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AFX5120 sample essay (2)

noreply@blogger.com (Herbert) — Fri, 01 Oct 2010 21:23:13 PDT

this is another essay of AFX5120, 7 out of 10

Introduction

Corporate Governance Statement and Remuneration Report are core components of the Annual Report. The external users of financial report will make decisions by check these two reports besides the income statement and balance sheet. The Corporate Governance Statement shows the company how to conduct corporate governance, and sound corporate governance can help company to make more profit. Also, a good Remuneration Report makes the financial position of the company more transparent. This essay will analysis some Corporate Governance Statement and Remuneration Report in practical world.

Provide some examples of companies that appear to have performed well financially, even though they might not have model systems of corporate governance. Do you believe these companies could have achieved their financial performance if they were required to implement the full array of corporate governance policies and structures?

We found two companies which don’t have model systems of corporate but have performed well financially.

○1 Westfield Group. It is the largest retail property group in the world by equity market capitalisation. In 2008, its profit was 2.1 billion, but in its Corporate Governance Report, its corporate governance is not as well as its business performance.

Firstly, ASX Corporate Governance Principles and Recommendations states: The chair should be an independent director, but the chairman of board of directors (Mr Lowy) is not independent director.

Secondly, ASX CGC recommends that listed companies have an independent director as chairman and that the roles of chairman and CEO are not held by the same person. But in Westfield Group, Mr Lowy acts as Chairman and CEO.

In my opinion, these two factors do not affect company’s performance. As it is stated in Corporate Governance Report, Mr Lowy is the co–founder of the Westfield Group and with over 47 years direct experience in the design, construction and management of shopping centres. Mr Lowy’s experience and reputation is unrivalled in the industry. Mr Lowy is the most appropriate person to act as Chairman of the Westfield Group Boards.

To sum up, Westfield Group can achieve its financial performance without following all the recommendations presented by ASX CGC.

○2 HiTech Group Australia Limited. HiTech was established in 1993, and has achieved substantial growth since establishment, delivering average annual EBIT growth in excess of 46% per annum over the past three years. In FY 2008, its total revenue is over 5 million and its profit before tax is over 120,000. But HiTech also has some problems in corporate governance.

1) The managing director and CEO is a member of the board and is also the chairman.

2) A majority of the board members are not independent directors.

3) The roles of CEO and chairman are exercised by the same individual.

4) The company does not have a nomination committee.

5) No performance evaluation of the board or management was carried out for the FY2008.

6) The company does not have a remuneration committee.

In my opinion, HiTech had better follow some of the ASX CGC’s recommendations if it wants to run smoothly in the long run. From its financial statement we can see that, it has $5 million revenue, but only has 120,000 profits, the Cost of Providing Service ($3,981,587) and Administration Expense ($888,328) are too high. Company need to figure out why the cost and expense are so high, and find the way out. But in the other hand, HiTech is not a big company, remuneration committee and nomination committee is not necessary for this size company.

In conclusion, the company should consider its own situation, and then decide whether or not following the ASX CGS’S recommendations.

From the internet, access the remuneration report of an Australian listed public company. From that report provide a summary of the salary and performance benchmarks for the executives of that company. Do you believe the report is clear and the performance benchmarks appropriate?

BHP Billiton is the biggest company in Australia. The net profit was 15,962,000,000 US dollar, and total asset was 75,899,000,000 US dollar at the end of FY 2008. In its remuneration report, it states that the remuneration package equal to Fixed Remuneration plus At Risk Remuneration.

Fixed remuneration is made up of base salary, retirement and other benefits. It represents approximately 28 per cent of the individual’s remuneration package. Base salaries are set by reference to the scope and nature of the individual’s performance and experience, and are reviewed each year. Retirement benefits for new entrants are delivered under defined contribution plans. All defined benefit plans are now closed to new entrants. Other benefits include health insurance, relocation costs, life assurance and tax advisory services as applicable. All such benefits are non-pensionable.

At risk remuneration is geared to Group performance and is made up of short-term and long-term incentives. It represents approximately 72 per cent of the individual’s remuneration package. Short-term incentives are delivered annually under the Group Incentive Scheme (GIS). Awards under the GIS are split equally between a cash award (being a percentage of base salary) and a grant of Deferred Shares and/or Options (to encourage employee retention and share ownership). Long-term incentives, in the form of Performance Shares, are awarded annually under the Long Term Incentive Plan (LTIP). The diversified natural resources industry is capital intensive, cyclical and long term. Outstanding performance comes from accessing high-quality resources, successfully developing new projects and maintaining efficient and safe operations.

For example, Marius Kloppers, the CEO of BHP, in FY 2008, his total revenue is shown in the following table.

The performance of the Group relative to the markets in which it operates over the past five years is illustrated by the two charts below. The first compares our TSR (total shareholder return) performance with that of the ASX 100 and the FTSE 100, both of which are broadly-based indices. The second illustrates performance against the LTIP’s (long term incentive plan) peer group index. For FY2008, the total return to BHP Billiton Limited shareholders (as measured by the change in share price plus dividends reinvested) was 60.72 per cent. Over the same period, the total return to BHP Billiton Plc shareholders (measured on the same basis) was 54.86 per cent.

In my opinion, I believe that the remuneration report is clearly. It contains 10 sections, and each section contains several sub-sections. From the report, we can clearly know the remuneration policy of BHP. Also, it uses some tables and charts to make the data more intuitional. But we also find one shortcoming of this report. In the report, we can see 7 people in the Group Management Committee (GMC), but it doesn’t show each person’s position. It just classifies these 7 people into 2 categories- Executive Directors and Other members of the GMC. So, the readers of this report will confuse each person’s position. Like in Amcor’s report, it shows every director’s payment like this:

The performance benchmarks for the executives of BHP are appropriate. It compares BHP performance conditions with other company in Australia and UK. But BHP is a world-famous company, in its remuneration report, it is better to compare with other company in the same industry, not only Australian and UK company. For example, in Qantas’ remuneration report, it shows Qantas’ TSR performance compared to the S&P/ASX 100 Index and the MSCI World Airline Index over the past six years.

In conclusion, BHP’s Remuneration Report is quite clear, only some small details need to improve.

Bibliography

Amcor 2008 Annual Report, 2008, http://media.amcor.com/documents/ar2008_Annual_Report.pdf

ASX CGC Corporate Governance Principles, 2007, second edition, http://asx.ice4.interactiveinvestor.com.au/ASX0701/Corporate%20Governance%20Principles/EN/pdf_pages/page_0018.pdf

BHP billiton 2008 Annual Report, 2008, http://www.bhpbilliton.com/annualreports2008/2008-business-review-and-annual-report/annual-report/index.html

HiTech Group 2008 Annual Report, 2008, http://www.hitechaust.com/annual_reports/2008%20HiTech%20Annual%20Report%20Final%20as%20lodged%2017-9-2008.pdf

HiTech Group Corporate Governance Statement 2008, 2008, http://www.hitechaust.com/investor_files/HiTech%20Corporate%20Governance%20statment%20as%20per%20AR%202008%20and%20web.pdf

Qantas 2008 Annual Report, 2008, http://qantas.republicast3.com/Publications/Qantas+Annual+Report+2008/View.aspx#p=0

Westfield Group, 2008, http://en.wikipedia.org/wiki/Westfield_Group
Westfield Group Corporate Government Statement 2008, 2008, http://westfield.com/corporate/pdf/governance/CORPORATE_GOVERNMENT_STATEMENT_2008.pdf

Westfield Group 2008 Annual Report, 2008, http://westfield.com/corporate/pdf/presentations/ASX_RELEASE_2008_Annual_Report.pdf

sample essay of BTX5090

noreply@blogger.com (Herbert) — Sat, 25 Sep 2010 18:41:39 PDT

the middle break is coming, but later than before. i still have an assignment due on today, but i haven't finished it yet.
melbourne royal show will be end at 28th september i think. but i think every's are the same...
few US TV shows come out now. TWO AND HALF MEN SEASON 8 or 9, THE BIG BANG THEORY SEASON 4. but no more 24. what a pity.
i cannot believe i watched the whole two seasons of 90210. this one is just like GOSSIP GIRL+DESPERATE HOUSEWIFE. i do not like GOSSIP GIRL...
anyway

last week, i know my BTX5090's result, a little disappointed. the teacher hands out the answers to each questions, but for the copyrights reason, i can not post it here. i post my assignment here. question 1, i got 24.5, question 5, i got 29.5
Question1

(a)

In this case, there are four facts should be considered: firstly, Kate was a director of a company limited by guarantee called Helping Kids Smile Again. Secondly, while director, Kate had access to confidential information regarding the client lists of organization and a database of doctors and medical staff who are sympathetic to complementary the therapies. Thirdly, a for-profit company, Goddess Products Pty Ltd, approached Kate and offered her a considerable salary increase, shares in Goddess Products Pty Ltd and the managing directorship if she would bring her skills, knowledge and the client and doctor database to Goddess Products. Then Kate did so, resigning from Helping Kids Smile Again and not disclosing the deal to anyone. Fourth, after Kate left, Helping Kids Smile Again suffered significant losses. Next, I will discuss these four facts, then give a recommendation for what legal actions should Helping Kids Smile Again take.

Kate was a director of a company limited by guarantee which governed by Common Law and Corporations Act 2001 Cth. The fiduciary duties of directors to:

- Act in good faith in the best interests of the company;

- Exercise their powers for proper purposes;

- Retain their discretionary powers; and

- Avoid undisclosed conflicts of interest

Directors also owe a duty of care to their company.

The fiduciary duties stem equitable principles developed through case law. The fiduciary duties are supplemented by various statutory duties contained in the Corporations Act. The most important of these duties are contained in Chapter 2D- ss 181-183 (Lipton & Herzberg, 2008, P283).

In this case, the clearest fact is that Kate use the information which she could get to make her own benefits (i.e. got a position at Goddess Products). And as Corporation Act Section 183-Use of information-civil obligations states: A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

Clearly, Kate breached this rule, she used the information in an improper way, i.e. gain an advantage for herself and cause detriment to the corporation. The fiduciary and statutory duties regarding the misuse of information are an instance of the wider duty to act in good faith in the best interests of the company: Southern Real Estate Pty Ltd v Dellow [2003] SASC 318. A director who contravenes s 183 may in the same circumstances also contravene s 181(Lipton & Herzberg, 2008, P344). In Southern Real Estate Pty Ltd v Dellow case, Ms Dellow 's conduct in preparing the list of customers whilst a director of Southern Real Estate with the intention of using it once she had resigned as a director was a breach of her duty to act bona fide and in the best interests of the company. She was placing herself and Mr Arnold in the most advantageous position to erode the goodwill of the company. When she announced her resignation, Ms Dellow informed her co-directors that she had no intention of walking away with nothing. She suggested that she was entitled to some of the customers on the rent roll in lieu of any other entitlement. A meeting was held the following day. Ms Dellow informed her co-directors that she had already contacted some of the landlords. Kate almost did the same thing as Ms Dellow did in that case. Hence, according to Dellow case, Kate breached s 181 as well as s183.

Also, Kate breached Section 182- Use of position. Section 182 prohibits officers or employees of a corporation from improperly using their position to gain an advantage for themselves or for any other person or to cause detriment to the corporation. Section 182 is breached if officers or employees improperly use their position to gain an advantage for others (Lipton & Herzberg, 2008, P332). While Kate was a director of Helping Kids Smile Again, she had the right to access the companies database, and got the information of the client and doctor. Her activity was breaching the law, she should not use her position to gain an advantage for herself.

Ss 181- 183 are civil obligation under Corporation Act 2001, in this case, criminal liability may be imposed under s 184 if a director or other officer of a corporation is reckless or intentionally dishonest and fails to exercise their powers and discharge their duties in good faith in the best interests of the corporation or for a proper purpose (Lipton & Herzberg, 2008, P317). If more evidences show that Kate did these things on purpose, Kate may breach s 184.
Another fact is that Kate resigned from Helping Kids Smile Again and not disclosing the deal to anyone. But in fact, Section 191 (1) requires a director who has a material personal interest in a matter that relates to the affairs of the company to give notice of the interest to the other directors (Lipton & Herzberg, 2008, P349). Examples of such conflict of interest situations include where a director:

- Makes a personal profit that arises from their position;

- Diverts an opportunity from their company; or

- Misuses confidential company information (Lipton & Herzberg, 2008, P347).

Clearly, Kate’s activity belongs to the third circumstance. Although how many directors are not stated in the question, according Section 201A (2), the company limited by guarantee must have three member on board (if there is only one director in the company, s 191 will not be applied). Hence, Kate also breached Section 191.

Last, after Kate left, because of her activity, Helping Kids Smile Again suffered significant losses. This may related to Section 588G, but few information contained in the question, so whether Kate had breached Section 588G is unclearly.
In conclusion, Kate as a director of Helping Kids Smile Again, she must act in good faith in the best interests of the organisation, and she also must act for a proper purpose, and never take advantage of her position as an office bearer or information she has gained in the role for personal advantage. Also when there is a conflict between her and the company, she should disclose it to the other directors (PilchConnect, 2008). Obviously, she failed to comply with these duties. According to the Corporation Act 2001 ss181-183 and s 191, Helping Kids Smile Again can sue Kate as she did not comply with the law. And Kate may suffer civil penalties under s 1317E. She can be punished according to 1317G (1). If the court finds out Kate did all these things on purpose, Kate will be judge under s 184.

(b)

In this part, it will discuss what may be different if Helping Kids Smile Again was incorporated as an association in Victoria.
The most obviously different is because of the different forms, it should comply with different laws. When an organization incorporated as company limited by guarantee, it should comply with Corporation Act 2001. But when it decides to incorporate as an association in Victoria, it must comply with Associations Incorporation Act 1981 (VIC) and Associations Incorporation Regulations 1998 (VIC) (PilchConnect, 2009)
In Associations Incorporation Act 1981 (VIC), there are also some similar clauses as ss 181-184 in Corporation Act 2001 which are related to this case.

In Associations Incorporation Act 1981 s29A, it states:

1) A member or former member of the committee of an incorporated association must not knowingly or recklessly make improper use of information acquired by virtue of his or her position in the incorporated association so as to gain, directly or indirectly, any pecuniary benefit or material advantage for himself or herself or any other person, or so as to cause a detriment to the incorporated association.

2) A member of the committee of an incorporated association must not knowingly or recklessly make improper use of his or her position in the incorporated association so as to gain, directly or indirectly, any pecuniary benefit or material advantage for himself or herself or any other person or so as to cause detriment to the incorporated association.
Apparently, Kate breached these provisions, she did not acted for maximum the benefits of the organization. In contrast, her activity caused a detriment to the incorporated association. But the words using in Associations Incorporation Act are not same as that in Corporation Act 2001. Associations Incorporation Act states the director must not “knowing or recklessly” make improper use of his or her position, if Kate can find some evidences to show she did these thing not on purpose, she may avoid penalty. Under Corporation Act, the term-“knowing and recklessly” is used to distinguish civil and criminal penalty.
Besides that, Kate did not disclosure of her self-interest. In s29B (1), it states that: a member of the committee of an incorporated association who has any direct or indirect pecuniary interest in a contract, or proposed contract, with the incorporated association- (a) must, as soon as he or she becomes aware of his or her interest, disclose the nature and extent of his or her interest to the committee; and (b) must disclose the nature and extent of his or her interest in the contract. According to this, Kate also breached this clause.

In conclusion, although under different laws, Helping Kids Smile Again still can sue Kate for breaching Associations Incorporated Act. At least, she breached s29B(1). And in the current situation, she also breached s29A unless more evidences she can find. Consequently, Kate will face some fines.

(c)

As what has happened to Helping Kids Smile Again, the management should consider how to management risks from now on. In this section, two parts are contained. First, it will discuss what risks involved in this case. Second, it will give some suggestions about risk management strategies.
First, in this case, three risks are involved. The first one is legal risk. Legal risk is risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations. For business, legal risk is mainly associated with the loss of financial benefit or reputation. In this case, because of Kate’s leaving, the some confidential information may leak to the third party (i.e. Goddess Products Pty Ltd). The staffs and the doctors who in the database will find this thing sooner or later, and that may lead to these people take legal action against Helping Kids Smile Again. For current, this will damage to the organization’s reputation as Helping Kids Smile Again is hard to win the lawsuit. For Helping Kids Smile Again, its priority mission is preventing the whole thing from becoming worse. The second risk is operation risk. When the staffs and doctors loss their confidence in Helping Kids Smile Again, the organization’s operation will be at risk due to lack of motivation among them. Then when all the things mentioned above happen, the organization will certainly suffer financial risk. Although the financial objects are not that important for not-for-profit organization compared with for-profit organization, it still needs money to maintain its operation.

Second, generally, four steps are contained in risk management strategy.

1. Risk awareness, which constitute to recognition of risks exist in the organization. In this case, the new management should aware that there will be more risk after Kate left.

2. Assess the risk, which involved:

- Determining the issues to be resolved

- The understanding of the context to determine tolerable risk level

- Determine the likely impact on the business

- Draw a conclusion on each issue.

In this case, Helping Kids Smile Again should assess the three risks one by one.

3. Treat the risks. In this step, the risks can determined whether to be avoided, transferred, reduced or controlled by the management. In this case, the management should find some efficient ways to deal with the three types risks.

4. Monitoring. In this step:

- The manager measures the risks by comparing them to the tolerable level created at the stage of “Assess the risk”.

- A compliance audit is conduct to ensure that the procedures are being followed.

- The manager establishes the compliance planning with periodically cycles.

Risk management is not a one-off thing, so the monitoring step is very important for the organization included Helping Kids Smile Again.
Besides above four steps, there are also two ways to help the organization to reduce or avoid the risk. One way is enhancing corporation government. The organization can improve its internal control by doing that. The second way is educating the managements. Sometimes, laws are not enough to control the organization. In this case, Kate knew what she did was not right, but she still did that. So to educate the management run the business in a moral way is more important.
In conclusion, there are three types risks involved in this case- legal risk, operation risk and financial risk. And to prevent the whole situation from becoming worse, the management should consider how to management risk in an efficient and effective way. Generally, there are four steps contained in risk management. Also there are two ways can help the organization to reduce or avoid the risks- corporate government and moral education of management.

Question 5

(a)

Clean Up Our Environment Caulfield is an unincorporated group. This kind group is a group of members that have come together for a common purpose. Obviously, this kind of group is easy to found and not required to be registered and no reporting requirements. But it also has some pitfalls, in the next few paragraphs I will discuss two main risks entailed in being unincorporated.

First, unincorporated group have no legal personality separate from individual members. No separate legal entity means it has no legal identity of its own, separate and distinct from the individuals who formed or make up the group. Also, unincorporated group cannot “conduct business” in its own name, so it cannot sign documents and enter into contracts; buy, sell, own lease and rent property and other assets; borrow money; and sue and be sued by its own name. For example, if Clean Up Our Environment Caulfield want to hold an event, and it needs to sign a contract with another organization. “Clean Up Our Environment Caulfield” cannot be one party of the contract, because it is an unincorporated group. One member of ”Clean Up Our Environment Caulfield” must sign his or her own name on the contract. If there is a lawsuit between these two organizations, the member who signed in the contract will take all the risk.
Second, committee members may suffer potentially personally liable. For example, if the group needs money in a very short time, it may consider borrow some money from the bank. Because an unincorporated group cannot borrow money from bank, one member of the group may borrow money from bank by using his or her name. If one day the group does not exist, that member may need to pay the loan by him or herself. After association incorporated, it will help to protect the people involved in the group from being personally liable if anything goes wrong with the group. Generally, the second risk is because of the first risk.
In conclusion, although unincorporated group are easy to be founded, it has two main pitfalls will bring some risks to the group.

(b)

Clean Up Our Environment Caulfield’s main activities include: build awareness about the plight of the environment amongst the citizens of Caulfield; tree planting; lobby the local council for more environment initiatives; and attend allies. And they raise money through small membership fees and through events such as “band nights”, garage sales. Also they would like receive donations from public people or charge a fee for giving local households and businesses about how to conserve energy. According to their activities and the ways they get fund, I will find what clauses they should include their constitution in order to ensure that they gain the maximum taxation benefits and to attract funding.
First, according to ATO (2010), if the organization wants to get taxation benefit (i.e. tax concession), it should be a not-for-profit organization. So in the first step, it should examine whether Clean Up Our Environment Caulfield satisfies the requirements for not-for-profit organization. In ATO (2010) website, it states that: “A non-profit organization is one which is not operating for the profit or gain of its individual members, whether these gains would have been direct or indirect. This applies both while the organization is operating and when it winds up. Any profit made by the organization goes back into the operation of the organization to carry out its purposes and is not distributed to any of its members”. In the case, most activities of Clean Up Our Environment Caulfield cannot make profit, but it should notice that, they charge fee for providing advices to individual or business. During this process, they will make profit. But their profit will not benefit or distributed to any member. Although, Clean Up Our Environment Caulfield make some profit through their activities, they are still a not-for-profit organization. What is more, ATO (2010) requires an organization as non-profit where its constituent or governing documents prevent it from distributing profits or assets for the benefit of particular people – both while it is operating and when it winds up. These documents should contain acceptable clauses showing the organization’s non-profit character. The organization’s actions must be consistent with this requirement. So, in Clean Up Our Environment Caulfield’s constitution, it must include following clauses:

Non-profit clause

‘The assets and income of the organization shall be applied solely in furtherance of its above-mentioned objects and no portion shall be distributed directly or indirectly to the members of the organization except as bona fide compensation for services rendered or expenses incurred on behalf of the organization.’
Dissolution clause

‘In the event of the organization being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another organization with similar purposes which is not carried on for the profit or gain of its individual members.’

Second, I will find what clauses should be included to attract funding. If it can be treated as “Charity”, it may easy to get fund (especially when the organization is a Deductible gift recipient/ DGR). In this case, Clean Up Our Environment Caulfield can be fall into the categories of charitable purpose under Pemsel: other purposes beneficial to the community. Because it is clear that the group would like to raise public awareness relation to environment issues. However, according to TR 2005/21, when an organization is involved political or lobbying activities, the organization cannot be treated as a charity. But the lobby of Clean Up Our Environment aim to require the local council for more environmental initiatives, thus it does not contain any political issues. So, this group can be treated as Charity. Next, I will analyze which type of charity should the group to be.

There are three types of charity organizations:

- Charitable institutions: organization or association established and operated to promote charitable purpose.

- Charitable funds: a fund established under a trust or will for charitable purposes.

- Public benevolent institutions and Health promotion charities: dominant purpose of direct relief of poverty, sickness, destitution or suffering and for the benefit of the public (ATO, 2010).

Among these three type, Clean Up Our Environment Caulfield is satisfies the definition of charity institution.

As discussed above, Clean Up Our Environment Caulfield is non-profit organization, and it can be treated as a charitable institution. Table 1 shows what tax concessions they can get when they are recognized as a charitable institution.

(table 1, found it at ATO website)

Form Table 1, it is clear that if Clean Up Our Environment Caulfield wants to get the maximum taxation benefits and to attract funding (i.e. Deductible gift recipient), it must follow the note 1 and note 6 of Table 1:

- Note 1: The entity must be endorsed by the Tax Office to access this concession – see Endorsement requirements for charities and income tax exempt funds.

- Note 6: The entity must be endorsed by the Tax Office as a deductible gift recipient to access this concession. The only organizations that do not need to be endorsed are those listed by name in the tax law, including prescribed private funds – see Deductible gift recipients (ATO, 2010).

According to note 1, Clean Up Our Environment Caulfield should have an ABN. According to note 6, to be entitled to DGR endorsement, the organization must:

- fall within a general DGR category as set out in the tax law

- have an Australian business number

- have an appropriate dissolution/revocation of endorsement clause(s)

- maintain a gift fund (if seeking endorsement for the operation of a fund, authority or institution), and

- be in Australia (with some exceptions) (ATO, 2010).

It is clear that, Clean Up Our Environment Caulfield is qualified as a DGR.

In conclusion, in order to maximum taxation benefits and to attract funding, in the constitution of Clean Up Our Environment Caulfield must contain following information:

-ABN/ Endorsement requirements for charities and income tax exempt funds

-Non-Profit Clause

- Dissolution Clause

- DGR organization

The first three clauses can make they gain the maximum taxation benefits, and last one can attract funding.

(c)

In part (a) it states the risk entailed in being unincorporated, and it finds the two main risks are actually put the members of the group into risk. So, it has better for the group to become incorporated. In this part, I will compare the main types of incorporated organization, and find out which one is the most suitable for Clean Up Our Environment Caulfield.

There are a range of incorporated legal structures which may be suitable for Victorian not-for-profit community groups. The 4 main options are:

- an incorporated association;

- a company limited by guarantee;

- a non-trading co-operative; and

- an indigenous corporation (PilchConnect, 2009)

Most commonly used for each one:

- Incorporated Association: it is likely that for locally focused not-for-profit community groups wanting to operate in Victoria, an incorporated association will be the best structure. Setting up an incorporated association can be easier and less expensive than setting up a company limited by guarantee. Small incorporated associations are not required by legislation to have audited accounts, and therefore may suit groups with limited funds and resources.

- Company limited by guarantee: it may be a suitable structure for not-for-profit organizations wanting to operate nationally or in more than one State or Territory and which have the resources to comply with the Act. Often larger not-for-profits, including those that only operate in one State, will use this structure. Some legislation requires this structure for certain types of organizations.

- Co-operative: it is generally set up for the mutual benefit of members. They can be suitable not-for-profit structure for providing community services to its members

- Indigenous Corporation: it is specifically designed to meet the needs of Aboriginal and Torres Strait Islander groups, and takes into account indigenous customs and traditions (Pilchconnect, 2009).

Obviously indigenous corporation is not suitable for Clean Up Our Environment Caulfield. Also, as this group will provide benefits to social but not individual member, co-operative is not suitable for this group. For the rest of types of legal structure, they both suitable for this group, so next, I will compare these two types and find which one is the most suitable one.

The company limited by guarantee has some advantages which incorporated association does not have. First one is no trade restraint. Company limited by guarantee can trade with others, but incorporated association cannot conduct significant “trading” activities. However, in this case, Clean Up Our Environment Caulfield has no significant trading activities. Second one is company limited by guarantee can carry on business in every state and territory with a single registration. But in this group, all the activities are in Victoria. So, it is clear that, although company limited by guarantee has two significant advantages, they are not relation to this case. What is more, incorporated association has one significant advantage- inexpensive, such as the annual fee is only $40.90 rather than $1,000 (Lang, 2010).

In conclusion, compared among the four types of legal structures, incorporated association is the most suitable for Clean Up Our Environment Caulfield.

(d)

In this part, two questions will be discussed, first one is discuss the board or committee structure, then discuss accountability.

First, there are three models of committee structure:

- Agency & Stewardship: boards and committees are put in place to provide overall leadership to the organization they govern in accordance with the constituent documents and mission statements. They are responsible for the stewardship of the organization by: setting goals and developing strategy direction and appointing senior management.

- Political/ democratic model: board members’ role is to represent the interests of one or more stakeholders in the organization or to resolve the differences between those interest groups. Anyone can put themselves forward for election to the board- no particular expertise required for board membership.

- Managerial view: the board is the apex of a management hierarchy. Board members should be selected on the basis of their expertise and contacts in order to add value to the organization’s decision-making processes.

Among these three kinds of board and committee structure, the most suitable for Clean Up Our Environment Caulfield may the first one- Agency & Stewardship. By using this one, the board can easy to govern the whole organization. As they hope to grow as large as 1000 members, 3-5 directors on board is enough for them.

Second, there are some advices to Clean Up Our Environment Caulfield:

1. Enhance corporate government. If there are some problems exist in the board, it will put the whole organization at risk. From Enron, WorldCom, ABC learning, we can see that all these big companies collapsed were because the management put their own interest over companies’. So, corporate government is very important for Clean Up Our Environment Caulfield.

2. Discourse statement and reports. Financial reports can be treated as a communication tool between organization and public/ external users. The organization can hire some professional accountants to charge the report issues in its accounting department. If the financial reports are audited by the external auditors, it will be better.

3. The organization should evaluate their performance both internal and external regularly. So, if there is a potential problem exists in the organization, it will be found earlier.

4. Improve self regulation. Constitution and code of conduct are necessary to be followed strictly. Code of conduct and Constitution are the rules to tell the directors and members what can they do and what they cannot do. If they do not follow these rules, the constitution and code of conduct are mean nothing.

References

A.D. Lang (2010) Pros and Cons of companies limited by guarantee versus incorporated associations

ATO, 2010, Is your organisation non-profit? - Tax basics for non-profit organisations

http://www.ato.gov.au/nonprofit/content.asp?doc=/content/33732.htm

ATO, 2010, Endorsement requirements for charities and income tax exempt funds Tax basics for non-profit organisations

http://www.ato.gov.au/nonprofit/content.asp?doc=/content/61173.htm

ATO, 2010, Fundraising - Tax basis for non-profit organizations

http://www.ato.gov.au/nonprofit/content.asp?doc=/content/33650.htm

ATO, 2010, Tax concessions - an overview - Tax basics for non-profit organisations

http://www.ato.gov.au/nonprofit/content.asp?doc=/content/33743.htm&mnu=454198&mfp=001/004

PilchConnect, 2009, Fact Sheet: Incorporated association or a company limited by guarantee?

PilchConnect, 2009, Fact Sheet: Which incorporated legal structure should we choose?

PilchConnect, 2008, Fact Sheet: Duties of committee of management members in Victorian incorporated associations

PilchConnect, 2008, Fact Sheet: Duties of directors of a company limited by guarantee

Lipton, P. & Herzberg, A ,2008, Understanding company law, 14th edn, Thomson

sample essay of AFX5120 (1)

noreply@blogger.com (Herbert) — Fri, 01 Oct 2010 21:14:53 PDT

few days ago, Julia announced new cabinet. Rudd got a position.:) the boss of DIAC is changed, now- Chris Bowen~ anyway~~

here is the third assessment of AFX5120, the first one is a test, and the second one is an essay. i will post the third one later
BTW, 7 out of 10 of this one.

Introduction

Due to the inherent uncertainties involved in business activities, certain items appearing in the financial statements cannot be measured accurately. They can only be estimated. (e.g. Bad debts.). The use of reasonable estimates which involve judgments based on the latest information available is essential for preparation of financial statements. It is called accounting estimates. It is very subjective, so in the auditing process, evaluating differences can be more difficult than in other areas of the audit. This essay will describe the auditor’s responsibility for examining management generated accounting estimates and describe the techniques commonly used by auditors to assess the reasonableness of those estimates. After that, it will show Waste Management Inc’s case to make these questions vividly.

ASA 540 Audit of Accounting Estimates

ASA 540 establishes mandatory requirements and provides explanatory guidance on the audit of accounting estimates contained in a financial report. In ASA 540, it states that the auditor shall obtain sufficient appropriate audit evidence regarding accounting estimates. Also, the auditor shall design and perform further audit procedures to obtain sufficient appropriate audit evidence as to whether the entity’s accounting estimates are reasonable in the circumstances and, when required, appropriately disclosed. The auditor shall make a final assessment of the reasonableness of the entity’s accounting estimates based on the auditor’s understanding of the entity and its environment and whether the estimates are consistent with other audit evidence obtained during the audit.

Auditors, in complying with ASA 540, should consider the possibility of management bias in developing estimates by considering whether the differences between the estimates best supported by the audit evidence and the estimates included in the financial statements indicate a possible management bias. For example, if each individual accounting estimate included in the financial statements was reasonable and, at the same time, the effect of the difference between each management estimate and the estimate best supported by the audit evidence was to increase income, the auditor should reconsider the estimates taken as a whole. Moreover, auditors should perform a retrospective review of significant accounting estimates reflected in the prior year's financial statements to determine whether management's judgments and assumptions relating to estimates indicate a possible bias on the part of management. If the auditor identifies a possible bias, he or she should evaluate whether the circumstances producing such a bias represent a risk of material misstatement due to fraud.

