Summary of Monster by Sanyika Shakur Essay -- Sanyika Shakur Monster G

Summary of Monster by Sanyika Shakur Growing up in a world of gangs, death, and suffering Kody Scott, also known as Monster Kody, grew up in a life of struggle. From eleven years old Kody knew what he wanted a to be, a gangster. Nothing could stop him from becoming one of the most feared gang member of the late 1970?s and early 80?s except maybe his own conscience. Kody Scott goes through an evolution, from a child to Monster Kody to finally Sanyika Shakur, his Muslim name. Sanyika Shakur is a true survivor, considering everything that has taken place in his life he has managed to make something of himself from nothing. Kody Scott was born into the gang life weither he liked it or not. Born on 1963 in South Central Los Angeles Kody?s life would be affected by the growing number of gangs inevitably. Kody knew he had a choice to be made, be a gang member or be a pedestrian. He viewed pedestrians as spineless nerds who were always victims of someone?s ridicule or physical violence, who never responded to an affront of any type. He himself had a taste of pedestrian life in grade school were he was picked on and had his lunch money taken from him. ?Early on I saw and felt both sides of the game being played where I lived. It was during my time in elementary school that I chose to never be a victim again, if I could help it?(Shakur 100). Being in a gang gave Kody a feeling of security in a city of violence. ?I felt very different, older, more attached than any of...

link between strategies Essay

The Business is shaping to be highly unpredictable, challenging and innovative by the passing day. Organizations face complex environment for which they need to formulate complex and full proof strategies to ensure competitive advantage, profit maximization and cost minimization, for which they need to adapt strategic approaches, theories and models. However, the role of theory is not always significant in scrutinizing the human resource(HR) strategy and the strategic plans. However, depending on the organizational strategy, HR strategies can be matched. This critique thoroughly discusses the linkages between Business strategies and the Human Resource Management (HRM) and their relevance in the dynamic environment. Strategic management is defined as the set of managerial decisions and actions that determine the long run performance of a corporation.(Hills and Jones,2001) Moreover, strategy is an action a company takes to attain superior performance.(Wheelan and Hunger, 1995) Strategic human resource management is ‘the process of linking HR practices to business strategy’(Ulrich,1997) To maintain the hierarchy in the market, organizations need to constantly formulate strategies to meet the customer requirements. There are various theories that have been formulated for firms to manage complex and problematic environment. These theories are broken down into two models; internal model which includes the Resource Based View ( RBV) and external based model formulated by Whittington (2001); which include Classical, Evolutionary, Processual and Systemic approaches. Due to the increasing value and appreciation of individuals as one of the major competitive advantage for organizations, there have been strong efforts to develop HRM. Beer et al suggest that ‘An organization’s HRM policies and practices must fit with its strategy in its competitive environment and with the immediate business conditions that it faces’ (Beer et al., 1984, p. 25). This is accomplished by applying different strategies which include two main models namely; ‘Best practice’ or Universalism’ and Best Fit’ or contingency’ or Matching model’. Strategic integration is used as one of the means to explore possible links between different approaches to strategy and HRM. So far, it has been recognized as a two-way process,  where HRM informs the nature of organizational strategy as well as being informed by it; that is full integration. Alternatively, it may be a one- way process where organizational strategy informs H RM without being informed by it in any intended or planned way; that is partial integration .(Millmore et al, 2007) Classical approach follows clear, rational, deliberate, linear, logical, and top-down approach to formulating strategy. (Millmore et. al, 2007) According to Sloan(1963), The long term aim of the approach is clearly profit maximization. For this approach, classicists choose best fit strategy and create a match between organization’s internal resources and the opportunities available in the external environment to achieve competitive advantage; its main goal. However, since the approach is subjective, the process of strategy development is affected by political, cultural and capability factors which need a complex model that clearly suggest the relationship between strategy making and HRM to represent such linkages in reality. (Millmore et. al, 2007) Looking at evolutionary approach, markets are highly unpredictable and hence the role of this strategy is to respond to the environment for survival and profit. To state an example, Sony released over 100 different versions of portable cassette player in 1980s and allowed the market to decide which would survive and removed the rest as a result of market failure.( Richard Whittington, 2007) Such conditions lead to strategic conservatism, where organizational efforts are focused on the basics of production, to minimize costs, sought operating efficiency, impose tight control and performance monitoring. Therefore, this strategy stresses on environmental determinism due to which, matching model is deemed to be most appropriate for such organizations. It is believed that this approach can be seen as strategically integrated only in relation to the strategic imperative to control costs. SHRM requires a wider remit where emphasis is placed on developing and integrating the ‘human’ side as opposed to the ‘resource utilisation’ aspect.