Corporations

Nucor Corporation is a leading construction and manufacturing company based in South Carolina in the United States of America (“Nucor”). The company was initially known as Nuclear Corporation of America when it was founded in 1955. By that time, the company was involved in the nuclear equipment and electronics industry. The company later suffered major losses and faced bankruptcy in 1965. However, it was salvaged by a new management in 1966 (“Nucor”).

The high cost of steel in USA in the 1960s led the management of the company to believe that it would be more profitable to venture in steel production in order to avail its own steel products (“Nucor”). The steel company was set up in 1969 and was the first of its kind in South Carolina. It operated with the name Nuclear Corp. at the initiation of its activities. Later, in1972, the company officially adopted the name Nucor Corporation (“Nucor”). Today, the company has about 20,000 teammates who work under the goal “To take care of our customers” (“Nucor”).

The corporation is intensively involved in the production of steel mainly for the building industry while keeping in mind high standards of safety, quality, and ensuring that it operates on the lowest possible cost.

In addition, the corporation is committed to being the most industrious and most profitable steel and steel product manufacturer in the world. In doing so, the company is committed to being an environmental and cultural steward among the communities who live near the company and work for the company (“Nucor”).

Stryker Corporation: In-sourcing PCBs

In late May 2003 executives in Stryker Corporation’s Instruments business were actively considering a change in their sourcing strategy for printed circuit boards (PCBs), a key electronic component of many of Stryker Instrument’s medical products. Currently, Stryker purchased PCBs from a small number of contract manufacturers. The Instruments business anticipated spending more than $10 million in each of the next two years on PCBs, an amount that would increase as the Instruments business grew. In recent years, the performance of some contract manufacturers had been unsatisfactory with respect to quality, delivery, and/or responsiveness and Stryker had repeatedly found itself looking for new suppliers. More generally, contract manufacturers tended to operate on thin margins with scant capital. Bankruptcies were not uncommon, and even without bankruptcy, a financially weak supplier was simply less reliable.

Given recent events and the shaky appearance of several current suppliers, Stryker Instruments had resolved to address the issue. Stryker Instruments’ manufacturing managers studied three options for improving the situation. Option #1 was to maintain the current basic sourcing policy for PCBs, but with important modifications. Specifically, it would protect against future disruptions by acquiring safety stocks of key materials and instituting dual sourcing of all electronic assemblies. Option #2 would boost reliability by establishing a partnership with a single supplier, one of the current group of contract manufacturers. That company would become Stryker Instruments’ sole supplier of PCBs and establish a stand-alone facility for supplying them. The partnership and increased business from Stryker was expected to strengthen the supplier, further boosting its reliability. Option #3 was for Stryker Instruments to manufacture its own PCBs in its own facility near company headquarters in Kalamazoo, Michigan. Once such a facility was up and running, it might be expanded to supply PCBs to other Stryker businesses as well.

Stryker Corporation

Stryker Corporation was a leading provider of specialty medical and surgical products with 2002 revenues and operating profits of $3.0 billion and $507 million, respectively. The corporation’s divisions included Orthopaedic Implants, Medical and Surgical Equipment (MedSurg), Rehabilitative Medical Services, and International Sales. Summary operating and financial data for Stryker as a whole are presented in Exhibit 1. MedSurg had 2002 sales of $1.1 billion, an increase of 13% over 2001, which came from three major business units. Stryker Endoscopy produced video-imaging and communications equipment and instruments for arthroscopic and general surgery. Stryker Medical produced hospital beds and other patient-handling equipment along with emergency medical service products. Stryker Instruments produced surgical instruments, operating room equipment, and interventional pain control products. Stryker Instruments operated manufacturing facilities in Michigan, Puerto Rico, and Ireland and recorded global revenues of approximately $430 million in 2002. PCBs were used in virtually all of Instruments’ key products and platforms, sometimes in more than one application. They were contained, for example, in instrument consoles, footswitches, handpieces, chargers, docks, and monitors. Stryker had considered in-house manufacturing of PCBs before – a proposal had been developed as recently as 2001, but had not been executed. In 2003, as supplier reliability continued to cause concern, the idea was once again receiving serious study.

The Proposal

An in-sourcing strategy had been studied in various forms so far and the proposal might change further before implementation. In its current version, the proposal called for the construction of a new building with 30,000 square feet of space on eight acres owned by Stryker in Kalamazoo, Michigan. Site preparation, construction, and improvements were expected to cost $3,030,000. This sum did not include architectural and engineering fees of $278,000. Furnishings and nonmanufacturing equipment would cost $126,000. Communication equipment and IT infrastructure would cost an additional $210,000. The building would be ready for manufacturing equipment by April 1, 2004. The proposed facility would manufacture all of the various types of PCBs required by Stryker Instruments and hence require many kinds of manufacturing equipment. Stryker Instruments’ managers and engineers were already familiar with the requisite manufacturing processes and had prepared detailed specifications for the needed equipment, including descriptions of equipment, software, and related systems by model and manufacturer; specific configurations and options to be included on the systems; quantities for each type; and installed costs. The total budget for about 70 separate categories of equipment was $2,643,258. Equipment was to be installed and ready for testing by the end of the second quarter of 2004. Actual production would begin in the third quarter of that year. As Stryker Instruments began producing its own PCBs, it would transition out of supplier agreements with third parties. This would happen fairly quickly: production transfers would take place product-by-product and the transition would be complete by the end of 2005. Accordingly, for part of 2004-05, Stryker would be manufacturing some PCBs while still buying some from outside suppliers. Beginning in 2006, all PCBs would be produced in-house. Exhibit 2 shows Stryker Instruments’ anticipated expenditures on PCBs for the period 2004-2009 under the old sourcing strategy using contract manufacturers, including growth in volume and expected increases in the 2