To sum up, the auditor has responsibility for examining management generated accounting estimates, the auditor needs to have an understanding of the procedures and methods to identify and assess risks of material misstatement in order to design the nature, timing and extent of the further audit procedures.

In ASA 540, there are some means to help auditors to assess the accounting estimates. The auditor shall endeavour to obtain written representations from management regarding the reasonableness of significant assumptions used by them in making accounting estimates. Management representation letter is used to let the client's management declare in writing that the financial statements and other presentations to the auditor are sufficient and appropriate and without omission of material facts to the financial statements, to the best of the management's knowledge.

In Para 14, it states that the auditor shall adopt one or a combination of the following approaches in the audit of an accounting estimate:

(a) Review and test the process used by management to develop the estimates;

(b) Use an independent estimate for comparison with that prepared by management; or

(c) Review of subsequent events which provide audit evidence of the reasonableness of the estimate made.

For reviewing and testing the process used by management, the auditor can evaluation of data and consideration of assumptions, testing of calculations, comparison of previous estimates with actual results or consideration of management’s approval procedures. Using of an independent estimate is a very useful way to examine accounting estimates, the auditor may make or obtain an independent estimate and compare it with the accounting estimate prepared by management. When using an independent estimate the auditor ordinarily evaluates the data, considers the assumptions and performs audit procedures on the calculation procedures used in its development. It may also be appropriate to compare accounting estimates made for prior periods with actual results of those periods. In some cases, subsequent events may provide audit evidence regarding an accounting estimate made by management. The auditor’s review of such event may reduce, or even remove, the need for the auditor to review and perform audit procedures on the process used by management to develop the accounting estimate or to use an independent estimate in assessing the reasonableness of the accounting estimate.

Nowadays, computer-assisted audit techniques may be required to identify entries that exist only electronically.

To sum up, auditors can choose one or some methods provided in ASA 540 to examine accounting estimate.
Waste Management, Inc

Arthur Andersen, LLP, was Waste Management’s auditor since before the Waste Management became a public company in 1971. And in 1990s, Arthur Andersen failed to reveal fraud which primarily centered on inappropriate estimates of salvage values and useful lives for property and equipment. But according to ASA 540, there are some techniques Andersen auditors could have used to assess the reasonableness of those estimates used to create Waste Management’s financial statements.

Firstly, Andersen should review and test the process used by management to develop the estimate. Generally, the auditor would evaluate whether the data on which the estimate is based is accurate. In Waste Management Inc’s case, the company changed the salvage values and useful lives for property and equipment in 1996, and disclosed it in the financial statement. At that time, Andersen should assess whether the change was reasonable. Also, the auditor can evaluates whether the entity has an appropriate base for the principal assumptions used in accounting estimate. Andersen could check whether Waste Management’s accounting policy was logical based on industry or government statistics.

Secondly, auditor can use an independent estimate for comparison with that prepared by management. When Waste Management changed their accounting policy, Andersen should evaluate it by itself. But in fact, it did not.

To sum up, Andersen had the chance and method to find Waste Management’s fraud, but it failed to do that.
Conclusion

In ASA 540, it states quite clear that the auditor has responsibility for examining management generated accounting estimates. And it also lists some methods which auditor can use to detect the mistakes or fraud in accounting estimates. In Waste Management case, Andersen had the chance and methods to find Waste Management’s fraud, but in fact, it did not do that.
Bibliography

ASA 540 Audit of Accounting Estimates

Apostolou, N. and Crumbley, D., (2009), Auditors’ Responsibilities with Respect to Fraud: A Possible Shift?, http://www.nysscpa.org/cpajournal/2008/208/essentials/p32.htm

Conceptsinfo, (2009), Teminology, http://conceptsinfo.com/teminology.asp

labor win, finally

noreply@blogger.com (Herbert) — Tue, 07 Sep 2010 05:59:53 PDT

after 17 days uncertain, labor finally win the election 2010 of Australia. the final score is 76: 74. too close...

well, some people said labor is not good, especially for international students. frankly, i don't know.

i heard that Julia had some plans about the internet, well, maybe i would like that plan. but so far, i don't know the details of plan.

tonight, i have a presentation, only 5-10mins presentation worths 30 marks, well, i got 22, i think it is reasonable for me. next week, i need to submit the report of the presentation. but only worth 5 marks. well...

so far, i still have not got my results of BTX5090, wish me luck, please

sample report of AFF5150

noreply@blogger.com (Herbert) — Fri, 03 Sep 2010 20:47:54 PDT

this report needs 4000 words, the written part of this assessment was not hard, how to collect the data was the hard one, then using Excel to analysis the data. the whole "data" part costed us a lot of time...
this was a group assessment, and we got 20 out of 30. the main problem was the purpose of our study was unclear, so the marks were just so-so

Abstract

The Ohlson (1995) and Feltham and Ohlson (1995) papers are landmark works in financial accounting. But when we employ Ohlson model for Australian market, it shows that the book value of equity is not as significant as we expected. So, we develop our new models. We decompose book value of equity per share into assets per share and liabilities per share to explore whether the disaggregated accounting items can provide better value relevance to share price. And then we decompose assets and liabilities into current/ non-current assets and liabilities. Including Ohlson model, we totally employ three models in our paper. Finally, after conduct regression test, we found that using current assets per share, non-current assets per share, current liabilities per share, non-current liabilities per share and earnings per share can provide more and better information of value relevance.

Introduction

Prior research has documented how disaggregated accounting data explain return (Ohlson & Penman, 1995). Ohlson presented a formulation derived from the classical conceptions that used accounts variables in the function of evaluation. The structuring was baptized Ohlson Model (MO) and had great impact in the academic research about capital markets. Also, Kothari and Zimmerman (1995) states that price models is better than return as price models have arguably provided better estimates for the coefficient and the profit figure than the returns model. Price models have also been found to be intuitively appealing (Rees, 1999) as they suggest that the current market price reflects the future estimated earnings power of the firm. Barth (1992) examines whether pension cost components result in an increase in explanatory power and found that the disaggregation of earnings does provide additional information to investors.

In this report, we first use the Ohlson model to check whether the book value of equity and earnings are good indicators of share price for the Australian market. Then, we hold earning unchanged, use total assets and total liabilities to substitute the book value of equity. After that we further decompose the total assets into current assets and non-current assets, and the total liabilities into current liabilities and non-current liabilities to examine whether these two developed model can provide more and better information of value relevance.

Models and Hypotheses

Models

The following version of the valuation model is the simplified Ohlson model which is used and consistent with which employed by Collins et al. (1997) for a US sample, Harris et al. (1994) using a German sample, Joos and Lang (1994) using German, French and British samples and Rees (1997) using a British sample.

Pit=a0+a1BVit+a2Eit+eit (1)

Where Pit is the year end price per share, BVit is the book value of equity per share and Eit is the earnings per share, for firm i year t. Generally, firms with higher book value of equity and earnings per share will have relatively higher share prices. Also, refer to the results from previous study (Giner & Rees, 1999), we expect there is a positive relation between the share price and the two variables. In other words, we expect that a1 and a2 are positive.

Previous studies have adjusted the simplified Ohlson model to examine whether the disaggregation of earnings or disaggregation of balance sheet items impacts on the valuation model. Lipe (1996) investigates whether gross profit and the breakdown of various expenses provides additional information to the model and finds that there is a statistically significant difference in the model compared with the consolidated model. Based on the result of Ohlson model in our case which shows that book value of equity per share in our case is not as significant as we expected, we decompose the variable Eit into Ait and Lit, which Ait is the total assets per share and Lit is total liabilities per share, for firm i year t. So we develop our new model:

Pit=a0 +a1Ait –a2Lit+a3Eit + eit.. (2)
Since assets and liabilities together compose the equity, we aim to use this model to test whether disaggregated equity provides additional information.

For our developed model, because generally when the company has more assets, it will likely have higher share price. Also, the ratio of asset-to-liability is usually at a particular level for big company, when the company has more assets, it usually means the company has more liabilities. So we expect there will be a positive relation between liabilities/assets per share and share price.
Furthermore, we decompose the Ait into CAit and NCAit and decompose Lit into CLit and NCLit. CAit means current asset per share, NCAit means non-current asset per share, CLit equal to current liabilities per share, and NCLit equal to non- current liabilities per share, for firm i year t. So, we have Model (3), that is
Pit=a0 +a1CAit +a2NCAit–a3CLit – a4NCLit +a3Eit + eit (3)
Model (3) is the further exploration of Model (2). Similarly, we also expect there will be a positive relation between the share price and our variables in Model (3). By using these three models, we want to find out which model can explain the relationship between share price and variables better.

Hypotheses

As mentioned above, there are three models used during our research, correspondingly, there are three hypotheses.

As the previous research conducted by Giner and Rees (1999), they found that the three basic variables, market price, book value per share and earnings per share are high correlated in Spanish. But according to the research of Lopes (2002), it states that earnings provide low value relevance when compared with book values in Brazil. But compared Spanish with Brazil market, we believe that, Australian market has more common with Spanish market. Thus, our first hypothesise is that:
H1 Market price, book value of equity per share and earnings per share are high correlated in Australia.
According to the development of our new models, we further hypothesise that:

H2 : The disaggregation of book value of equity provides additional information to the model.
H3: The disaggregation of assets and liabilities into current and non-current provides additional information to the model.
Data

Sample selection

We selected 50 companies which ranked in the top 100 listed Australian Companies colleting their data from Aspect Fin Analysis. The reason why we choose Australian top 100 is that it includes various industries, such as banks, financial services firms, retailers, mining and so on, which enable our results to be more explanatory. Since our developed model is based on current and non-current financial items (e.g. current asset and non-current asset), we first exclude all banks from our data, as it is hard to distinguish current and non-current financial items of a bank. Then, considering our relatively small sample size, to prevent our sample from any industry level bias, we randomly select 50 companies from the remaining top 100 companies to form our sample.

All of our data collected are base on the financial information of 2008, because, currently, some companies’ financial information of 2009 is still not available. Also, on 3rd July 2002, FRC (Financial Reporting Council) announced that Australia should adopt international accounting standards by 1st January 2005, and AASB changed a lot in 2007. So the accounting data of 2008 is more reliable.
To insure our data collected against errors, we don’t only collect the data which we need, but also collect relevant data to test the accuracy of our data. For example, we collect total equity for Ohlson model, also, we collect total assets and total liabilities, use their difference to double check the value of equity. Same approach also being used to insure the accuracy of other variables.
Another thing need to mention is that our input data of liabilities are all negative considering their nature.
Sample characteristic

We select 50 companies from the top 100 companies of Australia. And from Model 1 to Model 3, there are total nine variables involved. We select total asset, total liabilities, total equity, current assets, non-current assets, current liabilities, and non-current liabilities from each company, and using these accounting number divided by number of shares (weighted average number of shares). After that, we conduct the descriptive statistics test, the results are shown as followed:

These tables provide the descriptive statistics concerning the variables used. The data exhibits a considerable amount of skewness and kurtosis, as is normal for cross-sectional valuation models but there is no evidence that this affects the reliability of the results. Because all the companies we selected are from the top 100 companies in Australia, we are not surprising all of these figures are high. (During our research, we compared our results to other groups, we found our descriptive statistic results were a little higher than others.) We also noticed that, the range of “share price” and “asset per share” are very high, they are 106.63 and 100.54, and the minimum figures in these two columns are 0.24 and 0.245. These two figures are from Centro Properties Group and Publishing & Broadcasting. In Centro Properties Group’s annual report, it shows its financial situation has been changing dramatically, for example in 2004, its reported total assets are 488.9 million, but in 2005 it increase to 6564.6 million. Similarly, in 2007 its total assets are 8165.1 million, but in 2008, it reaches to 20576.1 million. Within 5 years, its total assets increase 42 times. We thought this company may influence our results, but we did another descriptive test which excludes Centro Properties Group and Publishing & Broadcasting, the results are similar with the original test. (The mean of share price is 16.5118 and the mean for assets per share is 15.94). So, we still believe that our data is reliable.

Results & Discussion

There are three models involved in our research. And for each model there are two levels of analysis are conducted. Initially, we conduct correlation test to explore the relationship among our variables. Then, we used regression to test the performance of the three models. In the rest of the section, we will discuss about these models one by one.

Ohlson Model (Model 1)

Firstly, we conduct the correlation test, the results are:

Table 2

From this table, we can see that, for the variables of Model (1) - share price (sp), book value of equity per share (e/s), and earnings per share (eps n) show a high positive correlation. The correlation is 0.65 for share price and book value of equity per share, and 0.89 for share price and earnings per share. This result is consist with Giner and Rees (1999), which is 0.803 for share price and earnings, 0.733 for share price and book value of equity per share. That is to say, in Australian market, book value of equity per share and earnings per share have a positive relation with share price.

Secondly, we conduct the regression test. The results are as followed:

The table above provides the regression analysis concerning the relationship between dependent variables and independent variables used. The positive coefficients (0.46 and 5.49) confirm the positive relation between share price and book value of equity per share (BVE), and same conclusion for share price and earnings per share (eps n). Adjusted R2 reports the explanatory power of the equity and earnings model. A 0.789 adjusted R2 shows a very high explanatory power of this model. A 2.67*10-12 P-value of earnings per share also shows that the result is very significant at the 0.05 level. However, the P-value of equity per share is 0.09, which indicates that equity per share is still significant at the 0.1 level, but not significant at the 0.05 level. Thus, we ran another test. This time we excluded the earnings per share, only analyse the relation between the share price and book value of equity per share. The result shows substantial erosion in the value of adjusted R2 which is 0.41 compared with 0.79, it also parallels the insignificant result of equity per share.
The results of Ohlson model which shows that book value of equity per share is actually not significant at the 0.05 level as we expected, thus we conduct the same tests for our new model: Pit=a0 +a1Ait –a2Lit+a3Eit + eit.. Since asset and liability together compose the equity, we aim to use this model to test whether disaggregated equity provides further information.

Model 2

We also did the correlation test at first. The results are:

For our Model (2), the absolute value of correlation is almost the same with Model (1). And the correlations of these two variables with share price are 0.67 and -0.62. The number here, is -0.62, is a negative number, as we expected, because our input data of liabilities are all negative. So, in fact, the relation between share price and liabilities per share is actually positive. And from the earnings per share (eps) perspective, same as that in Model (1), also shows high correlation with share price, (0.89 in the table). So model (2) shows there is a high positive correlation between asset per share, liabilities per share, earnings per share and share price.

Next table shows the result for regression test for Model 2

The positive coefficients confirm with our expectation which is the positive relation between assets per share, liabilities per share and share price. The value of adjusted R2 is 0.787 which is nearly the same of Ohlson model. That indicates that explanatory power of this model is also high. The P-value of earnings per share is 5.12E-11, still significant. However, the P-values of assets and liabilities are 0.06 and 0.08, still not significant at the 0.05 level. But, compared with the P-value for book value of equity (0.09) before disaggregation, the results we have in this table get a little improved.

Next, we further develop our model 3: Pit=a0 +a1CAit +a2NCAit–a3CLit – a4NCLit +a3Eit + eit. We disaggregate asset into current asset and non-current asset, and disaggregate liability into current liability and non-current liability. Still, we aim to use this model to test whether further disaggregated equity provides further information

Model 3

As the first two models, it also presents the results correlation test first.

This time our results change a little compared with our first two models. The correlation in Model (3) are 0.30 for current assets per share (ca/s) and share price; 0.73 for non-current assets per share (nca/s) and share price; -0.58 for current liabilities per share (cl/s) and share price; and -0.53 for non-current per share (ncl/s) and share price. From the assets perspective, the correlation between non-current assets per share and share price is higher than that with current assets. Then we calculate the proportion of current asset in total asset, the result shows that, the average is 30%, which means non-current asset makes up 40% more than current asset in total asset. We also notice that, all the insurance companies have more current asset than non-current, because the characteristics of insurance industry. For example, 97% of AMP’s total assets are current asset, and for IAG is 71%. That is to say, in the other industries, the current asset takes less than 30% of its total asset. Non-current asset makes up most part of total assets, that can explain why the correlation between current assets per share is less than non-current asset per share. From the liabilities perspective, we can see that the correlation for share price and current liabilities per share (cl/s) is -0.58, similar with share price and non-current liabilities (ncl/s) which is -0.53. These two figures are almost the same, because current and non-current liabilities make up almost same proportion of total liabilities. We find that, on average, there are 40% of companies’ liabilities are current liabilities. But when we eliminate some extreme samples, (for example, ASX’s 97% liabilities is current liabilities, and Fortescue’s 8% liabilities is current liabilities.) the proportion of both current and non-current liabilities are almost the same.

The correlation between current or non-current liabilities per share and share price shows there is a positive relation between current or non-current liabilities per share and share price. As explained in our Model (2), the values of the correlations for current/ non-current liabilities are negative, but in fact, they have positive relation with share price. To sum up, share price, current asset per share, non-current asset per share, current asset per share, non-current liabilities per share and earnings per share are positively correlated in Australia.

The results for regression test are listed below:

From table 7, we can still see a very high adjusted R2, 0.793, which suggests that the variables can highly explain the dependent variable which is the share price. The results also show that all of the coefficients are positive, which still confirm with our expected positive relation between share price and variables. However, there are some differences appear in the P-value compared with the previous two models. The table suggests that all the variables are significant at the 0.1 level, and earnings per share (3.56E-10), current assets, non-current assets and non-current liabilities are even significant at the 0.05 level, only current liabilities (0.051) is still not significant at the 0.05 level. Thus, this result indicates that the disaggregated equities, especially, current assets(0.015) and non-current liabilities(0.013), do provide better value relevance in explaining the share price.

Robustness Test

To perform a test of the robustness of our results, we rerun the correlation analysis and regression analysis for each of our three models, using the share price at 90 days after the financial report issued to replace our original share price data. The tenor of the results nearly remains the same for all three models. The correlation analysis in the robustness test parallels the results in our original tests. In addition, the adjusted R2 for Ohlson model and our first developed model are both approximate 0.59 which is still high. The adjusted R2 for our second developed model is 0.65 which is comparatively higher than 0.59. This also confirms our expectation which is our second model provides better value relevance in explaining the share price. However, we can see that there is a little erosion in the adjusted R2. We are not surprising with this result. Given the financial crisis all around the world, nearly every single company’s share price was going through a hard pressure, especially in the year 2008. Consequently, the erosion in the adjusted R2 is considered reasonable and acceptable. In other words, our results are still reliable.

Conclusions

This study suggests using disaggregated accounting item can provide more and better information of value relevance. During our study, we first conduct descriptive statistic test to check the characteristics of our samples. The results show that although the range, kewness and kurtosis are little high, our data is still reliable. Then we conduct the correlation test. And correlation results show there are only some minor differences among our three models. But we find more differences when we conduct the regression test. We find that the value of adjusted R2 increased a little from Ohlson model (Model 1) to Model 3. So the explanatory power increased a little when we decomposed our variables. (We first decomposed book value of equity per share into assets and liabilities per share, so generate our Model 2. Then we decomposed assets and liabilities by their characteristic- current and non-current to get our Model 3) But the P-value of our sampling change essentially. In Ohlson model, the P- value of book value of equity per share is over 0.05 which indicates that this variable is not significant at the 0.05 level. But in our Model 3, all of our variables are significant at the 0.1 level, four of our five variables are significant at the 0.05 level, and the one left is 0.051 which is very close to 0.05. So, the Model 3 can provide more and better information of value relevance.

Limitations and further research

Our research takes only 1 month, the time is too short, so there are some shortcomings in our research.

Firstly, the sample size is too small. We only collect 50 companies’ data for 2008. Compared with the previous research which related to this topic, they normally collect hundreds of samples for their studies. For example, Ohlson collected 391 companies’ accounting data from SP500. Lynn at el (2006), their final sample consists of 1628 firm year observations.

Secondly, the entire sample comes from top 100 companies in Australia. Weather the sample can demonstrate the real situation in Australia is questionable. We should notice that there are only a few industries involved in the top 100 companies, energy, financial, insurance, material and mining take up a large proportion in these companies. But there are lots of other industries in Australia, the industries included in our sample may not reflect the reality. Also, there are seven banks in the top 50 companies, but when we select our sample, we exclude all of them. It is because the unique characteristic of bank industry, in the bank’s financial reports, we can not classify their current and non- current assets or liabilities in their financial reports. Because that, our results may biased and noisy.

To improve our research, we should choose more companies of different industries in order to enlarge our research sample. Also, it is important to use other variables for further research if suitable data are available. According to the paper of Barth and Clinch (1998) - Revalued Financial, Tangible, and Intangible Assets: Associations with Share Prices and Non-Market-Based Value Estimates, we can use the tangible assets and intangible assets instead of the current assets and non-current assets in the future to find out which variables are more relevant to share price.

Reference

Barth, M. E., and G. Clinch. (Spring 1996): "International Differences in Accounting Standards: Evi- dence from U.K., Australian, and Canadian Firms." Contemporary Accounting Research 135-70.

Barth, M. E. Beaver, W and Landsman W. (March 1992): "The Market Valuation Implications of Net Periodic Pension Cost." Journal of Accounting and Economics 27-62.
Collins, D., E. Maydew and I. Weiss: 1997, “Changes in the Value-Relevance of Earnings and Book Values over the Past Forty Years”, Journal of Accounting and Economics 24: 39–67.
Giner, B.: 1997, “The Influence of Company Characteristics and Accounting Regulation on Information Disclosed by Spanish Firms”, The European Accounting Review 6(1): 45–68.
Giner, B.: 1999, “A Valuation Based Analysis of the Spanish

Accounting Reforms”, Journal of Management and Governance 3: 31–48, 1999.
Harris, T., M. Lang and H. Moller: 1994, “The Value Relevance of German Accounting Measures: An Empirical Analysis”, Journal of Accounting Research 32(2): 187–209.
Joos, P. and M. Lang: 1994, “The Effects of Accounting Diversity: Evidence from the European Union”, Journal of Accounting Research 32(Supp): 141–168.

Kothari, S and J. Zimmerman: 1995, “Price and Return Models”, Journal of Accounting and

Economics 20: 155–192

La Porta, R., Lopes-de-Silanez F. Shleifer, A. Government Ownership of Banks. Journal of

Finance, Vol. 57, No1, 2002

Stephen L. (2006), Incremental Value Relevance of Unrecognized Deferred Taxes: Evidence from the United Kingdom.
Ohlson, J.: 1995, “Earnings, Book Values and Dividends in Equity Valuation”, Contemporary Accounting Research (Spring) 11(2): 661–687.

how to prepare MKX9550 (2)

noreply@blogger.com (Herbert) — Fri, 03 Sep 2010 20:25:06 PDT

the weather changed again, some people said there will be a huge rain on today or tomorrow. well, wish us luck.

here is the second revision notes of MKX9550, different from last one, it contains some key terms which needed to be remeber but not in the Week 13's lecture notes. these terms are important too, and also need to remember the details of these term. base on these two revision notes, i got 30 or more out of 40 in the last semester's MKX9550 exam.

Chapter 21: Tapping into global markets

1In deciding to go abroad, the candidate countries should be rated on three criteria: market attractiveness, the lower risk and competitive advantage.

2 Once a company decides on a particular country, it must determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint venture and direct investment. Each succeeding strategy involves more commitment, risk, control and profit potential.

Chapter 17 Designing and managing integrated marketing communications

1. 8 major modes of marketing communication:

Advertising,

Sales promotion,

Public relations and publicity,

Events and experiences,

Direct marketing,

Interactive marketing,

Word-of mouth marketing,

Personal selling

2. Nine Elements in the Communications Process

Sender, receiver, message, media, encoding, decoding response, feedback and noise

3 Eight Steps in Developing Effective Communications

1 identify the target audience

2 determine the communications objectives

3 design the communications

4 select the communications channels

5 establish the total communications budget

6 decide on the communications mix

7 measure the communication results

8 manage the integrated marketing communication process

4 Communications Objectives

Category need

• Brand awareness
• Brand attitude
• Purchase intention

Designing the Communications: what to say (message strategy)

How to say it( creative strategy) -Informational appeals

-Transformational appeals

Who should say it(message source)

Celebrity Characteristics

– Expertise

-Trustworthiness

– Likeability

5 Factors in Setting the Communications Mix, marketers must examine the advantages and costs of each communication tool and company’s market rank

They must consider

• Type of product market in which they are selling

• Buyer-readiness stage: how ready consumers are to make a purchase

• Product life-cycle stage: product’s stage in the product life-cycle

6 Integrated Marketing Communications(IMC)

Implementing IMC p529

Chapter 15 designing and managing integrated marketing channels

1 companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible and when they can earn more by doing so.

Channel Member Functions

2 The functions of intermediaries are information, promotion, negotiation ordering, financing, risk taking, physical possession, payment and title

• Gather information

• Develop and disseminate persuasive communications

• Reach agreements on price and terms

• Acquire funds to finance inventories

• Assume risks

• Provide for storage

• Provide for buyers’ payment of their bills

• Oversee actual transfer of ownership

3 Deciding which types of Marketing Channel to use

1. Analyse customer needs

2 Establish channel objectives

2. 3. Identify major channel alternatives

4. Evaluate major channel alternatives

4 Marketing channels are characterized by continuous and sometimes dramatic change. 3 trends ：

• Vertical marketing systems

– Corporate VMS

– Administered VMS

– Contractual VMS

• Horizontal marketing systems

• Multi-channel systems

Channel-Management Decisions

• Selecting channel members

• Training channel members

• Motivating channel members

• Evaluating channel members

• Modifying channel members

5 Strategies for Managing Channel Conflict：
• Adoption of super ordinate goals

• Cooptation: co-option the support of leaders in different parts of the channel

• Employing Diplomacy：

• Exchange of employees: exchanging staff among two or more channel levels

• Joint membership in trade associations：

• Mediation：

• Arbitration：

• Pursuing Legal recourse：

Causes of Channel Conflict：
• Goal incompatibility

• Unclear roles and rights

• Differences in perception

• Intermediaries’ dependence on manufacturer

Chapter 14 Developing pricing strategies and programs

Steps in Setting Price

1 Select the price objective

2 Determine demand curve, the probable quantities it will sell at each possible price
3 Estimate costs： it estimates how its costs vary at different levels of output, at different level of accumulated production experience and for differentiated marketing offers.
4. Analyse competitor’s price, costs and offers ：

5. Select pricing method: making-up price, target-return pricing, perceived-value pricing, value pricing, going-rate pricing, auction-type pricing

6. Select final price

Companies do not usually set a single price, but rather a pricing structure that reflects variations in geographical demand and costs, market-segment requirement, purchase timing, order levels and other factors.

Price-Adaptation Strategies

􀁺 Geographical pricing

􀁺 Price Discounts and allowances Cash discount，Seasonal discount，Quantity discount

􀁺 Promotional pricing Loss-leader pricing ，Special-event pricing Cash rebates ，Low-interest financing， Longer payment terms， Warranties and service contracts ， Psychological discounting

􀁺 Differentiated pricing Product-form pricing，Time pricing

Companies often face situations in which they need to change prices:

A price decrease: excess plant capacity
Declining market share

Desire to dominate the market by lower costs or economic recession

A price increase: cost inflation and over-demand

Price Increase Alternatives ：

􀁺 Shrink product amount

􀁺 Substitute less-expensive materials or ingredients

􀁺 Reduce or remove product features

􀁺 Reduce or remove product services

􀁺 Reduce packaging costs

􀁺 Reduce sizes and models offered

􀁺 Create new economy brands

Brand Leader Responses to Competitive Price Cuts

􀁺 Maintain price

􀁺 Maintain price and add value

􀁺 Reduce price
􀁺 Increase price and improve quality

􀁺 Launch a low-price fighter line

Chapter 8 Identifying marketing segments and targets

1 Target marketing includes 3 activities: market segmentation, market targeting and market positioning

2 Target markets at 4 levels: Segment, Niche, local area and individual.

Market segments are large, identifiable groups within a market.

A niche is a more narrowly defined group.

Marketers appeal to local markets by grassroots marketing for trading areas, neighborhoods and even individual stores.

segmenting consumer markets:

Consumer characteristics and consumer response

egmentation variables for consumer markets

geographic, demographic, psychographic and behavioral

Also with operating variables, purchasing approaches, situational factors

To be useful, market segments must be measurable, Substantial, accessible, differentiable and actionable.

A company must evaluate the various segments and decide how many and which ones to target:

A single market, several segments, a specific product, a specific market or the full market, if it serves the full market, it must choose between differentiated and undifferentiated marking.

Monitor segment relationship and seek economies of scope and the potential for marketing to super-segments

Chapter 6 Analyzing consumer markets

1 Consumer behavior is influenced by 3 factors:

Culture (culture, subculture 􀁺 Nationalities, Religions, Racial groups, Geographic regions social class􀁺 Reference groups 􀁺 Family 􀁺 Social roles􀁺 Roles and status)

Personal 􀁺 Age 􀁺 Life cycle stage 􀁺 Occupation 􀁺 Personality and self concept 􀁺 Values 􀁺 Economic circumstances 􀁺 Lifestyle

Social( reference groups .family and social roles and statuses)

2 4Key Psychological Processes affect consumer behavior

􀁺 Motivation Maslow’s Hierarchy of Needs P171

􀁺 Perception

􀁺 Learning

􀁺 Memory

Consumer Buying Process
FIG 6.5 in the textbook
The marketer’s job is to understand the behavior at each stage. The attitudes of others, unanticipated situational factors and perceived risk may all affect the decision to buy, consumer’s levels of post-purchase product satisfaction, use and disposal.

how to prepare MKX9550 exam (1)

noreply@blogger.com (Herbert) — Fri, 03 Sep 2010 20:25:25 PDT

well, yesterday, Apple released couple of new products, includes new iPod shuffle, new iPod touch, and some other new services, such as Ping.

and, yesterday, i read the unit outline of MKX9550 2010 semester 2. well, this semester has additional assignment compared with last semester. so, i chose study MKX9550 in last semester was a good choice.

OK, go to the point. to prepare the MKX9550 final exam, first, you need to read carefully about the lecture notes of week 13. in week 13, the teacher will hand out the revision notes, but these notes just laid out some basic thing of this unit. you need to make the revision notes by yourself. and in this blog, i put the week 13 revision notes, and next time, i will put another revision notes.

NB: you need to understand each term in the revison notes, not just remeber their names.

The key factors re-visited

What is marketing?

Marketing is the activity, set of institutions and processes for creating, communicating, delivering, and exchanging offering that have value for customers, clients, partners, and society at large.

Core marketing concepts

1. Needs, wants and demands

2. Target markets, positioning, and segmentation.

3. Offering and brand

4. value and satisfaction

5. Market channels

6. Supply chain

7. Competition

8. Marketing environment

New marketing realities: Major Societal Forces

1. New information technology

2. Heightened competition

3. Globalisation

4. Deregulation

5. Privatisation

6. Industry convergence

7. Consumer resistance

8. Retail transformation

9. Disintermediation
Holistic marketing:

Internal marketing: marketing department, senior management and other department.

Integrated marketing: communication, products and channels.

Social responsible marketing: ethics, environment, legal and community.

Relationship marketing: consumers, channel and partners.
Marketing management tasks

Develop market strategies and plans

Capture marketing insights

Connect with customers

Build strong brands

Shape market offering

Deliver value

Communicate value

Create long term growth

Marketing plan is the central instrument for directing and coordinating the marketing effort.