( Storey, 1989) Processual approach emphasizes strategy making as an adaptive and emergent  process driven by organizational learning . It is believed that decision- makers lack the ability to act with pure reason and only a few factors affecting a decision can be dealt with, this limitation of human cognition is known as bounded rationality. ( Simon, 1991) The actual scenario of the market is unpredictable and hence managers develop imperfect representations of complicated world which helps strategists to trouble shoot problems and aim on sufficient profit rather than maximizing profit. Mintzberg(1979) believes that the development of emergent strategies in organizations is based on learning. This needs to be recognized and supported through HR strategies. Systemic approach recognizes that strategy and strategy making will be affected by the social and cultural system within which this occurs. To state an example, multinational organizations need to be aware of the cultural system in the host country to formulate achievable organizational strategies. This suggests that HR strategy and its integration into organizational strategy will vary, underpinned by societal values. Another example mentioned by Whittington, tells us about the series of conglomerates developed in South Korea which characterized small and family owned businesses nearby Taiwan. This suggests that HR strategy need to be conceived and integrated into Organizational strategy to avoid non conceptualization of HRM. Resource- based view is popularly associated with the work of Prahalad and Hamel( 1994). They argue that competitive advantage stems, from building ‘core competencies’ which are superior to those of rivals, over a long run. In a nutshell, they assert that it is a firms’ ability to learn faster and apply its learning more effectively than its rivals, which gives it competitive advantage. Different types of link have been identified between RBV and HRM. To start with, Resource Based Theory (RBT) sees resources and capabilities as the principal source of competitive advantage, which gives HR a central position to realize this. According to RBT, capabilities need to be built or developed rather than being bought.( Teece et al.1997) Therefore the management seeks to improve the utilization of an existing capabilities , particularly in a situation of rapid change. Another link  between HRM and RBT is related to the potential contribution of human resource policies or strategies.HR strategies are important in developing an organisation’s capabilities.HR practices related to recruitment and selection, managing performance, training and development and reward can be designed to attract, develop and retain high quality employees. Hence, it can be concluded that the linkages completely depend on the organization size, social and culture and the dynamic environment. It is seen that the resources need to strategically formulated to enhance organizational capabilities and competitive advantage of the firm. Indeed there are no clear linkages but the performance and effects are visible if not accomplished. REFERENCES Beer M, Sector B, Lawrence, P, Quinn M.D., Walton R, (1984), â€Å"Managing Human Assets†, New York: The free press Hamel, G., & C. K. Prahalad (1994), â€Å"Competing for the Future†, Boston, MA: Harvard,Business School Press. Hill, C, Jones, G. (2001), â€Å"Strategic Management: An integrated Approach† (5th ed), Boston, M.A.: Houghton Mifflin. Mintzberg, H. (1979). The Structuring of Organizations: A Synthesis of Research. Prentice Hall, Englewood. Mortimer, D & Ingersoll, L 2009, Human Resource and Industrial Relations Strategy, Pearson Australia. Simon, H, A,1991, â€Å"Bounded rationality and Organizational Learning† Organization Science, Vol 2, Iss 1,March 1991, pp 125-134. Last viewed on 24th August 2013. Sloan,A.(1963),†My Years with General Motors.†London,Sedgewick and Jackson. Storey, J (1989) â€Å"From personnel management to human resource management† ed Storey J. New perspective on human resource management, London : Routledge. Teece, D., G. Pisano, and A. Shuen (1997). â€Å"Dynamic capabilities and strategic management‟, Strategic Management Journal, 18, pp. 509-533. Ulrich, D. (1997), â€Å"Human Resource Champions : The Next Agenda for Adding Value and Delivering Results†, Boston: Harvard Business School Press Wheelan, T. L., Hunger, J.D. (1995),† Strategic Management and Business policy,† 5th ed, Reading : Addison – Wesley Longman. Whittington, R (2007) , â€Å"Theories of Strategy’, Strategy for business: a reader,† The Open University, Sage  Publications, in Mazzucato, M 2002.

Organizational Behaviour Essay

Part A consists of three questions. Be sure to include both the questions and the responses in the document you submit. Your total combined responses for these three questions should not exceed 1000 to 1500 words. 1. Marketing specialists at Napanee Beer Co. developed a new advertising campaign for summer sales. The ads were particularly aimed at sports events where Napanee Beer sold kegs of beer on tap. The marketing group worked for months with a top advertising firm on the campaign. Their effort was successful in terms of significantly higher demand for Napanee Beer’s keg beer at sports stadiums. However, the production department had not been notified of the marketing campaign and was not prepared for the increased demand. The company was forced to buy empty kegs at a premium price. It also had to brew some of the lower priced keg beer in vats that would have been used for higher priced specialty beer. The result was that Napanee Beer sold more of the lower priced keg beer and less of the higher priced products that summer. Moreover, the company could not initially fill consumer demand for the keg beer, resulting in customer dissatisfaction. Use open systems theory to explain what occurred at Napanee Beer Co. Begin with a brief description of open systems theory. Use your own words (paraphrase) and remember to cite all sources using APA style. The open systems theory states that organizations are entities that continually exchange resources with its external environment. The organization is dependent on the external environment for resources such as raw materials, employees, financial resources, and information and equipment