Stryker Corporation: In-sourcing PCBs

Exhibit 2 also shows the anticipated production schedule for the new facility as currently proposed. Stryker’s manufacturing costs were divided into three main categories: materials, variable costs, and fixed costs. Materials costs were estimated by-product and based on actual costs reported under existing supplier agreements, adjusted for expected price increases. These are presented in Exhibit 2 for the new facility’s anticipated production volume. Fixed costs were estimated by period for more than 30 categories, including wages and salaries, overtime, benefits, training, depreciation, building and equipment maintenance, office supplies, etc. Certain fixed costs would be incurred beginning in the first quarter of 2004, even before the start of production. A summary of expected fixed costs, including inflation and wage increases, is shown in Exhibit 2. Similarly, estimated variable costs for more than 20 categories including wages, overtime, shipping supplies, scrap, etc., also are summarized in Exhibit 2. Variable costs would begin to be incurred in the third quarter of 2004. Of the combined fixed and variable costs shown in Exhibit 2, roughly half represented employee compensation and benefits; by 2006 the facility was expected to employ 56 people. The building would be depreciated on a straight-line basis over 30 years.1 Capital equipment would be depreciated straight-line over seven years. IT equipment and other furnishings would be depreciated over 3 years. These depreciation charges are included in the fixed costs summarized in Exhibit 2. Also included are expected maintenance expenditures for both the building and equipment, but not additional capital spending. Manufacturing volumes contemplated for 2009 represented 100% of the facility’s rated capacity.

Finally, the project would benefit from terms of trade established with suppliers of certain PCB components and materials. About 60% of the materials purchased by Stryker for manufacturing PCBs would qualify for generous payment terms of net 120 days. Even better, the 120 days did not commence until Stryker actually took a given component from its stock. In effect, the supplier owned the component until that point, even though Stryker had physical possession of it. Further, the fact that payment was not due for 120 days meant that Stryker typically would be paid for finished goods by its customers before it was required to pay its materials supplier. Under existing arrangements with contract manufacturers, the contract manufacturer benefited from this arrangement rather than Stryker. Indeed, under the existing policy, Stryker paid its contract manufacturers much more quickly—in 15 to 60 days, depending on the contract, for an average of about 30 days. Exhibit 3 presents a calculation of the anticipated change in accounts payable associated with the new sourcing strategy. In its various financial analyses, Stryker would apply a 36% tax rate. The company generally used a hurdle rate of 15% for net present value calculations (for projects deemed riskier than usual a higher rate would apply). Exhibit 4 presents selected capital market data as of May 2003.

Subject: Assessment of Krispy Kreme Doughnuts Incorporation

1.1 History and Products of Krispy Kreme Doughnuts Incorporation

Krispy Kreme was founded by Vernon Rudolph in Marshall County and originally commenced with a doughnut method, a pack of cigarettes and a dream.  Even though from its creation the firm has frequently encountered business hardships due to economic and competitive conditions, they still manage to enter the market and build a good reputation.  Indeed in 1949 a laboratory was created in order to enhance product originality and quality (Arai J. et al. 2004).

Krispy Kreme is a leading corporation engaged in the wholesaling and retailing of high quality doughnuts.  From its inception in 1937 to date the organization have always strived to provide a variety of doughnuts to meet all the wants of its target clients.  Presently over 20 varieties are being marketed.  A number of beverage programs, like different kinds of coffee, where introduced in the product range of the company to complement the original good marketed.  The principal main distribution channels through which sales revenue is generated are the Company Stores, Franchise Fees and a number of supply chains attained through vertical integration (Securities Information, p 3-4).

The firm’s premises are both a manufacturing plant as well as retail outlets, on which on-premises company sales are generated.  Management has also developed a number of distribution channels, like convenience stores, groceries and more, through which off-premises company sales are attained (Securities Information, p 3).

Long ago the organization has noted a key managerial technique in which they can think globally and act locally.  In this respect a number of franchising agreements had been set in order to widen the market of the firm and enhance the revenue growth.  A vertical integration of supply chains was also carried out, managed under KK Supply Chains.  KK Supply Chain originate sales revenue from sale of doughnut mixes, equipment and coffee to franchisees and attains both the firm and the aforesaid franchisees via product knowledge and technical proficiency, together with appropriate control on critical production and distribution processes (Securities Information, p 4). Read about open access good example

1.1.1        Principle Officers of Krispy Kreme Doughnuts

The main officers of the organization are (Securities Information, p 124):

·          James H. Morgan – Chairperson of board of directors

·          Daryl G. Brewster – Chief Executive Officer

·          Michael C. Phalen – Chief Financial Officer

·          Douglas R. Muir – Chief Accounting Officer

·          Charles A. Blixt – Director

·          Robert S. McCoy Jr. – Director

·          Andrew J. Schindler – Director

1.2 Audit Risks
There are a number of audit risks that ought to be considered before accepting this client.  These are explained in the sub-sections below.

