Morality and Hawthornes Young Goodman Brown Essay

Young Goodman Brown was published in 1835, when Nathaniel Hawthorne was 31 years old. Hawthorne was born and reared in Salem, Massachusetts, a village still permeated by its 17th century Puritanism. When he was four, Hawthornes father died, and from that point on he was surrounded mostly by females: two sisters, a maiden aunt, and a retiring mother who was not close to her children. He had little contact with his deceased fathers family, but his maternal relatives were supportive and saw to it that he attended college, the first in his family to do so (Turner 33). During four years at college, despite his reclusive nature, he established close friendships with his male classmates, several of which he maintained for life. These four†¦show more content†¦On the other hand, he felt guilt for his ancestors part in witch trials and intolerant prosecution of Quakers. In Young Goodman Brown the devil tells Brown that I helped your grandfather, the constable, when he lashed the Qua ker woman so smartly (Hawthorne 2131). Historians of Hawthornes day were harshly critical of the witch trials and inflexible Puritan ideology of the 17th century. Many current publications and lectures condemned the cruel intolerance of Puritans, and Hawthorne anticipated reader interest as an added incentive for using his Puritan heritage as a background for his work. Hawthornes fullest display of witch lore is in one of the first tales he wrote, Young Goodman Brown (Turner 67). When Brown marveled that Goody Cloyse, who had taught him his catechism was in the forest after dark (Hawthorne 2131), he referred to an historical witch. Hawthorne had a skeptical, dual-outlook on life. By the time â€Å"Young Goodman Brown† was published he had chosen to spend approximately one-third of his life in self-imposed isolation. Though he chose isolation, it was entirely contrary to his beliefs. Hawthorne believed society to be all-important. During his college years, associations with people and exposure to current ideas convinced him of the need for social responsibility and humanistic concern (Johnson 35). Hawthorne felt that the human self has meaning and value only through reciprocalShow MoreRelatedYoung Goodman Brown from a Moral Standpoint1352 Words   |  6 PagesHawthorne discovered that his ancestors were founders and Puritan leaders of the Salem witch trials. Shortly after this tragic finding, he wrote â€Å"Young Goodman Brown,† a tale that is considered one of the greatest in American literature. Analyzing Nathaniel Hawthorne’s work from a moral perspective can help illuminate his short s tory: â€Å"Young Goodman Brown.† Hawthorne was both prideful and embarrassed in the actions of his ancestors. According to Jacqueline Shoemaker, Hawthorne felt pride in seeingRead MoreNathaniel Hawthorne s Young Goodman Brown1492 Words   |  6 PagesIn Nathaniel Hawthorne’s short story of Young Goodman Brown, the author uses symbolism and allegories in order to showcase the Puritan faith as well as man’s conflict between good and evil. This analysis will breakdown the techniques that the author uses to critique the puritan society, and to show the difference between how people appear to be in society and the true colors that they are hidden inside of them. There has been a lot of great authors in our time, but none more interesting than NathanielRead MoreShort Story Analysis: Young Goodman Brown Essay1115 Words   |  5 Pagesmore intriguing than Nathaniel Hawthorne. Hawthorne’s ability to weave stories through the use of complex language and early puritan society narratives has long been a topic of study amongst scholars and young adults, alike. â€Å"Young Goodman Brown† explores the idea of good vs. evil and draws many parallels to the life of Nathaniel Hawthorne. It is often debated whether man is born innately good or evil. In â€Å"Young Goodman Brown† it is possible to see Hawthorne’s stance on this. However, before delvingRead MoreCompare and Contrast Essat Nathaniel Hawthornes Young Goodman Brown and Thomas Wolfes The Child by Tiger1683 Words   |  7 Pagescompare and contrast essay Nathaniel Hawthornes Young Good man Brown and Thomas Wolfes The Child By Tiger @@@@@ ENGL: Literature and Composition 2011 Robert James Tebow 15 December 2011 Introduction: I. Nathaniel Hawthorne’s short story â€Å"Young Goodman Brown† and Thomas Wolfe’s short story â€Å"The Child by Tiger† show glaring similarities in many parts of each stories structure. Even though these stories were set in different time periods and different cultures, there is unityRead MoreThe American Concept Of Self Creation1647 Words   |  7 Pagesidentity for several reasons to include those in which he protects himself and slave Jim. The book’s setting is during the American slavery days and of a young man’s journey to discovering who he is and what role he plays throughout the book. Another literary example discussed in this review will be Nathaniel Hawthorne’s main character in Young Goodman Brown. This story depicts an internal self-creation whereas the main character undergoes a transformation into someone he fought hard against becoming. TheseRead MoreLiterary Analyzes Of Young Goodman Brown1746 Words   |  7 Pag esLiterary analyzes of Young Goodman Brown Young goodman brown by Nathaniel Hawthorne is a story about a normal man that ventures into the forest to meet an old man who attempts to tempt him into going deeper into the woods to worship the devil. After the old man convinces him that everyone that he loves and respects is going to the devil’s ceremony he gives in. In Young Goodman Brown, Hawthorne effectively uses the personality and psychology of the Characters along with symbolism to portray the themeRead MoreAnalysis Of Nathaniel Hawthorne s Writing Style864 Words   |  4 Pagesaddition, confrontation was another part that defines Hawthorne’s writing style. At the time Hawthorne wrote his stories, printing technology was not advanced and where his symbolism comes to play. He would write lengthy visual descriptions because his audience would not read the setting where the story is in. Next, we will mention some of his stories that personally express his use of symbolism and what they represent. One of Hawthorne’s best works to use symbolism is The Scarlet Letter, whereRead MoreBrowns Fall Essay1998 Words   |  8 Pagesenhance the theme of their works. One author in particular is Nathaniel Hawthorne. Nathaniel Hawthorne wrote â€Å"Young Goodman Brown† in 1835. His time period influenced the theme of his work. The theme Hawthorne chose was the weakness of public morality. In â€Å"Young Goodman Brown† Hawthorne shows this theme through the perspective of a Puritan man, Goodman Brown. In the story Hawthorne shows that Goodman Brown’s religious convictions are rooted in his belief that those around him are also religious. This kindRead MoreYoung Goodman Brown: The Evils of Puritanism Essay1728 Words   |  7 Pagesthe isolation of individuals who failed to uphold the faith. For Hawthorne, Young Goodman Brown illustrates the difference between Puritan teaching and practicing and reflects his own guilt about the mistreatment of men at the hands of his forefathers. Young Goodman Brown protagonist struggles with Puritanism is a reflection of Hawthorne personal conflicts with Puritanism. Hawthorne uses the story of Young Goodman Brown to illustrate Puritanisms disconnection between their espoused beliefs andRead MoreTheme Of Young Goodman Brown And The Man In The Black Suit1075 Words   |  5 PagesThe depictions of the Devil in Nathaniel Hawthorne’s â€Å"Young Goodman Brown† and Stephen King’s â€Å"The Man in The Black Suit† include differences to the character that convey the numerous ways evil can affect the innocence and morality of people. Their appearance and motivations dictate the success their evil intentions have on the character and lives of the protagonists. The physical manifestation of both devils mirrors the different strategies they utilized to manipulate the protagonists’ destruction

Dialect Is The Method Of Human Communication - 1901 Words

Dialect is the method of human communication, either spoken or written, consisting of the use of words in a structured and conventional way. The importance of languages to a culture is that when a language dies or disappears it removes the wealth of knowledge about history, culture, the natural environment and the human brain says Tom Colls from The Death of Languages. Languages are like the root of every culture. For a language to become nonexistence for a culture begins that culture to a hard rock. Also according to Mr. Colls Did you know about every fourteen days a language becomes extinction. So that brings me to an important question why do languages die? No one knows the real true answer, all we can go on is what we have heard and gather from other people. Languages can also be a human identity. Without identify you are unknown same thing goes for a language. If you don’t know one single language to speak, how will you communicate with others? So what happens when a language is loss will their identify leave with it. As indicated by† www.ethnologue.com â€Å"which is a website that gives important information on languages, Dialect danger is a genuine worry to which etymologists and dialect organizers have turned their consideration in the most recent a very long while. For an assortment of reasons, speakers of numerous littler, less prevailing dialects quit utilizing their legacy dialect and start utilizing another. It is trusted that 90% of the around 7,000 dialectsShow MoreRelatedLanguage As A Form Of Communication Essay1388 Words   |  6 Pagescustoms, the things we produce and the methods we use to produce them. The human ability to create and transmit culture is what differentiates us, as humans, from the rest of the animal world. The essential feature of culture, that it is learned and transmitted from one generation to the next, rests on the human capacity to think symbolically. Language, perhaps the most important feature, is a symbolic form of communication. Language is a form of communication. Without language, culture could notRead MoreDo You Speak American? Essay1096 Words   |  5 Pageswith language as time continues to turn. In the documentary â€Å"Do You Speak American?† Robert MacNeil analyzes the English language and reveals many dialects that culturally defines us. Regional dialect is one of the many strongholds of all cultures and now it has reached its’ zenith and today it is slowly declining because it does not possess the human nature of advancement. Optimistically, it allows people to learn how to cooperate with each other. In order to advance and adopt a person has to change;Read More Linguistic Stereotypes Essay1109 Words   |  5 PagesLinguistic Stereotypes Language is a method in which individuals communicate in order to get their opinion across to the listening party. Language is the tool which ideas can be conveyed in various ways. Typically, language is referred to verbal communication, however, it ranges to all methods of communication i.e. sign language. Linguistic stereotypes are an existent form of discrimination. Since, languages are criticized and mocked due to the connection between language and cultural characterRead MoreDifferences Between English And English975 Words   |  4 Pages1. A) Dialect is what you speak, or your register. Language is usually seen/associated with a standard language. If two people can understand each other, they are speaking the same language, but not necessarily the same dialect. Languages are typically looked at as prestigious, official, and written; while dialects are spoken and unofficial (often referred to as a type of slang). Language is the method of human communication which is either spoken or written. Dialect is a variety of language, distinguishableRead MoreThe Human Condition Through Innovation1683 Words   |  7 Pagesdeafness and would expect that the Deaf group would be energized and excited for a cure to deafness. The reaction to CIs from the Deaf group has not been positive, but in stead frowned upon. The center of the development is on the progression of the human condition through innovation. It is important to consider both the potential advantages and pitfalls of rising innovations, including any moral predicaments that may emerge on their cusp. It very important to understand