Strategic marketing plan: segment marketing decision, value proposition, analysis of market opportunities.

Tactical marketing plan: product features, pricing, promotion, merchandising, service, sales channels.

Characteristics of core competencies: a source of competitive advantage, applications in a wide variety of markets and difficult to imitate.

Dimensions that define a business: customer groups, customer needs and technology

Ansoff’s product- market expansion grid:

Current product and current market: market penetration strategy

New product and current market: product development strategy

Current product and new market: market development strategy

New product and new market: diversification strategy
The international consumer:

For the purposes of this subject we need to consider all the aspects of marketing covered, in the context of how it applies to international consumers.

The market environment:

Can change rapidly

Can be unpredictable

Can provide considerable opportunity

Can have a significant impact on strategy, operations, positioning, marketing programs

The marketing environment

Macro-environment forces: the larger societal forces that affect the whole micro environment and are considered mostly outside the control of the organisation.

Micro-environment forces: internal forces that can influence how the organisation operates.

Forces over which the organisation has some control

Scanning the marketing environment: marketers must continually scan the marco and micro environments- anticipating, predicting, responding to and dealing with the expected and unexpected.

SWOT analysis: strength, weakness, opportunity and threat

Marketing and customer value: the value delivery process

Traditional: make the product---sell the product

Value creation and delivering sequence: choose the value--- provide the value--- communicate the value

Marketing and customer value: the value chain

The value chain identifies strategically relevant activities that create value and cost in a business.

Primary activities: inbound logistic, operating, outbound logistic, sales and marketing, service

Supporting activities: company infrastructure, human resource management, technology development and procurement

Analysing the macro environment:

Needs and trends: fads, trends and megatrends

Six major forces present opportunities and threats: demographic, economic, socio- cultural, natural, technological and political-legal.

Major decisions in international marketing

Decide whether to go abroad- deciding which markets to enter- decide how to enter the market- decide on the market program- decide on the marketing organisation.
Desired country characteristics for market entry:

Rank high on market attractiveness, rank low in market risk, and possess a competitive advantage.

Five models of entry into foreign markets: 1. Indirect exporting 2. Direct exporting 3. Joint ventures 4. Licensing 5. Direct investment

Culture dimensions: individualism vs. collectivism masculine vs. feminine high vs. low power distance weak vs. strong uncertainty avoidanc
Levels of product adaptation

Production of regional product versions/ production of country versions/ production of city versions/ production of retailer version

Communications: communications adaptation/ dual adaptation

Five forces determining segment structural attractiveness:

1. Industry completion

2. Potential new entrant

3. Substitute

4. Bargaining power of supplier

5. Bargaining power of buyers

Analysing competitors:

Strategies: strategic groups

Objectives

Strengths and weaknesses: share of market, share of mind and share of heart

General attack strategies: frontal attack, encirclement attack, bypass, flank attack, guerrilla warfare

Market follower strategies: counterfeiter, cloner, imitator and adapter

Model of consumer behaviour

Marketing stimuli---other stimuli--- consumer psychology/ consumer characteristic --- buying decision process--- purchase decision

What influences consumer behaviour?

Consumer behaviour is the study of how individuals, groups, and organisations select, buy, use, and dispose of market offerings to satisfy their needs and wants.

It is influenced by: cultural factors, social factors and personal factors.

Key psychological processes:

Motivation: Maslow

Perception

Learning

Memory

Perception: selective attention- what people notice, typically the strongest or most involving stimuli.

Perceptual positioning and attitudes to products.

Four levels of micromarketing: segments/ niches/ local areas/ individuals

What is a market segment?

A market segment consists of a group of customers who share a similar set of needs and wants

Market segmentation process

1. Define the market: determine an appropriate market boundary

2. Segment the market: identify similar groups of markets which comprise segments

3. Target the market: select target segments which are meaningful and viable

4. Position offer in the market: create or design the appropriate values value offering for each segment targeted
Market segmentation- bases

Demographic/ geographic/ psychological
Effective segmentation criteria: measurable, substantial, accessible, differential and actionable.

Branding the offer: what is a brand? A name, sign, symbol, or design, or combination of them intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competitors.

Brand equity: the differential effect that brand knowledge has on consumer response to the marketing of that brand.

The offer:

1. Core benefit- what the customer is really buying. E.g. hotel- rest and sleep

2. Basic product- hotel room and furniture

3. Expected product- what the consumer expects. E.g. clean sheets etc

4. Augmented product- what does it take to exceed expectations

5. Potential product- what can be expected of the product in the future.
New- product development decision

1. Idea generation

2. Idea screening

3. Concept development and testing

4. Marketing strategy development

5. Business analysis

6. Product development

7. Marketing testing

8. Commercialisation
Steps in setting price

1. Select the price object

2. Determine demand

3. Estimate the cost

4. Analysis competitor price mix

5. Select pricing method

6. Select the final price
The cost of producing the offer

1. Set pricing objectives

2. Determine the price floor and ceiling

3. Influences on pricing

- Fixed and variable cost

- Break even analysis

- Influence of customer demand

- Price sensitivity
Developing pricing strategies

1. Market skimming: highest price possible to skim the market

2. Market penetration: new offer to market- low price to get big market share

3. Cost plus pricing: charge percentage mark up on cost of production

4. Loss leader pricing: reduced price for first order, then increase

5. Price bundling: sell two or more products together for lesser price
Selecting a pricing method

1. Markup pricing

2. Target-return pricing

3. Perceived-value pricing

4. Value pricing

5. Going- rate pricing

6. Auction-type pricing
Designing a marketing channel system

1. Analyse customer needs

2. Establish channel objectives

3. Identify major channel alternatives

4. Evaluate major channel alternatives

Channel- management decision

1. Selecting channel members

2. Training channel members

3. Motivating channel members

4. Evaluating channel members

5. Modifying channel members

Elements in the communications process: senders/ encoding/ message/ media/ decoding/ receiver/ response/ feedback/ noises

Steps in developing effective communications

1. Identify target audience

2. Determine objectives

3. Design communications

4. Select channels

5. Establish budget

6. Decide on media mix

7. Measure results

8. Manage integrated marketing communications

Facilitators of marketing strategy success

1. Organisational culture

2. Degree of market orientation

3. Continuous learning

4. Building resources and capabilities

5. Costs and benefits evaluation

sample essay of AFX5330

noreply@blogger.com (Herbert) — Sun, 29 Aug 2010 21:53:56 PDT

this is the second assessment of AFX5330, and i got a reasonable marks on this one, 14 or 13.5 out of 20, i think. this was a case study, the case was so long...

here are the requirements

1. What does the proposal document provided in the appendix tell you about the organizational issues that must be managed during the project?

Referring to the readings for this subject, explain the significance of each issue mentioned. (3 marks)

2. What additional information is required before Accenture can decide whether or not to make a bid on the project?

Refer to relevant research to support your answer. (3 marks)

3. Do you think that Accenture should present a bid? Why, or why not? (3 marks)

4. How much should the bank expect to pay for an ERP-based solution?

Describe separately the costs likely to be associated with the initial implementation as well as the ongoing maintenance of an enterprise system. (2 marks)

5. Irrespective of whether an ERP solution is within the project budget, describe an SAP-based software solution that will meet the business needs of NBSC. Be specific about the industry solution, modules and sub-modules that must be implemented, and why each is required.

For example, the bank will require the FI (Financial Accounting) module. Within that module, the bank will probably also need FI-GL (General Ledger), FI-AP (Accounts Payable), FI-AR (Accounts Receivable), FI-BL (Bank Accounting), FI-AA (Asset Accounting), and FI-FM (Funds Management). (4 marks)

essay is here:

Acknowledgements

First and foremost, we would like to show our deepest gratitude to our lecturer, Dr. Stephen Smith, a respectable, responsible and resourceful scholar, who has provided us with valuable guidance in writing of this report.

We shall extend our thanks to Mr. Ren for all his help, encouragement and support.

In addition, we are highly thankful to NBSC Financial Group for the supply of materials applies in the writing.

Abstract

The report is to assess the organisation problems of NBSC and determine whether the chosen enterprise application system, ERP system, is suitable to solve the problem through the case of Strategic IT Project at NBSC. By analysing the project proposal provided by NBSC, the report initially describes the organisational issues faced by NBSC. Then it considers the additional information and suitability before Accenture presented the bid with the help of ERP system, as well as the costs to implementation ERP. It is concluded that though ERP system is powerful, it is not suitable for NBSC’s project. In such case, Accenture should not present the bid. Alternatively, NBSC can implement SAP for banking, and choose FI module including some sub-modules to increase competitive advantages.

1. Introduction

ERP is more powerful than traditional technology for organising the company. But it is imperative for a business to analyse its own business strategy, organisation, culture and operation before choosing an ERP approach. (Monk & Wagener, 2009, p34). This report analyses NBSC’s case, and recommends whether Accenture should present a bid for NBSC’s project. Also, it analyses which SAP-based solution can meet NBSC’s need.

2. Discussions

2.1 The NBSC’s organisational issues

Accounting to Harris Kern & Randy Johnson (2009), the main three kinds of organizational issues are “people”, “process” and “technology”. “People” means culture, training, HR and so on. “Process” is some issues about problem management, capacity planning and production acceptance. Architecture, system management tools are relating “technology”.

For “people” aspect, Monk and Wagner (2009, p201) state that managing people is the key challenge to make sure that the ERP investment pays off in increased profitability. In the proposal, there are so many people involving in the project, so how to organise these people to work together in an efficient and effective way is a big issue for the project. Furthermore, after ERP implement, training people is an important sector.

For “process” aspect, a common problem in ERP implementations is scope creep, which is the unplanned expansion of the project’s goals and objectives. Scope creep always causes the project failure. Defining the project’s scope ahead of time helps prevent this problem. (Monk & Wagner, 2009, p202). In the proposal, it defines “project deliverables” and “within scope”, these can be treated as guide of project to avoid the scope creep.

For “technology” aspect, in the proposal, it states that it project deliverables should involve “recommendation of the optimal technology architecture to support CCG”. To achieve this goal, many tools are available to help manage implementation projects. Process mapping is perhaps the most critical. For an ERP implementation to go smoothly and provide value, it is critical that a company understand both its current processes and the state of process after implementation. (Monk & Wagner, 2009, p201)

2.2 Supplementary information required

Accenture should consider other information before deciding to make a bid on the project. The additional information included three categories.

2.2.1 Profitability of the project

It could be estimated that the project would affect the achievement of the profit targets. In other words, Accenture might make a loss as a result of the bid. In such case, the precise budget was need, so that whether the bid would bring the company a profit or loss could be identified. Moreover, if there was a loss, Accenture would observe the amount of loss and its future influence on the ongoing operation. When the loss was found too extreme to accept, Accenture had to cease the bid.

2.2.2 The specialties of the management involved

As this project was relevant to both the technology issue and business issue, the particular specialties of the management involved in the project should be recognised. For one thing, it helped to ensure all the management had both the technology and business skills. For another thing, it would be convenient to know with whom to communicate in some particular issues. Otherwise, the improved technology structure could not support the business effectively. In the project proposal, it just shows each person’s position without background. Accenture needed more information about it to make sure the project can be run smoothly.

2.2.3 The details of current technology

To decide what kind of technology which Accenture focused on was appropriate for the project, some other details of current technology of NBSC had to be known, such as the capacity of the computer hardware and the compatibility of the software. For example, if the ERP system was promoted, the computer must be powerful enough to operate ERP system. In addition, according to Monk and Wagner (2009), relational database software which provided the ability of storage, retrieval and analysis of large volumes of data played an important role in implementing ERP system. Generally, the advancement of hardware and software need to be identified. If they were not suitable for the technology which Accenture was good at, the bid should not be made.

2.3 Whether to present a bid

Based on the information in the proposal and the background of NBSC, the ERP system was the appropriate option for the project. Therefore, Accenture should not present bid. As Monk and Wagner (2009) said, “a large company, one with over 1000 employees, is likely to spend $50 million to $500 million. Even a midsized company with fewer than 1000 employees might spend $10 million to $20 million”. While CCG within NBSC just allocated a budget of $4 million which was much less than required amount. The ERP would not be successfully implemented with such small amount of investment. That was why Accenture had better not present a bid.

Someone might argue that this bid would help Accenture gain worthwhile clients, said banks, and future opportunity in IT industry. However, the global economic depression had influenced banks a lot. Hutcherson (2008) stated huge banks, such as Citi Bank, were in bad situation and could not recover until the finish of the economic crisis. In addition, because of the competitive of banking, Adelaide Bank and Bendigo Bank completed a merger. The situation fraught with uncertainty of banks might get Accenture in trouble. As such, the corporation with banks was not such a good idea.

2.4 The cost to implement ERP system

Basically, in accordance with Trattning and Uhink (2005), the costs of the implementation of ERP system were associated with the initial implementation and ongoing operation. As could be seen from Table I in Appendices, implementation fees and operations fees occupied 39% and 61% of total costs respectively. In particular, as illustrated in Table II & III, the initial implementation fees included 22% software costs, 16% hardware costs, 27% external service costs, such as consulting fees, and 35% internal service costs, for instance, managers and employees training fees. Meanwhile, ongoing operation fees were composed of 15% software maintenance costs, 20% hardware maintenance costs, and 65% support costs.

In this case, NBSC had 52,000 employees, which meant it was a definitely large company in terms of the number users of ERP system. Hence, the estimated total costs were estimated to a sum up of $300 million. Consequently, the initial operation fees and ongoing operation fees were $117 million and $183 millions. In details, the software costs would be $25.74 million. The hardware costs would be $18.72 million. The external service costs would be $31.59 million. And the internal service costs would be $40.95 million. The costs of each component of ongoing costs would be $27.45 million of software maintenance costs, $36.6 million of hardware maintenance costs, and $118.95 million of support costs.

2.5 SAP- based solution for NBSC

An ERP system can dramatically reduce costs and improve operational efficiency. NBSC can choose SAP for banking which can meet the business needs of it. On the SAP website (2009), it list several benefits after the bank chooses SAP for banking, for example it can improve understanding of the profitability of distribution channels, organizational units, products, clients, and more. Also SAP for banking can faster and more cost-efficient real-time processing of financial transactions.

For NBSC, it can choose following module and sub- modules:

2.5.1 The Financial Accounting (FI) module

This module records transactions in the general ledger accounts. This module generates financial statements for external reporting purposes. (Monk, E & Wagner, B, 2009) NBSC is a big company which process countless transactions, it need a system to record and analyse these transactions. FI module can meet this purpose. There are some sub- modules need to be implemented.

2.5.2 FI-GL

General Ledger is fully integrated with the other SAP Modules. It is within the General Ledger that all accounting postings are recorded. These postings are displayed in real-time providing up-to-date visibility of the financial accounts. This is the fundamental module for NBSC, it can help NBSC to trace and analyse the day- to- day transaction well.

2.5.3 FI-AP

Accounts Payable records account postings generated as a result of vendor purchasing activity. For banking, customers’ saving or loan from government are the main sources of accounts payable. There are thousands of existing or potential customers of NBSC, if it wants to keep and increase its market share, it should handle accounts payable well

2.5.4 FI-BA

Bank Accounting allows for management of bank transactions in the system including cash management. Cash has the high liquidity, so it is hard to control, especial for banking, a lot of cash withdraw of deposit from ATM or bank branches every day. Also, cash is the main component of asset for NBSC which really needs to be managed.

3. Conclusion

To sum up, based on the case study and the analysis above, technology, process and people in NBSC should be managed during the project. Before Accenture made a bid, the profitability of the bid, the management of NBSC involved in the project, and some other particular details of current technology of NBSC, for example, the capacity of computer hardware and the compatibility of the software, should be collected. However, because of the lack of enough money and the influence of economic crisis on banks, the bid should not be accepted. If NBSC really wanted to implement ERP system, future issues should be recognized, including the total costs, and the necessary modules and sub-modules.

4. Recommendation

Because the budget of NBSC may not meet the cost for the project, and NBSC’s future is unclear, it is recommended that Accenture should not present a bid for NBSC’s project. Generally, it cost $300 million to implement and maintain an ERP-based solution for NBSC’s business size. For NBSC, it can choose SAP for banking package, and choose FI module (including its sub-modules) as its fundamental module to make the business running in an effective and efficient way.

5. Bibliography

Hutcherson, M. (2008, January 12), Is Citibank In Financial Trouble, China/Kuwait Rush Cash?, Retrieved September 28, 2009, from

Kern H. & Johnson R.(2009), What are the most common IT organizational problems?, Retrieved September 28, 2009, from

Monks, E.F. & Wagner, B.J. (2009), Concepts in Enterprise Resource Planning, Boston: Course Technology Cengage Learning.

SAP for Banking – Business Benefits, 2009, Retrieved September 28, 2009, from

< http://www.sap.com/industries/banking/businessbenefits/index.epx>

Trattnig, W. & Uhink, H.J. (2005, October 5), SAP Financing–An innovative financing approach to enable a "pay-as-you-use" business model, Retrieved September 28, 2009, from

http://www.sap.com/australia/industries/professionalservices/pdf/fin_SAP_Financing_White_Paper.pdf

What is the SAP FI Module?, 2007, Retrieved September 28, 2009, from http://www.thespot4sap.com/IntroTo/SAP_FI_Module_Introduction.asp

sample essay of GSB9001

noreply@blogger.com (Herbert) — Sun, 29 Aug 2010 21:17:19 PDT

finally, the sun comes out. stop raining...

here is the essay of GSB9001, uh~not good marks, 11 out of 20. some problems with conclusion and recommendations. the recommendations are too long, and wikipedia is not a good information source.

Executive Summary

This report first analyses the financial prospects, political situation and environment credentials of three companies- Nissan, Vestas and Rio Tinto. It shows that only Vestas has a good financial prospect. Nissan and Rio Tinto’s future financial performances are not clearly. About political situation, only Vestas has strong policy backup by government. And so far there is no policy benefit to Nissan. Rio Tinto’s political situation is the worst, it is facing two legal issues which are not good for company’s development. For the third criterion- environment credentials, all of three companies do well, either they have an environment- friendly strategy, or their production good for environment. After analysis, it recommends that Vestas should be invested, because it matches all of three criteria.

Introduction

An analyst for ethical need to consider financial prospects, political situation and environment credentials before making an investment. This report first analyses all three criterions of Nissan, Rio Tinto and Vestas. And then, it is discussing the three criterions. During the discussing, financial prospects with political supports will treat as hurdle requirement, and environment credential is less important for the final decision making. After, it will give a suggestion about which company should be invested. All the data and material in this report are from the Internet, some of them from the news, and others direct from company’s website.

Discussion

Financial Prospects

Nissan

In 2008, the financial and economic crisis has created economic setbacks for the whole car industry. Under this background, Nissan sold 3.2 million cars, but loss 2.3 billion. (BBC, 2009) And in the world wide, the major carmakers did not perform well in 2008. For the long term plan, in Nissan 2008’s CEO Statement (Ghoson, 2009), it states that Nissan is not compromising its efforts to mass- market the electric car in the future. It is a good policy for the future development of Nissan. But this policy also need to be questioned. How many people will change their car to electric car? No doubt, electric car is more environment- friendly, but it is not economical. Although an exact price has not been announced, the car is expected to cost somewhat between US $ 25,000 to US $ 33,000. (Wikipedia, 2009) It is not cheap. People love it, but can not afford it. So the demand for the electric car is doubtful.

To sum up, Nissan’s financial future is not clear.

Vestas

There are some points should be considered carefully about its financial prospect:

Firstly, as the banking crisis hit in 2008, the booming wind power sector was dealt a setback. But Vestas did very well in 2008, in its annual report, it is shown € 11 million profit. (Wikipedia, 2009)

Secondly, wind accounts for just 1 percent of US electricity use now. This is because wind power energy is hard to produce and very expensive to build transmission lines. But it will be more and more popular because it is it is abundant and provides many communities with a clean, local source of electricity (Galbraith, 2009). Besides these, the cost of energy will be lower and lower because of technology development (Wikipedia, 2009). It will certainly increase the demand for wind power.

It is clearly that, the demand for Vestas will increase, and it will grow faster in the future.

So, Vestas did very well in the past, and will do better and better in the future.

Rio Tinto

Rio Tinto’s future is confusing. It is set to report sharp falls in profit for the June half, battered by a slump in metals prices and volumes (New York Times, 2009) Rio Tinto’s profit depends on the price of ore and sales volumes. However, the price of ore is an unknown number, and the price direct influences the sales volumes. So the financial prospect of Rio Tinto is puzzled.

From the argument above, it is clear that Vestas has the best financial prospect among these three companies.

Political Situation

Nissan

So far, Nissan has no political problem or legal problem. In contrast, Nissan is under way with the Australian Government to seek ways to cut the car’s price and encourage fleet customers (Heasley, 2009). But the outcome of this negotiation is not sure.

So, there is no sufficient evidence to show there will be a policy to assure Nissan’s future.

Vestas

Vestas’ development depends on the wind power. In US, Department of Energy has estimated that wind power could account for 20 percent of the nation’s electricity supply by 2030. Also, the economic stimulus package which is passed in February 2009 may help wind industry. The stimulus should inject some federal dollars into the wind sector (Galbraith, 2009). All of these factors help to wind power’s development.

So, Vestas will growth faster in the future due to there is a strong policy to help Vestas’ development.

Rio Tinto

There are two main legal issues against to Rio Tinto now. The first one is in China, Chinese Government detention of four of Rio Tinto’s Shanghai- based employees (Maiden, 2009). China is the world largest iron ore importer, the outcome of Rio Tinto’s China crisis will certainly influence Rio Tinto’s development. The second one is in US. The result of this issue is not optimist (Davies, 2009).

To sum up, Rio Tinto is in big trouble of political situation. And this is not good for Rio Tinto’s future.

In conclusion, Vestas has the best political situation among the three companies.

Environment Credentials

Nissan

Nissan has an environment- friendly plan, because it will focus on producing electric car (Ghosn, 2009).Traditional cars always considered causing air pollution and noise pollution. But electric car is no emissions, and more quiet.

Vestas

Wind power is the production of Vestas. Wind power is considered a kind of clean power. Definitely, Vestas is good for environment.

Rio Tinto

In Rio Tinto’s website, it states that “Balance social, environmental and economic considerations in developing new product applications and technologies, as well as joint venture and supplier relationships” (Goldberg, 2009). It implies Rio Tinto’s strategy is also environment- friendly.

To sum up, all of these three companies is ecologically friendly.

Conclusion

As analysis above, Nissan has unclear financial prospects and without government support. Vestas has a bright financial prospects and also with government support. Rio Tinto faced some legal issues and its future is unpredicted. But all three companies’ strategy or production are friendly to environment.

Recommendations

To decide which company should be invested is based on financial prospects, political situation and environment. Comparing these three criteria, environment credentials is less important, because the evidences show that all the three companies do well in this perspective. The general purpose of running a company is making profit, so financial prospect is considered as the most important factor to decide which company should be invested. It can bring profit to the investors when investing a company which has good financial prospects. But it also need to be noticed that, if the company has legal or political problems that could impede its future growth, or if there is a law or government decision which incentives industry, the companies in this industry will advantageous to it. So for the final decision, it should adds up these two criteria, i.e. to consider investing the company, the investee need have good financial prospects, it had better has some political supports, or at least has not legal or political problem. So it is clearly that, Vestas should be invested since it matches each criterion. Vestas has a clear financial future and sound support by the government. Also Vestas’ production is environment- friendly. People may argue that Nissan also worth to investing, that is according to Chief Executive Carlos Ghosn (2009) predicted then that Nissan would return to a profit in 2010/11 if external conditions stayed the same. But in the real world, the financial situation is hard to predict, especial when there is no strong policy backup. So far, Nissan has not got any support by government or related organisation. Hence, investing Nissan is not advisable. As Rio Tinto is the second biggest miner in Australia, its future should not be a problem. But it has many problems now, so it had better not invest Rio Tinto.

Reference List

BBC news, (2009, May 29), The global car industry in crisis, Retrieved September 12, 2009, from http://news.bbc.co.uk/2/hi/business/8068787.stm

Davies, A., (2009, August 8), US class action against Rio Tinto clears hurdle, Retrieved September 12, from http://business.theage.com.au/business/us-class-action-against-rio-tinto-clears-hurdle-20090807-ecy8.html

Ghosn, C., (2009), CEO Statement, Retrieved September 12, from http://www.nissan-global.com/EN/ENVIRONMENT/MESSAGE/index.html

Goldberg, G., (2006, December 15), Sustainability Policy, Retrieved September 12, from

www.riotintominerals.com/files/RTMPolicy%20Sustainability.pdf

Galbraith, K., (2009, February 19), Wind Power, Retrieved September 12, from

http://topics.nytimes.com/top/news/business/energy-environment/wind-power/index.html?scp=1-spot&sq=wind%20power&st=cse

Heasley, A., (2009, August 3), Nissan turns over a new, green Leaf, Retrieved September 12, from,

http://business.theage.com.au/business/nissan-turns-over-a-new-green-leaf-20090802-e5wm.html

Maiden, M., (2009, July 10), Rio Tinto's China crisis escalates, Retrieved September 12, from http://business.brisbanetimes.com.au/business/rio-tintos-china-crisis-escalates-20090709-derw.html

New York Times, (2009, August 6), BHP, Rio Tinto June Half Profits to Plunge, Retrieved September 12, from http://www.nytimes.com/reuters/2009/08/06/business/business-us-bhp-rio-preview.html

Vestas, (2007), Strategy, Retrieved September 12, from

http://www.vestas.com/en/about-vestas/strategy.aspx

Wikipedia, (2009), Vestas, Retrieved September 12, from http://en.wikipedia.org/wiki/Vestas

MKX9550 2008 exam paper (2)

noreply@blogger.com (Herbert) — Sun, 29 Aug 2010 21:55:06 PDT

I just answered 3 questions in this paper, becuase i was lazy...and i found these questions were not related what i have learned. maybe because the textbook was changed. I guess.

1. One of the major components of a marketing plan is the external environmental analysis. Describe the major elements of this environmental analysis (10 marks). Then explain the process you go through to draw conclusions from the analysis to enable you to set meaningful strategies later in the marketing plan. (10 marks)

External environment (opportunity and threat) analysis. A business unit must monitor key macroenvironment forces and significant microenvironment actors that affect its ability to earn profit. The business unit should set up a marketing intelligence system to track trends and important developments and any related opportunities and threats.

A marketing opportunity is an area of buyer need and interest that a company has a high probability satisfying. An environmental threat is a challenge posed by an unfavourable trend or development that would lead, in the absence of defensive marketing action, to lower sales or profit. To deal with them, the company needs contingency plans.

2. In marketing, perceptions are more important than reality. People can emerge with different perceptions of the same object because of three perceptual processes. List and briefly characterize those processes (10 marks). Further, marketing scholars have developed a “stage model” of the buying decision process. List and describe the five stages of this process using examples? (10 marks)

Perception is the process by which we select, organise and interpret information inputs to create a meaningful picture of the world. The key point is that it depends not only on the physical stimuli, but also on the stimuli’s relationship to the surrounding field and on conditions within each of us. People can emerge with different perceptions of the same object because of three perceptual processes: selective attention, selective distortion and selective retention.

1. selective attention: attention is the allocation of processing capacity to some stimulus. It’s estimated that the average person may be exposed to more than 1,500 ads or brand communications per day. Because we cannot possibly attnd to all these, we screen most stimuli out- a process called selective attention. Selective attention means that marketers must work hard to attract consumers’ notice.

2. selective distortion: selective distortion is the tendency to interpret information in a way that fits our preconceptions. Consumers will often distort information to be consistent with prior brand and product beliefs and expectations.

3. selective retention. Most of us don't remember much of the information to which we’re exposed, but we do retain information that supports our attitudes and beliefs. Because of selective retention, we’re likely to remember good points about a product we like and forget good points about competing products.

1. problem recognition

2. information search

3. evaluation of alternatives

4. purchase decision

5. postpurchase behaviour

3. Most brands are adapted to some extent to reflect significant differences in consumer behaviour, brand development, competitive forces, and the legal or political environment. Identify the five international product and communication strategies available to firms (10 marks). Using a product of your choice, explain how you would communicate this product to customers in two different countries of your choice. (10 marks)

4. Satisfying different consumer needs and wants can require different marketing programs. List and describe the four cultural dimensions that differentiate countries, as identified by Hofstede. (10 marks) In addition, in an increasingly connected, highly competitive global marketplace, government officials and marketers are concerned with how attitudes and beliefs about their country affect consumer and business decision makers. What is the term for this concept and what is the position of government officials and marketers? (10 marks)

5. When a company has overseas customers it must think carefully how they price their product in the different countries. Using an example of your choice, discuss the issues a company needs to consider when and if they adapt their price for those countries. (20 marks)

6. During this semester you completed a marketing plan. Based on your marketing plan assignment explain the key parts of the marketing plan their importance (10 marks).Then discuss the importance of the Problems and Opportunities statement and how it links the two parts of the plan together. (10 marks)

7. What are the main stages in developing new products (10 marks)? Explain the issues you would need to think about when developing a new product to market overseas. Use a product of your own choice as an example. (10 marks)

8. To take your company overseas is a big decision. Using a company of your choice as an example, discuss the factors you need to consider when deciding to go overseas or not. (20 marks)

MKX9550 past exam paper (1)

noreply@blogger.com (Herbert) — Tue, 24 Aug 2010 06:23:04 PDT

now, labor vs. liberal 73:73, well, let's see

here is the 2009 MKX9550 exam paper, totally 8 questions, but you can choose to answer 5 questions in the exam

1. When companies decide to go global, it often makes sense to enter in a few countries, than all. Identify the three criteria that companies prefer countries meet to be viable alternatives for entry. (5 marks) Then discuss the five possible modes of entry into foreign markets, describe and contrast them. (15 marks)

1. Rank high on market attractiveness brand awareness, market size

2. Rank low in market risk

3. Possess a competitive advantage

Indirect exporting: companies typically start with indirect exporting- that is, they work through independent intermediaries. Domestic-based export merchants buy the manufacturer’s products and then sell them abroad. Domestic-based export agents seek and negotiate foreign purchases for a commission. Two advantages: 1. there is less investment. 2. There is less risk.

Directing exporting: companies may eventually decide to handle their own exports. The investment and risk are somewhat greater, but so is the potential return. A company can carry on direct exporting in several ways: 1. Domestic-based export department or division. 2. Overseas sales branch or subsidiary. 3. Travelling export sales representatives. 4. Foreign-based distributors or agents.

Licensing: licensing is simple way to engage in international marketing. The licensor issues a licence to a foreign company to use a manufacturing process, trademark, patent, trade secret or other item of value of for a fee or royalty. The licensor gains entry at little risk; the licensee gains a production expertise or a well-known product or brand name. potential disadvantages. The licensor has less control over the licensee that it does over its own production and sales facilities.

Joint ventures: foreign investors join with local investors to create a joint venture company in which they share ownership and control. A joint venture may be necessary or desirable for economic or political reasons. The foreign company might lack the financial, physical or managerial resources to undertake the venture alone, or the foreign government might require joint ownership as a condition for entry.

Direct investment: the ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities. The foreign company can buy part of full interest in a local company or build its own facilities. If the market appears large enough, foreign production facilities offer distinct advantages. First, the company secures cost economies in the form of cheaper labour or raw materials, foreign-government investment incentives and freight savings. Second, the company strengthens its image in the host country because it creates jobs. Third, the company develops a deeper relationship with government, customer, local suppliers and distributors, enabling it to adapt its products better to the local environment. Fourth, the company retains full control over its investment and therefore can develop manufacturing and marketing policies that serve its long-term international objectives. Fifth, the company assures itself access to the market in case the host country insists locally purchased goods have domestic content.