1.2.1 Adhering to Relevant Legislations
The products marketed by Krispy Kreme Doughnuts Incorporation are subject to food product regulation.  For instance product weight, packaging, content and other factors are periodically investigated to ensure compliance.  It has been noted that presently the corporation is subject to governmental investigations for a number of incidents.  For example,   on 12th May 2004, the claimant alleged that between August 2003 and May 2004 the organization conducted certain activities in violation of sections 10(b) and 20(a) of the Exchange Act and legal proceedings commenced on such case (Securities Information, p 27).

Due to the aforementioned investigations the issue of contingent liabilities comes into force.   The auditor is required to increase the audit tests on contingencies in order to control the detection risk (ACCA Paper 6, 2000, p 335).  Apart from involving additional work, there is the risk that something remains undetected that can materially affect the truth and fairness of the financial statements. In fact the organization frequently incurs litigation costs arising from such incidents as portrayed in the past two years income statements of the firm.

1.2.2 Reliance on Franchisees
The sales revenue of the organization relies heavily on the franchisees, who are independent contractors and do not comprise employees of Krispy Kreme Doughnuts Incorporation.  Disputes that may arise with these entities may lead to a significant negative effect on the financial health of the company (Securities Information, p 19).  Therefore a risk element present in this area is that the firm’s profitability is vulnerable to such negotiations plus legal proceedings may occur directing to contingent liabilities. Read about Doughnut Industry

1.2.3 Sales generated from Company Stores
The highest proportion of sales generated by the company arises from the corporation’s stores.  In 2006, it amounted to 73% of the total sales revenue.  A section of this sales category is generated from in-house retail outlets in the firm’s premises.  In this division the majority of the sales made from clients comprise cash sales.  As a result a high amount of sales will be on cash leading greater scope to understatement of sales and/or theft of cash (U.S. Government Accountability Office).  Therefore a high inherent risk on sales will arise due to the nature of the transaction.

1.2.4 Industry and Market Risk
The market in which the organization operates is very dynamic and subject to client’s tastes and preferences, which are susceptible to change.  The continuous movement for dietary and health preferences is also influencing the type of doughnuts that the organization ought to focus on.  Such changes in the product mix can significantly influence the sources of income and the profit elements of the firm.  Indeed presently doubts about the ability of Krispy Kreme Incorporation to get back on her feet from the worrying losses is in doubt (Hogan M. 2006). As a result, the applicability of analytical procedures on the income statement would diminish necessitating during the audit fieldwork necessitating more detailed substantive tests on such area (Jiambalvo J, 2001, p 99).

1.2.5 The Management of Krispy Kreme Doughnuts Incorporation

The firm’s executive management holds considerable reputation and experience in the business area the organization is employed in (Gogoi P. 2006).  Concern about internal control procedures shown by management, reveal for instance that a good control environment exists sustained by managers.  Thus the risk of fraud induced from top management is remote and there is a high probability of appropriate cooperation from such parties with the audit team.  This is a very positive feature on this client.

1.3 Financial Health of Krispy Kreme Doughnuts Incorporation
Krispy Kreme Doughnuts Incorporation financial health is presently very weak as portrayed by the accounting ratios measured in Exhibit A.  The firm is facing losses, together with negative net current assets.

Further amplification of these categories reveals that even though negative profits, the efficiency of management in generating lower losses from the resources employed in the organization improved by a reduction in the return on capital employed of 29.67%.  The losses generated from every $100 of sales also decreased by 15.83% indicating better control on costs.  In addition, the gross profit margin shows that if proper cost exercises are conducted, the firm can attain profits, since a good 15.57% gross profit margin is derived from every $100 sales (Weetman P. 2003, p 365-366).

A slight development in the financial position occurred by a small improvement in the ability of the current assets to cover the current liabilities.  The most liquid assets also improved as shown by the Quick Ratio (Lewis R. et al 1996, p 382-383).  This may be the result from better working capital management, such as a decrease in the time taken to collect money from trade debtors.  However, the net current assets are still negative revealing that the current assets of the firm are not capable to cover all the current liabilities, which is a serious issue.

The capital structure of the organization comprises one of a low-geared company.  This means that the ratio of debt is in a lower proportion than equity.  Low-geared companies are considered as less risky corporations due to lower interest commitments.  Yet the ability of the firm to cover interest expenses out of profits is critical because the enterprise is operating at a loss (Weetman P. 2003, p 369).  It is imperative that profitability further improves in order to recover the stability of the organization as it happened from 2005 to 2006.

Overall the company’s financial health is improving as shown by the time series analysis conducted in Exhibit B.  However there are still significant doubts on the company’s going concern, because if an adverse unexpected business factor happens, the firm may face bankruptcy.  This is a serious audit issue, because important features of the financial statements upon which we conduct our audit opinion will be the going concern assumption of the organization (ACCA Paper 6, 2000, p 104).

