Research Topics: Global Warming

The Global Logistics

“The Global Logistics Model for the Choice of Distribution Centers and the Combination of Transportation Tools”   Introduction             Logistics is the process of strategically managing the procurement, movement and storage of materials, parts, and finished inventory (and the related information flows) through an organisation and its marketing channels in such a way that current and future profitability are maximized through the cost-effective fulfillment of orders. The term logistics has evolved from the military’s need of spare-parts supply, but is now widely accepted to include activities like purchasing, transport, warehousing, organizing and planning of these activities. Logistics managers need general knowledge of each of these functions, and specific knowledge of the industry, commodity, or business protocols governing the product types being managed. In business, logistics may have either internal focus, or external focus covering the flow from originating supplier to end-user, see supply chain management (http://en.wikipedia.org).       Global Logistics Logistic systems are providing solutions into today’s fierce global market competition; the introduction of products with short life cycles and the heightened expectation of customers that forced manufacturing enterprises to invest in and focus their attention on the system.  This, together with changes in communications and transportation technologies, for example, mobile communication and overnight delivery, has motivated continuous evolution of the management of logistics systems.             In these systems, items are produced at one or more factories, shipped to warehouses for intermediate storage and then shipped to retailers or customers.  Accordingly, to reduce cost and improve service levels, logistics strategies must take into account the interactions of these various levels in this logistics network.  This network consists of suppliers, manufacturing centers, warehouses, distribution centers and retailer outlets, as well as raw materials, work-in-process inventory and finished products that flow between the facilities.              According to the Council of Logistics Management, it is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.             When we use the term “Global” with logistics, we talk about imports from   Asia to the U.S.; we talk about exports to Europe; we talk about movements   within North America – and we talk about more; products, components and   finished goods, which never touch the U.S. They move from a vendor in . Credit:ivythesis.typepad.com

The Global Logistics

“The Global Logistics Model for the Choice of Distribution Centers and the Combination of Transportation Tools” Introduction ...

The Role of Management Accounting in the Firm’s Pricing Decisions

This paper contains an essay about the role of management accounting in the pricing decisions of firms. This is a research type of essay paper, which makes use of journals and textbooks to show the actual application of management accounting in the firm’s final pricing decisions. The first part is intended for the background on management accounting, to give the readers a bird’s eye view of the topic. Then a slow interconnection of the topic to pricing issues is made as it approaches the middle part of the paper. The existing relationship between the two topics is then illustrated through presentations for further and clearer evaluation of the situation to the reader. This is also a way of showing how management accounting can affect a firm’s pricing decisions. On the last part, the topic is summarized to end the discussion and to give a clear conclusion for the readers.      Management Accounting             While other branches of accounting is concerned with the considerations of accounting information of business enterprises for the use of external decision makers, managerial accounting is focused on the realm of enterprise-related accounting information for the use of a different set of decision makers – the enterprise’s management itself. Therefore, managerial accounting is the branch of accounting thought and practice concerned on providing useful information to decision-makers within the enterprise. These decisions are related to the development of resources and the exploitation of the opportunities available for the enterprise.             The boundaries of managerial accounting are not rigid.  One thing that managerial accounting and financial accounting have in common is their focus on the enterprise and its activities. Their difference, on the other hand, lies on the decision interests of the class  decision makers that they served. Additionally, most of the decision models that have evolved for management use and for accountants supply the necessary information inputs that have been developed within the disciplines of managerial economics and managerial finance. These models are described as part of the managerial accounting due to its vital role in supplying the relevant information for decision-making. Without it, it would be hard to understand the models of management decision.             Management decisions can be divided into two types. They are the long run and the short-run decisions. Long-run decisions are defined as decisions whose outcomes commit the enterprise or have direct influence on its numerous future-period activities. The long run is thought of as a span of time sufficiently long for the planning, implementation and running of the enterprise’s significant project or program. Short-run decisions, on the other hand, are decisions whose outcomes commit the enterprise or directly influence its actions for perhaps only a year at most. The latitude available in the selection of short-run alternatives is restricted considerably by the commitments made by the enterprise in past long-run decisions.             Given the objective of profit maximization in the long-run, the success of the enterprise (management) in the long-run hinges on the ability of the management in the identification and implementation of the most promising . Credit:ivythesis.typepad.com

The Role of Management Accounting in the Firm’s Pricing Decisions

This paper contains an essay about the role of management accounting in the pricing decisions of firms. This is a research ...