2. Kotler, Keller and Burton (2009) discuss eight Core Marketing Concepts. List and describe five of these, using examples to illustrate your answer. (10 marks) Further, during this semester, you had to write a marketing plan for a company of your choice. Describe what each of the terms “Internal Capabilities” and “Critical Success Factors” meant in your assignment. Using an example explain the difference between the two terms and the significance of it. (10 marks)

1. Needs, wants, and demands: Needs are basic human requirements. Needs become wants when they are directed to specific objects that might satisfy the need. Demands are wants for specific products backed by an ability to pay.

2. Target markets, positioning, and segmentation: marketers identify and profile distinct groups of buyers who might prefer or require varying product and service mixes by examining demographic, psychographic and behavioural differences among buyers.

3. Offerings and brands: Companies address needs by putting forth a value proposition, a set of benefits that they offer to customers to satisfy their needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information and experiences. A brand is an offering from a known source. A brand name such carries many associations in people’s minds that make up the brand image.

4. Value and satisfaction: combination of quality, service and prise. Satisfaction is a person’s subjective judgement. The offer delivers value and satisfaction to target buyers.

5. Marketing channels: Communication Channels, Distribution channels and service channels.

6. Supply chain: Raw material to components to final products. Services delivered to final buyer and companies may expand upstream and downstream.

7. Competition: Actual and potential rival offering. Any substitute a buyer may consider.

8. Marketing environment: internal environment, micro environment, macro environment.

3. Describe the following terms, marketing plan, strategic marketing plan, and tactical marketing plan highlighting what each specifies. (10 marks). Further, in your assignment, you conducted a customer value analysis to reveal the company’s strengths and weaknesses relative to those of various competitors. Outline the steps in this analysis. (10 marks)

A marketing plan is a written document that summarises what the marketer has learned about the marketplace and indicates how the company plans to reach its marketing objectives. It operates at a strategic and tactical level.

Strategic plan: target marketing decisions, value proposition, analysis of marketing opportunities.

Tactical plan: product features, promotion, merchandising, pricing, sales channels and service.

The steps in customer value analysis are as follows:

1. identify the major attributes and benefits that customers value.

2. assess the quantitative importance of the different attributes and benefits.

3. assess the company’s and competitors’ performances on the different customer values against their rated importance.

4. examine how customers in a specific segment rate the company’s performance against a specific major competitor on an individual attribute or benefit basis.

5. monitor customer value over time.

4. Kotler, Keller and Burton(2009) describe the descriptive characteristics that allow marketers to define segments. Contrast the three descriptive approaches, using examples to illustrate how each might be used by a marketer. (10 marks). Further, in segmentation, if the market segments are to be useful, they must rate favorably on five key criteria. List and describe these criteria?

Geographic segmentation: geographic segmentation calls for dividing the market into different geographical nits such as countries, states, regions, cities or neighbourhoods. The company can operate in one or a few areas, or in all, but pay attention to local variations. For example, Hilton Hotels customises rooms and lobbies according to location. Hotels in major business centres, such as Sydney’s refurbished Hilton Hotel, are sleeker and more cosmopolitan, whereas Hilton’s resort hotels, such as those in Hawaii, are open, airy and relaxed.

Demographic. In demographic segmentation, we divide the market into groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality and social class.

Psychographic. Psychographic is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided into different groups on the basis of psychological/ personality traits, lifestyle or values.

Five key criteria

1. Measurable. The size, purchasing power and characteristics of the segments can be measured.

2. substantial. The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. It would not pay, for example, for a car manufacturer to develop cars for people who are less than four feet tall.

3. accessible. The sements can be effectively reached and served.

4. differentiable. The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments.

5. actionable. Effective programs can be formulated for attracting and serving the segments.

5. Michael Porter has identified five forces that determine the intrinsic long‐run attractiveness of a market or market segment. Briefly list and characterise those forces. (10 marks) In addition Kotler, Keller and Burton(2009) suggest a company should monitor three variables when analysing competitors. List and briefly characterise those three variables? (10 marks)

1. threat of intense segment rivalry. A segment is unattractive if it already contains numerous, strong or aggressive competitors.

2. Threat of new entrants. The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new companies can enter the industry and poorly performing companies can easily exit.

3. threat of substitute products. A segment is unattractive when there are actual or potential substitutes for the product. Substitutes place a limit on prices and on profits.

4. threat of buyers’ growing bargaining power. A segment is unattractive if buyers possess strong or growing bargaining power.

5. threat of suppliers’ growing bargaining power. A segment is unattractive if the company’s suppliers are able to raise prices or reduce the quantity supplied.

In general, a company should monitor three variables when analysing competitors:

1. share of market. The competitor’s share of the target market.

2. share of mind. The percentage of customers who named the competitor in responding to the statement, “name the first company that comes to mind in this industry”

3. share of heart. The percentage of customers who named the competitor in responding to the statement, “name he company from which you would prefer to buy the product”

6. Kotler, Keller and Burton 2009) state that physical products could be differentiated in nine ways. Using real examples, state five ways that physical products can be differentiated? (10 marks) Further, they describe a six (6) step process in setting product pricing. One of these steps is ‘Selecting a pricing Method’. State and describe the five price setting methods using real examples. (10 marks).

1. Form. Many products can be differentiated in form- the size, shape or physical structure of a product.

2. features. Most products can be offered with varying features that supplement their basic function. A company can identify and select appropriate new features by surveying recent buyers and then calculating customer value versus company cost for each potential feature.

3. customisation. Marketers can differentiate products by making them customised to an individual.

4. performance quality. Most products are established at one of four performance levels: low, average, high or superior. Performance quality is the level at which the product’s primary characteristics operate.

5. conformance quality. Buyers expect products to have a high conformance quality, which is the degree to which all the produced units are identical and meet the promised specifications.

6. durability. Durability, a measure of the product’s expected operating life under natural or stressful conditions, is a valued attribute for certain products.

7. reliability. Buyers will normally pay a premium for more reliable products. Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period.

8. Repairability. Repairablity is a measure of the ease of fixing a product when it malfunctions or fails. Ideal repairability would exist if users could fix the product themselves with little cost in money or time.

9. Style. Style describes the product’s look and feel to the buyer.

1. make-up pricing. The most elementary pricing method is to add a standard mark-up o the product’s cost. Construction companies submit job bids by estimating the total project cost and adding a standard mark-up for profit. Lawyers and accountants typically price by adding a standard mark-up on their time and costs.

2. target-return pricing. In target-return pricing, the company determines the price that would yield its target rate of return on investment. General Motors has priced its cars to achieve a 15%-20% ROI.

3. Perceived-value pricing. An increasing number of companies now base their price on the customer’s perceived value. Perceived value is made up of several elements, such as the buyer’s image of the product performance, the channel deliverables, the warranty quality, customer support, and softer attributes such as the supplier’s reputation.

4. value pricing. In recent years, several companies have adopted value pricing: they win loyal customers by charging a fairly low price for a high-quality offering. Value pricing is thus not a matter of simply setting lower price; it is a matter of re-engineering the company’s operations to become a low-cost producer without sacrificing quality, to attract a large number of value- conscious customers.

5. going-rate pricing. In going-rate pricing, the company bases its price largely on competitors’ prices, charging the same, more or less than major competitors.

6. auction-type pricing. Auction-type pricing is becoming more popular, especially with the growth f the internet.

7. Think of yourself as the Marketing Manager for the McDonalds Fast Food chain. Explain the five (5) channel management decisions that you have to consider. (20 marks)

1. selecting channel members. To customers, the channels are the company. To facilitate channel member selection, producers should determine what characteristics distinguish the better intermediaries. They should evaluate the number of yearsin business, other lines carried, growth and profit record, financial strength, cooperativeness and service reputation.

2. & 3. training and motivating channel members. A company needs to view its intermediaries in the same way it views its end users. It needs to determine intermediaries’ needs and construct a channel positioning such that its channel offering is tailored to provide superior value to these intermediaries.

4. evaluating channel members. producers must periodically evaluate intermediaries’ performance against such standards as sales-quota attainment, average inventory levels, customer delivery time, treatment of damaged and lost goods, and cooperation in promotional and training programs.

5. modifying channel design and arrangements. A producer must periodically review and modify its channel design and arrangements. It will want to modify them when the distribution channel is not working as planned, consumer buying patterns change, the market expands, new competition arises, innovative distribution channels emerge and the product moves into later stages in the product life cycle.

8. Kotler, Keller and Buron (2009) describe the elements of a macromodel of the communication process. List and describe the nine elements contained. (10 marks) When deciding a marketing program, a company can run the same marketing communications program it uses in the home market or change them for each market. What is this process called? What are the other product and communication strategies that the company can adopt? (10 marks)

Nine elements in the communications process: sender, receiver, message, media, encoding, decoding, response, feedback and noise.

The model emphasises the key factors in effective communication. Senders must know what audiences they want to reach and what responses they want to get. They must encode their messages so the target audience can decode them. they must transmit the message through media that reach the target audience, and develop feedback channels to monitor the response.

who will win the election 2010 of Australia

noreply@blogger.com (Herbert) — Sat, 21 Aug 2010 21:23:02 PDT

well, the election was held yesterday, but no result comes out so far. according to Yahoo 7, Labor has 72 seats, and liberal has71 seats, no single party hold more than 76 seats, so maybe a hung parliament will come out. and I hear that the Green Party perfoms well in this election.

well, again, i have no vote rights, but i think election is an interesting, at least, the citizens have a chance to choose the leader by themself. according to the Chinese law, i do have a vote right in China, well, i do not know how to use, when to use it. what a pity.

A hung parliament will never in China, because CPC is the only majority party in China...and there is a communist party in Australia too, its website is http://www.cpa.org.au/ Oh~~CPA again~~different meaning
also, there is a sex party in Australia, i do not know, it is called Sex Party, maybe all the members in that party is sexy? just kiding~ i do not know~
i hear that, there is a party which about hunting and fishing...well, sounds interesting, but i am not interesting both of them...

well, maybe a fews days later, the result will come out, and let's wait and see.
but i hear that both of Julia and Tony will tighten the immigration laws, well, who knows~

labor vs. Liberal

noreply@blogger.com (Herbert) — Thu, 19 Aug 2010 03:09:29 PDT

well, the big show will come on this Saturday, and technically, i have nothing to do with it. because i have no rights to vote. but this event does have some impact on me. both parties have some points about the international students which i do not know yet. well, we will see.

today, i bought a new hardware, from officework. 1 TB for 95D, I thought it was cheap. i can copy so many movies into it. but it has the external power which i do not like.

tonight, or maybe i should say some minites ago, i went to school for the "Accounting Beyond" careers expo, well there are some exhibitors there, but it seems i have no chance of that, because almost all the companies needs the employees have a PR or citizens. well, i have none. so, maybe the it is easy for me to get a job after i get a PR. wish me luck.

next, i need to work the assignment of MGX5440, come on~~~

NIKE,assignment for MCD2040: MANAGEMENT 1: Managing People and Organisations

noreply@blogger.com (Herbert) — Sat, 14 Aug 2010 21:02:48 PDT

1. Executive Summary

Sustainability is becoming a hot topic in recent years. It requires that when managers are making decisions, financial profit is no longer the only thing to be focus, but also needs to concern about the effects on environment and social community.

Nike is a famous sports clothes and equipment supplier in the world, its famous products includes Air Force 1, Jordan and so on. It has very good financial performances in recent years. But it also faces some problems with environment and human rights, such as industry pollution and sweatshop. In this report, it will analyse Nike’s background and situation, then find out how to maximise the benefits of a focus on sustainability. It will discuss this issue from planning and organising aspect. And during the discussing, it finds that Nike has some opportunities to improve its performance in planning and organising aspect. At the end of this report, five recommendations will be given about how to maximise its benefits of a focus on sustainability.

The main sources of information contained in this report are from textbook (Management, Robbins et al), Internet and some academic journals. Also some information from other books and some are from Nike’s annual reports.

2. Introduction

Nike is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in Beaverton, Oregon. It is the world's leading supplier of athletic shoes and apparel, (Alexandria, 2008) and a major manufacturer of sports equipment with revenue in excess of $18.6 billion USD in its fiscal year 2008. As of 2008, it employed more than 30,000 people worldwide. (Nike, 2008) Nike has outstanding performance in the past, and it is believed that it will perform better in the future.

Obviously, the fundamental purpose of running a company is making profit, but recently Nike faces some legal issues about environment and labour power. Consequently, sustainability is needed to be considered by Nike now. According to Drever, Stanton and McGowan (2008, P194), sustainability refers to equitable consumption of resources that does not compromise the needs of future generations. That is to say, when company makes a decision or takes an action, profit is not the only thing need to consider or focus on, it also need to consider the impact on environment and its social responsibility (Shannon , Anderson and Henri, Dekker, 2009).

In this report, it will identify, discuss and evaluate how to maximise the benefits of a focus on sustainability in Nike from two functions of management- planning and organising. And at the end of the report, a conclusion and recommendations will be given.

3. Discussion

3.1 Planning

Planning involves defining the organisation’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organisational work. It is concerned with both ends (what is to be done) and means (how it is to be done). (Robbins, Bergman, Stagg and Coulter, 2009, P246). There are two old saying about planning- Failure to plan is planning to fail, and each hour spent planning is worth two hours saved during implementation. It indicates that planning is very important for the company. Especially for today, the competition in the market is fierce, the company can not survive without a adequate plan or strategy. Some markets are very competitive, with a number of vendors selling the same kinds of products or services. Conversely, some markets have low or no competition, particularly if the industry is protected by government legislation. (EcnomyWatch, 2009) For Nike, it can be classified in apparel industry. This market is very competitive because there are so many other companies sell the similar products like Nike, such as Adidas, Puma and Umbro. So a suitable plan is extremely important for Nike.

Generally, there are some advantages of planning. Planning provides direction, reduces uncertainty, minimises waste and redundancy, and sets the standards used in controlling (Loasby, 1966). Also, plan can be classified in different way. The most popular ways to describe organisational plans are by their breadth (versus operational), time frame (short term versus long term), specificity (directional versus specific) and frequency of use (single use versus standing). These planning classifications are not independent, strategic plans are long term, directional and single use. Operational plans are short term, specific and standing (Robbins, Bergman, Stagg and Coulter, 2009, P246).

Strategic plans are plans that apply to the entire organisation, establish the organisation’s overall goals, and seek to position the organisation in terms of its environment. Plans that specify the details of how the overall goals are to be achieved are called operational plans. (Robbins, Bergman, Stagg and Coulter, 2009, P251)

Go back to Nike, according to Fortune (2009), Nike is the number 1 company in apparel industry in US, and ranking in number 2 in the world following Christian Dior. So now, Nike’s actions or plans should let it keep the top 1 position in US market, and catch up with Christian Dior in the world market. The main way to achieve that is increasing its profit. But as mentioned above, nowadays sustainability becomes a hot issue in the world, it suggests that the company should not only focus on its profit, but also environment, social responsibility and other stakeholder. To meet this objective, Nike’s strategic plan should be increasing Nike’s profit as well as considers sustainability.

It is more important and challenging to make operational plan, because operational plans mean specify the details of how the overall goals are to be achieved. The bottom line of Nike’s operational plans is to solve current problems such as sweatshops in developing countries and industry pollution.

Traditionally, running a business is for making profit, and all business activities are around this purpose. Consequently, many companies set up factories in some developing counties such as China, India and Vietnam because of low labour power cost. Nike also built up in this kind of countries. Nike was stung by heavy public criticism in the 1990s for using sweatshops in developing countries for the production of many of its products. The new operational plans should cover this issue. But this is really put Nike in an economic dilemma. If Nike set up in a developed country, not only labour power would increase, but also some overhead cost such as electricity cost or water cost. But in the other hand, if Nike continues using its factories in these developing countries, people will still argue about the sweatshop issue, and that will not good for Nike’s future. If people begin to dislike or hate some products or brand that will defiantly be a nightmare for the company. When people stop buying this brand or product, the only thing the company can do is shut down. The most pressing matter of moment is balancing the economic benefit and human rights (stop sweatshop). That should be the new operational plans concern about. Nike can still use its factories in developing, but the employees’ benefits should be increased, such as increase their wages and decrease their working hours. There are two benefits from using this kind of plans. In one hand, it can stop people from arguing about sweatshop. And on the hand, although the cost will increase because of increased wage or decreased working hours, it still cheaper or more economic than set up a new factory in developed countries. In the short run it may increase its cost, but in the long run, Nike may attract more customers because of its social responsibility, so that it can maximum its benefit.

3.2 Organising

Organising is arranging and structuring work to accomplish the organisation’s goals. It is a management function that involves determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom and where decisions are to be made. (Robbins, Bergman, Stagg and Coulter, 2009, P12) It is a process through which managers design an organisation’s structure. That process is important and serves many purposes. The challenge for managers is to design an organisational structure that allows employees to do their work effectively and efficiently.

When managers develop or change an organisation’s structure they are engaged in organisational design, a process that involves decisions about six key elements: work specialisation, departmentalisation, chain of command, span of control, centralisation and decentralisation. And the purposes of organising are: divides work to be done into specific jobs and departments; assigns tasks and responsibilities associated with individual jobs; coordinates diverse organisational tasks; clusters jobs into units; establishes relationships between individuals, groups and departments; establishes formal lines of authority; and allocates and deploys organisational resources. (Robbins, Bergman, Stagg and Coulter, 2009, P342)

According to the recent situation of Nike and sustainability, Nike missed two purposes of organising- allocates and deploys organisational resources, and divides work to be done into specific jobs and departments.

Allocates and deploys organisational resources. Generally, two kinds of resources need to be allocated effective and efficiency. The first one is human resource. As mentioned above, Nike didn't do well in this aspect in the factories in the developing countries. And a way to solve this problem is increase employees benefits. The second one is material resource. The consistently growing textile industry often negatively impacts the environment. Because Nike is a large participant in this manufacturing, many of their processes negatively contribute to the environment. One way the expanding textile industry affects the environment is by increasing its water deficit, climate change, pollution, and fossil fuel and raw material consumption. In addition to this, today's electronic textile plants spend significant amounts of energy, while also producing a throw-away mindset due to trends founded upon fast fashion and cheap clothing (Textiles Intelligence, 2008). This is not an easy problem for Nike because of the limitation of the textile industry. It also makes that Nike is in an economic dilemma. In one hand, if Nike wants to change its material which is used to make products, the Develop and Research expense will increase dramatically. And the outcome of using the new material is unsure, such as the demand of the new material and customer satisfaction. But on the other hand, if Nike continues using the old material to make products, people may boycotted Nike because of lack of social responsibility.

Fortunately, Nike makes some changes on allocating the resources. Although these combined effects can negatively alter the environment, Nike tries to counteract their influence with different projects. According to a New England-based environmental organisation Clean Air-Cool Planet, Nike ranks among the top 3 companies (out of 56) on a survey conducted about climate-friendly companies (Zabarenko, 2007) Nike has also been praised for its Nike Grind programme (which closes the product lifecycle) by groups like Climate Counts.(ClimatesCounts, 2009) In addition to this, one campaign that Nike began for Earth Day 2008 was a commercial that featured Steve Nash wearing Nike's Trash Talk Shoe, a shoe that had been constructed in February 2008 from pieces of leather and synthetic leather waste that derived from the factory floor. The Trash Talk Shoe also featured a sole composed of ground-up rubber from a shoe recycling program. Nike claims this is the first performance basketball shoe that has been created from manufacturing waste, but it only produced 5,000 pairs for sale. (Janoff. 2008) Another project Nike has begun is called Nike's Reuse-A-Shoe program. This program, started in 1993, is Nike's longest-running program that benefits both the environment and the community by collecting old athletic shoes of any type in order to process and recycle them. The material that is created from the recycled shoes is then used to help create sports surfaces, such as basketball courts, running tracks, and playgrounds (Zales, 2008). From mentioned above, it is clear that, Nike really did a lot of effort on exploring and using new material to make less negative effect on environment. It should continue doing that, although in the short run it will increase a lot of expense. But in the long run, Nike will get more benefit than its expense.

Divides work to be done into specific jobs and departments. So far, in Nike’s annual report, it rarely discloses about Corporate Social Responsibility (CSR). And from the facts mentioned above, it shows that Nike did a lot thing about CSR, so this maybe a problem or mistake of account department which prepares the annual report for external users. Nike should make give account department more details task or mission about CSR. Although disclosing CSR may increase the cost of making annual report, but in the overall level and in the long run aspect, its benefits are far more than its cost. Nike can make a triple bottom line report. Triple bottom line is a practice that reports on the economic, social and environmental management and performance of a firm. (Elkington, 1997, 2004) Triple bottom line reporting is the provision of information that allows stakeholders to determine not only the economic value added by the firm, but also the environmental and social value (Elkington 2004, P3) Some advantages of environmental and social reporting (triple bottom line reporting) are: improving public image, which attracts investors and helps build reputation over the longer term; and benefits for management from eco-efficiency in terms of reduced waste, disposal and associated costs. Compared the advantages and disadvantages of CSR, it is clearly that, Nike’s account department should prepare the CSR reporting as well as annual report.

4. Conclusion

In conclusion, so far Nike has outstanding financial performance, it ranks in number one in apparel industry in US market. But Nike also faces some issues about sustainability, and that would affect Nike’s financial performance. As mentioned above, it indicates that Nike can solve these kinds of issues through planning and organising. It can have a new strategic plan about what company should achieve in the long run about both financial aspect and sustainability aspect. Also, it needs some operational plans to backup its strategic plan. Operational plans also have more details than strategy plan. In the organising aspect, Nike should organise both its human and material resource. And Nike needs do more about triple bottom line reporting. From the better planning and organising, Nike can maximise the benefits of a focus on sustainability in the organisation.

5. Recommendations

According to the situation of Nike and discussed above, there are five recommendations for Nike to maximise the benefits of a focus on sustainability:

1. Continue using the factories in developing countries, but increasing the employees’ benefits such as increases wages and decreases working hours.

2. Continues focus on research and using new material which is economic-friendly to make its products.

3. Prepared Triple Bottom Line reporting as well as financial reporting every year.

4. Using various means (marketing methods) to let more people know how Nike engages in sustainability stuff. It can increase Nike’s reputation and potentially increase its customer size.

5. When Nike in an economic dilemma (such as profit verse environment), it is better to put environment or social benefits before its environment benefits. Because in the short run, concerning environment or social benefits will lose some financial profit, but in the long run it will bring Nike more benefits.

Adelaide Football Club-assignment for MCD2050

noreply@blogger.com (Herbert) — Sat, 14 Aug 2010 21:09:18 PDT

i posted all the VU assignments which i have done, here are the assignment for MONASH college. So far, i still don't know the really different between college and university...anyway...it doesn't matter for me...

i had a haircut some days ago, well too short for me...whatever...

Executive Summary

Adelaide Football Club (AFC) is a famous club in Australia, it plays games in AFL and other matches. It provides high-level matches for its customers (fans), so that satisfies customers’ needs. Although there are some micro and macro environment factors affect AFC, it still runs well in the recent years. Also AFC segments its market in two ways, by geography and by age, and it helps AFC runs more efficiency and effective.

Introduction

Adelaide Football Club (AFC) is a famous football club in Australia. It established in late 1990, competes in the Australian Football League. Based at AAMI Stadium in the South Australian capital of Adelaide, the club has won two premierships in 1997 and 1998. The official colours are navy blue, red and gold. So far the club has two offices, one is in Adelaide, and the other in Melbourne. (AFC, 2009) As a football club, its main product is not physical object, but is the performance of the players in each match. Through their outstanding performance, the club can attract more fans and sponsors, so that the club can get more benefits. In the rest of this report, it will review the appropriateness of its product by analysing market environment, type of product and target segment.

Discussion

Market Environment

The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'. (Marketingteacher, 2009) In this section, it will discuss from two market environment- micro-environment and macro-environment.

According to Kotler et al (2006) the microenvironment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics. Among these micro-environment elements, the competitors have more effect on AFC than other elements.

Some markets are very competitive, with a number of vendors selling the same kinds of products or services. Conversely, some markets have low or no competition, particularly if the industry is protected by government legislation. (EcnomyWatch, 2009) The market which AFC in is very competitive, because there are many other teams play the same sports as AFC. In AFL, there are total 16 teams. So within Australia, there are 15 competitors. But in the whole world, its competitors are countless. That is because, some Australian may be not the fan of Australian rules football, maybe they like soccer, and they maybe the fans of Manchester United. So in this level, Manchester United also can be treated as AFC’s competitor. Focus on the Australian market, Geelong Football Club affects AFC a lot among the 15 competitors. There are two reason for that, the first one is from geography perspective. The below figure shows the 16 teams in AFL, it clearly there are two teams near AFC, one is Port Adelaide, and the other one is Geelong. People always choose the club near them because it is easy for them to watch the game.

The second reason is Geelong has very good results in the past. It has been playing in the Australian Football League, it has been VFL/AFL premiers eight times and won a record nine McClelland Trophies. Formed in 1859, Geelong is the second oldest club in the AFL after Melbourne and one of the oldest football clubs in the world. Geelong was an under-achieving club. Despite playing in five Grand Finals it took 44 years until it won another premiership- an AFL-record 119-point victory in the 2007 AFL Grand Final. Despite recording the most successful home and away season in the game's history, the club went one win short of back-to-back premierships in losing the 2008 AFL Grand Final, but won the 2009 Grand Final against St Kilda. (GFC, 2009)

From these two points of view, Geelong Football Club is the major competitor for AFC. But fortunately, AFC still have some advantages, such as number of members. AFC continued to rank number one for membership in the AFL during season 2008. Its average home game attendance was 40,683 compared to Port Adelaide’s 23,841. The AFL average was 36,996. The figure below shows 2008 ticketed members for each AFL team. (AFC, 2009)

To sum up, although AFC has many competitors, and its competitors get stronger and stronger, AFC still performance well.

From the macro-environment perspective, macro-environment means the larger societal forces that affect the whole microenvironment- demographic, economic, natural, technological, political and cultural. (Kotler et al, 2010, P134) Among these six factors, three factors can affect AFC. First one is demographic, it has bad effect to AFC. The population of Australia is not big which is only 20 million. That means this market is not big. The figure below shows the population in different States. (ABS, 2009)

From the figure, it shows South Australia only has 2 million people, but has two AFL team, this information is not good for AFC. The second factor is economic. As the global economic recession in 2007 and 2008, Australian income is declined, potentially people would choose spend less money on some entertainment, such as watching AFL. But lucky, AFC’s members keep increasing in recently years. The third factor is culture which has positive effect on AFC. According to ABS (2007), more than 30% SA people attended AFL in 2005-06. It is twice than the average of Australian sports attendance in AFL.

To sum up, form macro-environment, it affects AFC in both positive and negative way. But in the overall level, it has positive effect.

Type of product

Product is anything that can be offered to a market for attention, acquisition use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organisations and ideas. (Kotler, et al, 2010, P7) And service can be defined as deeds, efforts, or performances. (Berry, 1980, P20-24) For the AFC which is the football club, it belongs to the service market, because though it provides service (performance of players) to its customers, and makes its customers fun and relax. In the rest of this section, it will state the three level of AFC’s product (service).

1. Core product. Core product refers to the benefit of the product (service) that makes it valuable to buyer. (marketingteacher, 2009) AFC provides the matches for the fans (buyer), the fans want their team win the games, so they can feel happy, relax and exciting.

2. Actual product. The actual product must then reflect the core product in its characteristics, packaging, branding, and quality. (Pike, 2006) For AFC, because their actual product is service which is intangible, it doesn't need to be packed and labelled. And according to Kotler (1996) a brand is a name, term, sign, symbol or design or combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. So its brand is Adelaide Football Club, or Crows.

3. Augmented product. It is usually consists of lots of added value, for which the buyer may or may not pay a premium. For AFC, its augmented product may include some gifts, sports dress and souvenirs from team. There is a shop called CROWmania in Adelaide sold these kinds of goods, and it promises that 100% team products. Also, the fans can buy this kind of goods on online on AFC official website.

Target segment

In general, dividing the market into different segmentations and applying different strategies for each segment based on their characteristics and needs is crucial in order to come up with effective marketing plans. Traditionally, researchers have examined different demographic factors, such as gender, age, education level, and household income to determine whether segmenting the market based on these characteristics is beneficial (Dietz-Uhler et al, 2002) For AFC, its market can be segmented in two ways, geography and aged.

There are two offices of AFC, one is in Adelaide, and the other in Melbourne. The club sets an office in Melbourne because Melbourne has more population than Adelaide and not far from Adelaide. Through an addition office, the club can get more members of Club, and improve its financial performance. The fans from Adelaide and Melbourne may have different characteristics and needs.

The fans from Adelaide: these fans (customers) are easier to be held by AFC, because there are only two teams in Adelaide. They won’t become other team’s fans unless AFC does so bad in certain season. So far, AFC does not bad, so they will still be the fans of AFC. All they want is AFC plays well in all matches in the season.

The fans from Melbourne (or other places in Victoria): these fans (customers) are not stable compared with the fans from Adelaide. As mentioned above (from the first figure), there are ten teams in Melbourne area (includes Geelong), and there are total 16 teams in the AFL. So the people in Melbourne have at least 10 options to decide which team they support. Consequently, AFC wants to increase its market share in Melbourne is very hard. But in the bright side, Victoria’s population is 2 times than South Australia. Compared with fans from Adelaide, fans from Melbourne have their own needs, for example, maybe they can not go back Melbourne immediately after the matches finish, they may need some places for stay overnight. Also, the transport cost is a problem of these fans. If the club has free coach from Melbourne to Adelaide, the customer satisfaction will increase dramatically.

AFC also segments its market by age. But it does not so well in this way, it just has two categories- one is kids, and the other is people exclude kids. It should be classified into more sub-groups. According to ABS (2005), it shows that people in age from 25 to 44 are more like to participate in sports. Also, generally, people in this age have job, in another word, they can afford the tickets. AFC should treat these people specially, because these people are its main customers (fans). And their needs are simple, all they want is just a fantastic game. There is another benefit from focusing on these group people. Because these group people often have family, their kids or their partner, maybe they will come to watch the game together. Potentially, their kids or partner will become the fans (buyer). The club’s customer size will be increased. Also this group (age between 25 to 44) can be segmented by gender, because male and female fans have different needs. (Clark et al, 2009) And as males are typically thought to be more involved with sports than females, AFC should consider male fans’ special needs, such as big sports clothes. (Galen et al, 2008) For the kids group, their needs are different from adults, they maybe not so interest in the matches. Maybe they like the mascot more. Also, on the AFC’s website, there is a special link for kids. So far, because AFC does not bad in AFL, it can say that all its fans’ needs are satisfied.

Conclusion

AFC’s product is not physical object, but service. It provides performance for the customers (fans). And its customers’ need is AFC plays well in the AFL or some other matches. Both micro and macro environment have effect on AFC, but so far, AFC runs well, it provides the good matches to fans (buyer). So its customers’ needs are satisfied.