1.4 Recommendation of Client Evaluated

The audit risk evaluation of Krispy Kreme Doughnuts Incorporation revealed the following positive and negative features:

Positive Features
Negative Factors
Executive management of the company holds a good reputation.
High reliance on Franchisees.

Risk of understatement of sales and cash.

High market risk.

Weak financial health.

In view of the audit risks mentioned in the table above one can note that the issues of the organization are significant and substantial audit work needs to be carried out by the auditor in order to minimize the overall audit risk.  However at this stage, we cannot fully ascertain the value of the audit risk of Krispy Kreme Incorporation’s audit.  For instance we have not yet conducted a preliminary review of the internal controls of the firm through discussions with management on such matter (ACCA Paper 6, 2000, p 130).  This hinders us from providing an accurate value of the control risk.

Substantial information was gathered for the other uncontrollable risk, commonly known as inherent risk.  Indeed with respect to such factor we can provide a reliable assessment.  However, it is also necessary to conduct discussions with management with respect to the audit to obtain a better understanding of their willingness and value provided to the intended audit.

An overall estimate that can be provided from the information gathered on the audit risk elements is portrayed below:

Overall Audit Risk:

Inherent Risk (High) x Control Risk (Medium) x Detection Risk (Low)

The detection risk is considered high because it is the only variable that can be influenced by the auditor.  If the other risks are assessed a high figure, then it is imperative that the auditor increases the amount of substantive procedures in order to minimize the risk that a substantive test will not detect a material error or misstatement (ACCA Paper 6, 2000, p 97).  In this respect, we should not reject the audit of Krispy Kreme Incorporation solely on grounds of high inherent risk.  We ought to evaluate the overall audit by considering factors such as availability of time during the audit and other risk factors.  For example, control risk appears to be moderate, thus compensating for a lower overall audit risk.  At this stage, I suggest that further investigation and discussions should be carried out in order to obtain more information on the audit and thus be capable to take a decision based on more concrete evidence.

Exhibit A – Determination of Accounting Ratios
Profitability

Liquidity

Stability

Exhibit B – Time Series Analysis

References:

AAT Unit 17 Interactive Text (2004).  Implementing Auditing Procedures. New York:  BPP Publishing Limited.

ACCA Paper 6 Study Text (2000). The Audit Framework International Stream. Fourth Edition. New York: BPP Publishing Limited.

Arai J.; Shay W.; Robinson F. (2004). Krispy Kreme Doughnut Corporation Records, American History (on line). Available from: http://americanhistory.si.edu/archives/d7594.htm (Accessed 26th April 2007).

Gogoi P. (2006). A Taste for Tim Hortons?, Businessweek.com (on line). Available from: http://www.businessweek.com/investor/content/mar2006/pi20060321_777334.htm (Accessed 26th April 2007).

Hogan M. (2006). Can Krispy Kreme Rise Again?, Businessweek.com (on line). Available from: http://www.businessweek.com/investor/content/mar2006/pi20060307_732175.htm?campaign_id=nws_insdr_mar10&link_position=link7 (Accessed 26th April 2007).

Jiambalvo J.; Kennedy J. (2001). Analytical Procedures and Audit Planning Decisions, Journal of Accountancy, Vol. 191, Issue 2.

Lewis R.; Pendrill D. (1996). Advanced Financial Accounting. Fifth Edition. London: Pitman Publishing.

Securities Information. Krispy Kreme Doughnuts Incorporation (on line). Available from: http://www.secinfo.com/d14qfp.uUm.htm (Accessed 26th April 2007).

U.S. Government Accountability Office. Field Work Standards for Performance Audits (on line). Available from: http://www.gao.gov/govaud/ybhtml/doc6.html (Accessed 26th April 2007).

Weetman P. (2003). Financial and Management Accounting. Third Edition. England: Pearson Education Limited.

Haveloche Corporation is a research organization that is dedicated to designing and patenting electronics. These patents are sold to large electronics firms and generate a great deal of profit for Haveloche if they are useful to these electronics manufacturers. However, not all of the patents are a guaranteed success, so there is a great difference in the number of successful patents obtained as well as the amount of the company’s earnings. The history of Haveloche Corporation indicates fluctuations in their earnings, number of employees, and success in patenting immediately useful electronic products.

In 1994, the company went public because other research firms had beaten the company to several important patent projects. It used its status as one of the largest pure research firms to develop its reputation in the industry. However, in 2001, Haveloche Corporation was forced to reduce the amount of work being performed and reduced its number of employees due to an economic downturn. In 2003, Haveloche again took advantage of higher industry demand and expanded to meet these increased research needs.

The CEO of Haveloche Corporation has been asked to make a presentation to a class of finance students. In the course of preparing for his presentation, the CEO gathered several years’ worth of data in regard to the corporation’s dividend policy. Problems One of the major problems in this case is the fact that the CEO of Haveloche Corporation is unable to decide which dividend policy is best for the organization. Despite collecting several years’ worth of data, Mr. Grange was unable to find evidence of one policy working better than another. In addition, Mr.