which are the organizations inputs. Those inputs are used by the organizations internal subsystems, such as production and marketing, and are subsequently turned into outputs such as products, services, employee behaviours, profits/ losses, and waste/ pollution (McShane & Steen, 2009, p. 4). According to the open systems theory (McShane & Steen, 2009, p. 4), the organization Napanee Beer Company’s internal subsystems were not operating efficiently. Due to the lack of communication between the marketing group and the production team, production was unaware of the increase in demand for the product and did not order enough inputs to meet this larger demand. Consequently, the materials used were much more expensive than they would have been had they been ordered earlier. This oversight cost the company sales on higher priced specialty beer and caused customer dissatisfaction. Had the production team been aware of the success of the marketing campaign, which was geared towards sporting events where Napanee Beer sold kegs of beer on tap, they would have been able to order the appropriate amount of kegs, saving the company a lot of money. This is not an issue between the external and internal environment but an issue with Napanee’s internal subsystems effectiveness (McShane & Steen, 2009, p. 4.). The lack of communication between departments weakened the company’s ability to maximize its input to output capability; therefore, the company was not functioning at a high level of efficiency (McShane & Steen, 2009, p. 5.). 2. The sales office of a large industrial products wholesale company has an increasing problem: salespeople are arriving late at the office each morning. Some sales reps go directly to visit clients rather than showing up at the office as required by company policy. Others arrive several minutes after their appointed start time. The vice-president of sales doesn’t want to introduce time clocks, but this may be necessary if the lateness problem isn’t corrected. Using the MARS model of individual behaviour, diagnose the possible reasons salespeople may be engaging in this â€Å"lateness† behaviour. Begin with a brief description of the MARS model. Use your own words (paraphrase) and remember to cite all sources using APA style. The MARS model represents the four factors that influence people’s behaviour and performance. These factors are motivation, ability, role perceptions, and situational factors (McShane & Steen, 2009, p. 26). Motivation is what drives a person in a particular direction and the passion and persistence in which they pursue something (McShane & Steen, 2009, p. 26). The ability of an employee refers to their natural aptitudes as well as their acquired capabilities (McShane & Steen, 2009, p. 27). An employee’s competencies refer to his or her skills, knowledge and other characteristics that may be beneficial to the organization (McShane & Steen, 2009, p. 27). Role perception is the third factor in the MARS model. This refers to how closely the employee’s perception of their job duties aligns with the employer’s (McShane & Steen, 2009, p. 27). The final factor in the MARS model is situational factors. Situational factors involve conditions that are not part of the employee’s skill set or personality and are often out of their control (McShane & Steen, 2009, p. 28). According to the MARS model of individual behaviour, the possible reasons salespeople may be engaging in this â€Å"lateness† behaviour is first the lack of motivation they are feeling to show up to the office at their scheduled start time (McShane & Steen, 2009, pp. 26-28). This could be due in part to the lack of incentive they receive for showing up on time. Furthermore, the absence of negative consequences for showing up late has not shown the sales reps that the company is serious about this policy. In order for the sales reps to be motivated to show up to the office in the morning instead of seeing clients first, there needs to be some kind of reinforcement from the company that demonstrates that showing up on time is a behaviour that they expect and value. The sales reps were most likely hired because of their ability to gain new customers and sell products; therefore, they see this aspect of their job as being priority and do not see the value in showing up at the office first. The biggest factor effecting this situation is role perception (McShane & Steen, 2009, p. 27). The sales reps do not have a clear understanding that arriving at the office on time is an essential part of their job duties. It is clear from the sales reps behaviour that they are not aware of the importance of being at the office in the morning before they head out to see clients. While this may be a company policy in writing, it is not well practiced in the office, so it is perceived by employees as a recommendation rather than a rule. Situational factors may also contribute to the â€Å"lateness† problem (McShane & Steen, 2009, p. 28). This could be because face time at the office does not support their task goals which are to go out and see clients and s ell products. The sales reps might find the commute to the office an inconvenience whereas they could instead cut that commute out of their day and drive straight to a client’s office. 