corporate governance. It strives to deal honestly, fairly and respectfully with suppliers, customers, competitors, governmental agencies and communities. The company’s Standards of Business Conduct places great importance on abiding the law, honesty, trust, putting needs of shareholders and customers first, and steering clear of ethical lapses. The company has established a hotline for employees to call anonymously to report any concerns or wrongdoing by any other employee. To ensure compliance the company has designed programs to provide ethics and compliance training to all employees. Time Warner is committed to strong corporate governance practices and its board is composed of exceptionally qualified individuals with distinguished careers in business, finance, academia and public service.

The third focus area in being socially responsible is employees and their place of work. Time Warner has more than 87,000 employees in nearly 60 countries and is committed to be an employer of choice to attract, develop, retain and engage the best people. To achieve this objective the company has developed a unique program called Employees First which is a commitment on the part of Time Warner to help employees succeed at work and provide a workplace where employees feel valued, inspired and confident to achieve their professional goals. The company is committed to offering tools and resources to help employees succeed both at work and in life by offering a number of leadership and professional development programs and workshops at both the enterprise and division level. Another initiative of the company is called Focus on Careers and is designed to make employees aware of and provides new career opportunities across Time Warner.  The company strongly believes that careers are only one dimension of life and that people lead interesting, multidimensional lives as global citizens, community members, students, athletes, friends, activists, family members and so on. It provides a workplace that can adapt to peoples’ lifestyles and life stages through a cross-divisional Work/Life Council. The company supports its employees through health and wellness programs, inclusive family supports, child care, flexible work arrangements and other Employee Benefits

Another significant contribution of the company in this regard is the work force diversity. It strongly believes that in an increasingly multicultural world it must reach and understand the diverse people and cultures it serves. It strives to hire and retain staff that is as diverse as its audiences. In its effort in ensuring diversity it has gone beyond race, ethnicity and gender to include unique life experiences, geographic backgrounds, sexual orientation, skills and talents and seeks employees’ opinions in an organized and consistent way to bring about improvements.

The next focus of Time Warner in its social responsibility initiatives is towards the natural environment. Though the company is not an industrial or manufacturing company it is much aware of its environmental footprint and conducts its business in an environmentally sustainable manner. Its efforts are directed towards reducing environmental footprint in ways that make economic sense. The company has initiated programs in all its divisions to conserve natural resources and minimize waste through reduction and recycling, safe and environmentally friendly waste disposable methods and energy conservation and the use of renewable energy.

Time Warner considers the world’s forests as the most vital natural resource because if these forests are not protected, not only will ecological treasures be lost but, future paper supplies will be jeopardized and the price of paper would rise sharply. The company tries to ensure that as much of its paper as possible comes from reforestation efforts and at the same time wildlife is not endangered and there is no erosion problems to damage the ecosystem. To ensure this the company insists on its paper suppliers to participate in a program called Certified Sustainable Forestry. It has also joined with other major paper buyers to form the Paper Working Group, a coalition aimed at encouraging an increase in the supply of “environmentally preferable paper with lighter grades that hold up well on the presses and preserve the satisfying texture of the magazines. As lighter paper requires less wood to make it, reduces production, transportation and postage costs, as well as lower energy use during production and distribution, saving the company millions of dollars a year.  Its subsidiaries like Warner Bros. Studios have increased overall recycling rate and recycled and reprocessed waste into new products. Warner Bros. Studios also donates computers, office supplies, furniture, paint, wood and other items to schools and nonprofit organizations reducing waste disposal costs and benefiting the community.

Time Warner being a media company contributes greatly to environmental protection through effective media coverage and features the relevant issues in its magazines. For example Time magazine has run many cover stories and special reports devoted to environmental issues. Fortune has featured efforts by corporations to make themselves greener and boost profits at the same time. Popular Science has covered global warming and energy issues in its publication. In HBO’s comedy festival “Earth to America” comedians made an effort to educate all the stake holders by looking at the environmental issue of global warming in a lighter side.

