Financial Statement Analysis of Ibm

Financial Statement Analysis of IBM Financial Statement Analysis of IBM I. Company Facts IBM – International Business Machines Corporation The home office of IBM is located in Armonk, Town of North Castle, New York, United States. IBM was founded in 1911 as the Computing Tabulating Recording Company (CTR) through a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company.CTR adopted the name International Business Machines in 1924, using a name previously designated to CTR's subsidiary in Canada and later South America. Standard Industrial Classification Codes are 7379 which are mainly on computer and relative stuff. Chief Executive Officer (CEO) of IBM now is Virginia M. Rometty. Chairman of the Board of IBM now is Samuel J. Palmisano. The end date of recent fiscal year of IBM is Dec. 31st 2011. Main services IBM provides include business consulting, IT related services, outsourcing service and traini ng.Main products IBM provides include mainframe, software, system and storage. IBM’s major operations consist of five business segments: Global Technology Services, Global Business Services, Software, Systems and Technology and Global Financing. In the latest fiscal year, IBM has an amount of 433,362 wholly owned employees all over the world. PricewaterhouseCoopers LLP (PwC) is the independent auditor retained to audit IBM’s consolidated financial Statements and the effectiveness of the company's internal control over financial reporting.The stock ticker symbol is IBM. IBM common stock is listed on the New York Stock Exchange, the Chicago Stock Exchange, and outside the United States. And the latest stock price was $188. 32 on Nov. 14th 2012 on NYSE. II. Business and Strategy Analysis 1. Industry Description and Competitive Anlysis Since IBM is a highly diversified company, it concentrates on several industries at the same time. So let’s say IBM mainly concentra tes on the computer related hardware and software manufacturing industries. As we all now, these two industries supplement each other and depend on each other while the most competitive companies always work on both industries at the same time. The computer related software and hardware manufacturing industry is characterized by significant research and development activity and rapid technological change. The rapid pace of innovation in this sector creates a constant demand for newer and faster products and applications. While the sector has grown faster than most other industries over the past several decades, it faces challenges from rising costs, global market share, and the rapid pace of innovation.The main competitors for IBM now are Hewlett-Packard, Dell and Microsoft. Here I will use the Porter five forces analysis to give a competitive analysis among these four companies. Threat of new competition: The market of this industry is profitable in some parts like high-level softw are and frames, not too profitable in some other parts like PCs. So we can say the market is still profitable and is attracting the new entrants, which has the possibility to decrease profitability for all firms in this industry.While in this industry, because of the existence of several big companies, the barriers to entry are relatively high which are non-profitable for the new entry firms. The several big companies have held very high brand equity, customer loyalty, efficient distribution methods and scale effect to decrease the costs and increase the profits. There is not too much threat from the new firms to compete with IBM, there are high possibility for other main competitors like HP, Dell and Microsoft to enter the markets where IBM is making high profit, well they have the R&D capabilities.But to make the biggest profits, although IBM's main competitors are Hewlett-Packard, Dell and Microsoft, each of these companies has a different focus area. Dell makes most of its money on PC and server hardware, while Hewlett-Packard is more diversified as the leader in PCs and Imaging ; Printing as well as offering IT services and Microsoft concentrates on the computer software development. So we can conclude that there is threat of new competition, but the level is relatively low.Threat of substitute products or services: The threat of substitute products or services is relatively high compared with the threat of new competition. Also these threats come from the main competitors. For products, such as PC, most customers will compare the price, screen size, life time and other attributes instead of just the brand the same way as services such as IT consulting etc. Bargaining power of customers: The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes.In this factor, because customers of these two industries have many channe ls to access the products and services, high information availability, different choices, differentiated advantages of products and customers is also kind of price sensitive. So we can conclude that the bargaining power of customers is strong. Bargaining power of suppliers: The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes.Because there are plenty of suppliers in most parts, presence of substitute keeps being produced, degree of differentiation of inputs is not high enough and supplier competition is very strong. Then we can conclude that bargaining power of suppliers is also in a lower level. Intensity of competitive rivalry: Intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Sustainable competitive advantages through innovation, all these four big competitive companies have strong R&D team and invest much money on it.And we can always see the advertisements of their products anywhere. Each company has a differentiated competitive strategy to concentrate on their own areas and holds sustainable competitive advantages through innovation. So we can