3. Big Box Construction Company has received warnings from government safety inspectors that employees at some of its construction sites are not wearing the required safety helmets and noise-protection equipment. The company could lose these contracts if safety practices are not maintained. The company has warned employees that they could be fired if they don’t wear the safety gear, but this has had little effect. Describe an A-B-C analysis for this situation and provide two types of behaviour modification interventions that might change employee behaviour in this situation. In an A-B-C analysis of this situation the antecedent would be the warning the employees received from the company informing them that they must wear safety gear on the job site. The behaviour is that some of the employees are not wearing safety equipment on the construction sites. And the Consequences are that the employees face termination if they continue to disregard this policy (McShane & Steen, 2009, p. 66). Two types of behaviour modification interventions that might change employee behaviour in this situation are: 1) Positive reinforcement, the supervisor can offer praise to the employees who are adhering to the safety guidelines (McShane & Steen, 2009, p. 66). In addition, there could be a reward in place such as a bonus for employees who are wearing their safety equipment on the site every day. 2) Punishment, although punishment might generate negative feelings toward the company and supervisor, it is necessary because of the severity of the breach (McShane & Steen, 2009, p. 67). The type of punishment will depend on the frequency of the offence. For example, the first offence could result in a write-up, the second offence in a suspension without pa y, and the third dismissal. Part B Read Case Study 4.1: Conestoga-Rovers and Associates on pages 97 and 98 of the textbook and answer the three discussion questions that follow it. Your answer for this case study should not exceed 600 to 800 words in length and should incorporate, where appropriate, content from Lessons 1, 2, 3, and 4. Questions 1) Why does Conestoga-Rovers and Associates and other companies try to create a positive work environment? The text explains that according to the dual cognitive-emotional attitude process, the positive emotional experiences employees encounter on a daily basis at Conestoga-Rovers contributes to their job satisfaction (McShane & Steen, 2009, p. 80). When employees are satisfied with their job they are more likely to be accommodating to the organization’s clients, helpful to their co-workers, and can experience increased overall productivity (McShane & Steen, 2009, p. 87). Therefore, it is beneficial for the company to foster a positive work environment where its employees are frequently feeling positive emotional experiences, so that their outlook on their jobs and the company will be much more favourable (McShane & Steen, 2009, p.80). According to the model of emotions, attitudes, and behaviour (McShane & Steen, 2009, p. 79), our emotions will have a direct impact on our behavioural intentions which in turn will most likely affect our behaviour. If the employees at Conestoga-Rovers are bombarded with positive emotions in their work environment, than they are more likely to behave in a way that is agreeable to the company. Conestoga-Rovers acknowledges and appreciates its human capital and realizes that its employees knowledge provide a competitive advantage to the company (McShane & Steen, 2009, p. 7). They realize that in order for the company to retain its valued employees and attract new ones they need to foster a positive work environment. By â€Å"adapting employment practices† to suit the needs of their employees the company is striving to retain its valued intellectual capital (McShane & Steen, 2009, p. 6). 2) How does this company manage to provide events and perks that employees value? At Conestoga-Rovers and Associates having fun and maintaining a work-life balance are fundamental to the company and its employees. This is evident in the many perks this company offers its employees that vary from its extremely active social committee to the onsite daycare facility. As stated in the case study, an employee of Conestoga-Rovers suggested that the company build an onsite daycare facility, never really expecting that they would take her request so seriously. However, much to the employee’s delighted shock the company complied. This demonstrates the company’s dedication to its employees wants and needs. In addition the company has assembled a social committee to listen to what it is that employee’s value and have evidently been able to deliver to the Conestoga-Rovers employees what they want. By doing this for their employees the organization is building organizational commitment and loyalty to the company (McShane & Steen, 2009, p. 89). By involving employees in company decisions that affect them and listening to their needs they are strengthening their employee’s social identity within the organization. This shows employees that their opinions are not only heard but are valued and trusted by the organization (McShane & Steen, 2009, p.89). The company has a â€Å"work hard-play hard mantra†, and their â€Å"social events and activities play an integral role in the company’s culture (McShane & Steen, 2009, p. 97). This is evidently closely aligned with its employee’s values; therefore, the employee’s feel comfort in their shared values with the company prompting them to remain loyal to the company (McShane & Steen, 2009, p. 89). 3) Is it possible that employees can have too much fun at work? From personal experience, I think that it is possible to have too much fun at work. When there are too many social events at work it takes away from an employee’s personal time and time at home with their family. An employee can feel forced to participate in social events that they do not want to partake in, and this can end up having a contrary effect to what the company is striving for. This added pressure to attend social events can add stress for the employee and take away from time needed to complete his/her work. Conversely, having fun at work can help build camaraderie amongst the employees and reduce the consequences of stress such as job burnout. Attending social functions can give employees a break from the monotonous routine of their job tasks; therefore, reducing the risk of emotional exhaustion and indifference towards their jobs (McShane & Steen, 2009, p. 91). Fun events with co-workers can also help to build on an employee’s social awareness. For instance, when employees are interacting with each other and building personal relationships as well as professional relationships they are better equipped to â€Å"perceive and understand the emotions† of their co-workers (McShane & Steen, 2009, p. 84). Because they are getting to know their peers personal situations a little better, the interaction allows them to be able to experience some empathy for their co-workers.