Grange conducted research into dividend policy and found that the information available was sparse and did not conclusively recommend one policy over another. This lack of valuable information on dividend policy also affects Haveloche Corporation internally, as Mr. Grange is unable to determine which dividend policy would be most effective for the organization. Without instituting a policy that considers the needs of both the corporation and its investors, the company may be making incorrect business decisions. This case illustrates the importance of business research and practical applications in the field of finance.

Solutions One solution to these problems would be to conduct internal research as opposed to reading and applying external research and theory to the unique characteristics of Haveloche Corporation. Mr. Grange could conduct this research by gathering past dividend data, reviewing past financial statements, and studying historical stock prices both before and after company dividends were announced. Because this research would be more targeted to the company itself, it would most likely prove to be more useful than canned research that was generated from researchers in a different industry.

Because research firms are unique in how they conduct business, and Haveloche Corporation is particularly unique due to its fluctuating size and gains, specific research would better allow Mr. Grange to decide what type of dividend policy would be most beneficial. In addition to conducting his own research on behalf of Haveloche Corporation, Mr. Grange could also conduct practical applications of this research. If his research determined that one type of dividend policy would be beneficial to the company, Mr. Grange could attempt to implement this type of dividend policy and closely follow the results.

In conducting this type of study, Mr. Grange would need to closely watch the financial indicators of the company both before and after the announcement of dividends under the new policy. If the implementation of the policy generates positive results, Mr. Grange might decide to use that policy in the future. If the policy does not generate the results that Mr. Grange expects, he can repeat this observation process with another type of dividend policy. By conducting internal research and applying that research to business functions, Mr. Grange can better position Haveloche Corporation to be a competitive force in the research industry.

Corporations Law 1. 0 Areas of law Corporate social responsibility has long been a touchy issue for governments not Just in Australia, but around the world as well. Companies in Australia are governed by the corporation’s act, which outlines the legal capacity and power of a company. The Corporations Act 2001 (Act) s AAA, defines a corporation as a separate legal entity, that includes any corporate body and unincorporated bodies that may sue, be sued or hold property in the name of an office holder appointed for that purpose.

In context of corporate governance, the main issue is with the current escalation is in regards to director’s duties. Under the Corporations Act 2001 (Act) asses, directors have a civil obligation to act with due care and diligence, with best interest of the corporation in mind. This civil obligation however, does not extend to certain classes of stakeholders other then shareholders. Modern day companies often have a great impact on society at large, through the various activities they conduct.

Given the broad economic, environmental and social impacts they have, it is understandable that a push has been made for director’s duties to extend beyond warehouses, and include stakeholders at large. The Corporations Act 2001 (Act) sass, also outlines the legal capacity and powers of a company. S 124(1) states, ” a company has the legal capacity and power of an individual both in and outside this jurisdiction”. A company can also be held primarily or secondarily accountable for torts and crimes.

To think of a corporation as solely an instrument of business, fails to account for social changes, which has taken place over the past century. 5 It is therefore vital that amendments be made to the Corporations Act 2001 (Act), so as to ring accountability and responsibility of corporations and directors up to date with societal change that has occurred over the past decade. 2. 0 Problems associated with the law The current law governing companies and directors outlined in the Corporations Act 2001 (Act), only allow for calculated corporate social responsibility.

According to the Corporations Act 2001 (Act) asses, directors are required to act in good faith and in the best interest of a company, and in appropriate circumstances may choose to take into consideration a range factors external to shareholders, only if they benefit the warehouses collectively. As a result, companies may be obliged to consider CARS, only when it is likely to result in positive publicity, public approval, endorsements and goodwill; investor confidence and demand; and promote a positive impact on company share prices.

It is evident that the current Corporations Act 2001 (Act) limits company director’s ability to adhere to CARS practices, as shareholders must receive some benefit from engaging in CARS. This can be seen through statements made by The Australian Shareholder Association pertaining to corporate donations in relation to tsunami relief efforts, here it stated directors have no approval for philanthropy, donations should only be made in situations where they are likely to benefit the company or shareholders through greater exposure.

Directors who seek to engage in CARS activities that do not directly benefit their companies or stakeholders would therefore be in breach of their director’s duties outlined in the Corporations Act 2001 (Act) assess, and this is where the the Corporations Act 2001 (Act) falls short. 3. 0 Recommendations & suggestions Although there are absences of specific law regarding how companies should be socially responsible, new suggestions and recommendations may be implemented as a guideline for companies to be socially responsible.

One of the suggestions is for companies to introduce triple bottom line reporting, principles of conduct and charitable contributions in their environmental record as to evaluate its responsibility performance. However, according to the s 181 of the Corporations Act 2001 (Act) directors of the company should prioritize needs of the company for proper purposes by exercising their powers and duties in good faith. Also, the

Australian government may introduce a rule that requires registered companies to participate in a policy in which each company need to design a Corporate Social Responsibility Committee that will observe every activity conducted and how will it impact those other than the shareholders, specifically the employees, suppliers, customers and also the environment. The company would then have to participate in a policy in which it is required to be publicized on its own website.