International Business Law and Ethics

Ethics of Care Theory: Merger of Body Shop and L’Oreal   Introduction             Ethical care theory emerged to encompass business concerns over ethical issues and draw companies to consider the value of their relationships with employees and consumers in arriving at business decisions. The paper looks into the application of this theory to the decision of Body Shop to sell the company to L’Oreal amidst differences in the ethical values of these companies, particularly on animal testing. Ethical Theory             The ethics of care theory provides a different perspective on business decision-making. This theory propounds that business firms in the process of deciding over a minor or major change in the business have the responsibility to consider both legal and ethical aspects. This is because the “preoccupation with impartiality, rules, and principles obscures the centrality of the responsive qualities of intimacy and care inherent in relationships (1982). This theory recognizes the importance of character traits valued by people in relationships such as friendship and sympathy (2005). Ethical Issues             In business, a common ethical issue that arises in policy and decision-making is the prioritization of interests ( 1999). This supports the need for business firms to recognize the importance of considering employee and consumer feedback in decision-making. Thus, “balancing the interests of stakeholders” (2000), as propounded by the ethical care theory, is needed in arriving at policies and decisions that forward the interests of the firm and amenable to employees and consumers alike. Otherwise, the business firm could lose valuable employees or its consumers.              Consumers are evolving through their recognition that they can use their purchasing power to influence businesses to consider ethical issues such as environmental, health and community welfare consciousness. This trend finds expression in the emergence of the phrase ‘ethical consumerism’ in the late 1980s to capture the use of consumer mass actions to influence policy-making not only of governments but also of business firms on ‘green’ issues. Concerns towards global warming have influenced many companies to abandon the use of chlorofluorocarbons in their products. Animal rights activists have boycotted the cosmetics companies to stop animal testing and ended up swaying four major cosmetics companies operating in the United Kingdom to stop some forms of animal testing. (1999)             Throughout the history of ethical consumerism, this has influenced the cosmetics industry by influencing cosmetics companies to adhere to ‘green values’. Body Shop popularized as a ‘green’ company because of its concern for ethical issues so that most of its consumers are people advocating the total stop of animal testing and the use of natural ingredients in its body care products. (1999) However, at present some cosmetics companies, such as L’Oreal, still maintain some kinds of animal testing. Application of Ethical Theory Shareholder Decision to Merge Body Shop with L’Oreal             Body Shop is a British company that has positioned itself as an alternative to the large cosmetics and body care retailers while L’Oreal is a French cosmetics firm with global operations. Recently, the companies announced the acquisition of L’Oreal of Body Shop worth £652 million (2006). This has caused mixed public opinion because of the differences in the values and direction of these two companies. Body Shop emerged in the 1970s at the height of ‘green revolution’ so that as an alternative company, the firm offered products made of natural ingredients and refused to test their products on animals. L’Oreal came out in 1909 to develop into a large cosmetics company that does not condemn animal testing. (1999) In November 1996, Body Shop passed a petition to the European Union to ban animal testing ( 2007).             On one hand, consumers question the decision of Body Shop to sell the company to L’Oreal because of the stark differences in values that could affect the community support for the company. The merger was deemed unethical because the merger amounts to Body Shop destroying its core values since it was a strong advocate against animal testing that ended up collaborating with a company known to conduct some forms of animal testing. Moreover, even if the merger is only in terms of capital assets, this means that Body Shop would end up contributing capital towards the animal testing activities of L’Oreal. This was viewed as Body Shop’s betrayal of the values for which it was patronized by its customer base. Moreover, the merger also provided evidence to the claims of  (1998) on the hypocrisy of Body Shop in engaging in activities in discretely engaging in the activities that it openly protests.               On the other hand, stockholders of Body Shop see the merger as a rational move to enhance the competitiveness of the companies in the global market. However, the decision needs to consider the perceptions of consumers since competitiveness lies in the company maintaining or expanding its market. If consumers view the merge negatively, Body Shop could end up with additional capital but with a lesser customer base.             Amidst the differences in opinion, the ethics of care theory finds close links to the first perspective because this highlights the failure of Body Shop to consider the welfare of the employees and the immediate community that it serves.              Based on the history of Body Shop and its developed value system, ethics of care theory supports the conclusion that it was unethical for the shareholders of Body Shop to sell the company to L’Oreal. The issue raised by consumers is not the sale itself, but the characteristic values of the buyer that does not fit the value demands of consumers. Merging Body Shop with L’Oreal indicates a tainting of the value that propelled Body Shop’s popularity. Although, some may say that the merger supports the long-term financial viability of Body Shop and its quest to conquer global markets, it stands to lose its market base as the company adjusts to the values of the larger company. Even if L’Oreal stated that Body Shop maintains its own value system, its value system would be challenged by the market’s perspective of the value merger.                According to  (2006), merging with an ethical business especially when the buying company has not been able to develop strong ethical values towards its market, need to consider other important factors apart from expected profit in the future because of the ethical contribution of the other company to its firm or brand value. L’Oreal explains, as the reason for the merger that it stands to gain a value, which it has not been able to establish on its own. However, the merger with Body Shop does not only involve mere gain issues. Retailing L’Oreal products in Body Shop stores would make Body Shop consumers doubt the persistence of its company value since it merged with a company with contrary values, which may result to the decline in its consumer base.             