conclude that the intensity of competitive rivalry is very high. Given the Porter five forces analysis above, here we have a general conclusion that computer related hardware and software industries are relatively highly competitive and sustainable based on the current situation and future development trends.There do have some profitable niche market and some areas can be developed further. The big four companies have their own advantages and emphasis and also compete heavily with each other. There is no easy way for each of them to lead in all. 2. Industry’s Future Prospects Assessment When we come to talk about the future prospects of computer related hardware and software in dustries, I’m sure that it will not be that promising like nanotechnology or genetic therapy which is still in research period, since he computer related hardware and software industries have been developed many years, most of products, technologies and services have been mature enough. But it is still profitable and sustainable because the world has been established based on these two industries. Without their support, the world cannot step forward even a little. And the intense competition and fast replacement speed will drive these two industries to be developed faster and faster.There may be some lawsuits and governmental regulations there confronting companies, such as the plagiarization, copyright infringement, anti-monopoly, cutthroat competition, tax issue, local protection and so on. These will be the main legal issues that companies of two these industries are certainly meeting now and will still never end in the future. Plagiarization and copyright infringement wil l be the two main issues that these companies should pay more emphasis on cuz these two are the vital parts for them to keep their competitive advantages and make profits.Incorporating the relative small companies may be judged by the court saying it is buying the potential competitor due to the concern of monopoly of government. Cutthroat competition may not happen, while once it happened, it will certainly be a disaster. Tax issue and the local protection are always come together. Local government may protect the local companies by dealing high tax to the foreign competitors. Furthermore, due to the fast replacement speed, the price of products and services in these two industries will never be high as long as there is no monopoly.So the cost control is one of the key parts to determine these companies’ future. And innovation will never be too much. 3. Summarization and Evaluation of IBM’s Future Goals and Strategies The next decade holds enormous promise for IBM. Th ey are uniquely positioned to deliver the benefits of a vast new natural resource – a gusher of data from both man-made and natural systems that can now be tapped to help businesses and institutions succeed in an increasingly complex and dynamic global economy.IBM has steadily realigned its business to lead in a new era of computing and to enable its clients to benefit from the new capabilities that era is creating. As a consequence, its investors benefit from a business model that is both sustainable over the long term and fueled by some of the world’s most attractive high-growth markets and technologies. It will be on track toward its 2015 Road Map goal of at least $20 in operation earnings per share and $20 billion in revenue growth by 2015. This goal for IBM is quite suitable.There are four high-growth spaces as following, growth markets, business analytics, cloud and smarter planet. These four spaces IBM is working hard on will certainly drive to high profits due to its high emphasis and profession. The world is undergoing disruption, but IBM now stands out among its industry peers and in business at large as distinctively able to keep moving to the future, and to keep generating differentiating value for its clients, its employees and the citizens of the world. III. Accounting AnalysisThe accompanying Consolidated Financial Statements and foot notes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). 1. Revenue The revenue recognition principle provides guidance on when a company must recognize revenue. To recognize means to record it. If revenue is recognized too early, a company would look more profitable than it is. If revenue is recognized too late, a company would look less profitable than it is. The company recognizes revenue when it is realized or realizable and earned.The company considers revenu e realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Delivery does not occur until products have been shipped or services have been provided to the client, risk of loss has transferred to the client, and either client acceptance has been obtained, client acceptance provisions have lapsed, or the company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied.The sales price is not considered to be fixed or determinable until all contingencies related to the sale have been resolved. IBM’s revenue was growing in an increasing speed and its pre-tax income margin grew from 18. 9 percent in 2009 to 19. 7 percent in 2010 to 20. 02 percent in 2011 which is the ninth consecutive increasing year. If only based on this, IBM was doing better and better in last three years. 