Stock and Debt

CHAPTER 12 QUESTIONS 12-1Operating leverage affects EBIT and, through EBIT, EPS. Financial leverage generally has no effect on EBIT—it only affects EPS, given EBIT. 12-2Because Firm A has a higher fixed operating costs, its operating income will change by a greater percentage than Firm B’s operating income if sales change. Firm A has a higher degree of operating leverage than Firm B. 12-3If sales tend to fluctuate widely, then cash flows and the ability to service fixed charges also will vary. Consequently, there is a relatively large risk that the firm will be unable to meet its fixed charges.As a result, firms in unstable industries tend to use less debt than those whose sales are subject to only moderate fluctuations. 12-4The tax benefits from debt increase linearly, which causes a continuous increase in the firm’s value and stock price. However, bankruptcy-related costs begin to be felt after some amount of debt has been employed, and these costs offset the benefits of debt. See Figure 12-5 in the textbook. 12-5Carson does have leverage because its EPS increases by a greater multiple than its sales when sales change. According to the information that is given, Carson’s DTL is 4 = 20/5.Because we have no information about either the firm’s operating fixed costs or its fixed financing costs, we cannot state whether the firm has operating leverage, financial leverage, or both. 12-6EBIT depends on sales and operating costs that generally are not affected by the firm’s use of financial leverage, because interest is deducted from EBIT. At high debt levels, however, firms lose business, employees worry, and operations are not continuous because of financing difficulties. Thus, financial leverage can influence sales and cost, hence EBIT, if excessive leverage causes investors, customers, and employees to be oncerned about the firm’s future. 12-7Expected EPS generally is measured as EPS for the coming years, and we typically do not reflec t in this calculation any bankruptcy-related costs. Also, EPS does not reflect (in a major way) the increase in risk and ks that accompanies an increase in the debt ratio, whereas P0 does reflect these factors. Thus, the stock price will be maximized at a debt level that is lower than the EPS-maximizing debt level. 12-8A firm can change the proportion of debt it uses in its capital structure. If the firm has too much (little) debt, it can reduce (increase) the proportion of debt in its capital structure.Such as change should decrease the firm’s WACC, and thus increase its value. 12-9Absolute’s optimal capital structure is 40 percent debt (= $20,000,000/$50,000,000), because the market price of the company’s stock ($130. 75) is maximized at this point. 12-10With increased competition after the breakup of AT&T, the new AT&T and the seven Bell operating companies’ business risk increased. With this component of total company risk increasing, the new companie s probably decided to reduce their financial risk, and use less debt, to compensate.With increased competition the chance of bankruptcy increases and lowering debt usage makes this less of a possibility. If we consider the tax issue alone, interest on debt is tax deductible; thus, the higher the firm’s tax rate the more beneficial the deductibility of interest is. However, competition and business risk have tended to outweigh the tax aspect as we saw from the actual debt ratios of the Bell companies. The Bell companies and the new AT&T lowered their debt ratios, for reasons along these lines. 2-11Several possibilities exist for the firm, but trying to match the length of the project with the maturity of the financing plan seems to be the best approach. The firm might want to finance the R&D with short-term debt and then, if the project’s results are successful, to raise the needed capital for production through long-term debt or equity. Another possibility would be to issue convertible bonds, which can be converted to common stock—a lower interest rate would be paid now, and in the future (presumably the stock price will increase with the new process) investors would trade in the bonds for stock.One also should keep in mind that this project, and R&D in general, is extremely risky and debt financing might not be available except at extremely high rates. For this reason, many R&D companies have low debt ratios, instead paying low dividends and using retained earnings for financing projects. Under Debt financing the expected EPS is $5. 78, the standard deviation is $1. 05, the CV is 0. 18, and the debt ratio increases to 75. 5%. (The debt ratio had been 70. 6 percent. Under Equity financing the expected EPS is $5. 51, the standard deviation is $0. 85, the CV is 0. 15, and the debt ratio decreases to 58. 8 percent. At this interest rate, debt financing provides a higher expected EPS than equity financing; however, the debt ratio is significan tly higher under the debt financing situation as compared with the equity financing situation. Because EPS is not significantly greater under debt financing, but the risk is noticeably greater, equity financing should be recommended.INTEGRATIVE PROBLEMANSWER: Business risk is the uncertainty associated with a firm’s projection of its future operating income.It also is defined as the risk faced by a firm’s stockholders if the company uses no debt. A firm’s business risk is affected by many factors, including: (1) variability in the demand for its output, (2) variability in the price at which its output can be sold, (3) variability in the prices of its inputs, (4) the firm’s ability to adjust output prices as input prices change, (5) the amount of operating leverage used by the firm, and (6) special risk factors (such as potential product liability for a drug company or the potential cost of a nuclear accident for a utility with nuclear plants).ANSWER: Oper ating leverage is the extent to which fixed operating costs are used in a firm’s operations. If a high percentage of the firm's total operating costs are fixed, and hence do not decline when demand falls, then the firm is said to have high operating leverage. Other things held constant, the greater a firm’s operating leverage, the greater its business risk. [pic] ANSWER: Financial leverage refers to the firm’s decision to finance with fixed-charge securities, such as debt and preferred stock. Financial risk is the additional risk, over and above the company's inherent business risk, orne by the stockholders as a result of the firm's decision to finance with debt. [pic] ANSWER: As we discussed above, business risk depends on a number of factors such as sales and cost variability, and operating leverage. Financial risk, on the other hand, depends on only one factor—the amount of fixed-charge capital (financing) the company uses. [pic] ANSWER: Here are the f ully completed statements: The expected TIE would be larger than 2. 