Without a consumer base, the company would not be able to survive without reinventing its value system to meet other market segments. This means that it will have to shift to a different market in its marketing strategy because of the need to accommodate the value system of L’Oreal. A merger involving the complete acquisition of L’Oreal of interests in Body Shop means that even if this does not violate any regulations on competitiveness and may not affect employees of both companies, consumers constitute the sector most affected by the acquisition. The unethical aspect of the decision of the shareholders of Body Shop lies in the fact that it took the huge risk of loosing its consumers in exchange for financial viability, increased competitiveness, and the chance to tap into other market segments or international markets. Boycott against Animal Testing              (2006) reported that animal welfare activists have rallied its members and supporters to boycott Body Shop products after L’Oreal, a company known to conduct some forms of animal testing, acquired the company. Prior to the merger, animal rights groups considered Body Shop as a champion of ethical consumerism with its stand against animal testing. The boycott was based on the position that even if Body Shop developed as an advocate of animal rights, its funds and retail outlets following the merger may be used in the animal testing activities and product retailing of L’Oreal.             Animal rights advocacy is an international movement existing in various countries. Efforts has been forwarded by the  (2007), comprised of organizations engaged in the advocacy for the respect of animal rights, to have more countries support the Universal Declaration on Animal Welfare to make this part of international law. Although a number of countries have pledged support for the declaration, other countries such as the United Kingdom, Australia and the United States have not given their commitment to support the ratification of the declaration. This means that although the concern for animal rights is a global phenomenon, the issue remains unimportant to most countries.              Nevertheless, despite the difficulty in having animal rights form part of international law, this constitutes an ethical issue that persists even outside of the legal realm. This means that as an ethical issue, there is no need for an international law to draw compliance, although an international law serves as an important influence on the actions of governments and business firms. As an ethical advocacy, animal rights groups express their respect for animal rights by only buying the products of companies that do not engage in animal testing and other forms of cruelty to animals.               Body Shop has found support from animal rights groups because of its stand against animal testing. It became popular because of its adherence to the green value or ethical consumerism. As an advocate of animal rights, there is an expectation that Body Shop would not engage in any business deals with companies engaged in animal testing. With its merger with L’Oreal, a company known to hold animal testing, animal rights activists were disappointed that the company shunned its value advocacy. The merger amounted to Body Shop moving away from its advocacy towards a greater acceptability of animal testing.             After the merger, customer relations officer of Body Shop in the UK issued a letter in response to an email from the  (2007) explaining that the merger agreement involved the retention of Body Shop of its policies and the merger provides opportunity for Body Shop to influence L’Oreal. Based on the letter, it appears that Body Shop has ensured that it will be able to continue its advocacies amidst the merger. However,  (2007) explains that these assurances are not viable. In relation to the independent management of Body Shop and L’Oreal, the former made no guaranties that it will stick to its anti-animal testing advocacy or refuse to support the animal testing activities of L’Oreal. With regard to the assurance on its influence to L’Oreal, this was deemed as impossible by Nature Watch because Body Shop’s shareholder representation ratio is merely 1 in 50. The boycott against Body Shop by advocate groups is its unethical action of entering a merger that amounts to the demise of its core values but also in covering-up its unethical action with unviable guarantees of continued ethical actions.             Although, the merger maintains the separation of Body Shop as a business entity despite full ownership by L’Oreal ( 2007), the finality of the merger indicates that Body Shop has accepted the values of L’Oreal. L’Oreal would not have agreed to the merger without expecting Body Shop to carry its brands so that the support of Body Shop in retailing the products of L’Oreal is inevitable. It was ethical for animal rights groups to boycott the products of Body Shop after the merger because of the recognition that it would be inevitable for Body Shop to support the products and campaigns of L’Oreal. Even if the support should happen in the future, this point will inevitably come, making Body Shop’s support for L’Oreal products and campaigns imminent.             The issue further extends to the consequences of the boycotts to Body Shop employees. On one hand, employees working for the company because of its green advocacies feel betrayed by the merger and end-up leaving the company resulting to negative effects on the community in general. On the other hand, the boycotts may also cause Body Shop outlets to close resulting to loss of employment for community members. Since the boycotts are justified, Body Shop may need to take responsibility for the consequences of its unethical action.     Conclusion             Ethics of care applies to the merger of Body Shop and L’Oreal by pointing out the failure of Body Shop to balance its financial interests with the interests of its employees who believe and support the advocacy of the company and its consumers who patronize its products as an ethical business. Although, it is yet too early to determine the impact of the merger to Body Shop as an ethical company, it is unavoidable for the company to shift its values towards a neutral or complacent position to accommodate the value-shifting implications of the merger.                                       Credit:ivythesis.typepad.com