all that goes a long withRead MoreTaking a Look at Global English997 Words   |  4 Pages As human beings, it is in our nature to wonder what the earth will be like in the future. Several people imagine a world where technology will allow human to relax while robots take care of daily responsibilities. In addition, some theorists fear that earth’s climate will be too hot for humans to survive. When thinking about our world in the future, many overlook the change that will take place in our language. However, linguists are fully aware of the shift that will take place within the EnglishRead MoreOvercoming Language Barriers Health Care : Costs And Benefits Of Interpreter Services1703 Words   |  7 PagesRegardless of the interpreting methods, utilizing the professional interpretation services yielded in a higher patient satisfaction and privacy in LEP patients. However they realized that use of RSMI method in particular provides higher sat isfaction for LEP patients (RSMI 71% vs. UC 64%; P 0.05) and would address the language barrier in proving care to limited-English-proficient patients. Overcoming language barriers in health care: costs and benefits of interpreter services Jacobs, E. A.,Read MoreConceptions of the Soul Essay1161 Words   |  5 Pagesand whether their methods are plausible, it can be concluded that Aristotles formulation of the soul is more compelling than that of Plato. According to Plato, the body and the soul are separate entities. The soul is capable of existing before life of the body and after death of the body and it is constant, unchanging and non-physical (invisible). The soul resembles what is divine, immortal, and always remaining true to itself. The body, however, resembles what is human, mortal, and destructibleRead MoreThe Main Assumptions Underlying Bourdieu s Conception Of Language1213 Words   |  5 Pagesassess the main assumptions underlying Bourdieu’s conception of language. †¨ Pierre Bourdieu was a sociologist who was concerned with mainly the dynamics of power in society. Bourdieu believes language is a mechanism of power alongside a method of communication. According to Bourdieu, the language one speaks will vary across different social backgrounds. By this we mean that if an individual is from a lower social class, they are expected to speak the fundamentals of the language however, if an individualRead MoreThe And Its Effects On Society Essay1432 Words   |  6 Pagesmilitary employees; furthermore, they might have been mutilated or observed the people they loved mutilated before their eyes (Hollander, 2013). These refugees arrive defenselessness, and this impacts their ability to defend themselves through communication (Hollander, 2013). Immigrants are confronted with a deep type of fear in reaction to the bizarre rituals of their new host culture (Hollander, 2013). The symbols that represent the ideals of an individual’s individuality; in com parison, these immigrants

Digital Fortress Chapter 19 Free Essays

â€Å"What if someone else is looking for the ring?† Susan asked, suddenly nervous. â€Å"Could David be in danger?† Strathmore shook his head. â€Å"Nobody else knows the ring exists. We will write a custom essay sample on Digital Fortress Chapter 19 or any similar topic only for you Order Now That’s why I sent David. I wanted to keep it that way. Curious spooks don’t usually tail Spanish teachers.† â€Å"He’s a professor,† Susan corrected, immediately regretting the clarification. Every now and again Susan got the feeling David wasn’t good enough for the commander, that he thought somehow she could do better than a schoolteacher. â€Å"Commander,† she said, moving on, â€Å"if you briefed David by car phone this morning, someone could have intercepted the-â€Å" â€Å"One-in-a-million shot,† Strathmore interrupted, his tone reassuring. â€Å"Any eavesdropper had to be in the immediate vicinity and know exactly what to listen for.† He put his hand on her shoulder. â€Å"I would never have sent David if I thought it was dangerous.† He smiled. â€Å"Trust me. Any sign of trouble, and I’ll send in the pros.† Strathmore’s words were punctuated by the sudden sound of someone pounding on the Node 3 glass. Susan and Strathmore turned. Sys-Sec Phil Chartrukian had his face pressed against the pane and was pounding fiercely, straining to see through. Whatever he was excitedly mouthing was not audible through the soundproofed glass. He looked like he’d seen a ghost. â€Å"What the hell is Chartrukian doing here?† Strathmore growled. â€Å"He’s not on duty today.† â€Å"Looks like trouble,† Susan said. â€Å"He probably saw the Run-Monitor.† â€Å"Goddamn it!† the commander hissed. â€Å"I specifically called the scheduled Sys-Sec last night and told him not to come in!† Susan was not surprised. Canceling a Sys-Sec duty was irregular, but Strathmore undoubtedly had wanted privacy in the dome. The last thing he needed was some paranoid Sys-Sec blowing the lid off Digital Fortress. â€Å"We better abort TRANSLTR,† Susan said. â€Å"We can reset the Run-Monitor and tell Phil he was seeing things.† Strathmore appeared to consider it, then shook his head. â€Å"Not yet. TRANSLTR is fifteen hours into this attack. I want to run it a full twenty-four-just to be sure.† This made sense to Susan. Digital Fortress was the first ever use of a rotating cleartext function. Maybe Tankado had overlooked something; maybe TRANSLTR would break it after twenty-four hours. Somehow Susan doubted it. â€Å"TRANSLTR keeps running,† Strathmore resolved. â€Å"I need to know for sure this algorithm is untouchable.† Chartrukian continued pounding on the pane. â€Å"Here goes nothing.† Strathmore groaned. â€Å"Back me up.† The commander took a deep breath and then strode to the sliding glass doors. The pressure plate on the floor activated, and the doors hissed open. Chartrukian practically fell into the room. â€Å"Commander, sir. I†¦ I’m sorry to bother you, but the Run-Monitor†¦ I ran a virus probe and-â€Å" â€Å"Phil, Phil, Phil,† the commander gushed pleasantly as he put a reassuring hand on Chartrukian’s shoulder. â€Å"Slow down. What seems to be the problem?† From the easygoing tone in Strathmore’s voice, nobody would ever have guessed his world was falling in around him. He stepped aside and ushered Chartrukian into the sacred walls of Node 3. The Sys-Sec stepped over the threshold hesitantly, like a well-trained dog that knew better. From the puzzled look on Chartrukian’s face, it was obvious he’d never seen the inside of this place. Whatever had been the source of his panic was momentarily forgotten. He surveyed the plush interior, the line of private terminals, the couches, the bookshelves, the soft lighting. When his gaze fell on the reigning queen of Crypto, Susan Fletcher, he quickly looked away. Susan intimidated the hell out of him. Her mind worked on a different plane. She was unsettlingly beautiful, and his words always seemed to get jumbled around her. Susan’s unassuming air made it even worse. â€Å"What seems to be the problem, Phil?† Strathmore said, opening the refrigerator. â€Å"Drink?† â€Å"No, ah-no, thank you, sir.† He seemed tongue-tied, not sure he was truly welcome. â€Å"Sir†¦ I think there’s a problem with TRANSLTR.† Strathmore closed the refrigerator and looked at Chartrukian casually. â€Å"You mean the Run-Monitor?† Chartrukian looked shocked. â€Å"You mean you’ve seen it?† â€Å"Sure. It’s running at about sixteen hours, if I’m not mistaken.† Chartrukian seemed puzzled. â€Å"Yes, sir, sixteen hours. But that’s not all, sir. I ran a virus probe, and it’s turning up some pretty strange stuff.† â€Å"Really?† Strathmore seemed unconcerned. â€Å"What kind of stuff?† Susan watched, impressed with the commander’s performance. Chartrukian stumbled on. â€Å"TRANSLTR’s processing something very advanced. The filters have never seen anything like it. I’m afraid TRANSLTR may have some sort of virus.† â€Å"A virus?† Strathmore chuckled with just a hint of condescension. â€Å"Phil, I appreciate your concern, I really do. But Ms. Fletcher and I are running a new diagnostic, some very advanced stuff. I would have alerted you to it, but I wasn’t aware you were on duty today.† The Sys-Sec did his best to cover gracefully. â€Å"I switched with the new guy. I took his weekend shift.† Strathmore’s eyes narrowed. â€Å"That’s odd. I spoke to him last night. I told him not to come in. He said nothing about switching shifts.† Chartrukian felt a knot rise in his throat. There was a tense silence. â€Å"Well.† Strathmore finally sighed. â€Å"Sounds like an unfortunate mix-up.† He put a hand on the Sys-Sec’s shoulder and led him toward the door. â€Å"The good news is you don’t have to stay. Ms. Fletcher and I will be here all day. We’ll hold the fort. You just enjoy your weekend.† Chartrukian was hesitant. â€Å"Commander, I really think we should check the-â€Å" â€Å"Phil,† Strathmore repeated a little more sternly, â€Å"TRANSLTR is fine. If your probe saw something strange, it’s because we put it there. Now if you don’t mind†¦Ã¢â‚¬  Strathmore trailed off, and the Sys-Sec understood. His time was up. â€Å"A diagnostic, my ass!† Chartrukian muttered as he fumed back into the Sys-Sec lab. â€Å"What kind of looping function keeps three million processors busy for sixteen hours?† Chartrukian wondered if he should call the Sys-Sec supervisor. Goddamn cryptographers, he thought. They just don’t understand security! The oath Chartrukian had taken when he joined Sys-Sec began running through his head. He had sworn to use his expertise, training, and instinct to protect the NSA’s multibillion-dollar investment. â€Å"Instinct,† he said defiantly. It doesn’t take a psychic to know this isn’t any goddamn diagnostic! Defiantly, Chartrukian strode over to the terminal and fired up TRANSLTR’s complete array of system assessment software. â€Å"Your baby’s in trouble, Commander,† he grumbled. â€Å"You don’t trust instinct? I’ll get you proof!† How to cite Digital Fortress Chapter 19, Essay examples

International Journal Of Management Review â€Myassignmenthelp.Com

Questions: How Can IKEA Improve The Performance Of The Management? Should IKEA Expand Its Business Globally By Innovating New Products? What Kind Of Issue Is IKEA Facing In Nowadays? Anawers: Introduction A decision can be eliminated in the form of course of action intentionally object from a set of alternative to attain organizational objective. The nature of decision making is continuous component of handling any organization or activities of business. It is a report which is made on IKEA Company and the management issues of IKEA Company will be discussed. The report will focus on specific questions of research which will address the problem and decision of Management. Finding will be done on proper analysis by using secondary data. Alternative will be found to improve the efficiency of the employee and Recommendation has been given to improve the performance of the organization. IKEA Company IKEA is a multinational company that makes and sells ready to assemble furniture, appliances of kitchen and accessories of home. It has been the largest furniture retailer in the world. IKEA have more than 400 stores in 49 countries. It is a company that is known for its modernist design for different kind of appliances and furniture and its interior design work that is referred to eco friendly simplicity. Along with that it is a company which is known for its operational details, corporate attributes and cost control that offered IKEA to lesser its range uploaded by average of 2% to 3% in the time of expansion of global. It produces more than 12000 products of furniture with different interior quality. It has the website on which more than 2.1 million visitors visit and buy products. It is responsible for approximately 1% of commercial conception rich me company in the category of the largest uses of wood in the retail Store (Reimann and Rolfson, 2016) Management issues in IKEA Management is the backbone of the company that is why it is necessary that the management of the company should be effective. It has been found that IKEA has faced challenges regarding management. The key problem in IKEA is that it has not enough like-minded managers to manage the stores. Another key issue in IKEA is that it has not been through vigorous in receiving the definite of new market and tailoring some of its product to satisfy local market. These management issues can influence the organization in