5x if less debt were used, but smaller if leverage were increased. [pic] ANSWER: The optimal capital structure is the capital structure at which the tax-related benefits of leverage are exactly offset by debt’s risk-related costs.At the optimal capital structure, (1) the total value of the firm is maximized, (2) the WACC is minimized, and the price per share is maximized. [pic] ANSWER: Here is the sequence of events: 1. CDSS must first announce its recapitalization plans. 2. The company’s stock would have some market price before the announcement, in this case, $20 per share. The company would have to estimate (a) the price it would have to pay for the repurchased shares and (b) the method to be used for the repurchase (open market purchases, or a tender offer). 3.For simplicity, we assume that the firm could repurchase stock at its current price, $20, which also happens to be its book value per share. In actuality, investors would probably reassess their views about the firm’s profitability and risk under the new capital structure, and the stock price probably would rise. No current shareholder would be willing to sell at a price very far below the expected new price, although some would be afraid the recap plan might not go through, and those stockholders would sell out at a lower-than-expected price.Therefore, the stock price would adjust quickly to a new equilibrium that reflects the recapitalization. 4. CDSS would purchase stock, then issue debt and use the proceeds to pay for the repurchased stock. After the recapitalization, the company would have more debt but fewer common shares outstanding. A new EPS could be calculated, and the price would settle into its new level. [pic]4. ANSWER: The analysis for the debt levels being considered (in thousands of dollars and shares) is shown below: At Debt = $0: [pic] At Debt = $250,000: Shares repurchased = $250,000/$20 = 12,5 00.Remaining shares outstanding = 100,000 – 12,500 = 87,500. Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $500,000: Shares repurchased = $500,000/$20 = 25,000. Remaining shares outstanding = 100,000 – 25,000 = 75,000. (Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $750,000: Shares repurchased = $750,000/$20 = 37,500. Remaining shares outstanding = 100,000 – 37,500 = 62,500. (Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $1,000,000: Shares repurchased = $1,000,000/$20 = 50,000. Remaining shares outstanding = 100,000 – 50,000 = 50,000. (Note: EPS and TIE calculations are in thousands of dollars. [pic] [pic] ANSWER: We can calculate the price of a constant growth stock as DPS divided by rs minus g, where g is the expected growth rate in dividends: [pic] Because in this case all earnings are paid out to the stockholders, DPS = EPS. Further, because no earnings are plowed back, the firm’s EBIT is not expected to grow, so g = 0.Here are the results: Debt Level DPS rs Stock Price $ 0 $3. 00 15. 0% $20. 00 250,000 3. 26 15. 5 21. 03 500,000 3. 56 16. 5 21. 58* 750,000 3. 86 18. 0 21. 44 1,000,000 4. 8 20. 0 20. 40 * maximum ANSWER: A capital structure with $500,000 of debt produces the highest stock price, $21. 58, hence it is the best of those considered. ANSWER: We have seen that EPS continues to increase beyond the $500,000 optimal level of debt. Therefore, focusing on EPS when making capital structure decisions is not correct—while the EPS does take account of the differential cost of debt, it does not account for the increasing risk that must be borne by the equity holders. ANSWER: Currently, Debt/Total assets = 0%, so total assets = initial equity = $20 x 100,000 shares = $2,000,000.WACC = ($500,000/$2,000,000)[(11%)(0. 60)] + ($1,500,000/$2,000,000)(16. 5%) = 1. 65% + 12. 38% = 14. 03%. NOTE: If we had (1) used the equilibri um price for repurchasing shares and (2) used market value weights to calculate WACC, then we could be sure that the WACC at the price-maximizing capital structure would be the minimum. Using a constant $20 purchase price, and book value weights, inconsistencies might creep in. [pic] ANSWER: If the firm had higher business risk, then, at any debt level, its probability of financial distress would be higher.Investors would recognize this, and both rd and rs would be higher than originally estimated. It is not shown in this analysis, but the end result would be an optimal capital structure with less debt. Conversely, lower business risk would lead to an optimal capital structure that included more debt. ANSWER: The three degrees of leverage are calculated below: S = $1,350,000 New debt = $500,000 @ 11% VC = 0. 6S F = $40,000 (Note: Calculations are in thousands of dollars. ) [pic] [pic] DTL = DOL x DFL = 1. 08 x 1. 12 = 1. 21. The degree of operating leverage is defined as the percent age change in perating income (EBIT) associated with a given percentage change in sales. Because our company’s degree of operating leverage is 1. 08, this means that a given percentage increase in sales will lead to an 8 percent greater increase in EBIT. For example, if sales increased by 100 percent, then EBIT would increase by 108 percent. The degree of financial leverage is defined as the percentage change in EPS associated with a given percentage change in EBIT. Because CDSS’s degree of financial leverage is 1. 12, this means that if EBIT increased by 100 percent, then EPS would increase by 112 percent.The degree of total leverage shows the combined effects of operating and financial leverage on the firm’s earnings per share. It is defined as the percentage change in EPS brought about by a given percentage change in sales, and it is calculated as DOL x DFL. Because CDSS’s DTL is 1. 