2. Major Expenses The expe nse recognition (or matching) principle, prescribes that a company record the expenses it incurred to generate the revenue reported.The expense recognition (or matching) principle aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses. This matching of expenses with the revenue benefits is a major part of the adjusting process. Under the accrual basis of accounting, expenses are recognized when incurred, usually when goods are received or services are consumed. This may not be when the goods or services are actually paid for. The point at which an expense is recognized is dependent on the nature of the transaction or other event that gives rise to the expense.The major expense of IBM includes stock-based compensation, prepared expense, advertising and promotional expense, research expense, development expense, engineering expense, workforce rebalancing charges, retirement-related costs, amortization of acquired intangibles assets, interest expense and other expense. Below tables show the main expenses IBM recognized from 2009 to 2011. Table 3-2-1 Total Expense and Other Income ($ in millions) For the year ended December 31:| 2011| 2010| 2009|Total consolidated expense and other (income)| $29,135| $26,291| $25,647| Total operating (non-GAAP) expense and other (income) | $28,875| $26,202| $25,603| Total consolidated expense-to-revenue ratio| 27. 30%| 26. 30%| 26. 80%| Operating (non-GAAP) expense-to-revenue ratio| 27. 00%| 26. 20%| 26. 70%| We can see from this table that the expense is increasing with time goes on. While compared with the increasing speed of revenue and that of expense-to-revenue, we can figure out a little bit progress on expense control of IBM. Table 3-2-2 Selling, General and Administrative ($ in millions) For the year ended December 31:| 2011| 2010| 2009|Selling, general and administrative expense| | | | Selling, general and administrative—other| $20,287| $18,585| $17,872| Advertising and promotional expense| $1,373| $1,337| $1,255| Workforce rebalancing charges| $440| $641| $474| Retirement-related costs| $603| $494| $503| Amortization of acquired intangibles assets| $289| $253| $285| Stock-based compensation| $514| $488| $417| Bad debt expense| $88| $40| $147| Total consolidated selling, general and administrative expense| $23,594| $21,837| $20,952| Non-operating adjustments| | | |Amortization of acquired intangible assets| ($289)| ($253)| ($285)| Acquisition-related charges| ($20)| ($41)| ($8)| Non-operating retirement-related (costs)/income| ($13)| $84| $127| Operating (non-GAAP) selling, general and administrative expense| $23,272| $21,628| $20,787| Table 3-2-3 Research, Development and Engineering ($ in millions) For the year ended December 31:| 2011| 2010| 2009| Total consolidated research, development and engineering| $6,258| $6,026| $5,820| Operating (non-GAAP) research, development and engineering| $6,345| $6,152| $5,943| Table 3-2-4 Interes t Expense ($ in millions)For the year ended December 31:| 2011| 2010| 2009| Interest expense| $411| $368| $402| From all the tables above, we can find that the most important or the highest portion of the expense is the selling, general and administrative expense which includes most of the expense. 3. Investments IBM’s 2009 cash investment was $1. 2 billion for six acquisitions — five of them in key areas of software. And after investing $ 5. 8 billion in R &D and $3. 7 billion in net capital expenditures, IBM was able to return more than $10 billion to you — $7. billion through share repurchase and $2. 9 billion through dividends. Last year’s dividend increase was 10 percent, marking the 14th year in a row in which it has raised its dividend. IBM’s 2010 cash flow has enabled it to invest in the business and to generate substantial returns to investors. Our 2010 cash investment was $6 billion for 17 acquisitions— 13 of them in key areas of s oftware. After investing $6 billion in R&D and $4 billion in net capital expenditures, IBM was able to return more than $18 billion to you— $15. billion through share repurchases and $3. 2 billion through dividends. Last year’s dividend increase was 18 percent, marking the 15th year in a row in which it has raised its dividend. Over the past decade, IBM has returned $107 billion to you in the form of dividends and share repurchases, while investing $70 billion in capital expenditures and acquisitions, and almost $60 billion in R&D. IBM’s 2011 cash flow has enabled IBM to invest in the business and to generate substantial returns to investors, while spending $6. billion on R&D. In 2011 IBM invested $1. 8 billion for five acquisitions in key areas of software and $4. 1 billion in net capital expenditures. IBM was able to return $18. 5 billion to you — $15 billion through share repurchases and $3. 5 billion through dividends. Last year’s dividend incr ease was 15 percent, marking the 16th year in a row in which IBM has raised its dividend, and the 96th consecutive year in which it has paid one. From the table and the description above, the R&D investment was always above 5% of total revenue.IBM put much emphasis on its R&D to keep the sustainable development and competitive advantages. 4. Inventories Raw materials, work in process and finished goods are stated at the lower of average cost or market. Cash flows related to the sale of inventories are reflected in net cash from operating activities in the Consolidated Statement of Cash Flows. Table 3-4-1 Inventories ($ in millions) At December 31:| 2011| 2010| 2009| Finished goods| $589| $432| $533| Work in process and raw materials| $2,007| $2,018| $1,960| Total| $2,595| $2,450| $2,494| 5.Property, Plant and Equipment Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives of cert ain depreciable assets are as follows: buildings, 30 to 50 years; building equipment, 10 to 20 years; land improvements, 20 years; plant, laboratory and office equipment, 2 to 20 years; and computer equipment, 1. 