negative way which might damage the reputation of the company in the view of outsiders (Warner and Rowley, 2015). It can be resolved by considering the qualitative and quantitative research. However, the contribution of IKEA is not limited up to satisfy its customer by delivering and providing the furniture but also it is known company due to its contribution and donation to needy people and it supports to UNICEF for making new schools. Due to management issue, company might get influenced adversely so it is essential for the company to consider the possible resolution to resolve the issues rapidly (Guerrero, Maas and Hogland, 2013). Research methods and data collection There are number of methods available to research on a specific topic. Find static data has been considered for the research on the management issue of IKEA Company. Qualitative data refers to gather data which is taken in the used to improve the quality. Secondary sources are being used to gather the quality data from the journal articles website and were the Internet (Dekker, Fleischmann, Inderfurth and Wassenhove, 2013). Analyze the Findings Idea is a multinational furniture company but it has so many management issues. One of the issues is a lack of expertise in the store of IKEA. Manager should be attentive and have the full knowledge about the company's product and Vision and Mission so that he could make clear his employees about the objective of the company. It has been found that the manager of the IKEA is unable to give information to the Employees on the right time due to cultural difference. Another issue has been found in the context of IKEA is that it focuses only the local market without making any innovative changes. Expectations of the customer from the idea company are very high so it is a responsibility of the company to fulfill their demands and run with the latest trend of the furniture (Kelley, Cranor and Sadeh, 2013). It has been analyzed to the existing problem of IKEA is that the organization become larger, there is a risk all the links with the culture of Corporate getting thinner. The managers of the IKEA are not appointed on the basis of the experience. Company need to focus on the improvement of the performance because there are so many competitors who can beat the IKEA by focusing on the management team. It has been found that the Swedish managers of the IKEA are expected to be ambassadors, define the IKEA way to learn Swedish co-workers in global operation (Lebherz and Hartmann, 2017). It has been proved that due to this manner of the manager, it would be easy for the Netherlands but not for the Germany and France. It is unable to find a manager in the Sweden that that is why it brings a manager from the different country; they have found it difficult to perform their way of the promotion letter in production and international organization. Company has created a limitation for its product which can be the problem in the growth of the idea company. It does not focus on the retail market strategy and make products only to satisfy the local market (Shepherd and Rudd, 2014). Alternative and recommendations It has been recommended that IKEA should focus on management issues in a negative manner and resolve it as soon as possible. Manager if the company should be active and attentive towards the work. It has been found that that due to cultural differences manager of the company are not being a good performer. Company should conduct a training and development program and should provide the detail and depth knowledge about the companys mission and vision. IKEA should widen its selection base of hiring people. It should be higher the people from the different cultural background and provide the proper training about the working style of the company. It will be helpful to promote the diversity and inclusion of new ideas. It will make the rich culture within the company. It should form the formal career path and make a good understanding of the range of the product (Alnge, Clancy and Marmgren, 2016). It is important for the company to give importance to its customer in an appropriate manner. There are two options to resolve the management issue related to manager. Firstly, a company needs to focus to hire the employee of the same country with similar work ethos and cultural similarities. It would be helpful for the company and the other employee to make understand him about the culture of the workplace. Another option can be effective to resolve the issue related to manager. IKEA should promote the manager and focus on certain employees who are able to adjust in different geographical area. Globalization has been promoted to make the one country in the context of business. By focusing on the promotion of successful Manager from different countries to expatriate jobs in other countries, it would be helpful to attend the strong transplantation of talent along with it create strong and committed Global managers (Liang and Yu, 2015). It has been recommended to IKEA for another issue related to innovation and global expansion. IKEA need to focus on the marketing strategy and foresee the opportunity for the growth of the company. It is not the possible for the employee to work in the same environment for the long time the innovation is necessary for staying longer to an employee. As it has been discussed above that IKEA should focus on hiring the employee from different culture because it brings the new ideas and views of different culture. It should perform in the market research deeply and study about the taste of the customer. It has been analyzed that IKEA is very slow to innovate new product and in global expansion. Company need to conduct market research on monthly basis and should find the way to enter into the new market. References Alnge, S., Clancy, G. and Marmgren, M., 2016, Naturalizing sustainability in product development: A comparative analysis of IKEA and SCA, Journal of Cleaner Production,135, pp.1009-1022. Dekker, R., Fleischmann, M., Inderfurth, K. and van Wassenhove, L.N., 2013,Reverse logistics: quantitative models for closed-loop supply chains, Springer Science Business Media. Guerrero, L.A., Maas, G. and Hogland, W., 2013, Solid waste management challenges for cities in developing countries,Waste management,33(1), pp.220-232. Kelley, P.G., Cranor, L.F. and Sadeh, N., 2013, Privacy as part of the app decision-making process, InProceedings of the SIGCHI Conference on Human Factors in Computing Systems(pp. 3393-3402). ACM. Larsson, A. and Schiehle, S., 2016, The Effects of Diversity on Multinational Organisations: An exploratory case study investigating the cross-cultural management and organisational culture of IKEA. Lebherz, M. and Hartmann, J., 2017, Applying the value grid model to the furniture industry: the example of IKEA. Liang, C. and Yu, F.R., 2015, Wireless network virtualization: A survey, some research issues and challenges,IEEE Communications Surveys Tutorials,17(1), pp.358-380. Reimann, H. and Rolfson, J., 2016, The Process of E-commerce Returns: A Case Study of the IKEA Customer Distribution Center in Torsvik, Jo?nko?ping Sweden. Shepherd, N.G. and Rudd, J.M., 2014, The influence of context on the strategic decision?making process: A review of the literature,International Journal of Management Reviews,16(3), pp.340-364. Stadtler, H., 2015, Supply chain management: An overview. InSupply chain management and advanced planning(pp. 3-28), Springer Berlin Heidelberg. Warner, M. and Rowley, C., 2015,Demystifying Chinese Management: Issues and Challenges. Routledge.

The Effect of Corporate Governance Mechanism on the Quality of Earnings Among Nigeria Money Banks in Nigeria free essay sample

This paper examines whether corporate governance mechanism variable – Board Size, Board Composition, Ownership Concentration, Institutional Shareholders, Dividend Payment, Firm Size have significant impact on the quality of earnings of Nigerian deposit money banks as measured by modified (McNicols and Wilson, 1998), (Gred and Clarke, 2004) and (Chang, 2008) model of specific industry discretionary accruals as against (Dichow and Dichev, 2002), though widely accepted but is hardly industry specific. Secondary data are extracted from the annual reports of 15 banks that form the sample of the study within the period between 2006-2011. Multiple regression was used as a tool for analysis. The result reveals that corporate governance mechanisms affects earnings quality of Nigerian money deposits banks. All the corporate governance examined are positive except for the control variable firm size signifying that none of the explanatory variables is inversely related to quality of earnings amongst Nigerian money deposits banks. It is therefore recommended that amongst others that shareholders of Nigerian DMBs to ensure the inclusion of about 50% outside directors in the board and ensuring a good quantum of both institutional and block holders in the equity holdings of the banks. We will write a custom essay sample on The Effect of Corporate Governance Mechanism on the Quality of Earnings Among Nigeria Money Banks in Nigeria or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Keywords: Earnings, Discretionary, accruals, manipulation, monitoring, quality. Introduction The rising number of corporate failures, scandals and crises such as Enron, WorldCom, Global Crossing, HIH Insurance, Ansett, Pan Pharmaceuticals, Lever Brothers, Cadbury, and Afri bank has precipitated the growing interest on the governance structures of firms by academics, practitioners, the investment community, regulatory agencies, policy makers, national and multilateral government bodies and host of other stakeholders (Tsegba, 2011). Corporate governance is about building credibility, ensuring transparency and accountability as well as maintaining an effective channel of information disclosure that would foster good corporate performance (Matama, 2008). Income smoothing and earnings quality popularly called earnings management can be regarded as two of the attractive and challenging issues in studies related to accounting because investors pay attention to amount of income as an important factor in decision making. It has long been recognized that financial statements play an important role in assessing managers’ performance by the board of directors outside investors and external regulators. It is therefore, not unlikely that managers will manipulate financial reports in order to produce a good image of themselves and the firms that they manage (Shehu and Abubakar, 2012). There are a lot of qualitative empirical studies exist on the relationship between corporate governance mechanisms and earnings quality. However, quantitative studies supporting the existence of a link between corporate governance mechanisms and earnings quality are relatively scanty and inconclusive. Besides the scanty nature of quantitative literature, most of the existing ones are more concerned about the overall quality of corporate governance mechanisms rather than particular features or practices of such governance. In addition, most of the studies are cross-sectional in nature. There is none of these studies that examine either the overall or particular features of corporate governance mechanisms and earnings quality of the banking industry in isolation. The peculiar and sensitive nature of the banking industry as well as the reforms it has continued to undergo indicates the need for special attention. This study attempts to address that omission by examining the effect of corporate governance mechanisms on the earnings quality of Nigerian money deposit banks. The relationship between corporate governance mechanisms and earnings quality is important to the extent that good corporate governance builds confidence in the minds of existing and potential investors as well as other stakeholders of a bank. This in turn creates confidence in the banking industry. The implications of these on the economy as a whole are also obvious. Economic growth will be more sustainable, capital market will be boosted and become more developed and an egalitarian and corrupt-free society will be built. All these are essential for sustained economic growth and development. This study also contributes to the growing body of quantitative research on corporate governance and earnings management. The spate of well publicized corporate