International Business Law and Ethics

Ethics of Care Theory: Merger of Body Shop and L’Oreal Introduction Ethical care theory emerged to encompass business co...

Case Study of BP (British Petroleum)

PROS AND CONS OF ESTABLISHING A RUSSIAN BRITISH PETROLEUM (BP) OFFICE     EXECUTIVE SUMMARY               This manuscript aims to identify the advantages and disadvantages of setting up a British Petroleum (BP) bureau in the country of Russia. Primarily, it discusses the impact of the European Union (EU), the state of the Russian economy and environmental issues that affects the organisation of a BP office in Russia. These factors, among others were taken into consideration in the evaluation of whether it is wise to set up a BP headquarters in Russia.               An introduction containing brief background information on the BP provides sufficient data to enlighten the readers of the background of the organisation under discussion. The discussion regarding the leadership capabilities of their CEO, Lord  is also presented. Following this discussion is the EU section, with a one-point comparison of EU and Russian legislations when it comes to business activities to illustrate that there exist differences and even contradictions in the two legislations and a discussion of the advantages and disadvantages of BP being under the governance of both. The section on the state of the Russian economy examines how the present economic conditions in the local scene directly affect the BP in doing business within the country, either positively or in an adverse manner. The part on environmental issues mainly tackles Russian environmental regulations, how the strict or lax implementation of such laws significantly influences the establishment of a BP office in the country. Other concerns, such as the leadership capabilities of Lord , BP CEO in accordance to his environment and social concerns will be discussed in this manuscript.    A BRIEF INTRODUCTION[1]               BP is one of Britain’s biggest companies and one of the world’s largest oil and petrochemicals groups. William Knox D’Arcy, the company’s founder, believed that oil deposits were to found in Iran so in the company’s first six decades, its prime focus lay in the Middle East. But from the late 1960s the center of gravity shifted westwards, towards the USA and Britain itself. Oil exploration and production account for 20 percent of BP’s revenues. In 2005, the firm reported a turnover of 2 billion and by December of the same year, they have 96,200 employees working for the organisation. Lord  is the Chief Executive Officer of BP as of the moment. The recent 2003 merger with the Alfa Access Renova group creating the TNK-BP tie-up and the not-so-recent 1998 acquisition of the Amoco Corporation oil company has provided the groundwork for BP’s strategy in the Russian territory. As with any business deal, there have been debates on the economic rationale of the TNK-BP and Amoco deal, and Browne has been quick in justifying them. The following sections are discussions of the pros and cons of establishing a Russian BP office, sides which the group hopes to bring about a fair account of the pros and cons of setting up office in the said country.     LORD JOHN BROWNE LEADERSHIP CAPABILITIES   Conceptually, in order to perform, and grow in either a national or a global business environment, a business needs to possess some form of ‘competitive advantage’ and apply a unique ‘business strategy’. Competitive advantage is about how a firm actually puts the generic strategies (i.e. cost leadership, differentiation, and focus) into practice (1980). It is concerned with developing a value-creating strategy by uniquely combining of valuable firm resources and skills ( 2002). Likewise,  (2002) refer to ‘competitive advantage’ as an offer made by a firm’s that is most attractive to customers. In accordance to this advantage, the leadership capabilities of Lord, the CEO of BP plays significant role to the development and advantage of the company in terms of their global shift.   It cannot be denied that the only constant in this world is change, many people especially those in the business arena find themselves normally adapting. In this manner, the British Petroleum is never an exception.  This is because change can bring about so much improvement in certain aspects. In many ways, change can make work easier, pave the way for future innovations or generally improve people’s lives. Similarly, change has been adopted by various work organisations for varied reasons. Known as change management, companies and businesses are integrating change into their work strategies so as to be competitive and more efficient.               Due to the environment and social concerns and the target growth that have been distinguished by this company, the CEO, Lord John Browne has decided to create a plan in relation to company advancement. As part of these advancements, Lord  wanted to employ switching of company logo, manufacturing process and human resource management. Primarily, her major objective is to utilise change management process in order to enhance their target market by venturing to global shift and to satisfy their clients with respect to the environment and social concerns. Basically, Lord John Browne wanted to remove the old mindset in regards to ‘petroleum’ that is the idea in which oil companies are treated as dirty, secretive and supercilious.               Although this concern is in favour to the overall public and environment, Lord  should still need to be aware of the culture of the company. He should have respect to the BP history. Actually, Lord John Browne certainly needs to get the cooperation of the people involved in order to have successful changes in management.             With regards to ethical issues, Lord John Browne should be able to take considerations of what would be the reaction of their employees to the changes that would be imposed.  Furthermore, he should have seen to it that her employees have undergone critical explanations about the reasons why the change of management system and strategy is needed for a certain aspects within the company.  He should also give the employees enough time to master the skills and proficiency of their employees from maintenance, communication services and human resource management in utilising the changes made by the organisation. This is done by providing them enough trainings and orientation to explain the changes made.               IMPACT OF THE EUROPEAN UNION               Corporate governance practices in the EU and in Russia differ considerably. A comparison of the Russian and the EU legislations regulating certain aspects in corporate activities and the way the existing laws are coped with by Russian businessmen would show, among other major dissimilarities, one distinct difference in that whereas the non-compliance of EU members of the First Directive on Disclosure of Information (which is required to ensure adequate administrative, judicial or preventive control of documents submitted to the registration authorities of a EU member state) would mean that the documents are not accepted or the company may be recognised invalid, even if the breach is established after the company is registered, the Russian tax registration authorities accepting the documents are not obliged to verify the documents as to whether they comply with the Russian law and the documents are not subject to any other control procedures under the Russian law (2005).   These discrepancies in the EU and Russian legislation could provide difficulties in the setting up of a BP office in Russia. The United Kingdom being the hub of the entire BP business and a member state of the European Union, its corporate laws are subject to the directives of the economic organisation. The Russian government has yet to apply for a Union membership, and for the meantime, observes their own national legislation, which are sometimes, in an illustration above, different or contradicting to EU legislations. In another view, the TNK-BP and Air BP (both BP-held companies) offices being in Russia, it has to abide by the domestic rules and regulations that the country sets for foreign businesses. In this aspect lies one major disadvantage of establishing a BP office in Russia, because future disagreements between the two operating countries may arise with respect to the office set-up in Russia. Another factor to be taken into consideration is foreignness liability. This concept, introduced by states that internationalised firms are at a disadvantage in comparison with local companies due to foreign exchange risks and unfamiliarity with the business conditions of the foreign market (1960). Although this should not be wholly viewed as a disadvantage, more like a challenge for the BP, foreignness liability is one doubtless pitfall in setting up an office in Russia, or any other foreign country, for that matter.               