Recommendations

As mentioned above, AFC needs consider how to segment its market. And it is recommended that AFC should focus on its fans (customer) in age from 25-44. That will make its business more effective and efficiency.
Reference List

Books and Journals
1. Berry, L., June 1980, Services Marketing Is Different, Business Magazine

2. Clark, J., Apostolopoulou, Artemisia, Gladden, James M.2009, Real Women Watch Football: Gender Differences in the Consumption of the NFL Super Bowl Broadcast , Journal of Promotion Management; Vol. 15 Issue 1/2, p165-183,
3. Dietz-Uhler, B., Harrick, E. A., End, C., & Jacquemotte, L. 2002,. Sex differences in sport fan behavior and reasons for being a sport fan. Journal of Sport Behavior, 23,

4. Galen T. Trail, Matthew J. Robinson, and Kim, Y 2008,Sport Consumer Behavior: A Test for Group Differences on Structural Constraints, Sport Marketing Quarterly, 2008.17. 190-200,
5. Kotler, Phillip and Armstrong, G, 2006, Principles of Marketing 12th edition, Pearson Education Inc. New Jersey

6. Kotler, Brown, Adam, Burton and Armstrong. 2010, Marketing, 8th edition, Pearson Education Australia, Frenchs Forest
7. Kotler, Philip., 1996, Marketing Management Analysis, Planning, Implementation, and Control. 8th edition. New Delhi: Prentice-Hall of India Pvt. Ltd.
8. Pike W, 2006, The demise of independent wine production in France: a marketing challenge? International Journal of Wine Marketing
Websites
9. Australian Bureau of Statistic, Jun 2009, Australian Demographic Statistics http://www.abs.gov.au/ausstats/abs@.nsf/mf/3101.0
10. Australian Bureau of Statistic, 2005, 1301.0 - Year Book Australia, 2005, http://www.abs.gov.au/Ausstats/abs@.nsf/46d1bc47ac9d0c7bca256c470025ff87/daaada81176e2f89ca256f7200833023!OpenDocument

11. AFC, 2009, The Club, http://www.afc.com.au/the%20club/tabid/4491/default.aspx

12, AFC, 2009, Corporate Packages 2009, http://www.afc.com.au/hospitality/tabid/4562/default.aspx
13. Economywatch, 2009, Market types, http://www.economywatch.com/market/market-types/
14. Gautam, J. 2009, Marketing environment, http://knol.google.com/k/marketing-environment#
15. Geelong Football club, 2009, Detailed history http://www.geelongcats.com.au/gfc%20history/tabid/4015/default.asp

16. Marketingteacher, 2009, the marketing environment, http://www.marketingteacher.com/Lessons/lesson_marketing_environment.htm
17. Marketingteacher, 2009, Three level of product, http://www.marketingteacher.com/Lessons/lesson_three_levels_of_a_product.htm

Journals of BHO3473 (2)

noreply@blogger.com (Herbert) — Fri, 13 Aug 2010 04:08:16 PDT

here are another 6 Journals of BHO3473, a little similar as the last one.

JOUNRAL 1
I am setting two goals now. First of all, I hope that I will lose weight in the nearest three months. Secondly, I want to find a part-time job.

For my first goal, I did not achieve it in the past because of lazy. Firstly, I cannot withstand tempting food, such as, biscuits and chocolate. Secondly, I got up at 12:00 am, when I did not have the class. Therefore, I had a ruleless meal everyday. Thirdly, when I was hungry, I did not want to cook. So I ate a lot of unhealthy food which is easy to induce fat, such as, KFC and pizza. After eating, I prefer staying in bed and playing computer to doing the sports. As a result, I gather flesh.

At present, I am 55 kilograms. My aim is losing my weight up to 50 kilograms. I design a plan to solve the problem of fat. At the beginning, I will get up earlier than before. (7:30am) Then, I will do some sports becomingly every week, such as, yoga (twice a week), swimming (when I have a time) and running (four times a week). As well as, I will have a jog with my housemate after dinner. (About 2 hours three times a week) I live in Box Hill South which is near Box Hill market. We can jog there about 50 minutes and buy some vegetable and meat .Then walk back home. In addition, I should have a healthy diet. I should eat more vegetable, fruit, meat and rice, instead of biscuits, chocolate, KFC and pizza. I also should have a regular meal. At 8:00 am for breakfast, I should eat some bread and eggs and drink milk, because beginning of one day, breakfast is more important. At 12:30 am for lunch, I should eat some rice, vegetable, meat and fruit. At 19:00 pm, I just eat a little fruit and vegetable, because digest is slowly in the night and eating too much in the dinner is bad for heart.

Timetable for losing weight below:

Finding a part-time job is my second goal.

Last semester, I got to Australia at the first time. I was not seasoned with independence. Everything should be done by me here, instead of doing by my parents at home. So I felt so tired everyday. Although I only had two days to have a class, I preferred staying at home at any other day. After that, I lost many chance to work and made friends.

This semester, I want to have a job which makes my life richer. The first step, I should choose which job is fit for me. My specialty is accounting. So I want to find a job about accounting, which is too difficult. Last Friday, when I bought vegetable at market, I pointed out the mistake of toll collector. Therefore, she gave me a chance to charge in her market, because I can remember the price of different vegetable. I will try to do it. If I cannot get that job, I will go to Box Hill Center where a lot of Chinese restaurants are. I will walk along the street and find out the restaurants which need waitress. The other way is finding a job online. I will look through the website and find the satisfactory job. Then, I will give them an email for indicating my interest. When I get a job, the next step is arranging my timetable. I have a class in the afternoon of Monday, Wednesday and Thursday. Therefore, I can work at Tuesday, Friday, Saturday and Sunday. However, I need some time to have a rest and travel. As a result, I decide to work at Friday and Saturday.(four or five hours a day)

Timetable for finding a job below:

Monday: study

Tuesday: have a rest or travel

Wednesday: study

Thursday: study

Friday: work

Saturday: work

Sunday: have a rest or travel

JOURNAL 2

I will give effective criticism to solve the problem in the journal. I was living with five girls in a house and the space is limit and narrow. So we always suffered from different kinds of conflict. I this situation, I found out an effective criticism to solve the conflict and lived sequentially. I will show an example to explain how to give effective criticism.

All of us came to the narrow kitchen to cook dinner at 6:00pm and the dishware was limited. I saw that a girl used a basin to wash the vegetable. Therefore, I only found a boiler to wash my vegetable and dipped it in. A few minutes later, she looked at me with a disagreeable expression and said “all of us should choose the boiler instate of the basin to wash the vegetable. Following that, we can cook more expediently and do not need to change the dishware. When we finish washing, we can cook sequentially.” I heard her words and felt very angry. I never thought that washing vegetable in the boiler is convenient. I nearly disputed with her right now but not, because I remembered the theory I learnt in Human relations—the six steps for giving effective criticism. I intended to practice it here and check whether it works effectively.

On the first step, I gave her some praise. “I know that you are so laborious. You keep our kitchen very clean and we have a comfortable environment to cook. Thanks very much.”

Following that, I criticize immediately, perform the criticism and give specific, accurate criticism. “I think it is too late now and we are hungry. All of us want to have a dinner as soon as possible and no exception with you. But the kitchen is too narrow and the dishware is limited. I never thought that washing vegetable in the boiler is convenient. I only used boiler to wash, because you wash vegetable in the basin and I have not any other dishware to wash. When I heard your words, I felt so heart-struck. We are the friends and should help and understand each other. Previously, I always waited for your finishing cooking and then cook my dinner. However, I found that you always started cooking at nearly 6:00pm and finished it at nearly 10:00pm. My friend and I start to cook at 10:00pm everyday. I felt too hungry everyday and it is bad for our health. So I cook with you today.”

Then I open on a positive note. “I understand this action cannot solve the problem and even enhance the conflict. So I suggest that we can design a timetable. Everyone should cook follow the timetable and finish cooking as soon as possible. The first person should start at 5:00pm.” Then, I showed her my suggestion timetable below: (A: my and my friend, B: the other four girls)

Finally, I pointed out the action required. “We must keep a clean environment to the next people who want to cook. Therefore, we should wash the dirty dishware when we finish cooking and then we can have a dinner.” After I gave expression to her, she felt so shamefaced and said “I am sorry about my words and inconvenient for you before. I never thought about your feeling. I think the cooking timetable is scientific, appropriate and convenient. We will cook follow the timetable.”

In my opinion, this conflict is solved. It proves that I am successful in giving effective criticism. I give praise firstly instead of dispute with the girl or criticize her. If I really wrangle with her right now, it is bad for our relationship. And then criticizing him immediately and pointing her mistakes. I think the most difficult step is giving specific and accurate criticism. I will do more exercise on this step. I will give more appropriate criticism next time. I should change my tone more softly and tell her my difficulty.

JOURNAL 3

Finishing reading the conversation between Barbara and Peter, I find a lot of barriers to interpersonal communication. I choose three of them to identify and explain.
The first barrier is static evaluation. When Barbara said, “I just want to know what is going to happen with us. We are going to graduate in June-five months from now. What is going to happen then?” Peter replied, “Nothing. I mean the same as now.” When Barbara wanted to discuss the plans for after graduation with Peter, Peter terminated the continued conversation about plan and gainsaid the development of the plan. Thus, static evaluation causes the ending of the conversation and pot-bound communication.
The second is bypassing. The conversation is that Peter said: “so we are together. What more do you want.” And then, Barbara said: “I want to know you care for me.” And Peter said: “I care.” When Barbara showed that she wanted to be together, Peter just use the word “together”, which means we are together now, to replace the meaning of Barbara’s “together”, which means she want to go on together in the future. As a result, Peter evaded answer Barbara’s question and transfer the topic to care.
The third is fact-inference confusion. When Peter said, “I do not want to marry my mother.” Barbara answered, “Oh, so that is it. You do not want to marry me.” Peter just wanted to explain that he had a mother to disturb his life and did not expect his wife also disturb his life as his mother. However, Barbara misinterpreted that Peter did not want to marry her. She misconstrued the fact of the Peter’s meaning. Therefore, fact-inference confusion leads to miscommunication.
In my own life, a thing made me annoyed was argued with my teacher when I studied in secondary school.
I was always late to school in the morning in the past. My teacher decided a plan for avoid be late, which is cleaning the classroom. On the next day morning, I reached school very early, because I do not want to be punished. But my monitor forgot to write down the name of latecomer. When my teacher declared the name of latecomer, I amazedly detected that my name was on the name list. I was so angry. After school, I came to teacher’s office and said, “Why do you think I am late today? The monitor forgot to write down the name of latecomer, which is his mistake. You cannot use his mistake to punish me.” I used a lot of You statement and others listened to my explain likes the blame. My teacher heard my word and said, “I understand your feeling and I do not know what is happen?” I find that my teacher would like to listen to my opinion and then show him honestly, “I accept that I was always late in the past. But today I came to school very early, about 7:20 (the deadline of late: 7 am). Xu Hua can prove I do not lie.” After an extended pause, my teacher said, “I will ask Xu Hua to prove you are blameless. If we wake up the wrong passenger to you, I am so sorry. I will ask monitor to apologize for you.”
In this thing, I found that I statements allowed me to more effectively than do You statements. The reason is that I statement direct describe how and why I feel as I do. Others can easier understand my opinion unambiguously and honestly through my I statements. That was very important in communication. In contrast, You statement, which usually includes the blame, is hard to understand the thinking and also easy to make barriers to cause miscommunication

JOURNAL 4

Monica, who comes from Australia, and I, who am from China, discussed the intercultural communication in the lecture last week. We explored the cultural similarities and differences between two countries.
On the one hand, we discussed the same culture between Australia and China. First of all, both China and Australia’s culture is masculine. Men have the magisterial status in the society. Secondly, occupying a large landmass is another similarity between two countries. China has 9,596,960 square kilometer and Australia has 7,686,850 square kilometer. Thirdly, Australians and Chinese share a similar standard of living, with the pursuits, tastes and time that go with it. Fourthly, both China and Australia are multiracial country. In China, there are 56 nations living together. Similarly, immigrants who come from different country settle in Australia and mix in friendly.
On the other hand, although China and Australia have a lot of similarities in the cultural identity, they also have plenty of different aspects.
Firstly, China emphasizes collectivism but Australia insists individualism. Collectivism means government control of all key cultural and economic institutions. Under collectivism, the well being of the collective, the group, is considered more important than the individual who must sacrifice his self-interest to that of the group. China is communistic country, and Communist Party control all key cultural and economic institutions, as well as a lot of small party cooperate with Communist Party. In contrast, individualism holds that abstract groups or transcendent entities can act, benefit or suffer, necessitating an abstract structure (such as the state) to support these groups or entities. Australia’s system of government is based on the liberal democratic tradition, which includes religious tolerance and freedom of speech and association. Its institutions and practices reflect British and North American models but are uniquely Australian.
Secondly, unlike China which has high power distance, Australia has low power distance. For example, in China, the education system emphasize on ‘learning by rote’. Teachers have high authority, which means that people believe that all the knowledge of teachers’ teaching is right and students only can obey orders. In addition, there is little discussion in the class and Asian students only passively wait to be taught and dislike asking. However, the Australian concept of ‘show and tell’ means Australian students not only listen to teachers with eye-contact, but also take the initiative to join discussion and ask.
Thirdly, unlike China, Australian likes large personal space. They think everyone has privacy and we should keep distance to safeguard personal privacy. However, in China, standing too far, means they are not friendly. Small personal space stands for friendly, folksy, trustful and passional relationship.

Fourthly, China and Australia are different in number of children in one family. In China, government advocate ‘planned parenthood’ which means one family only has one child. In contrast, Australian government advocates that one family has more than one child. Government even give the child who born after 1st July, 2004, $3,000.
Finally, the population of two countries is different. China has 1.3 billion but there are 12million people in Australia.

In conclusion, China and Australia are different in political system, power distance, personal space, the number of children in one family and population. Except these differences, they are similar in masculine, a large landmass, standard of living and multiracial country.

JOURNAL 5

When we communicate effectively with others, the non verbal messages should interact with verbal message. Firstly, we should have a positive emotion. The people who talk to others with a smile can make others wish to go on communicating. If we have a good emotion, we should have an enthusiasm to talk to others and like express our feeling. Secondly, eye communication is indispensability, when we communicate effectively with others. Eye as a window can directly express people’s feeling. Though the people’s eye, we can see the emotion, such as, happy, sad and shy. Also, eye-connect stand for devoir.
I think anger is difficult to communicate to others. The anger happen when we are frustrated, thwarted or attacked. When you are angry, you cannot express your feeling and take in the information from other people. If we continue to communicate, it will create dislike, frustration, and even conflict or revenge.
I cannot effectively decode all the non-verbal language of others who comes from other country, because shyness and different background are two main difficulties in our communication. When I am shy, I am afraid to look at the eyes who talk with me. So I lose eye communication and other type of non verbal communication. In addition, if I communicate with others who come from different countries, we do not know the background between two countries. Different gestures in different stand for different meaning.
In my opinion, interpreting is more difficult than expressing, because interpreting should explain the meaning. However, expressing just need communicate with others about your feeling. I design some strategies to make interpreting easier. Firstly, we can use non verbal language to help interpreting. When we interpret with others, we can use gestures and posture instead of the word which is difficult to interpret. Secondly, eye communication is very important. When we interpret, eye-contact transmits a lot of information to communicator.
When I communicate with others, I should use non verbal messages interacting with verbal message. The non verbal communication can make our communication more effectively and easier. Non verbal communication include gestures, posture, facial communication, space communication, touch communication and paralanguage. The smile and eye communication can make others would like to communicate with you.

JOURNAL 6

I set two goals at the beginning of this semester and now I reach these two goals. First of all, I lose my weight from 55 kilogram to 50 kilogram. Secondly, I find a part-time job in a Chinese restaurant in Box Hill.
For my first goal, although I lose my weight from 55 kilogram to 50 kilogram, I suffer a lot of difficulties. First of all, I could not do every thing following the time table. Sometimes I could not get up at 7:30, because the study of this semester is too busy. I read the book and did the assignment late at night. I have not volition to get up very early on the next day morning. Therefore, the running at morning was delayed or cancelled when I could not get up at 7:30. Similarly, because of studying time and different time management with my housemate, I could not jog with my housemate third times a week following my plan. But I walked to Box Hill shopping center to buy the vegetables, when I am free and need to go shopping, which instead of dogmatic time table. Secondly, I also ate KFC and Pizza, when I have no time to cook. The study time and work time are too busy, but I had three regular meals everyday. In these three months, I gave up eating my favorite chocolate and ice-cream instate of vegetables and fruits. When I was hungry before go to bed at night, I choose drinking water to forget hungry.
I modify some timetable to achieve the first goal. Initially, I cancel the dogmatic timetable. I will do everything following the plan, such as the running, jogging and yoga. However, I will do everything according to the practical time. If I have more time at this week, I will do more sports, and vice versa. Secondly, I cannot give up my favorite chocolate and ice cream in my whole life. So I decide reduce the quantity of the chocolate and ice cream.
For my second goal, I found a part-time job in a Chinese restaurant of Box Hill. I walked along the street of Box Hill, and discovered a Chinese restaurant in which engage three waitresses. I walk into the restaurant and give the boss application. A few days later, I got a call said I can work in this Chinese restaurant and they can give me 7 dollar per hour for wage. Then I start to do my first job.
At the beginning, the boss required me to work about four times a week, which means I have no time to rest. After a week, I found that I was so tired and was not competent for this job, because I should write a journal and do an online test in my Human Relation, and write a case study in my Advanced Management Accounting course every week. So I solicited my boss that I only can work at Friday and Saturday. My boss loathly consent my request. From the fourth week of this semester, my study became busier and busier. The assignment and test appear one after another. I must review and read the book so that I have no time to work. As a result, I abdicate that job.
I decide to go on this work in my winter holiday. At that time, I will not be afraid the time management. I am free at the whole holiday and spend a lot of time to work. For example, I can work four times a week and have a rest and travel at the other days. If I have a chance, I also want to find the job which can acquire more wages per hour. Therefore, I will go on find the job online and on the newspaper at the rest time.
In conclusion, my goals are SMART goals, which is specific, measurable, achievable, realistic and time planned.

Journals of BHO3473 (1)

noreply@blogger.com (Herbert) — Fri, 13 Aug 2010 04:00:19 PDT

I wrote totally 6 journals:

JOURNAL 1:

During the long summer holiday, I have two goals to make the holiday more interesting and fantastic. Firstly, I want to learn MYOB by myself. Secondly, I have a plan to travel to Gold Coast after the summer course, and all the expenditure is from the income of my part time job.

For the first goal, I did not learn MYOB before because I haven’t had enough knowledge to learn it. My major is accounting, so learning how to be an accountant is the final goal of my university life. MYOB is a practical software, and in the past time I have been learning the theory of accounting, such as Accounting Information System, Financial Accounting. By the last semester, I have learned all the necessary knowledge required by MYOB. For these reasons, this summer I have the capability to learn MYOB and I have determination to make it.

So far, I have got the textbook and installation program of MYOB. After installing MYOB into my computer, I can learn how to use it following the textbook step by step.

There are 10 chapters in the textbook (MYOB, John Ring and Col Cheetham, 2008), so I plan to use 30 days to learn it from 9 January to 7 February. Because I have class and part time job in daytime, all the study will be processed in the night except Sunday.

The timetable for learning MYOB is shown as below:

Traveling Gold Coast is my second goal.

I am an international student, besides studying in Melbourne I have traveled several cities in Australia, for example, Adelaide and Sydney. In the summer holiday, I want to visit some places far from Melbourne. And I like the sea, so the Gold Coast is the best choice for me.

There are two necessary factors for traveling, i.e. time and money. During the school time, I don’t have enough time to travel, but the summer holiday is long enough to travel as well as study. The summer school will last from 06 January to 05 February, so after that I have enough time to travel. And I plan to travel Gold Coast from 17 February to 21 February. So now, the most important thing is money. I have a part time job in a duty free shop. If I want to have a good trip, I must have a good budget on it. The necessary expenditure for travel is air fare and accommodation fee. If I order the air tickets now, the price is around $200 for return. And if I stay in YHA Hostel, generally it costs $30 per night for one people. So before 17 February, I must earn more than $350, this amount is just fundamental cost, my total budget is $ 700. There are 5 weeks left from now to 17 February, I must work at least 20 hours per week to maintain my daily cost and prepare for the traveling.

JOURNAL 2

I will give effective criticism to solve a problem in the journal. I am living with another guy in a flat. We have our own room, but we share some public areas like kitchen and bathroom. So there are some conflicts between us when we using the public area. In the situation which I state below, I found out an effective criticism to solve the conflict. I will show an example to explain how to give effective criticism.

Last Sunday, both of us wanted to cook dinner at 6:00pm but the space was limited, if one person cooked there, the other one could not use it at all. At that time he was just starting to cook while I was so hungry, he looked at me and said “I am busy now, could you wait a couple of minutes?” I heard his words and felt a little angry. It was not the first time when he said that, he was so slow when he cooked. In his dictionary, a couple of minutes mean at least an hour. From Monday to Saturday, we have different timetables, so we don’t affect other when we cook. But on Sunday, we both at home, so when to cook dinner is a problem for us. I thought it was the time to solve this problem. So I talked to him on that day, and after a few minutes, the conflict was fixed. Using the method learned from this subject, this problem was solved.

On the first step, I gave him some praise. “I know that you want to everything to be perfect. You keep our kitchen very clean so that we have a comfortable environment to cook. Thanks very much.”

Following that, I criticize immediately, perform the criticism and give specific, accurate criticism. “I think it is too late now and we are hungry. Both of us want to have a dinner as soon as possible. But the kitchen is too narrow. Previously, I always waited for you finishing cooking and then cook my dinner. However, I found that you always start cooking at nearly 6:00pm and finish it at nearly 8:00pm. So, when I finish the dinner, it is almost 9:00pm. It is bad for health. How about we cook together today, I wash the vegetable and something else, and you cook it.”

Then I opened on a positive note. “I understand this action cannot solve the problem and even enhance the conflict. So I suggest that we can design a timetable. Everyone should cook follow the timetable and finish cooking as soon as possible. The first person should start at 5:30pm.” Then, I showed him my suggestion timetable below:

Finally, I pointed out the action required. “We should follow that timetable so that both of us can have dinner on time. Also, we must keep a clean environment for the next one who wants to cook.” After I gave expression to him, he looks so shamefaced and said “I am sorry about my words and inconvenience for you before. I never thought about your feeling. I think the timetable is good, appropriate and convenient. We will cook follow it.”

In my opinion, this conflict is solved. It proves that I am successful in giving effective criticism. I give praise firstly instead of disputing with the guy or criticizing him. If I really wrangle with him right now, it is bad for our relationship. And then criticizing him immediately and pointing his mistakes. I think the most difficult step is giving specific and accurate criticism. Sometimes I don’t know what to say when somebody don’t do the right thing or do something wrong. I will do more exercise on this step. I will give more appropriate criticism next time. I should make my tone more softly, maybe that can make the conversation smoother and easier.

Comparing with the activity what we did in the lecture, I think it is more difficult when I gave effective criticism in real life. The reasons are as follow:

Firstly, when I did the exercise in the class, I have enough time to think how to answer the “questions”. In contrast, I didn’t have enough time to think about what I should say to him. Secondly, the consequence of talking to my housemate was more important for me, because it would affect the relations of us. I will do more exercise on how to give effective criticism in the future, especially on the step- giving specific and accurate criticism. It is very common to criticize others, and an effective criticism can improve the relationship with others, but the bad one can’t.

JOURNAL 3

After reading the conversation between Barbara and Peter I find some barriers to interpersonal communication.
1. When Barbara said, “I just want to know what is going to happen with us. We are going to graduate in June-five months from now. What is going to happen then?” Peter replied, “Nothing. I mean the same as now.” This barrier is “static evaluation”. When Barbara wanted to discuss the plans for after graduation with Peter, Peter terminated the continued conversation about plan and gainsaid the development of the plan. Thus, static evaluation causes the ending of the conversation.
2. Peter said: “So we are together. What more do you want.” And then, Barbara said: “I want to know you care for me.” And Peter said: “I care.” This one is “bypassing”. When Barbara showed that she wanted to be together, Peter just use the word “together”, which means we are together now, to replace the meaning of Barbara’s “together”, which means she wants to go on together in the future. As a result, Peter evaded answer Barbara’s question and transfer the topic to care.
3. Peter said, “I do not want to marry my mother.” Barbara answered, “Oh, so that is it. You do not want to marry me.” This is an example of fact-inference confusion. Peter just wanted to explain that his mother always to disturb his life and did not expect his girlfriend do the same thing as his mother. However, Barbara thought Peter did not want to marry her. She misconstrued the fact of the Peter’s meaning. Therefore, fact-inference confusion leads to miscommunication.
In my life, a thing made me annoyed was argued with my teacher when I studied in junior high school.
I always talked with my classmates during the class, because I was so young then, sometimes I couldn’t not able to control myself. (In my country, students are not allowed to talk to each other during the class, especially in primary school and junior high school.) My teacher decided a plan for stopping students talking during the class. It was said that if some one talks during the class, he would clean the classroom. On the next day, I really didn’t talk to others because I did not want to be punished. But when my teacher declared the name of “talkers”, I was so angry. I was on the list. After school, I talked to the monitor firstly, he said he forgot to record who was talking in the class, so he just put some names on the list by he imagined. That was unacceptable. Then, I came to teacher’s office and said, “Why do you think I am talking in the class today? The monitor forgot to write down the name on the list, that is his mistake. You cannot use his mistake to punish me.” I used a lot of You statement and others listened to my explain likes the blame. My teacher heard my word and said, “I understand your feeling and I do not know what is happen?” I found that my teacher would like to listen to my opinion and then I said, “I know that I was always talking in the class. But today I really listen to the teacher carefully, and never talk during the class time. Jerry can prove I what I said.” After that, my teacher said, “I will ask Jerry to prove what you said. If your words are the truth, I am so sorry. I will ask monitor to apologize for you.”
From this thing, I found that I statements are more effectively than You statements. The reason is that I statement direct describe how and why I feel as I do. Others can easier understand my opinion clearly and honestly through my I statements. That was very important in communication. In contrast, You statement, which usually includes the blame, is hard to understand the thinking and also easy to make barriers during the communication. In the daily life, I should use more I statements, and avoid You statements.

JOURNAL 4

In the lecture, Jessica and I are in a group to discuss the intercultural communication. Jessica is from New Zealand, but I am from China. We explored the cultural similarities and differences between two countries.
Firstly, the language is different. Obviously, I speak Mandarin when I am at home. But she uses English. Chinese can be classified as High Context language, but English is Low Context.
Secondly, use of space is different. Because China has the largest population in the world, so there is little space for each people. But the situation in New Zealand is different.
Thirdly, power distance is different. In China, employees don’t talk much to their boss. On the other side, the boss rarely listens to the requirement or information from the employees. In contrast, it is very common that the employees communicate with the boss directly. In the theory of Hofsted’s Five Dimensions, Chinese culture belong to High Power Distance, but New Zealand’s culture belong to Low Power Distance.
Fourthly, Chinese culture is more like Collectivism, but New Zealand is Individualism. Under collectivism, the interest of the collective, the group, is considered more important than the individual. In contrast, the interest of individual is important as well as group.
Fifthly, unlike New Zealanders, Chinese people rarely like to enter into a debt, they would rather take longer to save up them to purchase now and pay it off later with or without interest. Hofstede’s Five Dimensions describe this Chinese characteristic as being long-term orientation, and subsequently New Zealand being short-term orientation.
But there are also some similarities between these two cultures.

Firstly, In China, there are 56 nations living together. Similarly, immigrants who come from different country settle in Australia and mix in friendly.
Secondly, Jessica and I have similar religious points of view, we are both atheists. In both China and New Zealand, there is a freedom of belief.

A stereotype is a prejudice towards an individual that simplifies thought and labels an individual into a group that is characterized with certain attributes with which this individual is expected to support. More simply stated, a stereotype is a preconceived and oversimplified notion of characteristics typical of a person or group.

When we communication with others, we should avoid stereotyping, because this can cause the barriers of communication. Especially when people contact other people who have different culture backgrounds, stereotyping can cause a lot of problem. To avoid it, there are four steps to change or minimize the stereotypes:

1. Interact on a personal as well as a professional level.

2. Commit considerable time and energy to the relationship.

3. Consciously work to form an accurate impression of the other person.

4. View the other person as a typical member of the other group.

JOURNAL 5

In the daily life, nonverbal communication is very important to us. Usually, though through others’ gesture, body language or posture, facial expression and eye contact, we can see the emotion, such as, happy, sad and shy. In the lecture, I successful expressed some my “feeling” of exercise 6.5, but also failed to express the others. In my opinion, the most difficult one is “anger”, because when someone is angry, others can feel his emotion from his voice, expression and activities. But during the exercise, we couldn’t use so many words, and I think the voice is the most important factor to express “anger”. I tried my best to express it, but only using some body language was a little difficult to express anger. In the real life, the anger happens when we are frustrated, thwarted or attacked. When you are angry, you cannot express your feeling and take in the information from other people. If we continue to communicate, it will create dislike, frustration, and even conflict or revenge.
Sometimes, I can not communicate well with the people from different culture, because of shyness and different culture background. These are two main barriers in communication. When I am shy, I am afraid to look at the eyes of whom I talk with. So I lose eye communication and other types of non verbal communication. In addition, if I communicate with others who come from different countries, we do not know the background between two countries. Different gestures in different cultures stand for different meanings. For example, in most culture, nodding head means yes, but in some countries in Western Europe, this action means no. So when we communicate with the people from these countries, we should be aware of it and avoid making conflict.
In my point of view, interpreting is more difficult than expressing, because interpreting is the process of understanding what the others’ meanings. To deal with it, we should know both verbal and non-verbal language well, and as mentioned above, sometimes we don’t know the others’ non-verbal language well because of different culture or something else. However, expressing just needs about communicate with others about your feeling. When you express something, you are just in your most familiar way to do it, and sometimes you don’t need to care about others whether understand it. I think there are some ways to make interpreting easier. The most important thing is learning some non-verbal language, which is necessary for interpreting. Especially we should notice that, some non-verbal language in different culture has different meaning.
When we communicate with others, I should use non verbal messages interacting with verbal message. The non verbal communication can make our communication more effectively and easier. Non verbal communication includes gestures, posture, facial communication, space communication, touch communication and paralanguage. They are all important for us to communicate with others. The non-verbal communication can help us to interpret and express our meaning. Meanwhile, some of non-verbal language can make the communication smoother, for example the smile and eye communication can make others would like to communicate with you.

JOURNAL 6

In the lecture activity “Lost on the moon”, our group did not bad, we made several items correct. In the activity, we used “Compromising Style” to deal with the conflict. Compromising Style means important for all parties to achieve basic goals and maintain good relationships, aggressive but cooperative. I think this is a good way to manage the conflict, so that we can share our ideas easily. When the conflict occurred, we explained our own idea, and then decided which one is correct together. During the activity, I acted as a “Teddy Bear”, i.e. Accommodating Style. This style means agreeable, non assertive behavior, cooperative even at the expense of personal goals. Sometimes, I thought this strategy wasn’t good for team work, because I couldn’t express my idea well. But it didn’t mean I don’t want to make the team work more effective. Sometimes I didn’t know the related knowledge, so I thought keep silence is the best way. For example, when we talked about “Magnetic Compass”, I was not sure whether it worked in the space. When the others said it was very important for people to find a way back home, I agreed with them. But actually, the magnetic compass was not important in the space. Of course, the ideal result for us is win-win. It means Problem Solving Style. It needs of both parties are seen as legitimate and important. But in the exercise, some barriers keep us away form win/win strategy. As mentioned, lacking of knowledge is one of factors so we can’t get win/win. If we have enough knowledge, I think we could have a better result.