failures around the world call for high-quality financial reporting, which gives a proper record of stewardship, provides details of real costs of services and in which the informed individual can have confidence. Moreover, the recent number game amongst banks in Nigeria raises additional concern on the need for financial reports that meet today’s requirements (Bello, 2005). Earnings management involves the manipulation of earnings by companies using financial statement elements that are largely at the discretion of the managers to achieve divergent personal goals. These elements are peculiar to industries depending on their nature of operations and external regulatory framework. Researchers such as (Dockery and Herbert, 2000); (La Porta, Lopez-de-Silanes, (Yakasai, 2001); (Detomasi, 2002); (Fort and Schipani, 2003); (Bai, Liu, Lu, Song and Zhang, 2005); (Barako and Tower, 2006); (Achua, 2007); (Okike, 2007) and (Shehu and Abubakar, 2012) have identified that accruals arising from depreciation are used to manipulate earnings in manufacturing companies, claim loss reserve in insurance and loan loss provision in banking. Loan losses has been identified as one of the most important factors that lead to bank failures and its provision has a direct impact on reported earnings (Grey and Clarke, 2004). The issue of earnings quality arises because financial reports may incorporate adverse information about future cash flows in a more or less timely fashion (Francis et al, 2003). According to (Ball and Shivakumar, 2002), earnings quality is about timely loss recognition that requires estimates of future cash flows from assets or outflows for liabilities. In (Basu’s, 1997) view, accountants have tendency to require a higher degree of verification to recognize good news as gains than to recognize bad news as losses. He consequently relates earnings quality to the accounting concept of conservatism, which supposes that earnings reflect ‘bad news’ more quickly than ‘good news’. In theory, one measure of earnings quality is the relation between current accruals and cash flow (Jindrichovska and Kuo, 2000). Thus, prior researches document an association between earnings pattern and earnings quality (Hunt et al, 2000; Francis et al, 2003). Relating this measure to banking, earnings quality becomes a function of DLLP and earnings pattern. Accordingly, banks with abnormal DLLP are considered as having low quality earnings while banks with normal DLLP are deemed to have high earnings quality. Incidentally, there also, exists an inverse relation between smooth and increasing earning pattern and earnings quality: the higher the smooth earning pattern the lower the earnings quality (Francis et al, 2003). Shehu and Abubakar, 2011) opined that loan loss provision is an expense on the income statement which signifies managers’ assessment of expected future losses. This means that an increase in loan loss provision reduces net income, while a fall in loan losses increase net income. Since it is the result of managers’ assessment of the likely loss that the company would incure should the borrower fail to repay his obligations as at when due, the provision for it is considered to have two (2) p ortions: non-discretionary and discretionary portions. Non-discretionary is a function of specific quality determinants in the loan portfolio- non-accrual loans, renegotiated loans, loans past due over 90 days, specific analyses on troubled large credits, usually implying internal grading system. This means that the non-discretionary portion is the provision that is based on fair and objective analyses of the firm’s economic conditions. While the discretionary portion are those accruals that largely depend on the outcome of the managers’ future expectations of uncertain events. The components of it are both quantitative and qualitative. Grey and Clarke (2004) pointed that the qualitative components include political, economic, geographical and political factors, while the quantitative are statistical analyses of loans not individually analyzed for special reserve and therefore are largely at the discretion of managers. The reasons why banks manipulate earnings are supported by three arguments of signaling argument, income smoothing or earnings quality argument and capital management argument (Zhou and Chen, 2004). The signaling argument suggests that banks use discretionary loan loss provision to insinuate that earnings will be high in subsequent periods (Wahlen, 1994: Liu and Ryan, 1995: Beaver and Engel, 1996). Contrary to the signaling argument, earnings quality argument holds that managers increase the provision for loan losses in periods when earnings are high, under the assumption of income smoothing (Beatty, Chamberlain amp; Moglio, 1995: Collins, Shacklford amp; Wahlen, 1995: Rivard, Bland amp; Morris, 2003). This implies that earnings quality in this area improves bank’s cash flows, capital adequacy, market value and overall performance. While the capital management argument suggests that since increase in loan loss provision increases regulatory capital, management exercises discretion over its provision (Ahmed, Takeda amp; Thomas 1999, Beatty et al. , 1995). Regardless of the industry and the strings attached, managers’ discretionary behavior to achieve personal gains undermines the shareholders’ wealth maximization objective of the firm. Consequently, therefore, this paper examines the influence of corporate governance mechanisms on the quality of earnings among Nigerian Deposit Money Banks (DMBs). In order to achieve this, it is posited that corporate governance mechanisms- board size, board composition, ownership concentration; audit committee, institutional shareholding and dividend have no significant impact on quality of earnings among Nigerian DMBs. It is the constant fear in the banking industry in spite of introduction of new code of corporate governance to enhance the efficiency of the industry practices, and the recognition of the use of discretion by bank managers as well as earnings manipulation that make this work apt and imperative. This study contributes to the sparse of literature that studied the relationship between corporate governance and earnings quality. It also extended to the financial firms by raising and discussing issues on corporate governance mechanism and earnings quality of banks using discretionary loans loss provision in the circumstance of emerging economies like Nigeria. The paper is structured as follows. Section two reviews related literature on corporate governance mechanisms and earnings quality and theoretical framework. Section three is methodology and model specification. In section four, the results and findings of the study are presented and discussed. Finally, section five deals with conclusion and recommendations. 2. 1 Literature Review and Theoretical Framework Literature on corporate governance and quality of earnings is reviewed. Specifically the study concentrates on governance mechanisms of dividend, audit committee, board size, board composition, ownership concentration and institutional shareholding. The theoretical framework that underpins the study is then presented and supported. Earnings quality as the altering of financial statements through the use of judgment in structuring transactions to either mislead the firm’s stakeholders about the true economic picture of the firm or to achieve some contractual benefit that is based on accounting numbers (Healy and Wahlen, 1999). (Schipper, 1989), opined that earnings quality is the deliberate intervention in financial reporting process to achieve personal goals. Earnings quality is the manipulation of financial statement by managers, using accounting choices, estimates and methods, to achieve some objectives that are largely in conflict with the underlying economic status of the firm. Different incentives to manage earnings are widely discussed in the literature, (Bhat, 1996), linked it to the attempt to enhance shareholders’ value and to maximize executive compensation through income smoothing and earnings quality respectively. Income smoothing, occasional big bath, living for today and maximization of variability are identified by (Koch amp; Wall, 2000). (Chang et al. 008) note three incentives to manage earnings: capital market motivation, which includes initial public offerings, seasoned equity offerings, management buoyant plans and plans for mergers to meet earnings forecast, to smooth earnings, management compensation motivation, debt agreement or job security and laws and regulations such as import regulation, antitrust laws, also can serve as incentives. Managers use discretionary accruals for opportunistic earnings quality (Cornet et al. 2009) by attaining some level of performance and affecting stock prices to enhance managers’ wealth through restricted stock returns. . 1. 1 Board Size and Earning Management There are a lot of empirical researches that have documented that board size is related to earning management. The evidence on the role of board size is inconclusive. Yermack (1996) and Eisenberg, Sundgren, and Wells (1998) demonstrate that smaller boards are associated with manipulative accounting. In the analysis of 131 different study-samples with a combined sample size of 20,620 observations (Dalton, Daily, Johnson and Ellstrand (1999) documented a positive and significant relation between board size and income smoothing. These conflicting results provide no conclusive relationship between earnings management and board size. A smaller board may be less encumbered with bureaucratic problems and may be more functional. Smaller boards may provide better financial reporting oversight. Alternately, a larger board may be able to draw from a broader range of experience. In the case of earnings management, a larger board may be more likely to have independent directors with corporate in financial experience. If so, a larger board might be better at preventing earnings management. Small boards are less effective monitors and are easier for CEOs to influence (Jensen, 1993) and (Lipton and Lorsch, 1992). 2. 1. 2 Board Composition and Earnings Quality Board independence simply refers to non-executive external directors, who do not represent any particular shareholder interest and hold no special business interest with the bank, relative to total number of directors on the board (Shehu and Abubakar, 2011). Studies on impact of board composition on earnings quality have produce varied results. Cornet et al. 2007), examine the impact of corporate governance and pay-for-performance on earnings quality. By means of 100 largest firms in the U. S. as ranked by Samp;P between 1994-2003, they find that the presence of independent outside directors reduce earnings quality. Aggregate accruals were used to proxy for earnings quality. (Cornet et al. , 2009), investigate how corporate governance mechanism affects earnings quality at large publicly traded U. S. companies for th e period between 1994 2002. Large independent boards constraint earning quality was found by the study. Roodposhti and Chashmi, 2010) find that for the period between 2004-2008 in Iran, using 196 firms listed on Tehran Stock Exchange, revealed a negative association between board independence and earnings quality. On the contrary, (Hashim and Devi, 2008) examine the relationship between board independence, CEO duality and accrual management in Malaysia. Using 200 top non-financial companies listed on Malaysian Stock Exchange, they find that large percentage of independent executive directors is associated with higher income-increasing earnings quality. Also, (Shah, Zafar and Durrani, 2009), study the relationship between board composition and earnings quality in Pakistani listed companies for the period between 2003 and 2007. They find no significant relationship between board composition and earnings quality. Yet, all studies exclude financial firms, the inclusion of which might have yielded different result. (Macey and O’Hara, 2003) opined that governance structure is industry specific and there is a systematic difference between the governance of different industries 2. 1. 