On a positive note, a major impact of the European Union to the BP is that with ongoing attempts to establish closer relations with Russia, the EU has compromised to work with the former in facilitating the movement of people and goods, common challenges (tackling crime, health, environment), and contributing to the economic development (2002). The BP could benefit in this in that being based in Russia, the firm is naturally a subject of common interest for both countries, thus giving impetus to the support that the organisation may acquire from both nations. Also, the European Union, because of want to establish closer economic ties with Russia, will push for the establishment of an oil and gas company partially owned by one of their member states. This will be good for the EU in that it can help them gather knowledge and forge relationships in the Russian territory that could turn out to be critical in securing an EU-Russian economic partnership. Another major impact of EU to the establishment of a BP office in Russia was their agreement to Russia’s admission in the World Trade Organisation (WTO). Russia’s attempts to join the WTO were prevented by refusal on the EU’s part to let Russia become a member state. When Russia conceded to gradually increase the tariffs that Russian oil corporations charge Russian companies for natural gas, the EU finally let the applicant country forge on with their WTO accession. The BP’s part in this is that when the Russian oil companies begin charging higher prices for natural gas, logically, the company — and their shareholders — stand to benefit from the higher margins of profit resulting from such charges.     THE STATE OF THE RUSSIAN ECONOMY               A peruse of the Russian economy for the past decades would reveal that it has its share of highs and lows. What is important, however, is that the country ended 2005 with its seventh straight year of growth, averaging 6.4% annually since the financial crisis of 1998 (2006). Russia is now the fourth richest country in the world in terms of hard currency reserves and oil export earnings over the period since  took office in 2000 rose from billion to 0billion (2006). Economic experts have been noted to say that high oil prices, relatively cheap rubble, investment and consumer-driven demand and the Russian government’s renewed efforts to advance structural reforms have been important drivers to this economic rebound (2001;  2005). Given the set of current circumstances, the BP may deem it wise to set up in Russia as the economic growth of the country could give impetus to the firm’s own economic performance. Another major advantage is that being a country rich in oil and gas reserves, the BP could easily source their products from within the country, decreasing the costs incurred for transportation of such and the taxes that they need to pay in order to import them. The demands of the local market could then be easily met, provided that they establish an oil plant in Russia, and of course operating under the environmental regulations of the country.     ENVIRONMENTAL ISSUES               A facet of corporate social responsibility is the company’s responsibility in the preservation and care of the environment. Oil companies, particularly the British Petroleum have battled issues coming out against them in relation to environmental issues. In fact, some environmental organisations have expressed dismay over the indiscriminate company performance of BP that resulted to harm in the environment. ‘In August 1991, based on its analysis of Environmental Protection Agency (EPA) toxic release inventory data for 1990 (the most recent available), the Washington, D.C.- based public interest group Citizen Action named BP among the top 10 polluters in the United States’ ( 2006). The findings brought out by environmental agencies and concerned environmentalist groups have caused the firm to take measures regarding the issue. Two years after Lord John Browne took over the BP administration, the firm rolled out a new marketing strategy that involved emphasis on environmental responsibility. In 1997, the British Petroleum supported the Kyoto Protocol, a worldwide agreement that seeks to prevent global warming by reducing greenhouse emissions. Subsequent efforts to minimise their business’ impact to the natural environment (providing cleaner burning fuels, reducing emissions, ending all facilitation payments (bribes) and political contributions) were also much publicised by the company, not only in observance of their corporate social responsibility, but also as a way of maintaining their stakeholders’ trust. These attempts on the part of the firm were questioned for their real intention, particularly the question ‘will it lead the world in a sustainable energy revolution, truly moving beyond petroleum, or will it be content to profit from the exploitation of an increasingly taxed planet while draping itself in green?’ (2004).               Some of Russia’s most important environmental problems include air and water pollution (over 200 cities often exceed Russian air pollution limits and less than half of Russia’s population has been found to have means in acquiring safe drinking water), solid and hazardous waste management (generation of solid wastes has increased in the country due to adoption of Western-style consumption and Russian officials estimate that about 200 metric tons of the most highly toxic and hazardous wastes are dumped illegally) and nuclear waste and chemical munitions contamination (1999). Russian president Vladimir Putin in 2000 dissolved the only government body responsible for environmental regulation and protection in Russia. It was a move that provoked outrage from environmentalists around the world, and even some Even some members of the Russian business community have objected to Putin’s decision, fearing the potential for arbitrary enforcement of environmental regulations and the mounting international perception of corruption (2000). Deutsche Presse-Agenrur reported on June 13th that Russian oil giants had a role in pressuring Putin into eliminating the committee. The oil companies claimed that certain ecological hindrances” would diminish their ability to invest in oil and gas exploration over the next five years, whereas they promised to invest 7 billion dollars if those “hindrances” were eliminated ( 2000). However, a subsequent action in 2004 that approved the Kyoto Protocol (a worldwide agreement that seeks to prevent global warming by reducing greenhouse emissions) by Putin gained favourable responses from economic authorities and the general public. This move from the Kremlin has aroused dozen debates of whether such decision would hinder the continued economic growth of the country in that the development of Russia’s critical oil and gas resources – the nation’s biggest source of wealth, but also its biggest source of carbon dioxide emissions – in particular would be jeopardised by any strict application of Kyoto regulations ( 2004).             As a general rule, environmental laws in a country where an oil firm is planning to put up business could prove an entry barrier to the company. However, the relatively lax environmental regulations for companies conducting business in Russia could prove an advantage for BP, as they need not go through the hassles of strict environmental protection procedures to set up in the country. In contrast, the disadvantage lies in the stakeholders’ perception of businesses in Russia. If other international firms who are known for their rampant violation of environmental laws can operate in Russia, then the image of BP could be stereotyped with those companies who are not observing such rules.     TWO OTHER CONCERNS               The following concerns, miscellaneous in nature but nonetheless vital considerations, would add to the pros and cons of establishing a British Petroleum office in the Russian territory already mentioned in the previous sections. The BP could set up office in Russia without fear of oil and natural gas resources diminishing along with relative political stability and production reliability, without fears of attacks or civil war unlike in other oil and gas reserve countries like Iraq, according to of the Washington, D.C.-based Brookings Institution (2004). However, according to Tim Lambert, director of energy consulting at Wood Mackenzie in Edinburgh, ‘taxes have cut into the new entity’s [BP’s] earnings, making it less profitable than it might have been. And last June, President Vladimir Putin’s administration questioned whether TNK-BP had broken laws regarding sharing reserves information with foreigners, according to a report in the   ( 2004).     CONCLUSIONS AND RECOMMENDATIONS               These diverse arguments on the pros and cons of establishing a headquarters in Russia have brought the group face-to-face with an undeniable reality, that for every advantage, there is an equally considerable disadvantage that arises. The good may not be taken without the bad, and as such, setting up office in the Russian territory is an attractive prospect but not devoid of difficulties and stumbling blocks. But if a conglomerate such as the British Petroleum was to widen their business horizon, risks need to be taken for it to be possible. Alternative avenues for growth are always in existence. It is in the discretion of the firm itself what path it chooses to take; the path that BP believes would provide a stable business future.   On the other hand, change management is a process wherein all sectors in the society undergo. It is a significant process because it allows the organisation to create decisions that will be beneficial to the employees and the company. Moreover, organisations that are accept changes like the British Petroleum are usually more successful compare to companies that resist it. In a globalise market, new technologies and procedure are emerging rapidly, in order to keep up with this progress a company must be willing to adapt to management changes.  The British Petroleum also needs change management particularly with its marketing, inventory, and performance of the employees in order to keep up with the competition that rapidly becomes a huge threat in the organisation. Addressing changes particularly in environment, social and human resource concerns will directly benefit the company because the development in these sections will either aid in the improvement or failure on the performance of the company.   Credit:ivythesis.typepad.com