Although it may be contradicting to the directors’ best interest for the company, by spending an mount on volunteering programs, such as the hunger project to help extinguish famine in poor countries, it also helps the company to build a better image that in turn, could be advantageous to the directors. 4. 0 Issues of importance The push for company reporting to include CARS related information in annual reports is of utmost importance, given the prominence of corporate influence in today’s society.

The recommendation to implement triple bottom line reporting would increase the extent to which companies are taking responsibility for the consequences of their actions, in relation to corporate activities that touch on environmental or other issues of community concerned The implementation of the policy requiring companies to establish a corporate Social Responsibility Committee are also essential in the push for more CARS friendly law reforms governing Australian companies.

Greater transparency in relation to social and environmental impacts of companies has been called for by community groups, given the success of corporations as vehicles for productive enterprise. The degree of accountability displayed by companies in their course of business pertaining to social and environment issues are understandably a matter of public interest, due to modern day companies having a large environmental and social impact on external stakeholders in the course of their activities. . 0 Foreign solutions for CARS A similar issue has been addressed in the United Kingdom in regards to the degree that the directors may take into consideration on its responsibility to other individuals besides its shareholders. As it was being evaluated by the country’s Department of Trade and Industry, the issue had resulted in the establishment of the Companies Act 2006 (I-J) (companies Act’) that constitutes the first codification of directors’ duties.

Based on the Companies Acts 172, it has been maintained that the directors are obliged to take considerations of the interests held by individuals other than the shareholders, employees, customers and also the environments 5. Nevertheless, the provision claimed that the directors are required to function in a way that the success of company can be improved, which will then prompt the directors on its duties in protecting the interest of the shareholders.

Also, in India, he government has come up with the introduction to the policy of a two-percent Corporate Social Responsibility law that promotes company to be charitable by having two percent from profit earned each financial year to be spent on government-approved projects that may consist of environmental sustainability and education that are leaning towards development of the nation as a whole. Companies are liable in designing its own committee of corporate social responsibility to aid in observing, reporting and preventing any activities that may harm the society and environment.

Each report is then to be disclosed in the company’s website as required by the policy. 6. 0 Views on suggested reform policies In relation to the proposed reporting reforms pertaining to CARS, we are in agreement that the implementation of the suggested changes would be in the best interest of companies, their directors and wider stakeholders at large. The Corporations and Markets Advisory Committee has stated in their report that it does not support the revision of The Corporations Act 2001 (Act), in relation to the inclusion of CARS under director’s duties.

The proposed amendments have been seen to fail in providing directors with meaningful clarification, whilst risk obscuring the accountability of directors. It is their belief that that the most effective response to concerns arising from time to time pertaining to the environment and social impact of business behavior, is through the setting of specific legislation directed to the problem real 8. However the Corporations and Markets Advisory Committee have identified a number of issues in relation to the implementation of environmental and social reporting elicits.

Issues relating to discrepancies that may arise in relation to comparability, market advantage and cost have been identified. In regards to the comparability of company reports, it has been argued that additional mandatory reporting is necessary to ensure comparability of non-financial reports. Further more, it has been identified that enhanced mandatory reporting would reduce selective positive-only reporting, thereby only benefiting responsible companies by improving their standing among risk analysts.

Lastly, concerns have been raised by companies in geared to costs that will have to be incurred due to additional mandatory reporting. There has been a general consensus among companies that additional mandatory reporting will be too costly, however others have argues that such additional reporting could in fact reduce costs, through the standardization of reporting requirements. Having considered these statements, we still belief that the best approach in relation to company CARS reporting, is through the introduction of separate policies which are to run concurrently with the Corporations Act 2001 (Act)

A company carries out public relations in order to have a good public image concerning its operations, products and services. Due to the current stiff competition in the contemporary business arena, many companies have emulated different strategies in order to out do their competitors in the market. Public Relation (PR) is one of the avenues which firms with a mission to attract new consumers and retain the existing ones should adopt.

Apple Incorporation is a US based company which is renowned for its high quality computers and their accessories. For the company to retain the competitive edge, it is important that it carries out good public relations. This paper seeks to discuss how Apple Inc. uses public relations and how effective this is in establishing rapport with other stake holders such as its customers, other business organizations, the media and its employees.

Some of the ways of carrying out public relations exercises are, establishing communication links between the organization and its customers, internal communication within the company, analyzing how Apple products perform in the market, its customer service, positive relations with investors and good relations with media. One of the benefits of maintaining an effective PR is that it enhances the awareness of the customers regarding the existence of the company products. As a result customers loyalty is generated which leads to more sales and high profits.

Through the diversification of its PR strategies, Apple Incorporation is able to provide information to the public mainly through business reporters. Apple has on its website an online shop where there is a display of the products that it produces so that customers are able to access information on availability, use and application of these products. Some of the products enlisted on the online shop include its range of hardware products such as AirPort Express, AirPort Extreme, Apple Battery Charger, Apple TV, iMac, iPad, iPod touch and iPhone, among others.

Some of its software products include Logic Studio, Qucik Time, MobileMe, iTunes, iLife and Aperture among others. With such product diversification, Apple Incorporation has been able to meet the various needs of its customers. In the same way, product information, good and attractive display of the company’s products on the Internet provides information to customers at a glance (Edward, 1945). In turn customers are able to read about the products without having to physically go to the Apple shop outlets.