3 Ownership Concentration and Earnings Quality Ownership concentration, which is also referred to as blockholders. It is the proportion of shares (usually more than 5%) owned by a certain percentage of shareholders. There are arguments that the higher the number of shares owned by the blockholders, the more the pressure on managers to act in conformity with shareholders interest (Sanda et al. , 2005). (Ramsy and Blair, 1993) opined that large ownership concentration has more incentives to manage earnings because the expected benefit from equity holding in the firm outweighs the cost associated with monitoring managers If this is true, then we expect ownership concentration to be inversely related to earnings quality. Some researchers observe that high ownership concentration beyond a certain level may lead to abuse of power, which could be detrimental to the value maximization goal of the firm (Sanda et al. , 2005). Inconsistent results were yielded on the relationship between ownership concentration and earnings quality. (Roodposhti and Chashmi, 2010) find a negative relationship between ownership concentration and earnings quality, while they used 196 firms listed on Tehran Stock Exchange as their sample for the period between 2004-2008, to examine the effect of board composition and ownership concentration on earnings quality. In the same vain, (Klai and Omri, 2011), investigate the impact of corporate governance on financial reporting quality in Tunisia. The study used 22 listed firms for the period between 1997-2007. They find that ownership concentration is negatively associated with earnings quality. Conversely, Using top 200 listed non-financial companies, (Hashim and Devi, 2008), examine the association between board independence, CEO duality and accruals management. They find that ownership concentration is associated with high income-increasing earnings quality. Besides the exclusion of financial firms from all the studies mentioned above, economic differences of nations calls for an investigation in of similar problems in an economy like ours. 2. 1. 4 Institutional Shareholding and Earnings Quality Institutional shareholders have both the incentive and power to compel managers to act in consonant with value maximization objective of the firm. (Shehu, 2011) note that institutional ownership has emerged particularly in the banking sector as a tool for protecting minority interest. We, therefore, expect that institutional shareholding and earnings quality will be inversely related. (Cornet et al. , 2007), investigate how governance structure and incentive based compensation influence firm performance when measured performance is adjusted for earnings quality. The study used top 100 firms rated by Samp;P in U. S. , they find that earnings quality is significantly reduced by institutional shareholders whether institutional shareholders is measured based on the proportion of shares owned by all institutional shareholders or by institutional involvement in the firm. This finding is an extension of (Klein, 2002). The study might have revealed different result if carried out in the Nigerian context. (Shehu, 2011) examine the interaction between corporate governance and financial reporting quality in deposit money banks. Using all 21 banks quoted on NSE for the period between 2007-2009, the study reveals a positive and significant relationship between institutional shareholding and earnings quality. The major drawback of this research is that it uses (Dichow and Dichev, 2002) model, which though is widely accepted but is hardly industry specific. The presence of institutional investors with substantial shareholdings restrain managers from engaging in income increasing discretionary accruals when companies have high free cash flow, however, when there is no free cash flow agency problems. 2. 1. 5 Dividend Payment and Earnings Quality While many studies ignore this variable as corporate governance mechanisms, this study consider dividend payment as a n important parameter that measures the overall efficiency of the board. A board that has high frequency of dividend declaration may force earnings managers to have less discretion in manipulating earnings. This is because higher earnings will attract high dividends leading to free cash flow. Larger free cash flow payout reduces managers’ ability to make bad investment (Jensen, 1986). Likewise, high payment obliges managers to raise additional capital via stock market there by being exposed to specialist, financial analyst, investment bankers, regulatory authorities and the press (Goergen, 2007). From these views, apart from the fact that high dividend is a signal to management effectiveness; it serves as a disciplinary mechanism in limiting management discretion over cash flow. In absence of priority we hypothesized that firms with high level of dividend history will have less level of unethical accounting practice that has to do with earnings misrepresentations (Bello, 2013). 2. 2 Theoretical Framework and Model Development In order to link corporate governance with earnings quality, the study first looks at the theories that induced earnings manipulations. Two prominent are opportunistic and desirous. The first theory which embedded the philosophy of this paper is opportunistic tendency of managers to engage in unethical in absence of good governance structure. Secondly, from corporate legal point of view board are to act as trustees of shareholders. Infact they are like operating shareholders directly overseeing the affairs of management. Agency theory, postulates an inevitable conflicts. Whereas, managers will be targeting better performance for short term gains, the interest of shareholders would be that of long term benefit of capital appreciation and return (dividend). Within the agency framework, it is both logical and inescapable that management behavior will be self serving (Amat, 1996). The end result will be that of managers manipulating earnings. These two theories; agency theory and opportunisms theory provide a complete framework for understanding corporate governance and earnings quality. 3. 1 Methodology The research design is inclined to use ex-post financial data because of its empiricism as well as practicality. The period of the study is six (6) years (2006 to 2011) both years inclusive. The period is considered more appealing because all DMBs for which relevant financial data from 2006 to 2011 is obtained would have survived the distress syndrome of the early 1990s and 2005 consolidation saga in Nigeria. We believe also that the six-year period would provide an adequate time series of data (observations) to realistically identify Nigerian DMBs that have been managing earnings over a number of years. This is consistent with Michelson et al (2000) idea that adequate time series studies captures incidence of smoothing, whereas one period studies reflect attempts to smooth. The data is extracted from the consolidated annual reports of the sampled banks sourced in the Nigerian Stock Exchange fact book 2010/2011. The population of the study is all the 25 DMBs that survive consolidation exercise as at 31st December 2006. The ample is drawn using criteria of complete data availability in which 15 banks automatically formed the sample of the study. Two steps Panel regression is used as tool of analysis because it satisfies our purpose of predicting and explaining relations between variables and also providing residuals of the LLP model to represent the explained variable in the second regress ion model. A pre-requisite for the use of any variant of earnings quality detection models is computation of the smoothing instrument. Theoretically and in practice, the smoothing instrument relevant to earnings quality studies in the banking industry is the LLP. Previous studies have investigated earnings quality instruments such as dividend income, changes in accounting policies, pension costs, extraordinary items, investment tax credit, depreciation and fixed charges, and many others (Kamarudin et al, 2001). However, (Kanagaretnam et al, 2001), specifically conclude that banks use LLP and charge-offs to smooth income. 3. 1. 1 Estimation of Discretionary Loan Loss Provision and Variables Measurement Now, in order that we use LLP in detecting earnings quality, we need to estimate the LLP made by sample banks in the industry. Nonetheless, we begin by making distinction between regulatory LLP as per the requirements of the PGs and discretionary loan loss provisions (DLLP) that is used for earnings quality. The distinction is useful because, where banks provide only in compliance with the PGs (non-discretionary LLP), it would be wrong to conclude that it uses LLP for earnings quality. The DLLP therefore contains an element of provision in excess of PGs requirements. It follows that to conclude that banks smooth their reported earnings; there must be evidence of DLLP in the financial reports. Stated differently, the presence of DLLP is a prima facie pointer to the possibility of earnings quality behaviour among the banks. (McNichols and Wilson, 1998), (Grey and Clarke, 2004) and (Chang, 2008) adapted measuring earning management in banks with discretionary loan loss provision. Consistent with prior studies (e. g. , Kim and Kross, 1998; and Kanagaretnam et al, 2001), the beginning balance of nonperforming loans, change in non-performing loans and change in total loans to estimate the non-discretionary component of LLP is used. Because the beginning balance of nonperforming loans (NPL) is usually positively related to LLP, therefore, with a higher level of beginning nonperforming loans, banks will have to make a higher LLP. In addition, change in nonperforming loans (CHNPL) in the current period to have a positive effect on LLP is expected. The sign of the coefficient of change in the value of loan deflated by beginning loans (CHLOAN) is also positive. An increase in loan portfolio will most likely result in an increase in LLP. Equation (1) provides an estimate of the non-discretionary LLP: LLPit = 0 + 1NPLit + 2CHNPLit + 3CHLOANit + it[1] Where, LLPit = provision for loan losses deflated by beginning loans; NPLit-1 = beginning of period nonperforming loans deflated by beginning loans; CHNPLit = change in the value of nonperforming loans deflated by beginning loans; and CHLOANit = change in value of loans deflated by beginning loans. In equation (1) above, the independent variables account for the non-discretionary component of LLP, and consequently, the DLLP is given by the residual term. In order to explain the cross-sectional differences in the level of DLLP, it requires a two-stage analysis where the first stage explicitly models the non-discretionary portion of LLP using a model as per equation (1). In the second stage, the residual from the first stage regression, representing the discretionary portion, is subsequently used as the dependent variable. A drawback of this stepwise estimation procedure is that, it systematically underestimates the absolute value of the regression coefficients in the second stage (Kanagaretnam et al, 2001). Hence, to alleviate this potential problem, analysis using a single regression model is conducted including the three variables used in equation (1) to explicitly account for the non-discretionary component of the LLP. The empirical model is given thus: LLPit = 0 + 1EBTPit + 2L/DEPit + 3 WELLit + 4 LASSETit +5 CHNPLit + 6 NPLit-1 + 7 CHLOANit + it †¦Ã¢â‚¬ ¦ [2] Where, EBTPit = earnings before tax and provisions deflated by beginning assets; LLPit = provision for loan losses deflated by beginning loans; L/DEPit = ratio of loans to deposits; WELLit = a dummy variable which equals 1 when industry capital ratio is well above the legal requirement (i. e. , when the total risk-based capital ratio exceeds 10% and the tier 1 risk-based capital ratio exceeds 8%), and equals 0 otherwise; LASSETit = the natural logarithm of total loan assets; CHNPLit = change in the value of nonperforming loans deflated by beginning loans; NPLit-1 = beginning of period nonperforming loans deflated by beginning loans; and CHLOANit= change in value of loans deflated by beginning loans. The first three variables (EBTP, L/DEP, and WELL) explain cross-sectional differences in DLLP; the third variable (LASSET) is a control variable and the last three variables (CHNPL, NPL, and CHLOAN) account for the non-discretionary component of LLP. The corporate governance variables of the study- board size, board composition, ownership concentration, dividend and institution shareholding are measured below: Board size (BS) is the total number of directors in the board Board composition (BC) is the ratio of independent or outside directors to total board size. Ownership concentration (OC) is the percentage of shares owned by blockholders (more than 5%). Institutional shareholding (IS) is the ratio of equity share owned by institutional investors to total number of shares issued. Dividend payment (DP) is the total amount of dividend paid. Firm size (FS) is the control variable which is the natural log (1n) of total assets. Such control is necessary because the bigger the bank, the larger the expected agency problem it will experience. Grey and Clark, 2004) note that large banks likely to avoid using discretionary loan loss provisions to manipulate earnings. A lot of researchers controlled for firm size in corporate governance studies including (Sanda et al. 2005), (Dabo and Adeyemi, 2007) and (Roodposhti and Chasmi, 2011). The regression model for testing the hypothesis of this study is presented below: LLPit = ? it + ? 