5 to 5 years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, rarely exceeding 25 years.Below is the table of Property, Plant and Equipment from 2009 to 2011 including the depreciation. Table 3-5-1 Property, Plant and Equipment ($ in millions) At December 31:| 2011| 2010| 2009| Land and land improvements| $786| $777| $737| Buildings and building improvements| $9,531| $9,414| $9,314| Plant, laboratory and office equipment| $26,843| $26,676| $9,314| Plant and other property—gross| $37,160| $36,867| $35,940| Less: Accumulated depreciation| $24,703| $24,435| $23,485| Plant and other property—net| $12,457| $12,432| $12,455| Rental machines| $2,964| $3,422| $3,656|Less: Accumulated depreciation| $1,538 | $1,758| $1,946| Rental machines—net| $1,426| $1,665| $1,710| Total—net| $13,883| $14,096| $14,165| The data from the table show a relatively steadily decreasing status of IBM’s property, plant and equipment in all. This means a good control and a relatively 6. Goodwill and Intangibles Below tables show the intangibles from 2009 to 2011 Table 3-6-1 Intangibles in 2009 ($ in millions) At December 31, 2009:| GrossCarryingAmount| Accumulated Amortization| Net Carrying Amount| Intangible asset class| | | |Capitalized software| $1,765| ($846)| $919| Client relationships| $1,367| ($677)| $690| Completed technology| $1,222| ($452)| $770| Patents/trademarks| $174| ($59)| $115| Other*| $94| ($75)| $19| Total| $4,622| ($2,109)| $2,513| Table 3-6-2 Intangibles in 2010 ($ in millions) At December 31, 2010:| GrossCarryingAmount| Accumulated Amortization| Net Carrying Amount| Intangible asset class| | | | Capitalized software| $1,558| ($726)| $831| Client relationships| $1,7 09| ($647)| $1,062| Completed technology| $2,111| ($688)| $1,422|In-process R&D| $21| $0| $21| Patents/trademarks| $211| ($71)| $140| Other*| $39| ($28)| $11| Total| $5,649| ($2,161)| $3,488| Table 3-6-3 Intangibles in 2011 ($ in millions) At December 31, 2011:| GrossCarryingAmount| AccumulatedAmortization| NetCarryingAmount| Intangible asset class| | | | Capitalized software| $1,478| ($678)| $799| Client relationships| $1,751| ($715)| $1,035| Completed technology| $2,156| ($745)| $1,411| In-process R&D| $22| ($1)| $21| Patents/trademarks| $207| ($88)| $119| Other*| $29| ($22)| $7| | $5,642| ($2,250)| $3,392|The net carrying amount of intangible assets decreased $96 million during the year ended December 31, 2011, primarily due to amortization, partially offset by intangible asset additions. No impairment of intangible assets was recorded in any of the periods presented. Total amortization was $1,226 million, $1,174 million and $1,221 million for the years ended December 31, 2011, 2 010 and 2009 respectively. The aggregate intangible amortization expense for acquired intangibles (excluding capitalized software) was $634 million, $517 million and $489 million for the years ended December 31, 2011, 2010 and 2009 respectively.In addition, in 2011 the company retired $1,133 million of fully amortized intangible assets, impacting both the gross carrying amount and accumulated amortization for this amount. The amortization expense for each of the five succeeding years relating to intangible assets currently recorded in the Consolidated Statement of Financial Position is estimated to be the following at December 31, 2011: Table 3-6-4 Estimated consolidated statement of financial position ($ in millions) | Capitalized Software| Acquired Intangibles| Total| 012| $480| $634| $1,113| 2013| $250| $590 | $840 | 2014| $70| $446 | $516 | 2015| —| $340 | $340 | 2016| —| $303 | $303 | The changes in the goodwill balances by reportable segment, for the years ended December 31, 2009, 2010 and 2011, are as follows: Table 3-6-5 Goodwill Balances in 2009 ($ in millions) Segment| Balance anuary 1, 2009| Goodwill Additions| Purchase Price Adjustments| Divestitures| Foreign Currency Translation and Other Adjustments| Balance December 31, 2009|Global Business Services| $3,870 | —| —| —| $172 | $4,042 | Global Technology Services| $2,616 | $10 | $1 | —| $150 | $2,777 | Software| $10,966 | $994 | ($50)| ($13)| $708 | $12,605 | Systems and Technology| $772 | —| ($7)| —| $1 | $12,605 | Total| $18,226 | $1,004 | ($56)| ($13)| $1,031 | $20,190 | Table 3-6-6 Goodwill Balances in 2010 ($ in millions) Segment| Balance anuary 1, 2010| Goodwill Additions| Purchase Price Adjustments| Divestitures| Foreign Currency Translation and Other Adjustments| Balance December 31, 2010|Global Business Services| $4,042 | $252 | $0 | —| $35 | $4,329 | Global Technology Services| $2,777 | $32 | ($1)| —| ($104)| $2,704 | S oftware| $12,605 | $4,095 | ($52)| —| $315 | $16,963 | Systems and Technology| $766 | $375 | ($1)| —| ($1)| $1,139 | Total| $20,190 | $4,754 | ($54)| —| $245 | $25,136 | Table 3-6-7 Goodwill Balances in 2009 ($ in millions) Segment| Balance anuary 1, 2011| Goodwill Additions| Purchase Price Adjustments| Divestitures| Foreign Currency Translation and Other Adjustments| Balance December 31, 2011|Global Business Services| $4,329 | $14 | $0 | ($10)| ($20)| $4,313 | Global Technology Services| $2,704 | —| ($1)| ($2)| ($55)| $2,646 | Software| $16,963 | $1,277 | $10 | ($2)| ($127)| $18,121 | Systems and Technology| $1,139 | —| ($6)| —| $0 | $1,133 | Total| $25,136 | $1,291 | $2 | ($13)| ($203)| $26,213 | Purchase price adjustments recorded in the 2011, 2010 and 2009 were related to acquisitions that were completed on or prior to December 31, 2010, 2009 or 2008 respectively, and were still subject to the measurement period that ends at the earlier of 12 months from the acquisition date or when information becomes available.There were no goodwill impairment losses recorded in 2011, 2010 or 2009 and the company has no accumulated impairment losses. IV. Financial Analysis 1. Financial Ratio Display and Interpretation 2. 1 Liquidity and Efficiency Ratios a. Current ratio 2011 Current ratio=Current assetsCurrent liabilities=50,92842,123=1. 21:1 2010 Current ratio=Current assetsCurrent liabilities=48,11640,562=1. 19:1 The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.Here, we can conclude that IBM is totally able to pay for its debt. b. Quick ratio (Acid-test ratio) 2011 Quick ratio=Cash+Short-term investments+ Current receivablesCurrent liabilities=11,922+4,895+18,38242,123=0. 