21, a 100 percent increase in sales would produce a 121 percent increa se in EPS. The degree of leverage concept is useful for planning purposes, as it gives an idea of what will happen to earnings as sales vary. Investors can use the concept to consider firms with different leverages if they expect sales to rise or fall. [pic]ANSWER: Because it is difficult to quantify the capital structure decision, managers consider the following judgmental factors when making capital structure decisions: (1)The average debt ratio for firms in their industry. (2)Pro forma tie ratios at different capital structures under different scenarios. (3)Lender/rating agency attitudes. (4)Reserve borrowing capacity. (5)Effects of financing on control. (6)Asset structure. (7)Expected tax rate. ANSWER: The following figure presents a graph of the situation: [pic] The use of debt permits a firm to obtain tax savings from the deductibility of interest.So the use of some debt is good; however, the possibility of bankruptcy increases the cost of using debt. At higher and higher leve ls of debt, the risk of bankruptcy increases, bringing with it costs associated with potential financial distress. Customers reduce purchases, key employees leave, and so on. There is some point, generally well below a debt ratio of 100 percent, at which problems associated with potential bankruptcy more than offset the tax savings from debt. Theoretically, the optimal capital structure is found at the point where the marginal tax savings just equal the marginal bankruptcy-related costs.However, analysts cannot identify this point with precision for any given firm, or for firms in general. Analysts can help managers determine an optimal range for their firm’s debt ratios, but the capital structure decision still is more judgmental than based on precise calculations. ANSWER: The asymmetric information concept is based on the premise that management’s choice of financing gives signals to investors. Firms with good investment opportunities will not want to share the benef its with new stockholders, so they will tend to finance with debt. Firms with poor prospects, on the other hand, will want to finance with stock.Investors know this, so when a large, mature firm announces a stock offering, investors take this as a signal of bad news, and the stock price declines. Firms know this, so they try to avoid having to sell new common stock. This means maintaining a reserve of borrowing capacity so that when good investments come along, they can be financed with debt. 12-17Computer-Related Problem a. If the outstanding debt has to be refunded at the new higher interest rate, expected EPS would decline under either financing plan. However, EPS would decline more if debt financing were used. Therefore, ebt financing has become relatively less attractive than stock financing. The output generated by the model is given below:ETHICAL DILEMMA A BOND IS A BOND †¦ IS A STOCK †¦ IS A BONDOCK?Ethical dilemma: Wally is evaluating whether to use a new (to the United States) financial instrument to raise funds to finance Ohio Rubber & Tire’s (ORT) expansion plans. The new instrument, which is called a bondock, has some characteristics of traditional debt and some characteristics that are similar to common equity. The cost of capital associated with bondocks is slightly higher than traditional debt, but significantly lower than common equity.If ORT’s expansion plans are successful, both its bondholders and its stockholders will receive handsome returns. However, if the expansion plans are not successful, then it appears that stockholders can still benefit but at the expense of bondholders. ORT’s executives are some of the company’s major stockholders, so it appears that they would be in favor of issuing bondocks. Discussion questions: ?Is there an ethical problem? If so, what is it? The question here is whether it is appropriate to use a new financial instrument called a bondock to raise funds needed for expansi on.Because the cost of capital associated with a bondock is slightly higher than the cost of debt but significantly lower than the cost of equity, management thinks that it might be appropriate to use this medium to raise funds to invest in risky ventures. If the expansion investment is successful, both the bondholders and the stockholders will benefit. Of course, the benefit to stockholders will be greater than the benefit to bondholders. On the other hand, if the expansion investment is unsuccessful, both bondholders and stockholders will suffer financial losses.But, because the market values of the bondocks will decline significantly, the firm could benefit by repurchasing these financing instruments in the capital markets. In this case, stockholders would benefit at the expense of bondholders. As a result, the ethical question is whether ORT should raise funds using bondocks knowing that there is a possibility that its stockholders will gain at the expense of its bondholders. ?I s it appropriate for ORT to use bondocks to raise funds that are needed for expansion? Is there an ethical dilemma here? Maybe not. Remember that investors take risks when purchasing the stocks and bonds of firms.In this case, ORT would be wise to use bondocks if the purpose is to raise funds for expansion while trying to lower the cost of capital associated with â€Å"going to† the financial markets. It might be argued that it is unethical for ORT to use bondocks if the intent is to benefit executives who receive bonuses and incentives in the form of the company’s stock. It also might be argued that it is unethical if the intent is to harm the position of bondholders.However, if the primary objective is to increase the value of the firm, then it is difficult to argue that issuing this new financial instrument is unethical. What would you do if you were Wally? It seems that the best solution is for Wally to try to get more information about the new financial instrument called a bondock. Because little is known about bondocks and they appear to be rather complex financial instruments, Wally should gather more information about the risks as well as the benefits to ORT associated with using this medium to raise funds for expansion. Once he has performed his due diligence, Wally should determine whether using bondocks will benefit the firm and its investors in general.If the answer is â€Å"no,† then bondocks should not be used. References: The following articles might be assigned for background material: Emily Thornton, â€Å"Gluttons at the Gate,† BusinessWeek, October 30, 2006, pp. 58-66. David Henry, â€Å"Cross-Dressing Securities,† BusinessWeek, March 13, 2006, pp. 58-59

Case Writeup Essay Example | Topics and Well Written Essays - 1000 words