1BSit + ? 2BCit + ? 3OCit + ? 4ISit + ? 5DPit + ? FSit + eit LLP= Loan Loss Provision BS=Board Size BC = Board Composition OC = Ownership Concentration IS = Institutional Shareholding DP = Dividend Payment FS = Firm Size 4. 1 Result and Discussion The analysis begins with a range of descriptive statistics on dependent variable and independent variables with mean, standard deviation, minimum and maximum presented below: Table 1: Summary of Descriptive Statistics | BS| BC| OC| IS| DP| FS| Mean| 14. 5444| 0. 2644| 0. 3177| 0. 5608| 2. 6556| 11. 2100| Std. Dev. | 2. 65703| 0. 11349| 0. 10243| 0. 5267| 0. 33000| 0. 11000| Minimum| 9. 00| 0. 0| 0. 12| 0. 43| 10. 37| 68. 97| Maximum| 20. 00| 0. 50| 0. 60| 0. 68| 4. 15| 83. 20| Observation| 90| 90| 90| 90| 90| 90| Source: Output of data analysis using E-view The table 1 shows the average independent directors in the board composition of the Nigerian banks is 26%, board size accounted for about 14 directors, block holders and institutional shareholding averaging 56% and 32% respectively of the shares issued and N2. 66k is the average dividend paid by Nigerian banks. The control variable is a veraging 11. 1 billion naira worth of assets by the banks. The standard deviations of most of the variables are not far away from their respective means values. This indicates a favourable level of dispersion that the data is not skewed and good to produce a reliable result which is confirmed by the values of skewness and kurtosis though not reported but attached. The minimum and maximum number of both executives and non-executives directors are 9 and 20 and that of independent directors of the banks are 10% and 50% respectively. In addition, the block holders and institutional shareholders of Nigerian banks range from 12% to 60% and 43% to 68% respectively. The total assets of the banks range from 68. 97 to 83. 20 billion naira during the period of the study. Table 2: Correlation Matrix | FIQ| BS| BC| OC| IS| DP FS| FIQ| 1| | | | | | BS| 0. 25| 1| | | | | BC| 0. 21| -0. 025| 1| | | | OC| 0. 29| 0. 090| 0. 024| 1| | | IS| 0. 42| 0. 035| -0. 034| 0. 34| 1| | DPFS | 0. 170. 31| -0. 146 0. 70| -0. 015-0. 034| 0. 158-0. 071| 0. 4890. 415| 10. 74 1| Source: Output of data analysis using E-view The correlation results presented in table 2 shows that all the explanatory variables are positively and strongly associated with explained variable except institutional shareholders and dividend paid. Thus, there is a strong relationship between corporate governance mechanisms and loan loss provision of the Nigerian money deposit banks. On the other hand, most of the independent variables are negatively and not significantl y associated between them. This indicates an absence of multicolinearity between the explanatory variables of the study. The correlation matrix reveals the relationship between all pairs of explanatory variables involved in the regression model. High correlation among the independent variables point the possibility of multicollinearity (excessive correlation), a situation which distorts the standard errors of estimates and the validity of the result became questionable. The correlation coefficients showed that multicollinearity does not exist among the variables. Additionally, this study adopts further test for excessive correlation using the variance inflation factor (VIF) and tolerance values. The purpose of additional investigation is to provide adequate assurance that the research findings are robust to the model specification. Table 4:Multicollinearity Test Variable| VIF| Tolerance| BS| 1. 081| 0. 925| BC| 1. 003| 0. 997| OC| 1. 080| 0. 926| IS| 1. 407| 0. 711| DP| 1. 657| 0. 603| FS| 1. 440| 0. 694| | | | Source: Output of data analysis using E-view To formally substantiate the lack of multicollinearity between the independent variables, colinearity diagnostics are observed and that the variance inflation factors (VIF) and tolerance values indicate no multicollinearity in the data. The values for tolerance and VIF are shown in Table 4. The tolerance value and the variance inflation factor (VIF) are two advanced measures of assessing multicollinearity between the independent valuables. The variance inflation factors and tolerance values are computed and found to be consistently smaller than ten and one respectively indicating absence of multicollinearity (Neter, Kutner, Nachtsheim, and Wasserman, 1996 and Casey and Anderson 1999). In addition, the tolerance values are consistently smaller than 1. 0 thus further substantiates the fact that there is no multicollinearity between independent variables (Tobachnick, and Fidell, 1996). The following regression result of the study is presented and discussed. Table 3: Regression Results Variable| Coefficient| T-Statistic| Sig. | | BS| 0. 355| 4. 123| 0. 000*| | BC| 0. 196| 2. 360| 0. 021**| | OC| 0. 144| 3. 673| 0. 008*| | IS| 0. 186| 4. 890| 0. 002*| | DP| 0. 520| 4. 873| 0. 000*| | FS| -0. 488| -4. 908| 0. 000*| | R-sq uared| 0. 43| Adjusted R-squared| 0. 40| F-statistic| 10. 46| F-Sig| 0. 000*| Durbin-Watson stat| 1. 99| | | Source: Output of data analysis using E-view The results show that the estimated model of the study is fit because all the explanatory variables are significant in determining the dependent variable. It can also be observed that the coefficients of all the explanatory variables are positive except for the control variable firm size signifying that none of the explanatory variables is inversely related with quality of earnings among Nigerian deposit money banks. The cumulative influence of all the explanatory variables put together is able to explain the dependent variable to 40% as indicated by the adjusted R2 and the remaining 60% is controlled by other factors. Again, the value of the F- statistic 10. 46 and significant at 1% confirms that the model is well fitted. This provides evidence of rejecting the null hypothesis that corporate governance mechanisms have no significant impact on the quality of earnings among Nigerian deposit money banks. The Durbin- Watson of 1. 99 reveals that serial correlation will not pose a problem to the statistical result of the study. The result in respect of board size and board composition shows that both of them positively and statistically significant at 1% and 5% respectively. This implies that the more their numbers the better the quality of earnings among Nigerian DMBs. For board size, the result reveals that Nigerian banks should have a minimum of 9 and maximum of 20 executive and non-executive directors for their reported earnings to be of quality. The finding supported that of Jensen (1993) and Lipton and Lorsch (1992) who suggest that small boards are less effective monitors and are easier for CEOs to influence and contradicts those of Yermack (1996), Eisenberg et al. (1998) and Loderer and Peyer (2002). The findings related to board composition or independence is line with (Hashim and Devi, 2008; Cornet et al. , 2009), and contrary to (Cornet et al. 2007; Roodposhti and Chashmi, 2010; Shah, Zafar and Durrani, 2009). Therefore, the policy implication is for Nigerian banks to have atleast 10% and not more than 50% independent directors out of the total maximum number of directors of 20. Moreover, for institutional share holders the result reveals that institutional shareholding is positively significant in influencing the quality of earnings among the Nigerian DMBs. This implies that banks with high number of institutional holders, their managers are easily restrained to manipulate accounting numbers. Looking at the level of association between institutional ownership and loan loss provision, a positive relation emerged and supported statistically. This significant association indicates that institutional investors are a major consideration in managers aggressive earnings management strategy. This result is not surprising as it shows institutional investors in Nigerian banks are effective in constraining managerial behaviour of earnings management. Consistent with the argument that institutional investors in Nigeria create incentives for managers of their portfolio firms to manage earnings aggressively, these institutional investors focus excessively on current earnings performance (Koh, 2003). Interestingly, this study extends the findings of Shehu (2011) who used a sample of 63 firm-year observations to document a positive relationship between institutional investors and financial reporting quality in the Nigerian banking industry. It also supports Cornett et al. (2008) who used 24,005 sample of U. S. industrial firms to document a postive and robust relationship between institutional investors and firm performance even when performance is stripped of the discretionery accruals. However, it contradicts that of Dabo and Adeyemi (2009) who fail to establish a statistically significant association between institutional shareholding and managers’ opportunistic behaviour using 20 most active quoted firms on the Nigerian Stock Exchange. Moreso, it conflicts with the finding of Al-Fayoum (2010) in their sample of Jordanian industrial firms. It can therefore be concluded that large institutional shareholding in the Nigerian manufacturing firms helps to allay the agency problem and leads to the protection of minority shareholders’ interest. In addition, the result in respect of ownership concentration and earnings quality reveals that ownership concentration is positively and strongly impacting on earnings quality at 1% level of significance among Nigerian deposit money banks. This is in line with our expectation, because given the fact that in most cases the institutions are the blockhoders of the company, therefore the results of the two variables would go in the same direction. The result contradicts the findings of Roodposhti and Chashmi (2010), Klai and Omri (2011) and supports the findings of Hashmi and Devi (2008). The implication of this finding is that the concentration of equity ownership in the hands of few individuals should be encouraged by the bank regulatory authorities. An equity ownership ceiling that should be raise. The result regarding dividend payment and earning management shows that managers will decline from managing earnings to enable them pay dividend to share holders. Statistically, dividend payment influences earning quality at 1% level of significance. This finding is in line with Bello (2013), Goergen,(2007) and Jensen (1986). Finally, the control variables banks’ size significantly and inversely affected the quality of earnings of DMBs in Nigeria. Size appears to affect earnings management inversely indicating that banks with larger assets have low earnings quality since they engage more in earnings management. This may be as result of the availability of much asset may motivate the managers to discretionary take selfish decisions to benefit their personal interest. 5. Conclusion and Recommendation Boards of directors, institutional and block holdings are responsible for monitoring, evaluating, and disciplining banks’ management. Perhaps one of the most important responsibilities of the board from a creditor’s perspective is oversight of earnings quality. Consistent with this idea, it is found that board size, board composition, ownership concentration, institutional shareholdings and dividend paid are all st rongly playing a prominent role in restraining management toward earning management.