84:1 2010 Quick ratio=Cash+Short-term investments+ Current receivablesCurrent liabilities=10,661++4,895+17, 39140,562=0. 81:1 Quick assets are cash, short-term investments, and current receivables. These are the most liquid types of current assets. The acid-test ratio, also called quick ratio, reflects on a company’s short-term liquidity.The quick ratio is more conservative than the current ratio, a more well-known liquidity measure, because it excludes inventory from current assets. Inventory is excluded because some companies have difficulty turning their inventory into cash. Here, the quick ratio is pretty good for IBM. c. Accounts receivable turnover 2011 Accounts receivable turnover=Net salesAverage accounts receivable, net=106,91617,886. 5=5. 97 times 2010 Accounts receivable turnover=Net salesAverage accounts receivable, net=99,87016,724=5. 97 timesAn accounting measure used to quantify a firm's effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. d. Inventory tur nover 2011 Inventory turnover=Cost of goods soldAverage inventory=56,7782,522. 5=22. 51 times 2010 Inventory turnover=Cost of goods soldAverage inventory=53,8572,472=21. 89 times The Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. e. Days’ sales uncollected 011 Days’ sales uncollected=Accounts receivable, netNet sales*365=18,382106,916*365=62. 75 days 2010 Days’ sales uncollected=Accounts receivable, netNet sales*365=17,39199,870*365=63. 56 days Accounts receivable turnover provides insight into how frequently a company collects its accounts. Days’ sales uncollected is one measure of this activity. f. Days’ sales in inventory 2011 Days’ sales in inventory=Ending inventoryCost of goods sold*365=2,59556,778*365=16. 68 days 2010 Days’ sales in inventory=Ending inventoryCost of goods sold*365=2,45053,857*365=16. 0 days Days’ sales in inventory is a useful measure in evaluating inventory liquidity. A measure of how quickly a company turns its inventory into sales. Days’ sales in inventory is linked to inventory in a way that days’ sales uncollected is linked to receivables. g. Total assets turnover 2011 Total assets turnover=Net salesAverage total assets=106,916114,942. 5=0. 93 times 2010 Total assets turnover=Net salesAverage total assets=99,870111,237=0. 90 times The total asset turnover ratio measures the ability of a company to use its assets to efficiently generate sales.This ratio considers all assets, current and fixed. Those assets include fixed assets, like plant and equipment, as well as inventory, accounts receivable, as well as any other current assets. 2. 2 Solvency Ratios a. Debt ratio 2011 Debt ratio=Total liabilitiesTotal assets=96,197 116,433 =82. 6% 2010 Debt ratio=Total liabilitiesTotal assets=90,279113,452=79. 6% A ratio that indicates what proportion of debt a company has relative to its assets. The measure giv es an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. b. Equity ratio 011 Equity ratio=Total equityTotal assets=20,236116,433=17. 4% 2010 Equity ratio=Total equityTotal assets=23,172113,452=20. 4% A financial ratio indicating the relative proportion of equity used to finance a company's assets. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book value), but the ratio may also be calculated using market values for both, if the company's equities are publicly traded. c. Interest coverage ratio 2011 Interest coverage ratio=Income before interest expense and income taxesInterest expense=22,904411=55. times 2010 Interest coverage ratio=Income before interest expense and income taxesInterest expense=20,923368=56. 9 times A metric used to measure a company's ability to meet its debt obligations. It is calculated by taking a company's earnings before interest and t axes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy. 2. Profitability Ratios a. Return on total assets 2011 Return on total assets=Net incomeAverage total assets=15,855114,942. 5=13. 8% 2010 Return on total assets=Net incomeAverage total assets=14,833 111,237=13. 3% A ratio that measures a company's earnings before interest and taxes (EBIT) against its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid. b. Return on equity 2011 Return on equity=Net income-Preferred dividendsAverage equity=15,855-3,47321704=57. % 2010 Return on equity=Net income-Preferred dividendsAverage equity=14,833- 3,177 22963. 5=50. 8% The amount of net income ret urned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. c. Net income as a percentage of net sales (Profit margin ratio) 2011 Net income as a percentage of net sales=Net incomeNet sales=15,855106,916=14. 8% 2010 Net income as a percentage of net sales=Net incomeNet sales=14,833 99,870=14. % A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. d. Gross profit rate (Gross margin ratio) 2011 Gross profit rate=Net sales-Cost of goods soldNet sales=106,916-56,778106,916=46. 9% 2010 Gross profit rate=Net sales-Cost o f goods soldNet sales=99,870-5385799,870=46. % A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations. 2. 4 Market ratios a. Price-Earnings ratio 2011 Price-Earnings ratio=Market price per common shareEarnings per share=183. 8813. 25=13. 9:1 010 Price-Earnings ratio=Market price per common shareEarnings per share=146. 7611. 69=12. 6:1 P/E ratio is an equity valuation measure defined as market price per share divided by annual earnings per share. b. Dividend yield 2011 Dividend yield=Annual cash dividends per shareMarket price per share=2. 90183. 88=1. 6% 2010 Dividend yield=Annual cash dividends per shareMar ket price per share=2. 50146. 76=1. 7% A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. . Comparison and Interpretation of Ratio Values With Main Competitors Microsoft All the comparisons are based on the data of 2011. 3. 5 Liquidity and Efficiency Ratios a. Current ratio 2011 IBM Current ratio=Current assetsCurrent liabilities=50,92842,123=1. 