Case Writeup - Essay Example Kiva’s existing business model does not allow lenders to receive interest against the funds they loan however; Kiva’s field partners charge the interest from the entrepreneurs. Though this rate is lower however, it is considered as enough to meet the requirements of the Kiva’s field partners. One group which obviously be affected by this will be the poor entrepreneurs because if start paying the interest to its lenders, this cost will certainly be passed on to the actual borrowers. Secondly, by not paying the interest, Kiva’s lenders are being affected though most of its lenders lend the money to gain the emotional returns rather than the financial returns. The situation described above therefore indicate towards the adaptation of a business model which can effectively combine both the elements together in order to create value for each of the stakeholders in terms of financial rewards. A closer analysis of the facts would suggest that Kiva is facing two important problems i.e. strategic as well as of operational nature. It is Strategic in the sense that paying interest rates to the lenders may dilute its overall appeal and can significantly reduce its overall public image. Further, it also need to maintain its operational viability therefore in order to attract more funds, it may require paying interest to the lenders. Apart from this, a change in the business model of the firm would also force it to change its very character therefore may further require it to complete important legal requirements in order to comply with the existing legal requirements for the commercial organizations. Apart from this since the lenders of Kiva may not be directly into the business of lending therefore they may also be subject to the different regulatory requirements which can effectively discourage them to lend to Kiva owing to

How is the Enlightenment connected to the Scientific Revolution Essay

How is the Enlightenment connected to the Scientific Revolution - Essay Example People thought the globe was the midpoint of the cosmos (Bacon 1960). That meant that the moon, planets, and the sun revolved around the earth. Europeans used ideas based on the physical world while Romans and Greeks believed in the Bible. However, attitudes changed in the mid 1500. A spirit of curiosity gave rise to a scientific revolution (Burns 2003). Scholars were willing to question old ideas and the level of focus was improved with much observation. Europeans were leading in the exploration leading to discovery of new lands and the establishment of universities. Francis Bacon, an English writer, assisted in fostering this approach. He urged scientists to base their opinions on what they could see in the world (Bacon 1960). R. Descartes used mathematics and logic to exert his immense influence. In the mid 1600, Isaac Newton established the law of gravity. He used mathematics to show the law of gravity controlled the motion of the planets and objects on earth (Burns 2003). Paris became the European cultural center in 1700 (Oslar 2000) where people from the entire Europe gathered to new ideas about enlightenment. Marie Therese became popular for hosting and funding ideas on enlightenment. According to the letters by Isaac Newton, religion and uniqueness were necessary for innovation. In the letters, Newton said that the discovery came as a result of patient thought. The letters contained significant propositions but were imperfect in some parts. According to Isaac Newton, no matter how matter was scattered, it would be infinitely attracted towards the center (Hankins 1985). This meant that at the center there would have a particle that is attracted to all other particles at equal measure (Goodman 1973). This became known as a state of perfect equilibrium. According to the observations of the great instauration by Francis Bacon, human intellect is responsible for its own challenges and difficulties (Oslar 2000). Therefore, man should use the help at his dispo sal to address the difficulties that he faces. This exposed the levels of ignorance and the damage it causes to the quality of life. He argued that through human efforts and determination life can be restored to the perfect condition or reduced to better condition that it is now (Burns 2003). Mathematics and philosophy grew so rapidly that the two had to be separated (Sax 2001). The impact is still being felt today. Scientist came to know that observing and explaining would help them in discovering the natural laws. The scientific method became increasingly prominent (Portar 2001). The discovering had an impact on education in all levels. As more people trained in science and physics, technology advanced and new technologies were discovered. Enlightenment had unprecedented impact in the quality of life (Goodman 1973). Complicated farm machinery and textile industry were discovered causing scientific and the industrial revolution (Sax 2001). Scientific revolution sought a break from a religious and theological approach to life (Hankins 1985). In medieval times, society was largely governed by church views and traditions which discouraged open-mindedness (Oslar 2000). Enlightenment was a movement that challenged people to think and make independent decisions. Newton, Descartes and Priestly played a significant role in the discovery of sextants slide rule and

Using a range of company examples from global retailing, critically Essay

Using a range of company examples from global retailing, critically review the extent to which you think competitive advantage is due to the possession of unique resources - Essay Example Gaining competitive advantage by using the resources of the firm can include access to natural as well as other resources which can help organizations to stay ahead of the competition. This paper will discuss about four firms from retail industries and will discuss as to whether the competitive advantage possessed by each of the firm is based upon the unique resources possessed by them. By using different strategic frameworks and theories, this paper will focus upon how firms like Tesco, Carrefour, Wal-Mart and Aeon use their unique resources to gain competitive advantage and remain at the top of their industry. Frameworks and theories which will be used for analyzing the above thesis will range from Porter’s five forces model, Value Chain analysis, VRIO as well as Core Competences. By using these frameworks, this paper will analyze and explore as to how leading firms in retail industry has been able to use their unique resources to remain at the top of industry in which they are operating. Competitive Advantage is considered as the strategic advantage firms have over their competitors in the industry they operate. Achievement of a competitive advantage actually strengthens the position of a firm in the industry and business environment they operate. Competitive advantage theory suggests that businesses should produce and sell high end products and sell them at higher prices in the market. Michael Porter who outlined this theory suggested that organizations need to possess attributes or group of attributes which can actually distinguish them from others in the market. Competitive advantage is based upon the notion of resource based view which outlines that organizations can have certain resources which can actually distinguish from others in the industry. (Stalk, 1992) The resource based view suggests that firms possessing competitive advantage are primarily based upon the application of resources which are at the disposal of the firms. This