This helps in time saving on the part of the customer and helps the company to sell itself better and faster. There is also a provision on Apple’s website referred to as Contact Us where customers can contact the company’s technical support, get help on Apple’s online store and retail store, post their feedback and ask questions concerning the efficiency of Apple’s products and services. It is imperative to note that Apple has adopted some of the best ways of doing public relations through establishing good customer relations leading to a good image of the company.

Market research and analysis is one of the most important ways that a company can use to establish good public relations with its publics among whom are its customers and other business organizations. In order to do business a company must be aware of what other companies are producing and how their products are priced and packaged. Apple conducts market analysis in order to get information about markets and customer needs and preferences.

Apple’s market research involves gathering information on customer opinions and the use of statistics to help in coming up with figures concerning numbers so as to establish the level of their customer base and what can be done to improve the quality of their products. In addition, intensive market research enables Apple to know and understand what is needed by customers and how they respond to the company’s products and services. Market information helps Apple to be aware of prices of different hardware and software available in the market and the supply and demand for these competing products.

This information is important in helping Apple to do market segmentation of its products to cater for different people in terms of personality, age, gender and geographic location, among others. It is therefore essential that Apple maintains a well managed market research department so as to be able to gather enough and appropriate market information which can be used to initiate more and effective public relation programs. Apple’s investor relations is part of its public relations exercises.

Due to their contribution in terms of capital and ideas, the company has been able to provide investors with opportunities where they can invest their money. High profits and investors loyalty enjoyed by Apple is based on its goal for market diversification and quality products. In this regard, Apple recognizes the importance of providing financial communication with investors. For instance, the company organizes meetings with investors in order to get information from them on what can be done to improve the company and how investors can contribute in order to make the company achieve its goals.

Corporate social responsibility (CSR) is one way Apple reaches out to the community as part of its investor relations. One of the objectives of initiating CSR programs is to rewards the members of community who are part of the company customer base. Through annual CSR activities the company is also able to advertise it wide range of products. This helps Apple to show its presence in the real world and create a good public interest in the company. Corporate social responsibility helps Apple to achieve its mission and demonstrate what it stands for. Society is one of the publics of Apple.

One of Apple’s objectives is to manufacture environmentally friendly products, for instance, in the year 2009, Apple became the first company to analyze its contribution in the emission of greenhouse gases and the way to reduce this through a program known as Life Cycle Impact. The company gives back to society by sponsoring community projects which helps communities to grow and improve themselves. Consequently, the same community that the company helps may in the long run become customers of the company. Internal Communications is essential in public relations.

Internal communications entails how a company communicates with employees. This includes both formal and informal communication. Apple has a good interaction networks between its management and staff. This is done by providing information on the performance of the company to employees and what is expected of them in order to boost the company’s proceeds. According to Kirkpatrick (1998), meetings held by Apple with its employees helps to enhance its public relations with them and this creates an atmosphere that employees’ contribution to the company is recognized and valued.

In the same way, internal communications help the Apple Company to communicate to its staff its objectives and how to execute plans to achieve these objectives. Communication is done through different ways such as writing down company guidelines and holding meetings (Johnston, 2008). One of the most fundamental ways that Apple has enhanced its public relations is through media relations. Media relations involve working with different media in order to inform the public of a company’s policies, products and services. Different media is used to achieve this for example magazines, newspapers, journals, Internet, television and radio.

Apple has good media relations with journalists who are in a better position to portray the good image of the company on the eyes of the public (Frieberger and Michael, 1984). Working with the media has sometimes been challenging for Apple but the company has done its best to overcome this. Likewise, Apple relies on different media to carry out advertising and promotion, give press releases, make important announcements and inform the public on the company’s performance through financial and business reporters. Conclusion

For a company to develop a good public image, public relations exercises have to be carried out in order to create rapport with its publics. From the above discussion, it is clear that Apple Incorporation has reached its current position by using public relations as one of its strategies to become one of the most reputable companies in computer technology. Customer service, market research, investor relations, internal communications and media relations are fundamental in carrying out public relations. According to my view, companies should emulate modern technologies such as internet in order to reach more customers across the global.

This will ultimately lead to high revenue, more sales, high demand and a significant global economic growth. Reference List Edward, B. 1945. Public Relations. Boston, MA: Bellman Publishing Company Frieberger, P, and Michael, S. 1984 Fire in the Valley: The Making of the Personal Computer, Berkeley, Calif. : Osborne-McGraw-Hill Johnston, J. (2008). Media Relations: Issues and Strategies. Sydney, Australia: Allen & Unwin Academic Kirkpatrick, D. 1998. The Second Coming of Apple. New York: Oxford University Press

The fall of Enron is blamed for its lack of strong corporate governance. The initial tremendous growth of the organization was prompted by ambitions for short-term economic advantage while overlooking the long-term sustainability of its business expansion. Enron should have been structured with a culture of transparency and accountability in its management to promote mitigation of the unethical practices which led to its downfall (Fox, 2003). A good corporate culture should encourage reliable linking of information (financial and governance) between investors and company management.