21:1 2011 Microsoft Current ratio=Current assetsCurrent liabilities=74,91828,774=2. 60:1 The lower current ratio means that Microsoft has more resources to pay its debts over the next 12 months. b. Quick ratio (Acid-test ratio) 2011 IBM Quick ratio=Cash+Short-term investments+ Current receivablesCurrent liabilities=11,922+4,895+18,38242,123=0. 84:1 011 Microsoft Quick ratio=Cash+Short-term investments+ Current receivablesCurrent liabilities= 9,610+43,162+14,98728,774=2. 35:1 Microsoft has a higher quick ratio which means that Microsoft’s shot-term liquidity is better than that of IBM. c. Accounts receivable turnover 2011 IBM Accounts receivable turnover=Net salesAverage accounts receivable, net=106,91617,886. 5=5. 97 times 2011 Microsoft Accounts receivable turnover=Net salesAverage accounts receivable, net=69,94314000. 5=5. 00 times The similar accounts receivable turnover means that both the companies have a relatively good ability to use its assets efficiently. . Inventory turnover 2011 IBM Inventory turnover=Cost of goods soldAverage inventory=56,7782,522. 5=22. 51 times 2011 Microsoft Inventory turnover=Cost of goods soldAverage inventory=53,8571,372=39. 25 times Microsoft has a higher inventory turnover which means a better inventory control. e. Days’ sales uncollected 2011 IBM Days’ sales uncollected=Accounts receivable, netNet sales*365=18,382106,916*365=62. 75 days 2011 Microsoft Days’ sales uncollected=Accounts receivable, netNet sales*365=14000. 569,943*365=73. 1 days IBM has a faster pace to collect its accounts. f.Days’ sales in inventory 2011 IBM Days’ sales in inventory=Ending inventoryCost of goods sold*365=2,59556,778*365=16. 68 days 2011 Microsoft Days’ sales in inventory=Ending inventoryCost of goods sold*365=1,37253857*365=9. 30 days Microsoft has a quicker speed to turn its inventory into sales. g. Total assets turnover 2011 IBM Total assets turnover=Net salesAverage total assets=106,916114,942. 5=0. 93 times 2011 Microsoft Total assets turnover=Net salesAverage total assets=69,94397408. 5=0. 72 times IBM has better abilities to use its assets to efficiently generate sales. . 6 Solvency Ratios a. Debt ratio 2011 IBM Debt ratio=Total liabilitiesTotal assets=96,197 116,433 =82. 6% 2011 Microsoft Debt ratio=Total liabilitiesTotal assets=51,621 108,704 =47. 5% IBM has a higher proportion of debe relative to its assets, which means a higher risk. b. Equity ratio 2011 IBM Equity ra tio=Total equityTotal assets=20,236116,433=17. 4% 2011 Microsoft Equity ratio=Total equityTotal assets=57,083108,704=52. 5% c. Interest coverage ratio 2011 IBM Interest coverage ratio=Income before interest expense and income taxesInterest expense=22,904411=55. times 2011 Microsoft Interest coverage ratio=Income before interest expense and income taxesInterest expense=28,071295=95. 2 times Microsoft has better ability to meet its debt obligations. 3. 7 Profitability Ratios a. Return on total assets 2011 IBM Return on total assets=Net incomeAverage total assets=15,855114,942. 5=13. 8% 2011 Microsoft Return on total assets=Net incomeAverage total assets=23,15066213. 5=35. 0% Microsoft is more efficient in generating earnings by using its assets. b. Return on equity 2011 IBM Return on equity=Net income-Preferred dividendsAverage equity=15,855-3,47321704=57. % 2011 Microsoft Return on equity=Net income-Preferred dividendsAverage equity=23,150-5,39451629=34. 4% IBM has a better performan ce in generating profitability by using shareholders’ investment. c. Net income as a percentage of net sales (Profit margin ratio) 2011 IBM Net income as a percentage of net sales=Net incomeNet sales=15,855106,916=14. 8% 2011 Microsoft Net income as a percentage of net sales=Net incomeNet sales=23,15069,943=33. 1% Microsoft is better in keeping earnings in how much out of every dollar of sales. d. Gross profit rate (Gross margin ratio) 011 IBM Gross profit rate=Net sales-Cost of goods soldNet sales=106,916-56,778106,916=46. 9% 2011 Microsoft Gross profit rate=Net sales-Cost of goods soldNet sales=69,943-56,77869,943=18. 8% Higher percentage of IBM means it retains more on each dollar of sales to service its other costs and obligations. 3. 8 Market Ratios a. Price-Earnings ratio 2011 IBM Price-Earnings ratio=Market price per common shareEarnings per share=183. 8813. 25=13. 9:1 2011 Microsoft Price-Earnings ratio=Market price per common shareEarnings per share=26. 872. 73=9. 84 :1 P/E ratio gives a clear comparison, Microsoft is better. b.Dividend yield 2011 IBM Dividend yield=Annual cash dividends per shareMarket price per share=2. 90183. 88=1. 6% 2011 Microsoft Dividend yield=Annual cash dividends per shareMarket price per share=0. 64 26. 87=2. 4% Microsoft give higher percentage of dividend. 3. Comparison and Interpretation of Ratio Values with Key Business Ratios All the comparisons are based on the data of 2011. Only compared with those available online. 4. 9 Liquidity and Efficiency Ratios Table 3-3. 1-1Liquidity and Efficiency Ratios with Key Business Ratios Item| IBM 2011| IBM 2011| Key Business Ratios| Current ratio| 1. 21:1| 1. 19:1| 1. 9:1| Quick ratio| 0. 84:1| 0. 81:1| 0. 68:1| Return on equity| 57. 0%| 50. 8%| 13. 96%| Net income as a percentage of net sales| 14. 8%| 14. 9%| 10. 2%| Price-Earnings ratio| 13. 9:1| 12. 6:1| 13. 2:1| Dividend yield| 1. 6%| 1. 7%| 2. 05%| The lower current ratio means IBM has a more resource to pay its debts over the next 12 month compared to the industry average. IBM has a higher quick ratio which means that IBM’s shot-term liquidity is better than industry average. A higher return on equity ratio means IBM has a better performance than industry average in generating profitability by using shareholders’ investment.A higher Net income as a percentage of net sales means IBM is better in keeping earnings in how much out of every dollar of sales than industry average. IBM’s P/E ratio increased and exceeded the industry average and is a little bit better. Its stock performed well last year. A lower dividend yield ratio means less dividend compared to industry average gave to shareholders. In conclusion, IBM had a quite well performance in last two years. All the ratios shows that IBM had got an obvious growth and improvement. 