Now, I will describe a situation where I experienced conflict with another person. At the end of last semester, I saw an advertisement on the board of school, and it said that the West Footscray House needs cleaner. Then I called the management of the House. She said I could work there. She told me the work time is between 7:30 am and 9:00 am. My duty was changing the bed covers and bed sheets. Also I had a teammate, he deal with the bathroom. We cooperated well during the first week. But in the second week, my teammate caught a cold, and he didn’t feel well during the work. He could not finish his work on time. But when the manager checked our work, she saw we could not finish the work on time, she blamed me and asked me why I haven’t helped him to finish his work. This situation happened at least three times within one week, and I said nothing to her when she blamed me, because I think she was the manager, at least I should give her some respect. But on the third week, she blamed me again as the same reason. I said to her the bathroom was not my duty, I have no responsibility to its cleanliness. Meanwhile I had a lot work to do, if I had time I will help him, but in the fact, I didn’t have time to help him. And she always blame me but didn’t not according the fact, I could not stand it. So I quit. And she said it was fine, I could quit from the job.
In this situation, I used “Avoidance Style” before I quit the job. Because I didn’t think the goal and relationship between manager and me are important for me. Maybe the result was not good for both of us, because after quit it, I had to find another job, and the manager had to find another guy to replace me in a short time. After study the “Conflict Management”, I think there would be a better way to resolve the conflict. I should do as “Owl”- Needs of both parties are seen as legitimate and important. I should explain why my teammate couldn’t finish his work on time and why I could not help him when the first time blame, so that she could understand the situation better. And she won’t blame me again, the conflict won’t go further. At last, I could continue the job and she need not find a new guy. That’s the win/win strategy.
In the real world, I prefer “Problem Solving Style”, because it really helps us to solve the conflict. I want to make everything perfect, and in this style, an agreement is sought that maximizes joint benefit and resolves any tensions and negative feelings. Think of solutions that will give me both what I want and will keep the relationship positive.

BHO3473 (2)

noreply@blogger.com (Herbert) — Fri, 13 Aug 2010 03:51:56 PDT

this one is about the presentation, this was a group presentation, it worthed 10 marks, i thought. but we got 3 out 10 marks, so low. all the Chinese Groups got very low marks. I heared that, the method waw wrong, so we got that low marks.
here is the design paper:

OBJECTIVE: The topic of the presentation is non-verbal communication. After our presentation, the audiences will understand the concept of non-verbal communication well.

TEACHING MODE: Several teaching modes will be used during the presentation.

Lecture: To give the audiences the outline of the non-verbal communication, we will talk about some conceptions first, such as verbal communication, non-verbal communication and so on.

Role-play: In this part, the audience will be a part of our presentation and make the presentation livelier.

Quiz and game: In this part, it will check to what extent the audience know the non-verbal communication.

LOG:

Our group had four meetings before the presentation.

The first meeting held after the first tutorial on 7th January. In this meeting, we just exchanged the contact number and email. It was a very shot meeting, just taken about 10 minutes.

The second meeting was held on 9th January. In this meeting, we divided the presentation into three parts. Herbert did the first part, Nicole and Jessie take the second one, while Tiffany and Nancy did the last part. Also, we discussed what should talk about in each part. The first part gave an outline of the presentation. The second part would deal with the definition of non verbal communication. The last part would state something can affect the non verbal communication. To make the presentation easily to understand, there should be a quiz and game included during the presentation.

We had a meeting on Saturday 17th January as our third meeting. Before the meeting, we finished a draft of our own part. We met in the library at 12o’clock to about 5o’clock. During the meeting, we discussed how to do the PowerPoint. Then Herbert collected them and typed them on the PowerPoint.

The last meeting was held one day before the presentation. We met in the library and watch the PowerPoint. At the same time, we read our own part and did the exercises about presentation. This meeting was taken 2 hours.

No one was absent from each meeting.

…………………………………………………………………………………………..

XXXXXX

Group work is very useful and effective. First, during the discussion, different people present different ideas. When we work together, many new ideas will come out. Secondly, team work can save time. In the group, different people do the different part. Then, collecting different part can form a full presentation. As well as, we can research more information during the team work.

I am the leader of the group, I organized the meeting, and decided the time and content for each meeting. Sometimes, I found it difficult to decide the time of meeting, Different people live in different areas, and someone even lived far from others. However, I asked everyone and know the timetable of each member, and found a suitable time for everyone.

Also I found using email and phone is the way to make the communication more effective, because we couldn’t hold the meet too much, but using email and phone can solve this problem easily.

XXXXX

The process of our group was satisfied with our members’ expectation. However, in the meeting, conflict often arose when there was a misunderstanding or ambiguity about one thing or when there were communication barriers that prevent full communication. When the conflicts happened, I often played a role of peacemaker who tried to calm down every member; furthermore, listened to their both ideas patiently and thought them carefully; lastly, gave my view and tried to satisfy both sides.

Though this group work, I have summarized some ways which could enable the group to become more effective. Firstly, being a good listener is an efficiency to reduce the times of conflicts. Next, being responsive – that means really listening to feedback and comments – will help improve team efficiency and effectiveness. Lastly, the informal leader will be more helpful to the team than the formal leader, because they do not hold a position of designated authority. So everyone could be a facilitator in different situations and not be in a controlling position.

XXXX

Our group members are very active in this presentation, we hold 4 meetings, discussing the processing of the presentation and distributing each member’s work. Within every meeting, we can make a deeper research or investment about our topic. The biggest problem I think is how to explain the topic in a lively method. We do not want to make this presentation a very bored and ponderous lecture, so we then decide to do some research via internet and find some interesting quizzes about our topic. But good quizzes are still hard to find, anyway, we finally found several representative quizzes and examples.

On the other hand, we have some problems which we did not solve. In order to make our group more effective, we have to solve these problems. The most important thing we should do is become more corporately, remember we are a team; we can read other partner’s work then give them advices to improve the whole work.

XXXXX

In every meeting, I mainly take the responsibility of enriching others’ idea and finding more useful information. In order to thoroughly cover the content of the topic we study, I try to make the material variety and utilized.

In terms of the team, with the same aim to make a good group work, everyone in our group participate fully in the group process that nobody feel left out or ignored and make significant contribution to the group’s work. We all contribute to make an effective and efficient group process by providing opinions, avoiding self-centered roles, respecting member differences. All group members are committed to group’s goal and willing to share and listen. When difficulties arise, although little conflicts occur, everyone try best to solve the problem rather than avoid it. Everyone can analyze the problem that confronts the group and identify the solution which is always the one appropriately manages disagreements and conflict. In a word, with every group members’ effort, the teamwork is getting better and better.
XXXX
In order to make our presentation successful, our group member all did a great job both during the meeting and after the meeting. Each group member plays a very important role. We make sure our idea of what to write about of the non-verbal communication and decide which person to prepare each part. Then wet take the information we got to discuss the specific point to write about. When we have discussing, every people behave themselves quite well. We were all willing to speak our opinion and share our own idea to others. During each meeting I usually to be the person who like to make some suggestions to others. And most of them we discussed and our group member accepted. I like to listen to others’ opinion carefully and then give my own suggestion timely and accurately. Our group member all give their own opinion and then listen to others. So at the end each part of our presentation blend all group members’ idea. I do think we do effective group job.

BHO3473-HUMAN RELATIONS

noreply@blogger.com (Herbert) — Fri, 13 Aug 2010 03:37:23 PDT

this is the last one of VU's assignments. to be honest, i did not like this unit. i learned it in the summer school, and i thought 80 people were there to learn this unit. the structure was a little different in summer compared with the normal teaching period. everyday, the lecturer gave us some questions, and the after that, we need to hand it in. but in the normal teaching period, no this kind of assessment. and we need to write a lof of journals which i did not like...well...bad memory...
before i start, i receved the comfirm letter from the teacher, thanks godness.
OK, here we go~
here are three sample final eassy:

SAMPLE 1

Abstract

In this report, it describes a story between my friend Rex and me. In this story, it shows how our relationship changed from beginning to the end. We used to be good friends, but something happened between us, and made us both unhappy. In this report, it also discusses some problems we met, and then shows why these problems confuse us and what should I do to fix these problems. Meantime some theories learned from Human Relations will be applied to analyses these practical problems. Three key components will be discussed in the report, conflict management, I statement vs. U statement and how to deal with angry. These three problems made us feel unhappy with each other, and we fell apart from each other gradually. All of the problems happened to us were very common in the daily life, but I did not handle it well. So these made the relationship between us changed. At the end of essay, some guidelines are applied to avoid future deterioration.

Introduction

Rex and I knew each other at the beginning of 2008. We met on the tutorial of Microeconomic Analyses. There was a group assignment in that subject. Rex and I formed a group, and we became friends. After that, we often ate out, went shopping and hung out together. Although there were some conflicts happened between us, but most of them were not a big deal, they didn’t affect the relationship of us. When we worked together, something made me angry, but I blamed him severely. Both of us were unhappy with that. Finally, the friendship dissolved. Next, I will describe the details about it.

Discussion

At the end of last semester, I saw an advertisement on the board of school, and it said that the West Footscray House needs some cleaners. Also I told this news to Rex, and invited him to work with me. He agreed with me. Then I called the manager of the House. She said both of us could work there. She told us the work time was between 7:30 am and 9:00 am. My duty was changing the bed covers and bed sheets. Also Rex as a teammate of me, he dealt with the bathroom. We cooperated well during the first week. But in the second week, Rex caught a cold, and he didn’t feel well during the work. He could not finish his work on time. But when the manager checked our work, she saw we could not finish the work on time, she blamed me and asked me why I haven’t helped him to finish his work. This situation happened at least three times within one week, and I said nothing to her when she blamed me, because I think she was the manager, at least I should give her some respect. But on the third week, she blamed me again as the same reason. I said to her the bathroom was not my duty, I have no responsibility to its cleanliness. Meanwhile I had a lot work to do, if I had time I will help him, but in the fact, I didn’t have time to help him. And she always blame me but didn’t not according the fact, I could not stand it. So I quit. And she said it was fine, I could quit from the job.

After went back home, I called Rex, and said: “I am very angry with you. Your duty is cleaning up the bathroom, why you can’t finish on time. If you can’t handle it, you should talk to the manager. Do what you should do, OK? You always keep silence when you in trouble. Say something, OK?” After that, Rex was very angry too, I could feel that from his voice. He said: “I do want to talk to her about my problem. But my situation can’t do that. I thought you are my friend, you could understand me. But now, I recognize I am wrong. Another thing, don’t talk to me in that way again.” Then he hanged up the phone even without saying goodbye. After this thing, we haven’t talked to each other. And a few weeks later, he went back his hometown.

In this story, I made 3 mistakes so that made the friendship worse.

Firstly, when I had a conflict with the manager of the House, I used “Avoidance Style” before I quit the job. Because I didn’t think the goal and relationship between manager and me are important for me. The result was not good for both of us, because after quit it, I had to find another job, and the manager had to find another guy to replace me in a short time. The conflict is very common in our life, it is more than a disagreement, incompatibility between partners, or partner opposition; it is an enduring or persistent element of interaction. Because it endures, it can also change and develop in form over time.’(John. G, Brant. B, 2003). David W. Johnson stated that conflict is a kind of natural interpersonal storm we cannot avoid it which has its origins in relationships among individuals. But in my story, I didn’t cope with the conflict well, in contract, the conflict made me angry. There would be a better way to resolve the conflict. I should do as “Owl”- Needs of both parties are seen as legitimate and important. I should explain why Rex couldn’t finish his work on time and why I could not help him when the first time the manager blamed me, so that she could understand the situation better. And she won’t blame me again, the conflict won’t go further. At last, I could continue the job and she need not find a new guy. That’s the win/win strategy. I didn’t do it in that way. In contract, I called Rex after went back home, and then the thing was getting worse.

Secondly, when I had conflict with other person, I haven’t control my emotion well. I got angry because of conflict. Anger is very common in our daily life as well as conflict. As Aristotle states “Anyone can be angry- that is easy. But to be angry with the right person to the right degree, at the right time, for the right purpose, and the in the right way-that is not easy.” I was angry with the wrong person. The guy made me angry was the manager but not my friend Rex. But I expressed my emotion in a wrong way to a wrong person. In our daily life, the anger happen when we are frustrated, thwarted or attacked. When you are angry, you cannot express your feeling and take in the information from other people. If we continue to communicate, it will create dislike, frustration, and even conflict or revenge. Under that situation, I should negotiate with the manager but not angry with Rex. Negotiation is a good way to fix the conflicts. Negotiation is the process whereby people attempt to settle what each shall give and take or perform and receive in a transaction between them. (Rubin & Brown, 1975) As L.M & Lynn states, the negotiation process can be divided into four phases, first building a good relationship; second talking about the business deal; third persuasion, bargaining, and making concession; finally making a final agreement. At that time, I had a chance to negotiate with the manager, but I gave it up. When I didn't feel well, I put all of anger to Rex, and made myself out of control.

Thirdly, when I expressed my anger, I use a lot of U statement to blame Rex. That was made the friendship breakdown. When we communicate with others, using I statement is always better than U statement. The reason is that I statement direct describe how and why I feel as I do. Others can easier understand my opinion clearly and honestly through my I statements. That was very important in communication. In contrast, You statement, which usually includes the blame, is hard to understand the thinking and also easy to make barriers during the communication. In that situation, I just want to express my anger, but not blamed Rex. But through the phone, Rex thought I was blaming him, because I use so much U statement. That made a misunderstanding between us. From this, it also indicates that the non-verbal language is very important during the communication. Because our conversation was via the phone, Rex could not see my eye and my body language, so he thought I was blaming him. But if we did a face to face communication, we could use verbal and non verbal language to communicate. The non verbal communication can make our communication more effectively and easier. Non verbal communication include gestures, posture, facial communication, space communication, touch communication and paralanguage. The smile and eye communication can make others would like to communicate with you. Obviously, it was not a good idea to use the phone to communicate under that situation.

After studying the Human Relations, I recognized my fault, and I find a way to fix these problems. The first problem is between the manager and me, though I felt angry with her, but I will forgive her. As David (2006) said, ‘an effective way to free you from anger is through forgiveness…forgiveness involves giving up negative thoughts…negative feeling…and negative behaviours.’

The other problem is about me and Rex, I should apologize to him. He was a scapegoat in that situation. I should not put my anger to him, which was not fair to him. He will come back to Australia soon, and then I will call him to make a face to face conversation. This time, I will use I statement instead of U statement. Also using some non verbal language with my verbal language so that make the conversation goes well. The purpose is that re-built the trust between us. Establishing trust is the first thing to save our friendship. As Deutsch (1962) states that “trust- you are in a situation where a choice to trust another person can lead to either beneficial or harmful consequences for your needs and goals.” I believe that after a good conversation, Rex and I will be good friends again.

Conclusions

In this essay, it describes how the friendship between Rex and me breakdown. It was just because of a small thing. But I failed to manage the conflict, and then I put all my anger to Rex with some uncomfortable words. I made three mistakes in the story. But past is past, if I have a chance to do that again, I will change the way to manage the conflict and my emotion, also change a way to talk to the other person.

From this story, it also indicates some weakness about my interpersonal communication. Firstly, sometimes I could not handle the conflict well. Secondly, I should learn how to express my emotion. Thirdly, I use so many U statements when I am angry. All of these are not good for me to communicate with other person. I must change my way to communicate so that I can make more friends.

Reference list

David, J. (2006) Ninth edition, Reaching Out

Deutsch, M. (1962), cooperation and trust: some theoretical notes., University of Nebraska

John, O. and Brant, R. (2003) Handbook of Communication and Social Interaction Skills

Johnson, W. and Johnson, R. (1995). My mediation notebook (3rd edition) Edina, MN: Interaction Book Company

L. M and Lynn.S. (1995) ‘Business Across Culture' Longman N.Y

SAMPLE 2:

My relationship with other residents in Sunbury Student Hall looked at from the perspective of increasing communication skill and improving conflict management

Summary

In this report I will give a statement about what is the relationship between other residents and me. And I will discuss some problems I encountered with other residents. Then I will figure out why these problems confuse me and how can I cope these problems. Meantime what theory I have used from Human Relation lectures and tutorials to assist myself to solve these practical problems. What is the result? What potential solution can be used and how does it work? Finally, through this experience what I find about interpersonal strength and weaknesses, and what I have learned.

Introduction

I am one of the Resident Life Team members (RLT) who live in Sunbury Student Hall of Victoria University. RLT member is part time official staff in VU who is basically around the accommodation to give residents support, first aid, cheap meals and outings. We are also save people if there is an emergency. We will be a consultant when residents have problems. And we want to ensure offer a safe and secure place to all residents. Our motto is “make sure your time spent here is awesome”. But the job is not easy to do. I always encounter many problems which are hard to solve. First of all, drinking problem is one of the serious problems here. You can frequently see someone hold a beer, wine or vodka who sit in lounge or walk around. When weekends are coming, people always hold alcohol party. They are drinking, singing and dancing. Unfortunately, not all the people want to control themselves until they drunk. People who drunk will lose mind and conscious and they are shouting, laughing, crying, fighting even naked running which interrupt other residents’ sleeping time. When I receive the complain call from others, I try to persuade them ease them but it not work to drunk people. Sometime the situation will be worse when I asked them to stop drinking. They possible drink more and shout to me. Another main issue is about administration. To be a RLT our responsibility is to keep a safe and healthy place for residents. Therefore we make rules which everyone should follow. However not all the residents obey it, they leave the dirty dishes in the sink without washing for a long time, mess the kitchen and lounge, put the recycle stuff into the rubbish bin, and not take back vacuum cleaner, mattress, and door key on time. I will use the topic of communication skills and conflict management to help me. These two theories can enhance my ability to know these problems and find out how to solve them. Basically, I get along well with other residents and everyone is my friend, therefore when I am on duty it is hard for me to stop singing in the room or drinking in the common room. The good relationship between residents and I will hinder me sometimes.

Discussion

Trenholm and Jensen (2000) stated that, communication is a process that sender transmits a message to receiver by some channels. Effective communication between sender and receiver can make receiver understand what sender wants to say clearly and avoid potential conflicts. To drinking problem, effective communication is quite important. Before people drunk or beginning of alcohol party, I should talk to all attendants learn to control themselves do not drink too much. This oral warning will remind parts of people when they enjoy the drinking. Even someone drunken appropriate communication is still working. Firstly, be patient to listen what they what to say, do not interrupt them and let them to release bad emotion. Then, clarify what I what to say simply. Drunken people cannot identify confused statement. Therefore I just need to say “you have drunk too much do not drink more”. Then, proper using non-verbal communication to facilitate the conversation such as nod to show agree with him or her, touch shoulder to show care and understand. Body language and gesture are also can transmit feedback to speaker which proves I listen seriously what he or she say. Do not take some aggressive posture or gesture, it will worsen the situation. The last thing what I will do is talking the drunk residents again by “I statement” when he or she wakes up. Now he or she under the conscious, I can ask he or she do not drink too much and what happen yesterday, and how embarrassing at that time. Make sure he or she guarantees he or she will control himself or herself next time. At the same time I will make a relationship statement to build or maintain the relationship. Johnson (2001) claimed that a relationship statement is talking about how you think the relationship between you. Through learning of communication skill, I know what communication is, how communication works, and how to effectively communicate with each others. And I understand this drinking problem more. The theory enhances my ability to solve this problem and also help figure out some solution.

David W. Johnson stated that conflict is a kind of natural interpersonal storm we cannot avoid it which has its origins in relationships among individuals. Especially two people act complementary roles, storm will arise. In the case of administrative problem, residents and I act the complementary role that is why the conflict arises frequently. When residents breach the rule in Student Hall, I have to ask them to stop and sometime charge them fees for punishment which will cause disagreements, disputes or quarrels. Follow the theory of conflict management; I should understand interests of conflicts firstly. “A conflict of interest exists when the actions of one person attempting to reach his or her goals prevent, block, or interfere with the actions of another person attempting to reach his or her goals”. (Deutsch, 1973) The conflict of interest between residents and I is agreeing on something. I ask them to obey the rules but they think it is not a big deal. Then, I will use the five basic strategies properly to resolve the interest conflicts. If someone who breaches the rule which relates to the health and safety of other residents for example someone who take the glass bottle of drinking (residents who live here always walk without shoe) or people sing songs after 11pm affecting others’ sleeping or studying, I will use the strategy of the shark which means I will achieve the goal at all costs. Keep health and safety of residents is my responsibility, the goal is more important than relationship. Therefore, I will stop the rule breaker and tell what they have done is forbidden. In other hand, if people who breach the rule which is not quite important such as not take back the vacuum cleaner on time or not wash the dish in the sink, I will utilize the strategy of the owl which is means goal and relationship are important to me. Do not take back vacuum cleaner is really a small thing, I just need to talk them take back vacuum quickly. When we have a conversation, using sense of humor is very useful. Johnson said that, in 1995, laughter can help people involved in conflict resolve the tension and help them think how to solve it.

I am an oversea student, sometime language barrier and difference of culture will confuse me. I cannot give feedback in time when people communicate with me. Therefore it hinders the solution of the above problem I have stated.

Developing and maintaining trust is another theoretical solution to resolve above problem. Deutsch in 1962 defined trust as “you are in a situation where a choice to trust another person can lead to either beneficial or harmful consequences for your needs and goals. Thus, you realize there is a risk involved in trusting.” Establishing trust is the foundation to develop a good relationship. In that case I have discussed that if all residents trust me and there is a good relationship among us, they will obey the rules I have told them.

Conclusion

To be a RLT member drinking problem and administrative problem is the main problem confused me. Fortunately, the theory of communication skills and conflict management help me know these problems, improve the ability of problem solving and resolve these problems. Basically, the solution resolves problems. However, sometimes the problem will occur again which is no longer a hard one. Developing and maintaining trust is another useful solution, but it will take long time to carry out. Establishing trust between different people is not an easy process. By this exercise I know myself more than before especially in interpersonal ability. I am good at trust others. People like to believe me and share their own experience. I am also a good listener when people are talking I will be there and listen patiently whatever if I am interested in the subject. I think listen to people who is talking patiently is a kind of respect to the speaker. The weakness of me is that I am lack of communication skills and I do not really know how to communicate with others. Learning from the theory of communication skills I have already mastered the main components and enhanced the communication ability.

Bibliography

David W. Johnson, reaching out, 9th edition, page 138, 252

Deutsch, M. (1973), the resolution of conflict, New Haven, CT: Yale University Press

Deutsch, M. (1962), cooperation and trust: some theoretical notes. In M.R. Jones, Nebraska symposium on motivation, University of Nebraska Press

Johnson, D. W., and Johnson, R. (1995b). My mediation notebook (3rd edition) Edina, MN: Interaction Book Company

Sarah Trenholm and Arthur Jensen, interpersonal communication, 2000, 4th Edith, page 4

SAMPLE 3

Abstract:

My relationship with one of my housemates looked at from the perspective of managing the emotion and negotiation effectively. As everybody know, Human relations plays most important roles in our daily life. Moreover, as Pakenham (1994 p147) defined that “Life in an advanced industrial society can lead us to believe that we are no longer dependent on our natural environment”. When we conflict with others, we should know how to managing our emotions and resolve the problems through effective negotiation. I will list the example of the conflict with my housemate in my life, and then analyze the conflict and find out the way of resolving the conflict with relevant theories. Forgiveness is an effective way to free myself from anger is and expressing yourself and negotiation will keep others from getting angry. While the strategy of negotiation, Win-win outcome, is recognized the best way to solve conflicts.

Introduction:

One of my housemates always found the flaw in my life. Sometimes, she asked me why I close the door loudly but I just slowly close the door and the noise comes from the involuntary voice of closing door. In addition, all of us came to the narrow kitchen to cook dinner at 6:00pm and the dishware was limited. One day, I saw that a girl used a basin to wash the vegetable. Therefore, I only found a boiler to wash my vegetable and dipped it in. A few minutes later, she looked at me with a disagreeable expression and said “all of us should choose the boiler instate of the basin to wash the vegetable. Following that, we can cook more expediently and do not need to change the dishware. When we finish washing, we can cook sequentially.” I heard her words and felt very angry. I never thought that washing vegetable in the boiler is convenient. I nearly disputed with her right now but not. I think we should resolve the problems through applying the theories which learnt from Human Relations, because our conflict happened nearly everyday which makes me very confused and even cannot sleep.

On the one hand, we should manage our anger. Anger is one of the most common emotions in the conflict. As David (2006) stated, ‘anger is a defensive, emotional reaction that occurs when we are frustrated, thwarted, or attacked.’ Anger is a natural human feeling, so everyone has the right to get anger. However, the result of the anger expressing can be either destructive or constructive. The destructive anger expressing may make our life disorderly and unsystematic. When we express angry destructively, our conflict cannot be controlled, and it may creates dislike, and irritability, depression and even some physiological problems such headache, because of repressed anger. In contrast, expressing anger constructively can make our life more comfortable, productive, and exiting. We will feel more energy and motivation and the others will feel more friendship, goodwill and gratitude. As a result, we should consider whether express our anger and how to express it before we suffer from the conflict with others.

On the other hand, after expressing the anger, I should negotiate with people who I conflict with. Negotiation is the process whereby people attempt to settle what each shall give and take or perform and receive in a transaction between them. (Rubin & Brown, 1975) Negotiation is a method of alternative dispute resolution, typically evidenced by trained negotiator acting on behalf of a particular organization or position. Compare this to mediation where a disinterested third party listens to each side’s arguments and attempts to help craft an agreement between the parties. Negotiation is a kind of art of communication. It is a tool to help people to solve the problem in the daily life. Almost everyone in the society has been negotiated with someone. Everyone is the negotiator. Whether in workplace or in family, people always reach the decisions through negotiation. You may negotiate with your friends to decide where to have a dinner. You discuss with your boss about the wages you are willing to get based on your owe ability. And you may also bargain with sale person for a brand new product. Definitely, negotiation is a part of people’s lives! It is a pervasive and important form of social interaction (Lewicki&Litter, 1985). Negotiation is an essential for anyone who wants to accomplish their goals.

Discussion:

I should manage our anger constructively in this situation for overcoming the problem.

There are four steps to manage my anger. Firstly, I should recognize that I am angry. Anger is a normal feeling and everyone cannot keep away from getting angry. Anger cannot vanish, but erupts when we suffer the provocation. So I need not fear or reject the anger. Secondly, I should clarify the other’s intent. Before expressing my anger, I should observe what actually occurred in other person’s action and make sure whether the provocation is deliberate. Thirdly, I will decide whether or not express my anger and how to express it. In this step, I should consider the risks of expressing anger and not expressing anger. If I decide do not express the anger, I must first free me from anger through doing physical exercises, psychological detachment and relaxation. As David (2006) said, ‘an effective way to free you from anger is through forgiveness…forgiveness involves giving up negative thoughts…negative feeling…and negative behaviours.’If I decide express the anger, I should decide express anger directly or indirectly. Finally, I should analyze my anger management. Through analyzing the origin of my anger and the signal of becoming angry, I can find out the regularities of my anger. Consequently, I can try my best to avoid getting angry.

In addition, I should find the way to deal with angry person. As David (2006) shown, ‘when the other person gets angry at you, the first step is for you to control your own feeling.’ Then, I should understand that anger is natural human feeling, so everyone has right to get angry. Finally, I can deal with other person’s anger through separating the other’s anger from aggression, keeping focusing attention on the task, using other emotion to help angry person control and presenting a rational explanation of the situation. In my case, I choose the final method, explanation, to keep that girl from anger.

In my example, I apply this four-step managing anger method to control my anger and make the girl understand that my behavior is not deliberate. Through analyzing from first step to the third step, I discover that I cannot reject anger and the anger cannot go on hiding my feeling, because the conflict happen frequently and I suffer from physical and psychological problems, as well as, impact my life negatively. As a result, I should decide to express my anger directly. Initially, I should describe that girl’s behavior and my feeling of anger. As everyone knows, others cannot make us angry, but the anger comes from our understanding of other person’s behavior. In my situation, I only hear the disgruntled words from that girl, but do not consider why she is displeasure. Therefore, I should find out the rootstock of the girl’s displeasure. In her words, I find that she make mistake with my behavior, and express her anger through put-down and sarcasm, which is bad way to express anger. Following that, I should describe my anger assertively through verbal and nonverbal message, especially, using ‘I statement’ instead of ‘YOU statement’. In my case, I said to her, ‘I know that you are so laborious. You keep our kitchen very clean and we have a comfortable environment to cook. Thanks very much. All of us want to have a dinner as soon as possible and no exception with you. But the kitchen is too narrow and the dishware is limited. I never thought that washing vegetable in the boiler is convenient. I only used boiler to wash, because you wash vegetable in the basin and I have not any other dishware to wash. When I heard your words, I felt so heart-struck. We are the friends and should help and understand each other. Previously, I always waited for your finishing cooking and then cook my dinner. However, I found that you always started cooking at nearly 6:00pm and finished it at nearly 10:00pm. My friend and I start to cook at 10:00pm everyday. I felt too hungry everyday and it is bad for our health. So I cook with you today.’

Though manage my emotion, anger, the girl and I’ am relationship is as good as or even better than ever. We understand the behaviors between us are not deliberate and aggressive. I release pent-up emotion by explanation, and then my physical problem disappears. I can have a good dream. Through solving this conflict, I find that the more positive feeling I express, the less angry both of us will be.

Furthermore, I should solve the problem through negotiation. The conflict is common in our life. ‘In the context of intimacy, moreover, conflict is more than a disagreement, incompatibility between partners, or partner opposition; it is an enduring or persistent element of interaction. Because it endures, it can also change and develop in form over time.’(John O. Greene, Brant Raney Burleson, 2003). To solve the conflicts, we have to be negotiators and negotiate with the others. Learning to use the negotiation skills is something very important in the daily life. Though negotiation process, we are looking the best solutions of the conflicts. ‘By the definition an outcome can be described as win-win, if both parties come out better; win-lose, if one comes out better and one worse than before; lose-lose, if both parties come out worse, or zero-sum.’(John S. Odell, 2000). Therefore, the win-win outcome strategy would be the best choice for us, which is a powerful and useful solution. ‘The negotiation process can be divided into four phases, first building a good relationship; second talking about the business deal; third persuasion, bargaining, and making concession; finally making a final agreement.’ (L.M&Lynn,s. 1995)

In general, the steps for successful negotiation according to text book are: firstly, I should orient towards a win-win approach. I have more chance to reach an outcome of win-win, if I approach the negotiation wanting to reach this kind of win-win out-come. It is crucial to determination to find a mutually satisfactory resolution. Secondly, before the negotiation, I should design a plan about how to negotiate. ‘Try figure out the best resolution you can expect, what is fair and reasonable deal and what is a minimally acceptable deal’ (E. Wertheim, College of Business Administration, Northeastern University). Thirdly, I should choose the best alternatives to make the negotiation successful. Fourthly, I should separate people from the problem and try to maintain a rational, goal oriented frame of mind. Fifthly, I should consider the other person’s situation focus on interests not positions I should try to find the interests what have under-lied the interests-parties. As Lyons (2007) shown, ‘What interests are in negotiation? They are needs, desires, concerns, fears—the thing one cares about or wants.’ I need to be clearer about the interests because it may not be easy to be found! Finally, I should pay a lot of attention on both external factors and internal social and psychological factors of negotiation. Also I should spend more time listening than talking and make direct eye contact. Use the word "and" instead of "but" helps to send the signal that I am interested in the other party and are seeking common ground.

In my case, I apply the negotiation to solve the problem. After analyzing the negotiation method, I found that our timetable is different, so we cannot have a dinner together. However, I suggest that we can design a timetable about cooking dinner. Everyone should cook follow the timetable and finish cooking as soon as possible. The first person should start at 5:00pm. Then, I showed her my suggestion timetable below: (A: my and my friend, B: the other four girls)

After my negotiation, she felt so shamefaced and said “I am sorry about my words and inconvenient for you before. I never thought about your feeling. I think the cooking timetable is scientific, appropriate and convenient. We will cook follow the timetable.” The negotiation result a win-win outcome.