On the other hand, acquisition and expansion of investment brings with it management complexity challenges (Powers, et al, 2002). This calls for the establishment of an efficient communication and network system for enhancing effective monitoring of the various subdivisions from a centralized point. Still, close evaluation and strategic analysis of the viability of a business venture should be given priority in making acquisition decisions. This structure of corporate governance could have significantly helped in mitigating the unethical business practices that led to the downfall of Enron.

Whether Enron’s officers acted within the scope of their authority The downfall of Enron was a chain of numerous ethical and legal failures by its officers. Their act of engaging in compromising financial statements of the corporation was no doubt beyond their authority (Powers, et al, 2002). Although the authorization of financial statement for a corporation remains at the hands of its executives, such should qualify the provisions of the underlying business laws of US. It is commonly asserted by some economic analysts that buffing in business is advantageous to the survival of the business.

Based on this reasoning, the officers of Enron engaged in unethical practices to protect the breakdown of the corporation (Benston, et al, 2003). However, the purpose of the auditing firms is to identify, prevent, and report incidences of illegal financial transactions to the authorities. The officers have not authority to contradict the recommendations of the auditing firm. Moreover, Enron officers’ authority is limited by the law to protect the interests of the investors, thus they acted outside the scope of their authority (Kurdina, 2005). The corporate culture at Enron

Enron Corporation had a corporate of unethical short-term economic expansionism whose decisions were limited to its executive arm. According to available information, the company had a nontransparent financial statement policy, which was aimed at hiding it actual operations and financial positions from its shareholders and economic analysts (Santa Clara University, 2010). In a move to realize its business interests, Enron engaged in establishing a complex corporate governance culture that complicated the process of easily detecting its unethical business practices.

Indeed, this corporate culture engaged in corrupting information to be presented to the company’s board of directors (Fox, 2003). This was further complicated with its move to pursue a diversification strategy in 2000, a move which made gain international business advantage. This was instrumental in promoting Enron’s corporate policies of establishing a network of intermediaries. In addition, the corporate culture in strived to bar the employees from getting informed of the actual functioning of the organization (Santa Clara University, 2010).

This compromised accountability and transparency in the corporation. Therefore, Enron had strong negative corporate culture as such never increased accountability in the operations of the corporation. Two alleged irregularities in the actions between sellers of securities and Enron One of the alleged irregularities between sellers of securities and Enron was the massive benefits gained by Enron through stock options. According to the law entering into the stock option plans requires a closely scrutiny of the actual worthy of the organization by the SEC.

such should entail auditing practices rather than just provision of the financial statements of the corporation (Joint Committee on Taxation, 2003). This was however not the case for Enron. It has been alleged that Enron had 96 million shares in the stock option plans by the end of 2000. Following a rise in its share price in 2001 to $83. 13, the company filed for compensation. The other irregularity is that Enron engaged in illegal insider trading practices. True to the letter, of the executive members of Enron, Lay owned $659 million and Skilling $174 million of the director’s stock ownership (Joint Committee on Taxation, 2003).

Just to be appreciated is the fact that Skilling has been established as the driving force to the unethical practices of Enron and Lay was the chairman of the corporation, an element indicative of illegal insider trading practices. Whether or not Enron was liable for the actions of its agents and employees The function of a corporation as a business entity is to promote transparency and accountability among its employees and agent. This is sort by the corporations to protect its reputation in the public. However, this was not the case in Enron.

The corporation lack ethical corporate culture for guiding the behaviors of its employees and agents. This can be evident from the move by Skilling to ask “What earnings do you need to keep our stock price up? ” during budget meeting and such could be implemented regardless of its feasibility (Human Rights Watch, 1999). Therefore, Enron was liable for the actions of its agents and employees.

References

Benston, G. , et al. (2003). Following the Money: The Enron Failure and the State of Corporate Disclosure. Retrieved August 15, 2010, from http://reg-markets.org/admin/authorpdfs/redirect-safely. php? fname=.. /pdffiles/phpD9. pdf

Fox, L (2003). Enron: The Rise and Fall. Hoboken: John Wiley & Sons, Inc. Human rights Watch. (1999). The Enron Corporation: Corporate Complicity in Human Rights Violations. New York: Human Rights Watch.

Joint Committee on Taxation. (2003). Report of Investigation of Enron Corporation and Related Entities Regarding Federal Tax and Compensation Issues, and Policy Recommendations. Retrieved August 15, 2010, from http://www. gpo. gov/congress/joint/jcs-3-03/vol1/index.html

Kurdina, A. (2005). The Collapse of Enron: Managerial Aspects. Retrieved August 15, 2010, from http://ezinearticles. com/? The-Collapse-of-Enron:-Managerial-Aspects&id=59932

Powers, W. , et al. (2002). Enron Special Investigation Report. Retrieved August 15, 2010, from news. findlaw. com/wp/docs/enron/specinv020102rpt1. pdf Santa Clara University. (2010). What Really Went Wrong With Enron? A Culture of Evil? Retrieved August 15, 2010, from http://www. scu. edu/ethics/publications/ethicalperspectives/enronpanel. html