4. Common-size Comparative Statements Analysis Appendix 1 is IBM Common-Size Comparative Balance Sheets A 0. 4% point increase in cash and equivalents , which is likely balanced with a 0. 87% point decline in Marketable securities, both steady status in inventories and property, plant and equipment, a marked increase 8. 5% in retained earnings and with most of the good increase and good decrease in percentage means a better performance year in 2011 than that in 2010. Appendix 2 is IBM Common-Size Comparative Income Statement A 0. 33% decline in cost of services, a 0. 39% decline in cost of sales, a 0. 11% decline in cost of financing, a 0. 82% decline in total cost contributes a 0. 82% increase in gross profits, and a 0. 2% decline in net income (loss) shows a better performance of IBM in 2011 than that in 2010. Appendix 3 is IBM Common-Size Comparative Cash Flow Statement A 4. 01% increase in net income, a 1. 29% decline in inventories, a 5% decline in other assets/other liabilities, a 0. 09% increase in investment in software, a 0. 61% in non-operating finance receivables – net, a 21. 17% increase in acquisition of busine sses, net of cash acquired, and a 21. 37 increase in net cash flows from investing activities gives a enough evidence to show the better performance of IBM in 2011 than that in 2010.So in conclusion, IBM performed better in 2011 than in 2010. 5. Trend Analysis Appendix 4 is IBM Income Statement Trend Percent The base period is 2009 and the trend percent is computed in each subsequent year by dividing that year’s amount by its 2009 amount. Total revenue in trend percent is 100% in 2009, 104. 29% in 2010, and 111. 65% in 2011; Total cost is 100% in 2009, 103. 62% in 2010, and 109. 25% in 2011; Total expense & other income is 100% in 2009, 102. 51% in 2010, and 113. 60% in 2011. These data shows a good control of cost but a relatively bad expense control.IBM used the relatively same cost generates more revenue but fewer revenue with the same expense. Total revenue falls short of that for total expense & other income in 2011 but exceeded in 2010, IBM fails to show an ability to c ontrol these expenses as it expands in 2011. Appendix 5 is IBM Balance Sheet Trend Percent The base period is 2009 and the trend percent is computed in each subsequent year by dividing that year’s amount by its 2009 amount. Total revenue in trend percent is 100% in 2009, 104. 29% in 2010, and 111. 65% in 2011; Total assets are 100% in 2009, 104. 60% in 2010, and 106. % in 2011; Retained earnings are 100% in 2009, 114. 38% in 2010, and 129. 61% in 2011. With these percent, we can figure out that IBM was more efficient in using its assets in 2011. Management has generated revenues sufficient to compensate for this asset growth. And in retained earnings shows a better in expense control and higher efficiency in generate revenues. So in conclusion, IBM did a quite good job in 2011. V. Prospective Analysis and Summary Here, based on what I have calculated and the interpretation. We can definitely come to a conclusion that IBM is still growing and it did very good in most parts.As the trend analysis listed above, the faster growing total revenue and the slower growing total cost shows a quite good control of the cost. IBM used the relatively same cost generates more revenue. And IBM was becoming more efficient in using its assets to generate revenue. The fairly good current ratio gives an average performance in giving the debts in next 12 months. And with the quite good quick ratio, return on equity, net income as a percentage of net sales, P/E ratio in 2011 which are higher than the average key business ratios and the ratios of IBM in 2010, we can anticipate a good performance in 2012 and far future.Common-size comparative statements analysis also gives a quite good result, such as the increase in cash and equivalents, gross profits, net income, acquisition of businesses, net of cash acquired, net cash flows and retained earnings, the decline in cost of goods and inventories. Although IBM didn't perform as well as Microsoft, and there is still some defects i n its performance in last two years. As a whole, I would like to invest my hard -earned dollars into the stock of IBM. Appendix 1 | | | Common-size Percent| Report Date| 12/31/2011| 12/31/2010| 12/31/2011| 12/31/2010| Cash ; cash equivalents| 11,922,000| 10,661,000| 10. 4%| 9. 40%| Marketable securities| 0| 990,000| 0. 00%| 0. 87%| Notes ; accounts receivable – trade, net| 11,179,000| 10,834,000| 9. 60%| 9. 55%| Short-term financing receivables| 16,901,000| 16,257,000| 14. 52%| 14. 33%| Other accounts receivable| 1,481,000| 1,134,000| 1. 27%| 1. 00%| Finished goods| 589,000| 432,000| 0. 51%| 0. 38%| Work in process ; raw materials| 2,007,000| 2,018,000| 1. 72%| 1. 78%| Inventories| 2,595,000| 2,450,000| 2. 23%| 2. 16%| Deferred taxes| 1,601,000| 1,564,000| 1. 38%| 1. 38%| Prepaid expenses ; other current assets| 5,249,000| 4,226,000| 4. 51%| 3. 2%| Total current assets| 50,928,000| 48,116,000| 43. 74%| 42. 41%| Land ; land improvements| 786,000| 777,000| 0. 68%| 0. 68%| Build ings ; building improvements| 9,531,000| 9,414,000| 8. 19%| 8. 30%| Plant, laboratory ; office equipment| 26,843,000| 26,676,000| 23. 05%| 23. 51%| Plant ; other property, gross| 37,160,000| 36,867,000| 31. 92%| 32. 50%| Less: accumulated depreciation| 24,703,000| 24,435,000| 21. 22%| 21. 54%| Plant ; other property, net| 12,457,000| 12,432,000| 10. 