Cash Management Report Essays

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SWOT and PESTEL analysis of StratSim The StratSim is a growing and wide spread industry around the global among automobile sellers. Notwithstanding the economic and energy instabilities that led to decreased vehicle demand, sales revenues slowly grew as Gross Domestic Products (GDP) increased from period 1- 4, and remained constant in period 5, and inflation rate decreased from 2.5% in period 1 to 1.0% during period 3. However, in some circumstances, sales were increased and/or decreased as firms started making decisions. The 7 competitors were; firm A, B, C, D, E, F and G. Seven vehicle classes include Minivan (M), Family (F), Sports (S), Luxury (L), Utility (U) Economy (E), and Truck (T). Attributes considered were; performance, styling, quality, interior and safety. Furthermore, advertisement plays a significant role especially when firms are striving to create brand image, awareness as well as interests to target customers. Dealerships contributed in generating revenues through sales of a range of vehicles which in turn enabled the firm to increase its market share while maximising shareholders wealth. Firm B has had 3 vehicle classes, namely; Boss -Truck, Boffo Family and Buzzy Economy. 2.0 Strategic Analysis Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through the use of resources and competence aiming to fulfil shareholder expectations (Johnson et al, 2006, p 9). Figure 1, processes by which strategy is described and executed Source:http://www.12manage.com/description-deliberate-strategy.html. In a competitive business environment such as StratSim, analysing firms strategies is vital in order to enhance firm performance and customer satisfaction. 2.1 Strategic Intent Firm Bs mission was to become the leader in automobile industry worldwide by offering highly innovative vehicles to diverse customer segments aiming at consistently satisfying their dynamic needs. 2.2 Basic Strategy Firm B strategy was to provide high quality vehicles at premium price while trying to differentiate its vehicles from incumbents to avoid encouraging price war. By doing so, firm B was the leader twice in economy (Buzzy) car in period 2 and 5. To meet diverse customer tastes and preferences, the firm made minor upgrades to its vehicles during decision making periods, e.g. technology, promotion, advertising, etc. 2.3 External Analysis Scanning the macro-environment is vital since there are several factors that hinder firms performance and growth. In order for managers to come up with effective and suitable strategies that will enable the firm exploit overt and hidden opportunities while overcoming threats, those factors need to be thoroughly tackled before decisions are made. The external analyses considered were; The Michael Porters five forces. PESTEL analysis. Opportunities and Threats (OT) from SWOT analysis, And Critical Success Factors (CSF). 2.3.1 PESTEL PESTEL framework is a useful tool that is applied by organisations to analyse the complexity of macro-environment variables. It also provides a picture on how these key factors may influence firms success or failure of its particular strategies in future in order that managers can find ways of overcoming them. PESTEL refers to; political, economic, social, technology, environment and legal. Figure 2, PESTEL Framework Source: (Johnson et al, 2006. p 68) The Organisation Political Taxation policy Government stability Social welfare policies Foreign trade regulations Legal Health and safety Competition law Product safety Employment law Economic factors Business cycle Inflation Interest rates Unemployment GNP trends Money supply Disposable income Environmental Environmental protection laws Waste disposal Energy consumption Sociocultural factors Population Demographic Socio mobility Consumerism Income Distribution Lifestyle changes Level of Education Attitudes to work and leisure Technological Government spending on research Speed of technology transfer New discoveries/developments Government and industry focus on technological effort Rates of obsolescence Political/Legal Since 1960, laws and government regulations have affected the automobile industry (Highfill et al, November, 2004). Political changes may favour or hinder the firms production because anti-pollution laws and taxes can be imposed, and hence firm B should continuously pay special attention to any rules, codes and regulations that dwell on carbon-dioxide emissions. Economic During simulation, firm B had experienced unstable economic growth. Its variables like inflation, interest rates, gas prices, and material costs were fluctuated. These have affected the firms profitability. Social Due to increased health awareness, people tend to change their lifestyles, while turning to low carbon emission vehicles. Also income distribution and demographic changes both affect vehicle production either positively or negatively. Technology Advanced technology has provided both opportunities and threats to the automobile industry. Those who employ it effectively, it enables them to enhance firms efficiency in producing vehicles that appeal to customers whilst lowering costs. So far, internet and firm websites as part of technology have been used by many buyers as a reference tool before making their purchase decisions. Environmental Environmentalists stress on minimising carbon-dioxide emissions, noise as well as air pollution, in order to keep the environment clean. This move no doubt affects vehicle production as well as firm profitability. 2.3.2 Critical Success Factors (CSF) Johnson et al (2009) defined CSF as those product features that are particularly valued by a group of customers and, therefore, where the organisation must excel to outperform competition. CSF comprises; threshold features and differentiators. Source: Johnson et al (2009) CRITICAL SUCCESS FACTORS (CSF) THRESHOLD FEATURES DIFFERENTIATORS Threshold features These are features that the customer values mostly, and is not likely to buy a product or service that lacks one of them. Firm B, threshold features were; quality, performance, safety and size for all of its three vehicles; family-Boffo, economy-Buzzy and truck-Boss. Differentiators These are customised/added qualities which some customers may or may not consider before purchasing a service or products. Firm B regarded price, styling and interior as differentiators to its vehicles. Differentiators gave difficult moments when trying to distinguish what was preferred most, as many vehicles were similar to competitors after modifications had been made. Innovations are necessary for firms to meet CSF features and outwit their competitors through customer satisfaction. 2.3.3 Porters Five Forces Model The model was developed by Michael Porter in 1980 (Johnson et al, 2006). Since then, the model is applied by firms as a tool to analyse the profit potential while determining the intensity of competition (threats) of an industry, and finally coming up with the right strategies that will support in exploiting opportunities, neutralise threats and hence grow. Figure 3 Porters Five Competitive Forces Model SUPPLIER POWER Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Supplier concentration Importance of volume to supplier Impact of inputs on cost or differentiation Differentiation of inputs Cost relative to total purchase in industry BARRIERS TO ENTRY Government Policy Capital requirements Access to distribution Economies of scale Switching costs Proprietary learning curve Access to inputs Expected retaliation Brand identity Absolute cost advantages Proprietary products BUYER POWER Price sensitivity Threat of backward integration Substitutes available Bargaining leverage Buyer concentration vs industry Buyer information Buyer volume Buyers incentives Brand identity Product differentiation www.scribd.com DEGREE OF RIVALRY Brand identity Exit barriers Switching costs Product differences Industry growth Fixed cost/ value added Diversity of rivals Industry concentration Corporate stakes Intermittent overcapacity RIVALRY THREAT OF SUBSTITUTES Buyer inclination to substitute Switching costs Price-performance trade-off of substitutes Threat of New Entrants The threat of new entrants in automobile industry is low, since barriers to enter are very high, such as high start-up capital required. Moreover, adequate experience curve, distribution access, economies of scale, strong research and development (RD) and even brand and customer loyalty all of which the incumbents have. It therefore becomes difficult for new entrants to manage compared to incumbents. Bargaining Power of Suppliers Suppliers power in automobile industry is low, since producing a car/vehicle requires a range of inputs (parts) from diverse suppliers. If some inputs are not available in one source, they will be sought from another supplier due to low switching costs. Threat of Substitutes Substitute threats in this industry are likely to be moderate and depend much on customer geographical location. Other customers prefer walking, taking train or riding on a bike. But in Dar es Salaam city for example, people prefer public transport, motorcycles (BAJAJ, known as rickshaw in India) as alternative means to automobile due to increased congestion. Bargaining Power of Buyers In this industry, buyers power is a bit high. Low switching costs from one firm to another seeking for substitutes since most of the customers are price sensitive. For the case of the simulation game we played, most of the products were undifferentiated, so, buyers can easily shift to an alternative producer as well as products when seeking satisfaction. Competitive Rivalry The intensity of competition in automobile industry is high due to lack of strong differentiation strategy and innovation among incumbents, especially in the case of the three vehicle classes, i.e. family, economy and truck, because most of the firms use similar strategies like price; this reduces market growth as well as profitability. 2.3.4 SWOT- Opportunities and Threats Opportunities: Advanced technology Firms can use it more efficiently in enhancing product features that can appeal to the eyes of customers. Also use e-commerce to advertise and sell globally. Bargaining power of suppliers. Low supplier power is an advantage to automobile firms since they can set input prices, and hence be able to enjoy cost advantages while offering good quality products that will satisfy customers. European Union (EU) Automobile manufacturers can use the EU to sell their products. Diversification Diversification can be done to widen the market to other untapped segments like high income earners or go internationally and also locate the firms near raw materials sources where they can enjoy location economies. Differentiation strategy In order to sustain customers, after satisfaction has been met, differentiation strategy can be used as a weapon in delivering a range of added values that surpass those of competitors, since most of the firms use similar strategies. Threats: Bargaining power of buyers Strong bargaining power of buyers associated with low switching costs to alternative products, force suppliers to face an increased competition in order to provide the best that will satisfy their customers. Increased gas prices Gas being one of the operating energy, increased price will affect firms production as well as profitability e.g. in simulation that we played, period 1 $/gal was 3.15 rise to 3.50 in period 5. New laws New rules and regulations on carbon-dioxide emissions in environmental protection hinder production of cars that use petrol engines. World economic recession Recession discourages consumption of luxury goods, and streamlines production while people turn to public transports. High competition Initially, all firms in the StratSim industry were in similar position e.g. financially and other resources; however, this proved difficult when making decisions on how to create demand in order to enhance market shares as well as profits. Each firm was competing. Inflation Inflation started to increase in period 4 from 2.0% to 2.5%, this rise affected consumer prices. Fuel price instability. Rapid change in technology This poses a threat to vehicle production since other substitutes to vehicles may be produced. 