Another focus of Time Warner is in the area of supplier diversity. The company purchases huge number of products and services from hundreds of suppliers around the world. It also licenses its brands and characters to licensees who then use them to manufacture and sell toys, electronics, posters, costumes and other products. These licensees work with thousands of manufacturers around the world to produce these and other products. The company aims to achieve its objective of having supplier diversity by engaging women and other minorities in supply and support the supplier diversity initiative through training, education, internal and external communications, business development, internal networking activities, reporting and a process through which the good work of such suppliers is recognized.

The sixth important focus area for Time Warner in being socially responsible is the general community. The company has always been involved in providing philanthropic support for many worthwhile causes and organizations involved in the betterment of the communities in which it operates. Time Warner’s corporate office funds a number of non-profit organizations supporting education and arts with an objective to nurture and develop creativity and diversity. In arts it funds initiatives to broaden public access to arts, engage underserved youth with arts programs and encourage unrepresented artists. In education its efforts are directed towards ensuring that young people from all walks of life are equipped with knowledge and skills to succeed in their life. Time Warner’s divisions also manage their own philanthropic programs and take the company’s education and arts focus even deeper into the community.

As the company operates in more than 60 countries it has also responded to the global social needs. Time Warner has responded with tremendous generosity to the natural disasters that have occurred around the world. Being a media company it has brought the stories of people affected by natural disasters that have occurred anywhere in the globe on their channels and magazines. The company also donated cable time, Internet access, advertising space, and other services to those in needs and also encouraged others to give money and other aid in response to relief efforts. Some of the recent disasters to which the company and its divisions and employees have donated are Indian Ocean Tsunami, Gulf Coast Hurricanes, Pakistan earthquake and London Bombings.

Efforts of Hitachi Maxell Ltd. at being Socially Responsible

Hitachi Maxell Ltd. is a leading Japanese electronics manufacturer headquartered in Tokyo, Japan and has its operations in the US, Europe and Asia. The group’s technologies, products and services are focused on enhancing the comfort of people’s lives and serving industry and society. It manufactures information storage media like computer tapes, CDs, DVDs etc., batteries and data devices and other electronic appliances for various applications. The globally renowned group conducts its corporate social responsibility activities with every employee striving to gain the empathy and trust of its stakeholders. The social responsibility activities of the company are focused on six key areas namely improvement in customer satisfaction, quality control, ethics abidance, consideration for the environment, health and safety and the enhancement of workplace environments.

The company makes its social contributions by offering innovative and high tech products that enhance the quality of life of people. Its products support home safety, traffic safety, better equipment performance and clean energy development.  The products it manufactures also support safety of automobiles, help improve the quality of life of patients and provide for comfortable and healthy life styles. The major focus of Hitachi Maxell in being socially responsible is its support for customer satisfaction through continuous quality improvement. The company seeks and incorporates the opinion of customers to enhance satisfaction. It has developed internal systems to encourage every employee to improve quality. For example it has promoted Product Safety Voluntary Action plan to encourage employees to tackle product safety themselves. The company operates the Maxell Top Quality campaign to ensure that the customers receive top quality products and services.  If at all there is even a hint that a company product malfunction may threaten lives, the information is immediately passed on to the customers to avoid risk at any cost.

To ensure ethical decision making in all its divisions it has established an internal control committee, a compliance helpline, a set up for timely disclosure of information and personal information protection committee. It has established a code of corporate ethics to raise the corporate values in the execution of all its business activities. It also educates and trains every employee to ensure voluntary compliance. Hitachi Maxell buys a large number of products and services from hundreds of suppliers and treats suppliers as partners and no employee is to accept any benefits from them. The company believes in socially responsible investments and provides through and timely disclosure of information to shareholders and investors through direct communication.

An important focus area of being socially responsible is in creating a comfortable workplace for every employee. The HR activities of the company are conducted with high consideration for human rights and individuality. It strives to provide a pleasant and motivating work environment to support optimum employee performance. There is a special provision for punishing any sexual harassment occurrences. There is no discrimination in employee treatment and facilities have been developed to support the performance of employees with special needs. There is leave provided to employees for child raising and the company also provides a platform for employee to improve their education levels. It promotes activities to take care of employee health and safety and strives for good labor management relations.