Case Study of BP (British Petroleum)

PROS AND CONS OF ESTABLISHING A RUSSIAN BRITISH PETROLEUM (BP) OFFICE EXECUTIVE SUMMARY This manuscript ai...

Corporate Social Responsibility and Corporate Governance

Corporate Social Responsibility and Corporate Governance   Introduction             Corporate governance encompasses the importance of developing and maintaining effective intra and inter-business relations particularly for firms seeking internationalisation or already operating in the global market based on the context that cultural orientation and political standpoint constitutes the differentiating factor for international business players (2001). Applying a sound corporate governance system constitutes a motivating factor for the members of the organisation as well as investors. This then enhances the competitiveness of the company and the business position of the firm.             Recently, globalisation has resulted to the creation of an international business setting that considers the wider responsibility of companies extending to the natural environment and the community. The liberalisation of economies that boosted growth in business activities has resulted to global environmental issues such as the global warming phenomenon, natural resource scarcity, accumulating volume of non-biodegradable waste and social issues such as labour market abuses, community displacements, and health problems due to minimal safety standards in the workplace. Due to the growing propensity of these issues and the recognition that the business sector constitutes a big player in slowing down or addressing these issues, business competitiveness has to a certain extent included the acceptance of environmental and social responsibility by firms as a added value to the firm based on the perspective of some investors and consumers.   Financial & Non-Financial Objectives in Corporate Governance              In corporate governance, business firms apply important basic principles such as honesty, integrity, trust, accountability and responsibility (2001). Corporate leaders and decision-makers apply these principles in developing a governance model able to balance conflicts of interest based on the priorities of the company and enhance accountability in financial reports based on the parties in interest. These principles encompass not only the financial but also the non-financial aspects. This means that as much as the company wants to maximise its profit margin, it cannot do so based on the consideration of cost-saving activities alone because its social responsibility also has an influence on its profitability.             A case in point is the recent merger of the British retail company Body Shop and the French cosmetics company L’Oreal. The board of directors of Body Shop decided on the merger based on financial reasons. The value of the merger for Body Shops is £652 million ( 2006) and an added retail network for L’Oreal. At first glance, this is a good deal for both companies because of capital infusion and wider market reach translating into greater revenue. However, as the news of the merger spread, Body Shop has experienced criticisms especially from the green consumerism advocates. This is because of the differences in the corporate values of these companies that amount to the reversal of its previous advocacy against animal testing. Body Shop developed as a green company. One of its campaigns is against animal testing in the cosmetics industry so that in 1996 Body Shop petitioned the European Union to ban animal testing in European Union member countries ( 2007). L’Oreal emerged on a different light because it engages in certain forms of animal testing for its cosmetic products (1999). The irreconcilable divergence in business values, when widely recognised by Body Shop’s consumer base could cause a decrease in sales of Body Shop if the company does not address this issue. This case shows that financial and non-financial considerations are both necessary factors in corporate governance decisions. Unaddressed consumer concerns, which constitute a non-financial concern, regarding the company could affect its financial performance.      Corporate Social Responsibility             The policy reflection of the consideration of both financial and non-financial concerns in corporate governance is termed as corporate social responsibility. As a business strategy, corporate social responsibility encompasses the way that firms integrate economic and socio-environmental issues in their respective corporate culture, operations, and decision-making to achieve accountability and transparency (1995). As such, the existence of corporate social responsibility serves as basis of best practices of firms as well as the catalyst of value creation (2003) on the perspective of consumers and the community that the business firms directly serve.               Two views of corporate social responsibility exist that covers business firms. First perspective considers corporate social responsibility as “defensive and business focused” (2001) by focusing on improvements in firm operations and performance. Second perspective explains corporate social responsibility as “positive and broadly focused’ (2001) because the firm takes the responsibilities of a community leader concerned over socio-environmental issues. This means that corporate social responsibility of business firms depend upon the extent of responsibility that it assumes. This can be purely internal such as taking responsibility for the well-being of its employees and the environmental friendliness of its operations or including external concerns such as the environmental conservation, providing employment opportunities, and sponsoring children’s learning.             Another conceptualisation of corporate social responsibility is as the business “commitment to improve community well-being through discretionary business practices and contributions of corporate resources” ( 2005). This implies a voluntary action on the part of the business firm to take an active part in improving the community constituting their market or their immediate area of operation. Moreover, a voluntary and active involvement in community concerns requires resource allocation such as labour, time and money.                The essence then of corporate social responsibility is business firms consciously developing policies that address social and environmental issues within the business organisation or extending to the immediate community of the firm. The goal of engaging in corporate social responsibility is to develop consumer patronage to the company as well as acceptance especially on the part of international companies entering domestic markets.             A multinational company that engaged in corporate social responsibility is McDonalds, due to the rising concern over the escalating rates of obesity in children exposed to the fast food culture. The company also faced environmental concerns changing some of its food containers to biodegradable materials. In an attempt to support efforts against obesity, the company introduced healthy options in its menu. McDonalds also implemented other corporate social responsibility activities such as the exclusion of beef products in India because of the cultural reverence for cows and in Hong Kong, the company established the Ronald McDonald House that provides shelter to children and their parents from the rural areas or distant locations seeking medical care in a nearby children’s hospital. McDonald’s also provides scholarships, employment and skills development in various countries. ( 2006) Due to the implementation of corporate social responsibility, McDonalds experienced acceptance in the Indian and Chinese markets. These markets comprise the coveted consumers of most international companies because of the sheer size of the market. Since McDonalds was able to receive significant degrees of acceptance in these markets due to its corporate social responsibility activities, it stands to gain in terms of revenue and market base.             