2.4 Internal Analysis 2.4.1 Resources and Capabilities These are those which will create a strategic fit in order for the firm to survive and prosper even in a competitive business environment. Lucino Noto, (2007, p 125) Analyzing resources and capabilities: The interface between strategy and the firm THE FIRM Resources and Capabilities Goals and Values Structure and System STRATEGY THE INDUSTRY ENVIRONMENT Customers Competitors suppliers The firm-Strategy Interface The Environment-Strategy Interface Resources Organisation resources are divided into two categories (Johnson et al (2009); Tangible Resources These are firms physical assets. Firm B tangible resources were; Three vehicle classes, each of these represents a unique configuration while targeting different customer segments like value seekers, families, singles, high income and enterprisers (the StratSim Case, 2010). Financial resources, at period 0, each firm were given sales amounted to $ 15.5 billions (the StratSim case, 2010). Manpower, firm B had 4 competent human resources who made diverse valuable decisions and hence became twice the leader of economy car (Buzzy). Intangible Resources. These are non-physical resources such as; information, reputation and knowledge i.e. intellectual capital. (Johnson et al, 2008). Firm B holds a number of unique competences over its rivals. Firm B capabilities were; Quality. Safety. Performance. Style. Interior. 2.4.2 V.R.I.O Are criteria that are used to assess the sustainability of an organisations resources and capability that will enable the firm to achieve durable competitive advantage. V.R.I.O stands for Value, Rarity, Inimitability and Organisation. (Johnson et al, 2008). Value As the game started, firm B had enough resources and capabilities i.e. unique brand name that facilitated it in formulating and implementing different strategies to meet customer needs. But due to increased market demand, demand exceeded production throughout the periods as the firm lacked efficiency. Rareness At the beginning, all firms had a similar starting point which led them to have a low degree of rarity. This positioning by StratSim, made firm B to create more appealing strategies like vehicle enhancements and improvements in terms of its attributes which allowed it to come up with things which turned out to be less common among the firms. Inimitability During simulation game, product imitation was very high since previous results and almost all modifications and other statistics were openly published for other firms to see. This means that competitors could possibly copy other firms techniques. Organisation In StratSim industry, there were 7 firms producing identical vehicles, because they used similar strategies that lacked differentiation. Due to these, it therefore became easy for customers to switch from one firm to another if satisfactions were not yet met. 2.4.3 SWOT- SW SW is a tool that is used in identifying or analysing firms internal strengths and weaknesses and enables it to use the available strengths to minimise or turned those weaknesses to strengths. SW means Strengths and weaknesses. Strengths: Unique brand name Best Motor Works. Unique product names like Buzzy, Boffo, and Boss. Twice leader of Buzzy-Economy car, period 2 and 5. Reliable dealerships. Innovation, almost every decision period, firm B upgraded its vehicle attributes to meet emerging customer needs. Weaknesses: Weak financial position. Unstable growth of market shares. Limited product lines, this means that firm B did not exploit the available opportunities of unsatisfied and potential new customers to launch any new vehicle that would satisfy their needs. 3.0 Decisions 3.1 Technology Firm B upgraded its technology capabilities during decision periods considering dynamic business environment and customer tastes and preferences, while special attention was given to economy (Buzzy) and family (Boffo) cars. Investment in technology facilitated firm B in enhancing its production capacity as well as vehicle attributes that appealed to target customers and hence satisfying their emerging needs (see appendix 2.1) 3.2 Marketing Firm Bs marketing mix was to create leverage with customers and build strong brand loyalty which would enable customers purchase our products even in intense competition as in StratSim industry. Firm Bs unique selling price USP was quality. Quality being the key in our vehicle while charging premium price that enabled Buzzy (economy) car to become the leader in period 2 and 5. Despite this success, it was hard for firm B to survive in just a success of one car brand and become the market leader. Though the marketing mix was thoroughly applied by adding or reducing the number of dealers in each area, increasing dealer discounts and product promotions to attract customers, firm Bs market share was increased and decreased during decisions due to overspending and other factors. (For more marketing and distribution details for period 5, see appendix 2.2 2.3) 3.3 Finance During simulation, firm Bs financial performance was somehow weak despite a slight increase in sales ($). Net income was negative during period 2 and 5 results. It was discovered that one of the problems could possibly have been overspending, however, unit market share increased and total debts continued to decrease (Firm B financial and performance summary period 5, see appendix 3.0). 3.4 Production Throughout all the decision periods, production was increased as well as vehicle attributes to meet customer demand. Though Boss (truck) and Buzzy (economy) vehicles were upgraded in period 4, there were some shortages with regard to Boss vehicle model; this means that if the firm was given a chance to continue making decisions, it could probably increase production to meet the demand (see appendix 4.0). 4.0 Conclusion Firm Bs mission was to become the leader in automobile industry worldwide by offering highly innovative vehicles to diverse customer segments aiming at consistently satisfying their dynamic needs. Unfortunately, firm B did not meet its expectations. Though it became the leader twice in Buzzy (economy) car, this means that its strategies fit in the economy car brand market, having had success in one vehicle does not guarantee survival, and this is why firm Bs income and market share fluctuated. The firm was not yet pretty sure of what contributed to the unstable financial performance, though the firm speculated that overspending was one of the major problems. 4.1 What I Have Learned I learned that, in practical business, taking risks is only way to achieve success. In StratSim industry, for each time period, market research had identified some potential new customers whose needs were not yet satisfied by current vehicle (the StratSim case, 2010). But firm B overlooked this market potential to timely take advantage of launching new vehicle models in order to exploit these opportunities and hence increase its turnover and profit margins. 5.0 Reference and Bibliography: Johnson G, Scholes K, and Whittington R, (2006), Exploring Corporate Strategy, 7th Edition, Prentice Hall. Johnson G, Scholes K, and Whittington R, (2009), Exploring Corporate Strategy, Prentice Hall. Highfill D, Baki M, Copus S, Green M, Smith J and Whineland M, (November, 2004). Automotive Industry Analysis-GM, DaimlerChrysler, Toyota, Ford, Honda, overview of industry analysis, available at http://www.academicmind.com/unpublishedpapers/business/management/2004-11-000aaa-automotive-industry-analysis.html. Accessed on 19/11/1010. The StratSim Case (2010), Automobile industry. Lucino Noto, (2007), Analysing resources and capabilities: the interface between strategy and the firm, available at. http://www.blackwellpublishing.com/grant/files/CSAC05.pdf . Figure , Porters Five Forces Available at www.scribd.com/doc/16998313/Diagram-of-Porters. Accessed on 20/11/2010. 6.0 APPENDIXES: 1. DECISION SUMMARY FIRM B, FOR PERIOD 5 Product Development Dev Ctr Project Class Status Size HP Int Sty Saf Qua Curr Exp 1 Buzzy Economy upgr: launch Now 10 120 2 2 2 2 $275 2 Boss Truck upgr: launch Now 70 200 3 3 2 2 $275 3 (unused) Total (mill.) $551 Consumer Marketing Budget (mill.) Regional Corp. Adv. $48 Direct Mail $6 Public Relations $12 Total $66 Direct Mail Targets: Value Seekers(1), Families(2), High Income(4), Enterprisers(5) Product Marketing Vehicle Platform MSRP Dealer Disc. Adv. (mill.) Adv. Theme Promo. (mill.) Boffo No Change $20,400 15.0% $34 Safety $29 Boss Upgraded $20,499 13.0% $28 Perform $15 Buzzy Upgraded $11,550 12.0% $33 Quality $20 Total $95 $64 Plant Capacity Current Capacity (000s) 1,350 Capacity Change (000s) 0 Vehicle Production Vehicle Previous Sales (000s) Current Inventory (000s) Scheduled Production (000s) Flexible Production Retooling Costs (mill.) Boffo 646 25 671 X $0 Boss 200 *13 213 X $80 Buzzy 298 *109 345 X $123 Total 1,144 147 1,229 $203 *Vehicle being upgraded: this inventory will be written off. Be sure to produce enough to match forecast. Dealerships North South East West Total Dealer Inc./Dec. 10 9 11 12 42 Training and Support (mill.) $34 Financing Amount ($ mill.) Bonds Issued $0 Stock Issued $0 Dividends Paid $100 StratSim Ind:ind1 Firm:b Period 4 2. RESULTS FOR PERIOD 5 2.1 Technology Capabilities Period 5 Firm Ratings (1=low capability) Dev. Centers Interior Styling Safety Quality Max. Feasible 5 11 12 11 12 Firm A 3 4 6 4 7 Firm B 3 4 6 5 7 Firm C 2 4 7 6 6 Firm D 2 4 6 5 6 Firm E 2 6 8 6 8 Firm F 2 4 6 4 6 Firm G 3 5 8 7 9 Tech Dim Considerations Interior flexibility of cargo space Styling general curb appeal, styling, handling, finish Safety structural design, braking system, safety features Quality overall reliability, durability, consistency of products StratSim Ind:ind1 Firm:b Period 5 2.2 Marketing Detail Period 5 Consumer Budget (mill.) Company Owned /Fleet Budget (mill.) Regional Corp. Adv. $48 Direct Sales Force $0 Direct Mail $6 Direct Mail $0 Public Relations $12 Total $66 Total $0 Vehicle Val Mkt Share MSRP Dealer Disc. Avg Sell Price Adv. (mill.) Adv. Theme Promo. (mill.) Days Inv. Buzzy 2.4% $11,550 12.0% $10,572 $33 Quality $20 18 Boffo 9.4% $20,400 15.0% $18,749 $34 Safety $29 0 Boss 3.2% $20,499 13.0% $19,859 $28 Perform $15 0 Total $95 $64 StratSim Ind:ind1 Firm:b Period 5 2.3 Distribution Detail Period 5 North South East West Total Full Coverage 200 250 150 200 800 Established Dealers 137 137 133 133 540 Coverage 69% 55% 89% 67% 68% Planned Openings 10 9 11 12 42 Support/Dealer (000s) $150.6 $150.6 $153.2 $153.2 $151.9 Units/Dealer 2,187 2,284 2,389 2,756 2,401 Sales/Dealer (mill.) $36.9 $38.9 $40.2 $46.3 $40.5 Service/Dealer (mill.) $1.4 $1.5 $1.6 $1.7 $1.5 Gross/Dealer (mill.) $3.3 $3.6 $3.6 $4.1 $3.7 Dealer Rating 59 60 60 61 60 StratSim Ind:ind1 Firm:b Period 5 2.4 Product Contribution Period 5 Firm B Product Contribution Vehicle Units (000s) Dealer Sales (mill.) Direct Sales (mill.) COGS (mill.) Gross Margin (mill.) Adv Promo (mills.) After Mkting (mill.) Boffo 734 $12721 $0 $9797 $2924 $63 $2861 Boss 234 $4179 $0