Hitachi Maxell accords top priority to being socially responsible towards the environment and minimize its environment foot prints. The company has established the environment protection action guidelines to direct all its activities. The company uses raw materials, energy and water to manufacture products to enhance the customer’s quality of life and in the process impacts the global environment by emitting CO2, effluent water and chemical wastages. The company strives very hard to reduce the environmental impact through the entire chain from manufacture to product use and disposal. It aggressively promotes the purchase of goods from green suppliers. It is designing eco-friendly products that have minimal impact on the environment and is setting up eco-friendly factories to reduce the impact of manufacture on the environment. It has set a target of reducing CO2 emissions by 10% by 2010. It is striving hard to increase the efficiencies of non-renewable energy sources, reduce the impact of transportation through green eco logistics, reduce the wastage generated and promote recycling and reuse wherever possible on a continuous basis. The company has also set up voluntary standards for critical pollution issues like air pollution, water contamination, soil pollution, noise and vibrations. It provides environmental education to employees and their families and carries out environmental accounting to ensure compliance.

The company is involved in a number of activities for the betterment of the communities it operates in. It supports education and culture through conducting contests for students, online library for kids, theater for encouraging children participation and establishing a large planetarium. It supports career development of students by providing internships and holds workshops to promote sports for students. It guides local people in the areas of environment protection and beautification of their surroundings. In its global initiatives it has promoted John Lennon Educational Tour bus that is dedicated to provide students to make music and produce videos free of cost in the US. In China it has donated clothes to school children and conducted blood donation activities. It has also supported the restoration of revered Buddhist statues in Cambodia and supported a youth soccer team in Singapore.

Comparison of Social Responsibility Approaches

Both Time Warner and Hitachi Maxell though operating in different countries and in radically different sectors have elaborate strategies towards being socially responsible and trying to minimize their environmental footprints. The two companies are convinced that being socially responsible makes sound business sense and so have used CSR strategically. They place great importance on being ethical and have established clearly defined codes, methods for training and compliance mechanisms to ensure that every employee is ethical in his decisions. The two companies use their product and services strategically to be socially responsible. Hitachi develops, manufactures and provides products to better the lives of consumers and Time contributes in a socially responsible way through quality content in its services.

The companies have a similar approach in improving the work life of their employees by providing great work environment and a policy of nondiscrimination. They provide a great scope for career development of employees and provide facilities for employees with special needs. However Time places comparatively great emphasis on bringing about cultural, ethical, racial and gender diversity in its workforce and Hitachi Maxell has a unique program for providing employment to the elderly. The companies also follow a policy of non discrimination and a partnership approach towards suppliers; however Time has gone a step further and encourages and trains suppliers from women and other minorities and gives preference to them as their preferred suppliers.

The companies firmly believe in supporting the communities both domestic and global in which they operate. They have initiated a number of activities to especially support education and arts for the under privileged. Hitachi Maxell provides education and guidance to support the local communities in improving their surroundings. However Time Warner has contributed greatly to natural disasters that have occurred anywhere in the world and also brought the sufferings of people in these disasters to viewers all over the globe through their services. Both the companies have been seriously involved in reducing their environmental footprints. Hitachi Maxell is comparatively more involved because of the impact of its products and processes on the environment. It has embedded its social responsiveness initiatives in the products as well as the processes to reduce the impact. Time Warner has focused on conserving forests and publishing the importance of reducing global warming as a contribution in this area.

Conclusion

Business organizations have accepted the growing importance of corporate social responsibility and the need to reduce their environmental footprints because of the increased awareness and the expectations of all the stakeholders. Major corporations in the world like Hitachi Maxell and Time Warner irrespective of the country and sector they operate in have realized that sound corporate social responsibility initiatives can lead to competitive advantage. They have formulated comprehensive social responsibility strategies and established mechanisms to facilitate proper implementation of such strategies to gain the desired advantages.

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http://www.timewarner.com/corp/citizenship/index.page/tw_csr_report08.pdf