Conclusion:

In my case, I get the success to overcome the problem between my housemate and me. Initially, I express my anger directly in an honest and appropriate way. Then, I keep the girl from anger though describing my behavior. Finally, through negotiation, we agree to design a timetable and cook the dinner following the timetable. From this exercise, I learn that we should manage our emotion constructively and more express positive emotions. When we suffer the conflict, we should resolve the conflict through negotiation instead of sarcasm.

•Bibliography:

David W. Johnson (2006) Ninth edition, Reaching Out

E. Wertheim, College of Business Administration, Northeastern University, viewed April 21, 200.7

http://web.cba.neu.edu/~ewertheim/interper/negot3.htm

John O. Greene, Brant Raney Burleson, 2003, Handbook of Communication and Social Interaction Skills

John S. Odell, 2000, Negotiating the World Economy

Lewicki & Roy, 2007, Essentials of negotiation, McGraw-Hill/Irwin, Boston Fowler, Alan, 1990, Negotiation: skills and strategies, Institute of Personnel Management, London.

L. M& Lynn.S. (1995) ‘Business Across Culture' Longman N.Y

Lyons, Carl, 2007, I Win, You Win: The Essential Guide to Principled Negotiation, London: A & C Black, 2007

Pakenham, K.J. (1994) Making Connections: An Interactive Approach to Academic Reading CUP UK

BTW, this essay needs to use TURN IT IN system, so, when you decide to use the above essays, you need to be careful

this semester~~

noreply@blogger.com (Herbert) — Thu, 12 Aug 2010 05:37:23 PDT

three weeks have passed after first day of this semester, i really hope this is my last semester.

just two units in this semester-MGX5440 and MGX5870.

some days ago, i handed in my take home exam of BTX5090. i think it is very similar to the last year's. but after i emailed it to the teacher, i still not get the reply from her. i hope she did receive it.

about MGX5870, i just finished the first assignment of it. it taught using a software, i can not recall the name, but i think it called Vesium or something similar. some friends told me MGX5870 is an easy unit. well i don't know, because i just learn a little about it.

the teacher of MGX5440 is the same teacher of MGX9230-Jeffrey, he is a good teacher. but i can not search the details of him. but i did find a lot details of the other teachers on MONASH website.LOL. MGX5440 is about public sector financial management, and so far, it is talking about the budget. two assessments in this unit, first one is due on week 6 and 1000 words, the second one is 2000 words, and last one is a group presentation included a report.

well, i hope the whole thing will go well.

about migration, a new words comes out recently, well, maybe not that new, but very popular-DRC (Decision Ready Checklist). i think the DIAC encourages people to find an agency to deal with the migration stuff. because only few agencies have the rights of DRC. some agency claims that you can get PR within 3 days after using DRC. well, i think these people are extremely luck. becasue of the migration rules, some of my friends back China after they finished the master course without applying for PR. well, i hope my all my friends have a good future.

i still confuse about the future, i do not know what should i do after i leave school. and recently, i still go for the seminars about the careers, i hope those seminars can help me.

PS, when my friends go back to China, they can not use Facebook, Youtube, Twitter, Blogger and sooooooooo many other websites. well.........i do not know what to say...

sample essay of BEO2263: Macroeconomic Analysis:

noreply@blogger.com (Herbert) — Mon, 02 Aug 2010 04:22:57 PDT

well, this is an esay unit, i thought. the assignment was essay.
Question:
Task: Whilst the world wide recession which commenced during 2007-2008 originated outside Australia, Australia cannot escape it. Briefly analyze the means by which the recession spread to Australia, and what steps Australia can take to mitigate it.

SAMPLE:
Introduction:

Many industrialized countries suffer from a deep recession which was affected by financial crisis during the period of 2007 to 2009. The global financial crisis commenced when credit risk was perceived in the general economy, especially the United States. The recession spread to the whole world, Australia is no exception. In the follow paragraphs, the analysis of the recession in Australia and the measure of decrease effect will be present.

Part A-Global financial crisis:

At the beginning of July 2007, when the investors lost faith in stock market, a liquidity crisis created the financial recession. Between 2000 and 2002, the stock bubble collapsed, which means a loss of confidence by investors in the value of securitized mortgages. Credit risk in the general economy increased and remained volatile in July 2007 and went on going up in September 2008, in which stock markets worldwide crashed and high volatility and a considerable number of banks, mortgage lenders and insurance companies failed.

The financial crisis origin in the reckless, sub-prime lending, which collapse of bubble affected the housing market showed up. Like American Enterprise Institute fellowed Peter J. Wallison, believed the roots of the crisis can be traced directly to sub-prime lending by Fannie Mae and Freddie Mac, which are government sponsored entities. On 30 September 1999, The New York Times reported that the Clinton Administration pushed for sub-prime lending: "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people." Housing collapse caused the crisis and the financial system was vulnerable because of intricate and highly-leveraged financial contracts and operations. When the share and housing price declined, many large and well establish investment and commercial bank suffered loss even bankruptcy, and then need financial assistance.

The unemployment rate has been increasing since September 2008. For April 2009 alone, a net total of 539,000 jobs have been lost in the United States. The unemployment rate in the United States is currently at 8.9%.

A commodity bubble was created following the collapse in the housing bubble. The price of oil rose to over $140 dollars per barrel in 2008 before plunging as the financial crisis began to take hold in late 2008. A similar bubble in oil prices has preceded other historical economic contractions.

The financial crisis affected in Australia will be explained in the following part.

PART B- by which means the recession spread to Australia

In the modern world, the international trade is more and more activity. So when the economic recession was first happened in America in 2006, then it quickly speared to the other countries. Australia has also been affected by current world’s economic recession which has slowed down economic activities and financial performance during the past two years.

The spread of economic recession in Australia can be illustrated by two main aspects; they are Aggregate Demand and the exchange rate.

First of all, the effects of the unstable economic status worldwide create the negative impacts on the aggregate demand. “Aggregate demand is the total demand for final goods and services in the economy (Y) at a given time and price level. It is the amount of goods and services in the economy that will be purchased at all possible price levels. It is usually described as a linear sum of four separable demand sources:

• C is consumption demand = ac + bc(Y − T),

• I is Investment demand,

• G is Government demand,

• NX is Net export=X-M

o X is total exports, and

o M is total imports = am + bm(Y − T).

So, Y=AD=C+I+G+NX” (Wikipedia, 2009)

Consumption Demand, when there is a fluctuation on the economic condition and it getting decline, some international companies will shut down or cut their employees to reduce the cost, thus the unemployment increased, the purchasing power was depressed, and as a result the consumption demand will decrease.

Investment Demand, when the economic recession outside of Australia, the investors who intend to invest in Australia will decrease their investment. Foreign investment in Australia recorded a net inflow of $149.0 billion for the year ended 31 December 2008, a decrease of $11.0 billion on the net inflow of $160.0 billion for the previous year. (Australian Bureau of Statistics, 2008)

Second, because of the economic recession, the exchange rate fluctuated a lot during 2008. The Australian dollar grew rapidly in value up to the middle of the year, before falling sharply. By year end, the Australian dollar had fallen 21% relative to the US Dollar, 18% relative to the Euro and 2% relative to the Canadian Dollar; but had appreciated 8% relative to the British Pound and 5% relative to the New Zealand Dollar. (Australian government, 2009)

The changing of exchanging rate will cause the economic environment changed, especially in the import and export sector. And as mentioned above, the net export is the component of aggregate demand.

To sum up, because of the decrease of aggregate demand and the changing of exchange rate, the recession spread to Australia.

Part C- copes with the economic recession

When an economy falls into a depression, governments can try four things to return employment to its normal level and production to its “potential” level. Call them fiscal policy, credit policy, monetary policy, and inflation. (J. Bradford DeLong, 2009)

In this essay, two ways will discuss in details: monetary policy and fiscal policy.

Both monetary and fiscal policy are used to stabilize the economy, that is, provide the environment for sustainable economic growth with full employment and low inflation.

Monetary policy may be defined as the activities of central banks designed to influence the cost of credit with a view to achiveving low inflation and simultaneously sustainable economic growth with low unemployment. The implementation of monetary policy is the responsibility of the Reserve Bank of Australia. The Reserve Bank Act states that monetary policy must be implemented with three objectives in mind: 1, the stability of the currency. 2, the maintenance of full employment. 3, the economic welfare and prosperity of the people of Australia. Since 1996, achievement of these three objectives are seen to depend crucially on the maintenance of a low rate of inflation. The RBA therefore implements its monetary policy with a view to keeping inflation at 2 to 3 percent over the course of the business cycle. If inflation looks as if it will breach 3 percent, the RBA will act to tighten monetary policy; if inflation looks as if it will decline below 2 percent, the RBA will seek to ease monetary policy.

The chart below shows that the inflation rates of Australia fluctuate a lot since the economic recession. On October 2008, it even raised to 5%, and as mentioned above, RBA will act to tighten monetary policy to cope with the economic recession.

In Australia, as in most other countries, the major weapon of monetary policy are open or domestic market operations [OMO’s] in which the RBA engages in buying and selling government securities with a view to achieving a particular interest rate, the target rate. If the Reserve Bank wishes to tighten monetary policy, it announces its intention to enter the money market and sell securities [an open market sale]; this has the effect of debiting exchange settlement balances which puts upward pressure on the cash rate and interest rates in general.

The effect of a tightening of monetary policy can be seen with the aid of the IS-LM diagram.

Initially the economy is in equilibrium, generation an income of Y1 and an interest rate of i1: this is given by point E1. The open market sale of bonds reduces the money base and this in turn reduces the money supply. The contraction in the money supply shifts the LM curve to the left, to LM2, the interest rate rises from i1 to i2 and the level of income contracts from Y1 to Y2. The new equilibrium level of income and the interest rate are given by point E2. The level of income declines because the rise in interest rates reduces investment (and other credit sensitive) expenditures.

When the economic recession spread to Australia, RBA raised the interest to cope with it. As the figure shows from August 07 until October 08

But unfortunately, raising interest can not stop the spear of economic recession; the government had to find the other way to cope with it- fiscal policy.

Fiscal policy is aimed at regulating the level of aggregate demand by changing government receipts and/or outlays; that is, it impacts on disposable incomes. In economics, fiscal policy influences the economy by using government spending and revenue collection. (Wikipedia, 2009) It impacts on the LM curve to influence aggregate demand, fiscal policy attempts to do this by impacting on the IS curve.

Fiscal policy refers to the overall effect of the budget outcome on economic activity. It can be contrasted with the other main type of economic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the supply of money. (Wikipedia, 2009) The two possible stances of fiscal policy are expansionary and contractionary.

An expansionary stance of fiscal policy involves a net increase in government spending (G > T) through rises in government spending or a fall in taxation revenue or a combination of the two. This will lead to a larger budget deficit or a smaller budget surplus than the government previously had, or a deficit if the government previously had a balanced budget. Real government spending has grown significantly over the past decade, from $174.7 billion in 1997-98 to $264.1 billion in 2007-08, and is projected to grow to $282.1 billion by 2010-11 (see Chart 2). (Treasury, 2009)

The expansion in incomes has led to an increase in the demand for money and interest rates rise. This rise in interest rates discourages some private investment expenditure and the economy moves along the IS curve (in the direction of the arrow)
The two main instruments of fiscal policy are government spending and taxation. Changes in the level and composition of taxation and government spending can impact on Aggregate demand and the level of economic activity, the pattern of resource allocation, and the distribution of income.

Increasing the government has many benefits. For example, it can create more work opportunities. Such as when the government developed a park, it needs engineers, workers, drivers and so on. More people can get a job because of it. Further more, when these people get the job, they have the money to buy goods, so it will increase the consumption demand.

Conclusion

Whilst the world wide recession which commenced during 2007-2008 originated outside Australia, Australia cannot escape it. Because the decrease of the aggregate demand and fluctuation exchange rate, the recession spread to Australia. But there are two ways to mitigate the affection of the economic recession. One is the tighten monetary policy, the other is expansionary of fiscal policy. Using these two economic weapons, Australian has recovered from the economic recession.

Reference:

Dean Baker， The Run-Up in Home Prices: Is It Real or Is It Another Bubble?, CEPR, August 2002

Financial crisis of 2007–2009, from wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008, retrieved on 2009-05-25
Global financial crisis of 2008–2009, from wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Global_financial_crisis_of_2008%E2%80%932009, retrieved on 2009-05-25
"Greenspan Concedes Error on Regulation". New York Times. http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=1&partner=permalink&exprod=permalink， retrieved on 2009-05-24.
Late-2000s recession, from wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Late-2000s_recession, retrieved on 2009-05-25
Norris, Floyd (August 10, 2007), "A New Kind of Bank Run Tests Old Safeguards", The New York Times, http://www.nytimes.com/2007/08/10/business/10liquidity.html, retrieved on 2009-05-23

Aggregate Demand, 2009, http://en.wikipedia.org/wiki/Aggregate_demand, accessed at 20 May 2009

International Investment Position, Australia: Supplementary Statistics, 2008, http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5352.0Main%20Features22008?opendocument&tabname=Summary&prodno=5352.0&issue=2008&num=&view= accessed at 19 May 2009

Exchange rates movement, 2009, http://www.international.ac.uk/resources/43SS09_pdf.pdf, accessed at 19 May 2009

J. Bradford DeLong, Four Ways Out, 2009 http://www.project-syndicate.org/commentary/delong86/English) accessed at 21 May 2009
Australia inflation rate, 2008, http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=AUD accessed at 22 May 2009
Reserve Bank of Australia, ABOUT MONETARY POLICY, 2009, http://www.rba.gov.au/MonetaryPolicy/about_monetary_policy.html#the_implementation_of_monetary_policy

A perspective on trends in Australian Government spending, 2009, http://www.treasury.gov.au/documents/1352/PDF/03_spending_growth.pdf, accessed at 20 May 2009
Fiscal policy, http://en.wikipedia.org/wiki/Fiscal_policy, accessed at 22 May 2009

sample essay of BAO3306 Auditing

noreply@blogger.com (Herbert) — Mon, 02 Aug 2010 04:06:09 PDT

a lot of students fell that auditing is hard, but i really think it is a funny unit. i am not sure it is a useful unit, but it still fun.
OK, the questions of the assignment:

Background

Solace Limited (Solace) is a listed Australian company specialising in private tutoring services. Samantha Solace, a former school teacher who felt the Australian marketplace lacked high quality, low priced tutoring services, originally founded Solace. Samantha initially started providing private tutoring at home. She worked for a few years until the business took off and Samantha had to lease new premises and moved her operations there to keep up with the increasing demands.
Solace was incorporated in 2002 and listed on the Australian Stock Exchange in 2007. Since listing, profits for the company have been fluctuating, but Samantha feels as if they have a promising future as the market penetration of Solace improves. Since incorporation, Samantha has been the Chairperson and the CEO of Solace. Samantha remains closely involved in the day-to-day running of the business, taking a hands-on approach to the running and marketing of her tutoring services. Samantha personally oversees all of Solace’s operations. She frequently travels interstates as well as around south-east Asia to search for new opportunities as well as improving the current services offered by Solace. All the tutoring services are accredited and Solace is a member of the Australian Council for Private Education and Training (ACPET).
Over the past three years, Samantha has filled senior management positions at Solace by recruiting highly regarded managers from competing service providers (both local and overseas firms). In order to obtain these high-quality staff members, Samantha has had to offer attractive salary packages including a share option plan that is tied to a variety of financial performance benchmarks and share price. Despite the high cost of recruiting these senior managers, Samantha is happy as they all have good records of providing highly competent and ethical leadership.
In addition to providing tutoring services from Prep to Year 12, Solace also involves in real estate business. Solace’s philosophy is to initially lease premises to set up classrooms to cater for local students. Once the business grows, Solace offers to purchase the premises from the owner. The purchased premises are then demolished, developed or renovated to service the local population.
Solace’s current focus is to penetrate the Australian marketplace and achieve a market share of at least 30%. In an effort to strengthen its position and further build brand awareness, Solace plans to acquire other, smaller service providers that would fit with Solace’s current range of services.

Until 2008, Solace was audited by a small accounting firm which Samantha had always used for her personal tax and accounting affairs. However, Samantha felt that the small firm would not have enough experience for a listed company, so in early 2008 she approached Brian Shaun, an audit partner of BWE, a mid-size chartered accounting firm.
For the 2009 audit, BWE has appointed Brian Shaun as the audit partner due to his experience in the education sector. Brian currently has three other clients in this sector and was a school teacher himself until he became a registered company auditor. Brian has over 20 years experience as a chartered accountant and has had clients in this sector for the past 7 years. Since BWE took over the audit, there have been no problems with the audit.

Part A

Olga is part of an audit team who have been sent to Laos to conduct an audit of one of Solace's subsidiary companies. During the audit Olga uncovers a series of bribes that the company has paid to local authorities. Bribes are considered a normal part of business in this particular country so the subsidiary company feels as though they have done nothing wrong. It is likely that the bribes will not be uncovered but there is a chance that they will be, and that Solace, BWE, and Olga personally will all suffer negative consequences if they are. If Olga does report the bribes then the subsidiary company will suffer and there will be a scandal for Solace. However, the impact of reporting the bribes is likely to be less than if they are discovered at a latter date by other authorities. Olga thinks of herself as an honest person and is trying to decide what the ethically 'right' thing to do is.

Required

(a) Describe three different ethical theories.

(b) Try to determine what decision Olga will make regarding whether or not she will report the bribes by applying the ethical theories of teleology, deontology, virtue ethics, and ethical relativism.

Part B

Following the collapse of a number of high profile educational service providers in recent time, Brian is concerned about auditor’s legal liability in relation to those collapses.

Required:

(a) Explain the impact that the Pacific Acceptance case had on existing auditing practice.

(b) List four of the procedures or practices that were identified in the ruling as being part of a competent audit.

Part C

BWE is determining whether to accept an audit engagement with Solace Ltd. As this would be a new engagement the audit firm sought Solace's permission to contact the previous auditor. Solace did not give their permission, explaining that they did not want the previous auditors to know they were thinking of changing. Recently, Solace Ltd had been in the media for management not disclosing that one of its subsidiaries is being investigated by local authority for suspicion of bribery. The incident is still under investigation but if the subsidiary is found to be at fault then they may be subject to heavy fines from local authority and lose their business licence.
Required:

From the information provided above, identify four reasons for not accepting the audit engagement with Solace Ltd.
Part D

BWE Audit Firm was planning the audit for its existing client, DEF Learnings. The audit partner was trying to determine the best audit strategy to use. DEF Learnings. is a small private tutoring company that does not have any warehousing facilities as all stock in the form of educational materials is kept on the premises. Being small, they only have a small team of staff, which makes the separation of duties principle difficult to achieve. The preliminary tests of controls found that the internal control procedures are well designed, but not always observed due to the small amount of staff. Previous experience with this client also showed that controls were not always observed. Despite this, BWE has never discovered a material misstatement in the accounts.
Required:

Determine what audit strategy should be used and justify your answer.

it is really a long question...
SAMPLE:
Part A

(a) Describe three different ethical theories.

Teleology: Teleology (consequentialism) considers actions or behaviour according to the consequences of that behaviour. An action is right because it produces some specified type of consequence, i.e. welfare, wealth, happiness, pleasure or knowledge. The most common form of consequentialism is utilitarianism. (Leung P. & Corman P, 2009, p.68) It is teleological because actions are assessed in terms of the consequences – the final or end result.

Consequentialism identifies the moral worth of conduct in terms of how well that conduct produces some effect. It has a ‘forward-looking’ rationale in determining what one ought to do. (Leung P. & Corman P, 2009, p.68)

Deontology: it is an approach to ethics that holds that acts are inherently good or evil. (wikipedia, 2009) According to deontological ethics, an action is right because of the process, i.e. the intention, rather than its outcome. In deontology the emphasis is on individual duty such as telling the truth, acting justly or keeping promises. (M. Gaffikin, 2007) Morality is a matter of doing one's duty, regardless of consequences, and that one must be consistent and carry out one's duties under all circumstances. Morality and rationality are closely connected with logical consistency. (Leung P. & Corman P, 2009, p.68) As teleology, deontology is also a normative ethical theory.

Virtue ethics: the one that emphasizes the virtues, or moral character, rather than rules and consequences. (Stanford, 2009)Moral behaviour is a natural result of one's character. Under this theory, ethics is not just a matter of what people do; it is a matter of what people are. Virtue ethics covers human qualities such as courage, honesty and loyalty. (Leung P. & Corman P, 2009, p.69) Some criticise the theory in relation to the difficulty involved with establishing the nature of the virtues. Different people, cultures and societies often have vastly different opinions on what constitutes a virtue. Virtue ethics is currently one of three major approaches in normative ethics. (wikipedia, 2009)

(b) Try to determine what decision Olga will make regarding whether or not she will report the bribes by applying the ethical theories of teleology, deontology, virtue ethics, and ethical relativism.

No matter using which ethical theories to analyse this issue, Olga will report the bribes.

(i) Teleology

Olga has two options, one is reporting the bribes, and the other is not. If Olga does report the bribes, the consequence will be that the subsidiary company suffers and there will be a scandal for Solace. On the other hand, it is likely that the bribes will not be uncovered. But there is a chance that they will be uncovered, and that Solace, BWE and Olga personally will all suffer negative consequences if they are. Comparing these two consequences, the impact of reporting the reporting the bribes is likely to be less than if they are discovered at a latter date by other authorities. So the consequence is received from reporting the bribe is much better than the result if Olga chose not to do so. Under teleology theory, an action is right because it produces some good consequences. Hence, Olga will report the bribe.

(ii) Deontology

Under deontology theory, an action is right because one's duty is to be honest, which is simply the ‘right thing to do’. (Leung P. & Corman P, 2009, p.68) Olga is an auditor, so her duty is reporting all her findings, and makes sure the auditors’ report is true and fair. According to deontological ethics, an action is right because of the right process. So reporting the bribes is the right action, this action is accordance with the Corporate Law and other ethical coeds. Under deontology ethics, Olga should report the bribes.

(iii) Virtue Ethics

Under virtue ethics, it states that the ability of a person to act morally based on his or her character. Thus ethics is not just a matter of what people do, it is a matter of what people are. (Leung P. & Corman P, 2009, p.69)In the scenario, Olga thinks of herself as an honest person, so under virtue ethics theory, she will report the bribes.

(iv) Ethical relativism

Ethical relativism is a view that moral values are relative to a particular environment. This subsidiary company locates in Laos, and bribes are considered a normal part of business. However, it is important to note that tolerating culture differences does not mean being indifferent to ethical principle. Although specific rules might differ from culture to culture, those specific rules are, nevertheless, grounded in the same basic principles. Respect for a host culture does not include excuses for inducements, secret commissions and bribes. (Leung P. & Corman P, 2009, p.69) Olga still need to report the bribes, although bribes are very common in Laos.

To sum up, Olga should report the bribes by applying the ethical theories of teleology, deontology, virtue ethics and ethical relativism.

Part B

(a) Explain the impact that the Pacific Acceptance case had on existing auditing practice

The Pacific Acceptance case was a cornerstone in Australia, because it was the first major case to review auditing under modern concepts with respect to what is reasonable due care and diligence. The Pacific Acceptance case established some of the key features of professional due care expected of an auditor. The Pacific Acceptance case is of great importance in considerable detail the role of the auditor, the nature of the duties which the law imposed upon the auditor, and the standards of performance by which those duties were to be fulfilled. (Leung P. & Corman P, 2009, p.130)In the case the Pacific auditors were held negligent in a number of respects, the failures noted by Moffitt J provide useful detailed guidance to any auditor in the conduct of an audit. The case also caused considerable turmoil in the profession. There was concern that the case had established new and unrealistic standards for the auditing profession. In this case, it states that no part of an auditor’s duty to detect fraud or to conduct the audit in a way aimed specifically at detecting fraud. An auditor is not under any prima facie duty to detect fraud, but if fraud is detected during the course of the audit, the Pacific Acceptant case indicates that there is a duty promptly to warn the client of the existence of fraud. (Gul. F., Teoh. H at el, 1994,p.44)

(b) List four of the procedures or practices that were identified in the ruling as being part of a competent audit.

• Pay due regard to the possibility of material fraud or error in framing or carrying out audit procedures so the auditor has a reasonable expectation that the fraud or error will be detected. (Leung P. & Corman P, 2009, p.130) Whenever an auditor enters into an agreement to conduct an audit there is a contractual obligation to execute the task in accordance with the standards of a reasonably competent member of the profession. This is a term of any contract, though often unwritten or implied.

• Promptly report fraud or warn of suspicion of fraud, whether material or not. (Leung P. & Corman P, 2009, p.130) An auditor has the duty to warn of any fraud or major error detected during the course of the audit. The auditor has the duty to report the auditor’s opinion on the truth and fairness of the published accounts.

• Closely supervise and review the work of inexperienced staff. (Leung P. & Corman P, 2009, p.130) In the case the company employed inexperienced staff without adequately supervising and checking their work. Sometimes the inexperienced staff know few about how to deal with the issue, they need to be supervised and guided well.

• Audit the whole of the year, not just the year-end balances; the duty to audit encompasses the client's financial affairs throughout the period of appointment and is not confined to reporting on the year-end balances as presented in the accounts. (Leung P. & Corman P, 2009, p.130) So when the auditors audit an entity, they should check all the accounts in the financial year.

Part C

From the information provided above, identify four reasons for not accepting the audit engagement with Solace Ltd.

APES 320 Quality Control for Firms (ISQC 1) requires that an audit firm should establish client evaluation and acceptance procedures that ensure that the firm accepts audit engagements only where it has considered the client’s integrity and where it is competent and is able to meet the ethical requirements. (Leung P. & Corman P, 2009, p.226) In the scenario, BWE should not accept the audit engagement with Solace Ltd, the reasons are:

(i) In undertaking a client evaluation, the auditor seeks reasonable assurance that an entity’s management can be trusted. For a new client, the proposed auditor may obtain information about the integrity of management by communicating with the predecessor auditor. The reason of doing that is the previous auditor’s working paper files are also valuable source of information about a new client, reviewing those paper helps new auditor to know the firm’s situation. It is a way to check client’s integrity. But in fact, BWE sought Solace’s permission to contact the previous auditor. Solace did not give their permission. As Section AUST210.11.1 of the Code of Ethics states that the proposed accountant who is asked to replace the existing auditor must ask the prospective client’s permission to communicate with the existing auditor — if refused, the auditor should decline the engagement (unless there are exceptional circumstances). (Leung P. & Corman P, 2009, p.227) There is another way to check the integrity of management, which is making enquiries of other third parties. The auditor may obtain information about a client management’s integrity from knowledgeable people in the community. But in the scenario, there is no evidence shows that BWE has asked any third party any information about Solace, in another word, so far BWE has known nothing about the previous financial poison and performance of Solace. So for lacking of communicating with existing auditors or enquiring of other third parties, BWE can not assess the integrity of Solace’s management. It should not accept the audit engagement with Solace Ltd.

(ii) Before accepting the audit engagement, the auditors should assess a prospective client’s legal and financial stability. Some entities whose operations or main products are the subjects of either material lawsuits or investigations by authorities, the outcome of which could adversely affect the viability of the business. For this kind of entities, the auditor should reject prospective clients. (Leung P. & Corman P, 2009, p.227) This kind entity can not keep the legal stable, they pose a high risk of litigation. One of Solace’s subsidiaries is being investigated by local authority for suspicion of bribery, and the consequence probably is that the company will lose its license. If BWE accepts the engagement, and some day, Solace is sued by the authority or other organisation. If Solace can find any pretext for claiming reliance on the financial statement, then such litigation will probably also involve BWE. Then, BWE may incur the financial and other costs of defending themselves. That’s not good for the BWE, so it is not a good choice to accept the audit engagement with Solace Ltd. Besides checking prospective client’s legal stability, the auditors should check whether the financial position is stable. In this case, the subsidiary is being investigated but if it is found to be at fault then it may be subject to heavy fines from local authority. If it happened, it must affect the financial position of Solace. Now Solace is potentially suffering a financial problem, so it is not a good time for BWE to accept the engagement letter with it.

(iii) Ethical principles require the auditor to exercise due care in performing the audit and preparing the report. The auditor should decline an engagement if due professional care can not be exercised throughout the audit. (Leung P. & Corman P, 2009, p.228) In the scenario, Solace has enlarged their business, not only private tutoring, but also real estate business. There is no doubt that BWE has the ability to audit the private tutoring sector, but for the real estate sector, there is no evidence shows that BWE can deal with it professionally. Furthermore, BWE is a mid-size chartered accounting film, so whether it has enough capability of auditing the oversea business of Solace is questioned.

(iv) Before accepting a new audit client, the firm must evaluate whether there are any circumstances that would compromise its independence. One procedure is to circulate the name of a prospective client to all professional staff to identify any financial or business relationships inconsistent with independence. In addition, the firm should determine that acceptance of the client engagement would not result in any conflict of interest with other clients. (Leung P. & Corman P, 2009, p.228) In this case, BWE has appointed Brian Shaun as the audit partner. There is no doubt that Brian is a chartered accountant, but he has had clients in this sector for the past 7 years. One auditor audits two companies in the same sector in the same time, that’s may cause the problem of conflict of interest. So it potentially shows that, if BWE accept the engagement with Solace, there will be a conflict of interest with other clients.

Conclusion, BWE can not assess Solace’s integrity, and it is not competent and is not able to meet the ethical requirements (independence and due care). So BWE should not accept the audit engagement letter with Solace.
Part D

Determine what audit strategy should be used and justify your answer.

The audit strategy significantly affects the detailed work performed in the audit. The interrelationship among evidence, materiality and the components of audit risk affects the auditor’s decision on the type of strategy chosen.

In many situations it is apparent to the auditor during the course of planning the audit that there is nothing to be achieved by assessing control risk as less than high. In such situations the auditor plans an audit consisting entirely of substantive procedures. (Leung P. & Corman P, 2009, p.330) So BWE can use predominantly substantive approach to audit DEF Learnings, the reasons are:

(1) the entity is small, such that controls are unlikely to be effective

DEL Learnings is a small private tutoring company and only have a small team of staff. And it makes the separation of duties principle difficult to achieve.

(2) previous audits have revealed inadequate controls

Previous experience with this client also showed that controls were not always observed.

(3) the understanding of the internal control structure reveals that controls are inadequate

The preliminary tests of controls found that the internal control procedures are well designed, but not always observed because of the small amount of staff.

(4) there are few transactions in a transaction class or items making up an account balance, such that substantive procedures are unlikely to be costly.

DEF Learnings is a very small company, it even does not have any warehousing facilities. So it can be forecasted that there will be not many transactions happened during the whole year. And also BWE has never discovered a material misstatement in the accounts. Hence substantive procedures are unlikely to be costly.

If the auditor assesses that appropriate controls do not exist or are likely to be ineffective, then no reliance can be placed on internal controls- control risk is assessed at a relatively high level and therefore a predominantly substantive approach will be adopted. (Leung P. & Corman P, 2009, p.330)

In conclusion, BWE should use predominantly substantive approach.