However, corporate social responsibility is not without criticisms, especially the perception that this is an unnecessary allocation of resources.  (1970) explains that businesses only carry responsibilities towards stockholders because this group meets the capital needs of the firm. Any additional assumption of responsibilities is unnecessary. A business firm is amiss in its responsibilities only when it fails to meet its role relative to stockholders. (1991) adds that even the firm’s moral responsibility should be only towards stockholders.  (2001) further provide that corporate social responsibility would likely “make people in general poorer” () because of the spread of resources. These perspectives indicate that the decision to engage in corporate social responsibility largely depends on the context of business needs and objectives. McDonalds applied corporate social responsibility because it served its purposes of gaining market entry.    Importance of Corporate Social Responsibility             Although, there are opposing perspectives on corporate social responsibility, there are important benefits derivable from engagement in this strategic policy-making.  (2001) identify ten benefits that business firms can gain from corporate social responsibility. First is the ability to anticipate and manage risks. Business firms engaging in corporate social responsibility become aware of the social and environmental risks that it could potentially face by carefully studying changing community issues. Second is the capability to improve form reputation management. Researching on corporate social responsibility issues allows that firm to gather information on the perspective of the public about the company to derive areas requiring change to enhance its market reputation. Third is the capability to enhance human resource management particularly the development and retention of employees by strengthening business values targeting employee satisfaction and well-being. Fourth is the achievement of tools to improve the competitive position of products, brands or firm name through value adding CSR activities. Fifth is the capability to improve the operations and cost-efficiencies of the firm by allowing the firm to anticipate the impact of social and environmental issues and implement preventive actions. Sixth is the ability to enhance supply chain efficiency by developing good working relations with local suppliers, who constitute members of the community. Seventh is the ability to improve change management competence since engaging in corporate social responsibility would likely involve varying levels of change in business culture. Eight is obtaining legitimacy to operate within different communities by seeking the acceptance of its members as employees, consumers or investors. Ninth is the ability to make capital accessible since value-adding activities provide motivation to investors to contribute capital to the firm. Tenth is gaining the ability to improve links with regulatory authorities since compliance with social and environmental regulations places the firm in good business standing.          Engaging in Corporate Social Responsibility             Companies successfully implementing corporate social responsibility policies expect to incur one, more or all of these benefits, with the effect of improving competitive position and profitability. A number of general principles exist to ensure success of corporate social responsibility activities. The implementation of these general principles depends upon the contextual appropriateness of these principles in particular firms. The multi-stakeholder and holistic approaches encompass the various success factors of corporate social responsibility.             Multi-stakeholder approach pertains to the integration of business, government and community into a partnership to address social and environmental issues. Collaborative partnership is based on the recognition that no single sector can curb these issues on their own. ( 2001; 2001) As an example, the problem of obesity involves a number of parties in interest spanning the cause and solution to this problem. Parties in interest include families, schools, healthcare facilities, government departments, non-government organisations and other health advocates, and business firms especially in the food sector. The causes of obesity rests upon the failure of these parties in interest to recognise the risk early on or the allowance of the proliferation of activities that results to obesity in the long-term such as unhealthy food and lack of exercise. As such, the solution to this problem also depends upon the concerted action of these groups. From the perspective of the business firm such as McDonalds, the success of its corporate social responsibility rests upon its partnership with the other parties in interest for its activities to gain acceptance, support and following. From this, financial benefits ensue.             Holistic approach refers to the consideration of a string of preparatory and implementing programmes that support the achievement of the objectives for the planned corporate social responsibility activity (2001). As an example, Australia and New Zealand Banking Group Limited (ANZ) recognised the importance of a holistic approach in optimising the benefits derivable from corporate social responsibility. An important thing implemented by ANZ is changing its business perspective to perceive all its stakeholders as a single integrated system that experience issues in an interconnected manner. This allowed the company to develop policies directed towards sustainable results for all stakeholders. Moreover, this approach also flowed through its products and partnerships resulting to a strong and clear message of trustworthiness and social concern to the market. (2006) Again, improved financial performance followed. Conclusion             Corporate governance systems primarily concern the responsibilities of the directors and board members in ensuring the effectiveness of corporate policies and practices and efficiency in its collaborative processes. Due to many key players, the challenge to corporate governance is the development of a sustainable and balanced relationship between and among key players, maintenance of the soundness and stability of its regulatory reforms, and application of accountability on the impact of its activities and business process results to the company, its investors and other parties in interest.             Businesses would at one time or the other engage in activities directed towards social and environmental issues. In these instances, it would be a rational corporate governance decision for firms to transform these efforts into corporate social responsibility exercises to maximise costs and optimise results, including the achievement of sustainable and balanced relationship with stakeholders.                     Credit:ivythesis.typepad.com

Corporate Social Responsibility and Corporate Governance

Corporate Social Responsibility and Corporate Governance Introduction Corporate governance encompasses the importa...

Geography

Environmental Issue – Global Warming   (i)            Discussion of the previous research undertaken on your chosen topic The topic chosen as the basis for research is about global warming that refers to process when the earth heats up the temperature will rise as it can be possible when greenhouse gases trap heat and light from the sun in the earth’s atmosphere, which increase the temperature. Aside, the greenhouse effect implies temperature rises because sun’s heat and light is being trapped within the earth’s atmosphere. Furthermore, temperature can change in ways that it helps humans as greenhouse effect make earth appropriate for the people to live on as without the presence of it, the earth would be freezing and if not the earth would be burning hot.  Although the greenhouse effect makes the earth able to have people living on it, if there gets to be too many gases, the earth can get unusually warmer, and many plants, animals, and people will die. Thus, there were research evidence shows pollution have contributed substantially to global warming and the earth is likely to get hotter than predicted, founded by United Nations-sponsored panel of scientists. There is expected to influence climate debate as there is discernible human influence on earth’s climate because of greenhouse effect caused by the buildup of heat-trapping chemicals in the atmosphere. “Emissions of greenhouse gases and aerosols due to human activities continue to alter the atmosphere in ways that affect the climate system,” the report says. ( 2000) ADAPTATION Global warming is under way and climate change is inevitable. While it is impossible to say for sure, many of the extreme natural events experienced in recent years, may be manifestations of climate change. The European countries, clearly sensitive to global equity and their obligations regarding this issue, wanted to lay the groundwork for going beyond the Kyoto Protocol by starting negotiations within deeper incision of the greenhouse gas emissions. Demands for such cuts got nowhere at the climate conference. Given the highly competitive nature of the global economy, the continued refusal of the United States to reduce its greenhouse gas emissions may push the Europeans to reassess their own relatively strong and commendable support for international climate equity. During the 2002 conference was useful in again acknowledging the vital need for rich countries to help the developing world cope with climate change, and it highlighted the utter unfairness of the rich demanding that the poor reduce their energy use. Aside, new alliance between the United States and developing countries has set back efforts to take concerted action to reduce the pollutants causing global warming.       In the decades to come everyone will have to adapt, but one wonders what kind of world we will be leaving our grandchildren as seas rise, glaciers melt, pathogens spread, and ecosystems become unfamiliar even during a single lifetime. APPLICATION TO GLOBAL WARMING The story of international environmental cooperation is not encouraging for the current effort to tackle global warming. It would be easy to generate global warming agreements with modest commitments that yield high levels of compliance as indeed, deep cuts in emissions will be needed to slow global warming, and they could be costly and that, it would be possible to restrict demanding cooperation to the liberal states where concern about global warming and the capacity to enforce obligations are high, but an agreement that is restricted to the OECD nations would be meaningless. Failure to establish credible institutions could cause the emission trading system to unravel quickly; with trillions of dollars at stake and the cost of compliance extremely clear to permit-buyers, no country will stay inside the system for long if it senses that others are skirting compliance.         Yet, having already capitalized their permits, no large permit-holder will want to discard the system before cashing out. A system for coordinating policies and measures, such as that proposed by the European Union, faces serious challenges of monitoring and enforcement since policies and measures must be defined, their effects must be estimated and there have been no serious attempts to do so. Moreover, such technology strategy could ease the problem of international cooperation because it requires significantly fewer nations to participate. However, collective action would be needed because no nation would implement the strategy fully on its own, precise effects of technology strategies would be difficult to measure. Negotiations would evolve through system of proposals for packages of measures for implementation. There support development and demonstration of new technologies would make it possible for those new technologies to diffuse worldwide through the normal operation of technology markets that are increasingly global and free from barriers. However, tax to limit greenhouse gas emissions, would be needed to ensure that a growing fraction of the world market faces the appropriate incentive and thus applies new technologies and will require broader international cooperation, but a regime that begins with technology in the core centers of innovation will have three advantages over conventional approaches to addressing global warming.           Global warming is affecting many parts of the world.  Global warming makes the sea rise, and when the sea rises, the water covers many low land islands.  This is a big problem for many of the plants, animals, and people on islands.  The water covers the plants and causes some of them to die.  Although animals have a better ability to adapt to what happens than plants do, they may die also.  When the plants and animals die, people lose two sources of food, plant food and animal food.  The oceans are affected by global warming in other ways, as well.  Many things that are happening to the ocean are linked to global warming.  One thing that is happening is warm water, caused from global warming, is harming and killing algae in the ocean. Global warming is doing many things to people as well as animals and plants.  It is killing algae, but it is also destroying many huge forests.  The pollution that causes global warming is linked to acid rain.  Acid rain gradually destroys almost everything it touches.  Global warming is also causing many more fires that wipe out whole forests happens because global warming can make the earth very hot.  In forests, some plants and trees leaves can be so dry that they catch on fire.          People are doing many things to try to stop global warming.  One thing people are doing is carpooling.  Carpooling is driving with someone to a place that you are both going to.  This minimizes the amount of greenhouse gases put into the air by a car. Another thing that people are doing is being more careful about leaving things turned on like the television, computer, and the lights.   A lot of people are taking time away from the television, and instead, they are spending more time outdoors.  Now, more people are even riding busses, walking to school, and riding their bikes to lower the amount of greenhouse gases in the air.  Planting trees and recycling also helps. The government is doing many things to help stop global warming. The government made a law called The Clean Air Act so there is less air pollution as global warming is making people get very bad illnesses that could make them disabled, very sick, and sometimes even die.  The Clean Air Act is making many companies change their products to decrease these problems part of the law says that you may not put a certain amount of pollutants in the air.  Hairspray and some other products, like foam cups, had this problem.                (ii)          The research question you are seeking to address   What does global warming do to the environment? What are people doing to stop negative fact regarding global warming?  What is the government doing to stop harmful reality of global warming? What are environmental stresses and issues that form warming impacts about earth changes? What research and information needs that can better prepare policy makers for making wise decisions related to the issue?   (iii)         The kind of theoretical framework that underlies your research design. How does it guide your research question and the kinds of answers you might be looking for?   The theoretical framework would amicably involve process of understanding the presence of Kyoto Protocol which indicates such global agreement to reduce emissions of greenhouse gases that took effect last February 16, 2005. Thus, protocol sets mandatory limits on greenhouse gas emissions for party nations according to consumption and projected needs, with goal of reducing global emissions to 5.2 percent by the year 2012. Furthermore, some companies that undertook efficiency measures accumulated unused credits, selling to those exceeded allowance (2006). Thus, several scientists ascertain that global warming is under way and believe that climate change is happening now. It causes increased frequency of severe weather events like floods and droughts, adverse changes in agriculture yields, increased human mortality from heat and cold, coastal erosion and damage. While substantial global warming and the resulting change in climate cannot be avoided, they can be mitigated, and those suffering from them can be aided in their efforts to adapt.             (iv)         The techniques and methods you plan to use to find answers to the research question? What is the rationale for choosing these techniques and methods? What possible risks are involved in the work?   The techniques and methods for the study will make use of the case study method and its respected analysis and interpretation reflecting on how global warming is of controversy as of the present as such providing valid literature studies of such activities and programs that have been created to eliminate harmful reality of the global warming taking into detailed account of the Kyoto Protocol agreement. Thus, exploration technique is also possible as there is ample need to have such organization of research evidences and information findings, knowing every imperative matter and aspects pointing to the prevalence of global warming and how the earth is reacting as of the present times. The choosing of the methods will provide wide view and awareness of people to take care of the environment and doing their part in saving the earth such as avoiding harmful materials in order to fully heal global warming problems as the ozone layer is now being threatened by such chemicals that affects deeply the cycle of life in every living creature on earth,     (v)          What sorts of problems can you foresee in tackling the question, and how might you address these? As studied, aerosols play role in affecting climate by scattering sunlight or absorbing it and thereby serve to reduce the amount of sunlight reaching the earth’s surface (1992). In addition to their direct effect, aerosols have an indirect effect on the radiation budget, through their role as cloud condensation nuclei. Pollution, increased the quantity of aerosols when water vapor condenses on them in clouds resulting in highly reflecting clouds. The aerosols mask true degree of greenhouse gas warming by potential amount ( 2005). The pursuit of cleaner atmosphere and short lifetimes of aerosols are to diminish the magnitude of masking effect in future and may lead to greater warming respectively (1981 ) and then, reduction in ozone will have effect of cooling leading in growing damage surface.           The sorts of problem foreseen has emphasis that global warming is almost certainly the most important problem addressed by the atmospheric community today and has recently become one of the hottest on the political agenda. Due to the fact that, it can be complex problem, majority of atmospheric researchers are carrying out investigations on it. The outcome of studies are assimilated in global circulation models for the simulation of earth’s climate. Despite such intensive efforts, there is still much contention over the nature and degree of global warming, over long-term climate prediction, and over the implementation of mitigating measures. However, precise degree of future warming does not change the imperative to act; the only relevant question is whether any action will be sufficient, not whether it is necessary. Thus, some politicians argue about the economic and social consequences of actions and warming concentrations continue to rise and there is quest to improve sophistication and predictive capability of certain models (2004).   ___________________ Credit:ivythesis.typepad.com

Geography

Environmental Issue – Global Warming (i) Discussion of the previous research undertaken on your chosen topic The topic ...