Reference

Gul. F., Teoh. H, Andrew. B. & Schelluch. P., 1994, Theory and practice of Australian Auditing, 3rd edition, Thomas Nelson Australia

Gaffikin. M, 2007, Accounting Theory and Practice: the Ethical Dimension, University of Wollongong, Australia

Leung. P., Corman. P., Cooper. B. & Richardson. P., 2009, Modern Auditing & Assurance Services, 4th edition, John Wiley & Sons, Milton, Qld.
Deontology,2009, http://en.wikipedia.org/wiki/Deontology [accessed at 17th May 2009]

Ethics-virtue, 2009,http://plato.stanford.edu/entries/ethics-virtue/ [accessed at 19th May 2009]

Virtue ethics, 2009, http://en.wikipedia.org/wiki/Virtue_ethics [accessed at 17th May 2009]

sample of BAO3309 ADVANCED FINANCIAL ACCOUNTING (3)

noreply@blogger.com (Herbert) — Fri, 30 Jul 2010 05:55:46 PDT

this time is an older one,

requirements:
General Information

As detailed in the subject/unit Guide, the assignment, which may be completed in a group of maximum 3 students, constitute 20% of the total assessment in this unit.
Please answer the following question:

1. Using examples from social and environmental reporting (SER) research literature, explain the potential motivational factors behind such reporting?

Select one company from each of the following industry sectors:

a) Mining

b) Retail

c) Pharmaceutical

This means that you will be reviewing three companies in total. For each of these companies, you will need to investigate the company website, annual reports; publicly available special reports; media and other sources of information.

For each of the above companies prepare a report answering the following questions:

2. What are the factor(s) that you consider motivates SER in each of these companies?

3. Analyse and report on the disclosures made by each company?

4. Do the actual company practices contradict with their social and environmental policies? In what ways? Describe.

5. Does the particular SER meet the best practice recommendations of ASX? Explain how.

Introduction

Along with the strong competition in the business world, companies are focusing on the social and environment reporting, which will provide a comprehensive view of the organization and its resources, and indicate the company’s attitude for community and environment. However, there are many questions about the motivation of companies doing such reporting. In the essay, these questions will be answered in five parts. First, an analysis of the potential motivational factors behind such reporting will be conducted. Next, a discussion of motivates SER will be analyzed by selecting three companies in Mining, Retailing, and Pharmaceutical industry, they are, David Jones Limited. Then, the disclosure made by each company will be analyzed and reported. After that, a comparison between practice of each companies and their social and environment policies will be conducted. Lastly, the SER will be compare with the best practice recommendations of ASX.

Question 1

Another motivation of doing social and environmental reporting is to increase the wealth of managers and shareholders of the organization. The positive accounting theory assume that people are driven by self-interest, so if such a social and environmental reporting will maximum the wealth of the management or the company, the managers and shareholders are willing to disclosure the social and environmental report. In other words, a well disclosed social and environmental report will protect the interests of stakeholders, maximize the interest of the company, and establish the competitive advantage and good reputation for the company, as a result, if the concept of people are driven by self- interest is accepted, doing social and environmental report is to maximize the wealth of the managers and shareholders of the organization.

Question 2

Motivation of SER in David Jones

David Jones is not the only oldest department store in Australia, but the oldest department store trading under its original name. David Jones was floated on Australia Stock Exchange in November 1995, so David Jones as a listing company; it should be complied with the ASX listing rules and corporate governance guidelines. Recently, many companies recognize the importance of the social and environmental reporting which will grow trust for companies and lead growth to the company, so David Jones also doing such a reporting, but the social and environmental reporting is in the corporate governance statement. As a result, the motivation of David Jones as a retailer will be analyzed in detail.

1) To prove the organization is acting comply with the law, and to meet mandatory requirements

2) To satisfy and needs of stakeholders, and manage powerful shareholders by doing the social and environmental reporting to maximum the wealth of the organization.

3) To fulfill the social responsibilities, and build a good reputation for the company.

4) To establish the benchmark of current position of the company, future goals and targets, and strategies for the company to reach the goals.

5) To build trust, and increase wealth of the company.

Question 3

Analyze and report the disclosure on social and environmental reporting of David Jones

Environment

David Jones has recognized the importance of the environment it operates, so David Jones is trying to protect the environment the business they involved. It takes several actions to protect the environment, such as establishing benchmark for the supplier or producer to use recycle material in production, monitoring the energy they used, encouraging the management to use recyclable products, reducing number of plastic bags, and minimizing the packing volume generated by retail business. All the actions indicate that David Jones take environment protection in consideration, and it trying to protect environment. By doing these actions, David Jones also get benefits, for example, the recycle material is required in order to produce less waste, so the company will not punish by the government, monitoring energy and reducing the packing volume generated by retail business will lower cost for the company. As a result, doing environment reporting is beneficial for the company and stakeholders.

Social

David Jones also takes social commitment in consideration, and it participates in many programs which contribute a lot for the community, these activities will help David Jones aligning the interest of customers with those of the shareholders. David Jones conducted a research in 2003, and it found that the most effective donation is in the area of children’s and women’s health. As a result, David Jones has made a lot of donations to National Breast Cancer Foundation, Children’s Cancer Institute of Australia, Rose Clinic, Sydney Cancer Centre, Children’s Hospital Burns Units, Starlight Foundation, Sydney Children’s Hospital, and Look Good...Feel Better(Corporate Governance Statement, 2005, pp24). All the donations help David Jones to build a good figure for David Jones, it will encourage people to shopping in David Jones, the people who buying the products in David Jones seems to offer funds to the women’s and children’s health, as a result, when the sales are increased, the profit is generated, and the wealth of stakeholder is growth.

Question 4

The policy of responsibility to community of David Jones is that “it aims to be socially responsible in all business it conducted to protect the health, wellbeing and lifestyle of the communities. Also, it is doing the business in ways which minimize the negative impacts on environment. In addition, as employees of David Jones we each have a role to play in this by ensuring our actions are consistent with the Company’s community commitment. David Jones has a charitable donations policy, established to give something back to the communities which have supported the David Jones business”. (Code of Ethics and Conduct, 2004, pp5)

However, The Australia Institute release a media with a title "Corporate paedophilia -- sexualising children by advertising and marketing.” pointed out that David Jones’ advertisement had adverse impact on children, because “children are increasingly being portrayed in clothing and posed in ways designed to draw attention to adult sexual features that they do not yet possess. ... Children are being eroticised in the interests of the corporate bottom line.” (Bob Burton, 2007).

As a result, the event shows that David Jones may not comply with its policy in responsibility to community.

Question 5

The SER reported by the David Jones is complied with the best practice recommendations of ASX. The ASX Principle 3 requires promoting ethical and responsible decision-making, which means companies need to have regard to their legal obligations and the interests of a range of stakeholders including shareholders, employees, business partners, creditors, consumers, the environment and the broader community in which they operate. Also, the ASX Suggestions for the content of a code of conduct number 4 indicates that company should describe the company’s responsibilities to the community. This might include environmental protection policies, support for community activities, and donation or sponsorship policies. In David Jones corporate Governance Statement 2005, it describe the environmental protection policies, which are monitoring energy they used, reducing packing volume in retail, encouraging recycle material in production. In the statement, David Jones also disclosed their supports to the community by making donations to children’s and women’s health, and other program.

Reference

David Jones Limited Corporate Governance Statement 2005

David Jones Limited code of Ethics and Conduct 2004

www.davidjones.com.au

KPMG Sustainability Advisory Services (2002), State of Sustainability Reporting in the Trade and Retail Sector

Bob B. (2007), The Corporate Art of Creating a Crisis

http://www.prwatch.org/node/5858

Adele H. (2007), Sex, lies and advertising: DJs sues over child exploitation claims

http://www.smh.com.au/news/national/sex-lies-and-advertising-djs-sues-over-child-exploitation-claims/2007/02/04/1170523959855.html

essay of BAO3309 ADVANCED FINANCIAL ACCOUNTING (2)

noreply@blogger.com (Herbert) — Fri, 30 Jul 2010 05:50:40 PDT

Requirements
“Corporate governance is the system by which companies are directed and managed. Good corporate governance structures encourage companies to create value and provide accountability and control systems commensurate with the risks involved” (ASX Corporate Governance Council, Principles of Good Corporate Governance and Best Practice Recommendations, March 2003, p. 3)

Corporate governance involves decision making by the people who run an organisation, decisions made by management affect the well being of stakeholders.

In many cases, people who are responsible for safeguarding the interest of the stakeholders abused their positions and power which resulted in corporate collapses and environmental disasters. Few examples are Enron, Parmalat, Onetel, and WorldCom

Due to several corporate collapses and environmental disasters, importance of corporate governance has become a dominant issue and there are several theories provide different explanations about the behaviour of people responsible for decision making.

REQUIRED:

A. Review ASX’s principles of good governance and provide a critical analysis of corporate governance principle/s related to decision making.

B. Critically discuss the notion that corporate governance principles should only be applied on large organisations because they are too costly for smaller companies.

C. From a review of last three years i.e., 2005, 2006 and 2007 annual reports of an Australian firm listed on ASX. Identify and critically discuss firm’s disclosure of corporate governance practices during the last three years.

D. Critically discuss with the role of agency theory in corporate governance.

Assignment :
Abstract

Corporate governance is the way companies managed and controlled. The directors play a vital role in the corporate governance, who take the most of the responsibilities with the company’s strategy, appointment, the policy for development and so on. ASX Corporate Governance Council published two set of corporate governance principles to regulate and provide recommendations to companies which will influence the way they make decisions. Because the development of the modern economic scale and the opportunities, not only the large listed company adopt the 10 principles of the corporate governance, but the small business also accept it for the future development although it cost a lot. E-pay Asia Limited is a listed company in ASX which headquarter is in Sydney, providing the software and services. The company strongly endorses the corporate governance and also take advises developed by ASX to manage the daily business affairs. However, the agent cost which arises from the agent theory in the corporate governance can not be ignored. Companies should take it as a serious problem and try to minimize the costs.

Introduction

Corporate governance constitutes the strategy, implement, employees, cultures, laws and departments as a system which will affect the control and direction of a company to achieve success and control risk. . ASX Corporate Governance Council set up 10 principles of the corporate governance to help the companies with daily management and business. E-pay is an example provided to explain how the 10 principles work in a corporation. Although the corporate governance has many advantages, agent cost still a problem raised from the agent theory in corporate governance which needs more attention.

Part A

The ASX Corporate Governance Council has established two visions of corporate governance principles in order to motive the investors and to help companies satisfy stakeholder. These documents represent corporate governance effectively, while there is a little difference between the two editions. For the latest edition, the original principles 7 and 10 are cancelled. The ASX Corporate Governance Council revises the 10 principles to 8 which are as follows: (http://www.asx.com.au/supervision/governance/)

Principle1: lay solid foundation for management and oversight

Principle 2: structure the board to add value

Principle 3: promote the ethical and responsible decision-making

Principle 4: safeguard integrity in financial report

Principle 5: make timely and balanced disclosure

Principle 6: respect the rights of shareholder

Principle 7: encourage enhanced performance

Principle 8: recognize and manage risk

Principle 9: remunerate fairly and responsibly

Principle 10: recognize the legitimate interests of shareholder

These principles play a vital role in decision-making. Some of the reasons are represented below.

Principle1which is lay solid foundation for management and oversight clarify the separate roles and responsibility of board and management. That means when the board and management will follow their own responsibility to make decision.

Principle 2 structure the board to add value which states that a company should have an effective board to discharge its duties. This principle especially ask the directors (whether independent or dependent) should have their own judgments on the board decisions.

Principle3 promote ethical and responsible decision-making has the influence on decision-making as well. It ask the company to consider about the stakeholders which includes the shareholders, employees, customers, suppliers, etc when they face the decision whether to comply with the legal obligation or their reasonable expectations according to different circumstance in every company.

Principle4 safeguard integrity in financial report requires the company to establish a structure to make truly represents of their financial position. So, the company may consider the auditors opinions when they make decisions in order to achieve the request.

Principle6 respect the rights of shareholder which specified that company should communicating with their shareholder frequently, give them prepared and understandable information about the company’s financial position, and make easy access for them to attend the general meetings, which are all methods to empower shareholders’ rights. Such requests may effects the company with some decision on how to protect the rights of shareholders.

Principle8 recognize and manage risk suggest that company should have a system to control the business risk. Risk management which involves identifying, accessing and control of the risk may help the company to process the potential opportunities and at the time control the disadvantage aspects. Different decisions may make by the company when consider the risk and the profit of a particular project.

Principle9 remunerate fairly and responsibly ensure that the remuneration is reasonable and sufficient. With the satisfied salary, the employee, especially the management, will consider the benefit of company and shareholders’ wealth first when they make decisions.

Part B

There is a discussion that whether smaller organization should adopt the corporate governance, because it needs too much money for small companies to establish and run systems with daily business affairs .However, the practicing of the corporate governance is very different between the large and small companies. Informal arrangements works in small corporations which has little cash base and assets. Medium to large corporations need formal system to run business and to achieve successful.

For medium and large corporations, directors need the formal arrangement to do a good job. The board of directors should focus on the aim and directions of a company and at the same time decide the best ways to achieve the goals. It is a big challenge for corporations find the aim and goals. Also in the process of implementation to achieve the goals, the management as well as the executive officers plays an important role to control the risk and manage the business well. So the corporation governance in medium to large company is a complete and complex system which is essential and helpful to be success but also need a lot of money and energy to work on it.

As far as I am concerned, due to today’s fierce competition, the small business may also need corporate governance to run the business. Various reasons contribute to this issue. Such as the directors believe that the internal control will increase the efficiency which will bring more benefit, and also the suppliers and customers require strong internal controls. Most importantly, the corporate governance will help the small business to develop and finance to outsider market. In addition, because there are significant changes for the expectations of board and managements which reflect in the corporate laws, it is a wise behaviour for the small business to adjust their corporate governance to get law benefit.

Part C

The e-pay Asia Limited is a company which business includes the software and services. E-pay is the leading provider of electronic top up services for prepaid mobile users in South East Asia Its principal activities are Electronic payments and mobile top up services. After landing the Indonesia market, e-pay has built a successful regional network of Retail Agents, at the same time expanded its service and entered into New Markets. Since then, there is a significant increase of the sales and the revenue.After the review of its last three years’ annual reports, the result is that the corporate governance is well applied in this company, which is very help with the internal control and management of the company’s business.

In the very beginning of the corporate governance part of the annual report, it is clearly state that E-pay Asia Limited company strongly agree with the corporate governance principles and according to the company’s circumstances the Best Practice Recommendations are adopted.

And then, each principle of the Corporate Governance is explained in detail very clearly. From the review of the last three years annual report, there is not much change for the part of corporate governance. The main change is the structure of the board. Due to the development of the business, there is an enlargement of the size of the company. So the number of executive and non-executive directors is increase. And also the nomination committee which the corporate governance suggested is establish in E-pay Asia Limited with the well development of the company.

For the other part of the Corporate Governance in the E-pay Asia Limited company, it well explained policy and aim of the company according to the company’s business and unique situation. To be concrete, firstly, the company specifies the role of, such as the board should protect and enhance the value of the shareholders, setting strategy direction, monitoring the financial performance, identifying and managing the risk, and pointing manage director and so on. Secondly, E-pay Asia Limited Company set their own ethical code which contained the basic principle the employees and external consultant need to follow. Thirdly, there is a committee of auditors which complied with the principle four of corporate governance. The responsibility of the auditing committee contains 1) reviewing of the financial information, accounting policy, 2) and external auditors’ report, monitoring the internal control framework and the ethical standard,3) and ensure that compliance with the Corporation Act, etc. additionally, the annual reports to shareholders are disclosure in its website, and there is a strategy to help the shareholders’ rights internally. Also the remunerations of the directors are outlined in the annual report. One thing which must be point out is that E-pay Asia Limited Company does not adopt the principle which is encouraging enhanced performance for three year continually. The reason is because the board regularly reviews the company performance.

Overall, the E-pay Asia Limited company is well followed the Corporate Governance, and explained clearly the strategy and implement in their annual reports.

Part D

An economic profession Mr. Brown says that agent theory says the role of the board of directors is to be independent intermediary between the principles the people who contribute the resources to the corporation and the agents people who utilize the resources to get things done. Each of the shareholders and managers have different needs and expectations and interests, therefore the board in agent theory is to make decisions how the resources should be allocated.

The main problem in the agent theory is the seperation of the shareholders and the mangement. Each part has its own interest and pursuant benefits. The principle delegate the right of decision-making to agent which causes many problems. The principle may not monitor the agents’ behavior and access the useful information quickly and costlessly. They agency problem arise which is that there is posibility that the agent work on their own benefit againt the shareholders’ wealth. İf this happens, there is no doulbt that the corporate governance will not be well implement. Overall , principals require agents to conduct business and seek success(Ghatak, Healey, & Jackson, 1998). On the contrast, agents may be motivated by incentives to perform for principals. The separation of roles between the board of directors and executive management requires the protection of the shareholders’ interests. As a matter of fact, the agent costs arise which include the monitoring costs, bonding costs and residual loss.

Corporate governance invloves the company structures, business process, cultures and corporate systems which can operate organisations successfully (Keasey and Wright 1993) and mechanisms to cope with these elements, and it is a system by which the companies are directed and controlled. An active participantation of shareholder in managing the corporation through the apointment of directors represent a good corporate governance which will lead to a positive corporate desicion-making.

However, the using of non-executive directors will help to achieve the good corporate governance, because the non-executive directors other than managing directors will provide their advices impartially. There is an expectation that the non-executive directors could bring an independent judgment on the strategy, policy, performance even the vital appointments of the company, which will minimize the agent cost to some degree.

Conclusion

To conclude, it is easily to find that corporate governance is popular among companies no matter listed company or small business although it is costly.

Take the E-pay Asia Limited as an example, the corporate governance in this governance is well compliant with the 10 principles establish by the ASX according to the company’s own situation. And also there is problem. With the popular practice of the agent theory, the agent cost can not avoid which increase the cost of the company. The firms and society should bring their attention on this to minimize the cost, maximize the shareholders’ wealth, and help the company run the business in good corporate governance.

Bibliography

Becker A & Means G (1933): The modern corporation and private property; New York; Commerce Clearing House

Burkart, M., D Gromb and F. Panunzi. (1997), ‘Large Shareholders, Monitoring, and the Value of the Firm’, Quarterly Juurnal of Economics112(3), 693-728.

Conyon, M.J. and S.I. Peck. (1998), ‘Board Control, Remuneration Committees, and Top Management Compensation.’ Academy Management Journal, VOL.41,pp.146-157

Core, J.E., R.W. Holthausen and D.F. Larcker. (1999), ‘Corporate Governance, Chief Executive Officer Compensation, and Firm Performance’, Journal of Financial Economics51, 371-406

Fma, E.f. (1980), ‘Agency Problems and the Theory of the Firm’, Journal of political Economy 88(2), 288-307

Shleifer, A. and R. Vishny. (1997), ‘a Survey of Corporate Governance

, Journal of Finance 52(2), 737-783

http://en.wikipedia.org/wiki/Corporate_governance#Parties_to_corporate_governance (viewed on 18th April 2008)

http://www.orac.gov.au/run_close_corporation/good_corp/default.aspx (viewed on 18th April 2008)

http://www.asx.com.au/supervision/governance/principles_good_corporate_governance.htm (viewed on 25th April 2008)

http://www.asx.com.au/supervision/governance/ (viewed on 6th May 2008)

http://www.ato.gov.au/corporate/content.asp?doc=/Content/88713.htm&page=38 (viewed on 6th May 2008)

http://www.freeonlineresearchpapers.com/corporate-governance (viewed on 8th May 2008)

http://www.dashboardinsight.com/articles/digital-dashboards/fundamentals/corporate-governance-dashboards.aspx (viewed on 9th May 2008)

http://www.allbusiness.com/management-companies-enterprises/1189210-1.html (viewed on 10th May 2008)

http://www.allbusiness.com/corporate-governance/3074361-1.html?googlesubtop=corporate%20governance(viewed on 10th May 2008)

http://www.epay-asia.com/default.html (viewed on 12th May 2008)

http://www.lotsofessays.com/viewpaper/1706098.html (viewed on 12th May 2008)

sample essay of BAO3309 ADVANCED FINANCIAL ACCOUNTING

noreply@blogger.com (Herbert) — Fri, 30 Jul 2010 05:51:05 PDT

a little tired today, did a lot of thing.
today is the free travel day of melbourne, i really enjoy it...

OK, the requirements:
The measurement in accounting has been a critical and controversial issue. Firms use different methods to measure the elements of financial statements depending upon the nature of business and it creates several controversies when it comes to the reporting of fair value.

Measurement is translated into information and information can be categorised into financial and non-financial information, which is subsequently displayed in the market value of both equities and liabilities of firms.

REQUIRED:

A. Review AASB framework and provide a critical analysis of different measurement bases.
B. Critically discuss the notion that the use of different measurement bases creates a problem of additivity with the help of research literature.
C. Discuss with the help of theoretical framework and research literature, how does firms’ reported information affects stakeholders’ perception?

Here is mine:

Abstract

The purpose of this essay is to analyse four different measurement bases. It will state the advantages and disadvantages for each measurement base. Then discuss the notion that the use of different measurement bases creates a problem of additivity, explain how and why the additivity problem comes out. Finally, using the positive accounting theory and capital market research to explain how firms’ reported information affects stakeholders’ perception.

Introduction

According to AASB Framework, qualitative characteristics are attributes that make the information provided in financial reports useful to users. The four principal qualitative characteristics are understandability, relevance, reliability and comparability. (Claire Locke, 2008, p.37) So, it is very important to choose a suitable measure base when an entity preparing its financial reports. This essay will discuss some issues about measure bases. Part A will provide a critical analysis of different measurement bases. Part B discuss about an additivity problem when using different measurement bases. Part C shows how does firms’ reported information affects stakeholders’ perception.

Part A

As AASB framework states, there are four measurement bases are employed in financial report.

(a) Historical cost

Historical cost is the most commonly used by entities in preparing their financial reports, as its advantages are very clearly. Firstly, historical cost is easy to use, and no need to reference to market values. Second, historical cost is easy to understand. So the users will easily understand the financial reports based on the historical cost, even they don’t have financial background. In contrast, it also has some disadvantages. When using historical cost, it is assuming that the purchasing power of the dollar remains constant. But in fact, the purchasing power can not be stable. In the inflation period, the price of asset is changing a lot, so it doesn’t make sense to record the value of asset under historical cost when suffering changing price. It can not reflect the real financial position of the entity. Also, historical cost relies on a financial capital maintenance perspective, so it can lead to an overstatement of profits in times of inflation. It is not good for the company, because it need to distribute more dividends, and may cause decreasing the entities’ capacity to adapt to changing circumstances.

(b) Current Cost

The primary advantage of current cost results from the breakdown and segregation of current-value income into current operation profit and holding gains and losses. The company can get prominent benefit from distinguishing these two kinds income. The purpose of running a company is making profit. The profit can make the company keep running as well as distributing dividend to the shareholders. Under current cost base, the holding gain doesn’t put into dividend, so the company can have enough money to adopt the changing of circumstance. That make sure the purchase power of the company is stable, and it can goes well in the future no matter how the price level is changed. In the other hand, current cost also has the shortcoming. Firstly, when using current cost base, the value of the asset is difficult to determine. Sometimes, it is not easy to define the meaning of “the same asset”. The entity should choose use the value of the asset in the new-goods market or in the second-hand market. Secondly, for some kinds of asset, there is no activity market, such as goodwill, brand, trademarket. Therefore, they can’t be valued under current cost.

(c) Realisable value

Realizable value provides relevant and necessary information on which to evaluate the capacity for adaptation and liquidity of a firm. But, some significant disadvantages to the realisale value base. First, realisable value relies on the net selling price, but for some kinds of assets, such as goodwill, it can not be sold separately. Therefore, the realisable value is not easy to decide. It needs professional judgement. Secondly, for the same asset, put it in the different markets, it can be sold in different value. So that’s a problem about which market’s “selling price” or “realisable value” should be used. Thirdly, for the groups of the assets, the price of selling the group of assets maybe not equal to the prices of selling each asset separately.

(d) present value

The present value basis is deemed useful for such long-term operation decisions as capital budgeting and product development. The options yielding the highest positive capitalized values are deemed to be best method. The present value is generally considered to be an ideal attribute of assets and liabilities, although it presents some conceptual and practical limitations. (Ahmed & Stewart, 2000, p.421) Using this basis, it bases on some calculations. It need to estimation of future net cash receipts as well as choose an appropriate discount rate. But both of two factors are subjective, it can not present the really value of asset objectively. Secondly, it is not easy for users to understand the value of asset which is measured under present value. So it may lead the Financial Reports not understandable.

Part B

When the company is preparing the Financial Reports, it is very common that the entity use different measurement bases to value different kinds of assets.

And for Balance Sheet, it need add all the assets and liability up. During this process, it is need consider very carefully whether it is really logical to add together assets and liability. Generally, there are two problems of additivity, the first one is about the purchasing power, and the other is about the real value of the asset.

(a) Purchasing power

Different measurement focuses on different period. Historical cost focuses on the past, current cost and realisable value focuses on the present, present value focuses on the future.(Ahmed & Stewart, 2000, p.477) And because of inflation and some other factors, the purchasing power in different period are dissimilar. It doesn’t make sense that just simply add the assets but they don’t represent the same purchasing power. For example, a company bought two same computers in Year 1 and Year 2, but separately cost the company $1000 and $1500 because of inflation. Ignore the depression, at the end of Year 2, if the company just adds $1000 and $1500 to record the value of the computers, the Balance Sheet will mean nothing to users. Because that the Balance Sheet is not reliable and comparable. What is more, at the balance sheet if the cash is measure in historical cost, accounting receivable measurement by the net realisable value and all the other asset measure by current cost, the difference between purchasing power in different time period will be huge, the Financial Statement will cause more misleading. Although there are some methods to avoid this kind of addivitity problem, such as Current Cost Accounting which bases on the current cost or Continuously Contemporary Accounting bases on realisable value. If all the assets are measure at current cost or realisable value, then logically they can be added together. It can solve additivity problem. But in fact, because of the limitations of the current cost and realisable value, not all the assets can be value at current cost or realisable value, such as goodwill and trademark.

(b) Value of the asset

Finally, the Financial Statement is evaluated by the “amount”. Form the amounts, the users can see how much money the entity made or what’s the value of the asset. But whether these “amount” is correct or makes sense, it depends on which measurement bases they used. The same asset under different measure bases, the value of it will be different. For example, AA company bought a car two years ago for $10000, and expected to keep the car for five years. In the used-car market, this car can be sold at $2500. And replace cost for the car in similar condition is $3000. The future cash flow will be $4000 for the next three years, and discount rate is 10%. Under this situation, there are four options for AA company to record this car. (1) under historical cost, the asset is $6000 ($10000 less two years’ depression) (2) under realisable value, the asset should be $2500 (3) $3000 under current cost, or (4) $9947 under present value, which is calculate by:

Discount Factors amount

Year 1 $4000 0.9091 $3636

Year 2 $4000 0.8264 $3306

Year 3 $4000 0.7513 $3005 total $9947

(Michael Jones, 2006, p291)

From this example, it shows that different measurement bases give different asset valuations. There are thus four different valuations ranging from $2500 to $9947 and each amount has different meaning. From this example, it is clearly that, just one asset under different measure base has different value. Moreover, in practical, an entity can not hold only one asset, there are so many asset should be valued. If the entity adds up all the assets, but these assets are measure by different measure bases, in another word, they have different meaning in value. So that its Financial Reports will be confused the users, also they are not comparable.

Part C

The Financial Reports are prepaid to be used, and the stakeholders can be treated as the main users of the Financial Reports. A corporate stakeholder is a party that affects or can be affected by the actions of the business as a whole. (http://en.wikipedia.org, 2009) The stakeholders can classify into two categories- internal stakeholders and external stakeholders (Figure 1)

And each stakeholder may interest in the different parts of the firms’ reported information, also they will take actions according to the information they get from the firms’ reported information. To analysis how firms’ reported information does affects stakeholders’ perception, the share price can be used to measure the relationship between reported information and stakeholders’ perception, as no matter internal or external stakeholders, they both have more or less interest in share price. And also there are two theories need to be applied- Positive Accounting Theory and capital market research.

Information can be categorised into financial and non-financial information. The financial information will be shown on the Financial Reports, and the stakeholders most interest in will be the “earn” or the “profit” part. Under Positive Accounting Theory, it focuses on relationships between various individuals within and outside an organisation and explains how financial accounting can be used to minmise the costly implications associated with each contracting party operation in his or her own self-interest. (Deegan, 2006, p.260) Also, there are three central hypotheses: bonus hypothesis, the debt hypothesis and the political cost hypothesis. So using the bonus hypothesis, it is easily to explain that why the manager would like choose an accounting method which can show more profit. From the efficiency perspective, many organisations will elect to provide their mangers with bonuses tied to the performance of the firm, with these bonuses often being directly related to accounting numbers. (Deegan, 2006, p.261) So that, the more profit is shown on the Financial Reports, the more manager will make. And under the opportunistic perspective, PAT predicts that once bonus schemes are in place, managers will, to the extent that they can get away with it, manipulate performance indicators such as profits to generate higher individual rewards. (Deegan, 2006, p.261) Besides the bonus plan hypothesis, there are also debt hypothesis and political cost hypothesis, both the hypotheses can shown that, when the manager choose the accounting method they use, they always choose the one which can shown more profit, can have good affect to the share price.

About another kind of information-non-financial information, the relationship between non-financial information and stakeholders can be explained under Capital Market Research. The researchers investigated share market reactions to the releases of information, often specifically the release of accounting information. The view taken was that the accounting disclosures often revealed new information and in a market that was deemed to be informationally efficient with regard to acting upon new information share prices react to this information. (Deegan, 2006, p.428)Also CMR relies on the assumption that equity markets are efficient, it is to say all publicly available information is rapidly and fully impounded into share prices in an unbiased manner when released. Share price and share returns can be treated as the benchmark of the market reaction on the information. Favorable reactions to information mare presumed to be evidenced by a price increase in the particular security, whereas unfavorable reactions to information are evidenced by a price decrease. (Deegan, 2006, p.412) When there is good news reported by the entity, it may cause the increase of the share price. In contrast, when there is bad news released, the share price will decrease. And the investors may consider cut their investment, that is absolute not a good news for the company. Consequently, the manager will prefer to release some new which is good for the entity, and that will have a good impact on the share price.

Conclusion

There are four different measurement bases- historical cost, current cost, realisable (settlement) value and present value. Each measurement base has its own strengths and weaknesses. Compare to other measurement bases, the historical cost is the easiest way to use and understand. So with some rare exceptions, most companies worldwide still use historical cost. (Micheal Jones, 2006, p292) It is not to say the historical cost is better than the others, the other three bases has their own advantages. They can solve the problem of changing price which the historical cost can not. Nowadays, historical cost usually combined with other measurement bases. (Claire Locke, 2008, p.37)

When the entity is preparing the Financial Reports, it need add up all kinds of assets and liabilities. During this process, the additivity problem will come out. Because of changing of purchase power, it is not logically just put them together. Unfortunately, so far there is no way to solve the additivy problem because no matter each measurement base has some shortcomings. In the last part of this essay, it uses the positive accounting theory and capital market research to analyse the connection between the firms’ reported information and the stakeholders.

Reference

Deegan, C., 2006, Financial Accounting Theory, 2nd edition, McGraw-Hill, Australia

Jones, M., 2006, Accounting, 2nd edition, John Wiley & Sons Australia, NSW

Locke, C., 2008, Financial Reporting Handbook 2008, 2008 edition, John Wiley & Sons Australia, NSW

Riahi-Belkaoui, A. & Jones, S., 2000, Accounting Theory, 2nd edition, Nelson Australia Pty Ltd. VIC

Stakeholder_ corporate, (2009), Available from: http://en.wikipedia.org/wiki/Stakeholder_(corporate) [accessed 9th May 2009]