70%| 10. 96%| Rental machines, gross| 2,964,000| 3,422,000| 2. 55%| 3. 02%| Less: Accumulated depreciation| 1,538,000| 1,758,000| 1. 2%| 1. 55%| Rental machines, net| 1,426,000| 1,665,000| 1. 22%| 1. 47%| Plant, rental machines ; oth property, gross| 40,124,000| 40,289,000| 34. 46%| 35. 51%| Less: Accumulated depreciation| 26,241,000| 26,193,000| 22. 54%| 23. 09%| Plant, rental machines ; other property, net| 13,883,000| 14,096,000| 11. 92%| 12. 42%| Long-term financing receivables| 10,776,000| 10,548,000| 9. 26%| 9. 30%| Prepaid pension assets| 2,843,000| 3,068,000| 2. 44%| 2. 70%| Deferred taxes| 3,503,000| 3,220,000| 3. 01%| 2. 84%| G oodwill| 26,213,000| 25,136,000| 22. 51%| 22. 16%| Intangible assets, net| 3,392,000| 3,488,000| 2. 1%| 3. 07%| Deferred taxes| -| -| | | Deferred transition ; set-up costs ; other deferred arrangements| 1,784,000| 1,853,000| 1. 53%| 1. 63%| Derivatives, non-current| 753,000| 588,000| 0. 65%| 0. 52%| Alliance investments – equity method| 131,000| 122,000| 0. 11%| 0. 11%| Alliance investments – non-equity method| 127,000| 531,000| 0. 11%| 0. 47%| Prepaid software| 233,000| 268,000| 0. 20%| 0. 24%| Long-term deposits| 307,000| 350,000| 0. 26%| 0. 31%| Marketable securities| -| -| | | Other receivables| 208,000| 560,000| 0. 18%| 0. 49%| Employee benefit related| 493,000| 409,000| 0. 42%| 0. 6%| Prepaid income taxes| 261,000| 434,000| 0. 22%| 0. 38%| Other assets| 598,000| 663,000| 0. 51%| 0. 58%| Total investments ; sundry assets| 4,895,000| 5,778,000| 4. 20%| 5. 09%| Total assets| 116,433,000| 113,452,000| 100. 00%| 100. 00%| Taxes| 3,313,000| 4,216,000| 2. 85%| 3. 72%| Commercial paper| 2,300,000| 1,144,000| 1. 98%| 1. 01%| Short-term loans| 1,859,000| 1,617,000| 1. 60%| 1. 43%| Long-term debt – current maturities| 4,306,000| 4,017,000| 3. 70%| 3. 54%| Short-term debt| 8,463,000| 6,778,000| 7. 27%| 5. 97%| Accounts payable| 8,517,000| 7,804,000| 7. 31%| 6. 88%| Compensation ; benefits| 5,099,000| 5,028,000| 4. 8%| 4. 43%| Deferred income| 12,197,000| 11,580,000| 10. 48%| 10. 21%| Other accrued expenses ; liabilities| 4,535,000| 5,156,000| 3. 89%| 4. 54%| Total current liabilities| 42,123,000| 40,562,000| 36. 18%| 35. 75%| U. S dollar notes ; debentures| 24,192,000| 21,766,000| 20. 78%| 19. 19%| Other debt in Euros| 1,037,000| 1,897,000| 0. 89%| 1. 67%| Other debt in Japanese yen| 1,123,000| 1,162,000| 0. 96%| 1. 02%| Other debt in Swiss francs| 173,000| 540,000| 0. 15%| 0. 48%| Other currencies debt| 177,000| 240,000| 0. 15%| 0. 21%| Long-term debt| 26,702,000| 25,606,000| 22. 93%| 22. 7%| Less: net unamortized premium (discount)| -533,000| -531,000| -0. 46%| -0. 47%| Add: SFAS No. 133 fair value adjustment| 994,000| 788,000| 0. 85%| 0. 69%| Long-term debt before current maturities| 27,161,000| 25,863,000| 23. 33%| 22. 80%| Less: Current maturities| 4,306,000| 4,017,000| 3. 70%| 3. 54%| Long-term debt| 22,857,000| 21,846,000| 19. 63%| 19. 26%| Retire ; nonpension postretire benef obligs| 18,374,000| 15,978,000| 15. 78%| 14. 08%| Deferred income| 3,847,000| 3,666,000| 3. 30%| 3. 23%| Income tax reserves| 3,989,000| 3,486,000| 3. 43%| 3. 07%| Executive compensation accruals| 1,388,000| 1,302,000| 1. 19%| 1. 5%| Disability benefits| 835,000| 739,000| 0. 72%| 0. 65%| Derivatives liabilities| 166,000| 135,000| 0. 14%| 0. 12%| Restructuring actions| 347,000| 399,000| 0. 30%| 0. 35%| Workforce reductions| 366,000| 406,000| 0. 31%| 0. 36%| Deferred taxes| 549,000| 378,000| 0. 47%| 0. 33%| Enviromental accruals| 249,000| 249,000| 0. 21%| 0. 22%| Non-current warranty accruals| 163,000| 130,000| 0. 14%| 0. 11%| Asset retirement obligations| 166,000| 161,000| 0. 14%| 0. 14%| Other liabilities| 777,000| 841,000| 0. 67%| 0. 74%| Total other liabilities| 8,996,000| 8,226,000| 7. 73%| 7. 25%| Total liabilities| 96,197,000| 90,279,000| 82. 2%| 79. 57%| Common stock| 48,129,000| 45,418,000| 41. 34%| 40. 03%| Retained earnings| 104,857,000| 92,532,000| 90. 06%| 81. 56%| Treasury stock, at cost| 110,963,000| 96,161,000| 95. 30%| 84. 76%| Net unreal gains (losses) on cash flow hedge derivatives| 71,000| -96,000| 0. 06%| -0. 08%| Foreign currency translation adjustments| 1,767,000| 2,478,000| 1. 52%| 2. 18%| Net change retirement-related benefit plans| -23,737,000| -21,289,000| -20. 39%| -18. 76%| Net unrealized gains (losses) on mktble secur| 13,000| 164,000| 0. 01%| 0. 14%| Accum gains ; (losses) not affecting ret earns| -21,885,000| -18,743,000| -18. 0%| -16. 52%| Total stockholders' equity| 20,138,000| 23,046,000| 17. 30%| 20. 31%| Non-controlling interests| 97,000| 126,000| 0. 08%| 0. 11%| Total equity| 20,236,0 00| 23,172,000| 17. 38%| 20. 42%| Appendix 2 | | | Common-size Percent| Report Date| 12/31/2011| 12/31/2010| 12/31/2011| 12/31/2010| Services revenue| 60,721,000| 56,868,000| 56. 79%| 56. 94%| Sales| 44,063,000| 40,736,000| 41. 21%| 40. 79%| Financing revenue| 2,132,000| 2,267,000| 1. 99%| 2. 27%| Total revenue| 106,916,000| 99,870,000| 100. 00%| 100. 00%| Cost of services| 40,740,000| 38,383,000| 38. 10%| 38. 43%| Cost of sales| 14,973,000| 14,374,000| 14. 0%| 14. 39%| Cost of financing| 1,065,000| 1,100,000| 1. 00%| 1. 10%| Total cost| 56,778,000| 53,857,000| 53. 11%| 53. 93%| Gross profit| 50,138,000| 46,014,000| 46. 89%| 46. 07%| Selling, general & administrative – base expense| 20,287,000| 18,585,000| 18. 97%| 18. 61%| Advertising & promotional expense| 1,373,000| 1,337,000| 1. 28%| 1. 34%| Workforce reductions – ongoing expense| 440,000| 641,000| 0. 41%| 0. 64%| Retirement-related expense| 603,000| 494,000| 0. 56%| 0. 49%| Amortization expense-acquired intangible s| 289,000| 253,000| 0. 27%| 0. 25%| Stock-based compensation| 514,000| 488,000| 0. 8%| 0. 49%| Bad debt expense| 88,000| 40,000| 0. 08%| 0. 04%| Total selling, general & administrative exps| 23,594,000| 21,837,000| 22. 07%| 21. 87%| Research, development & engineering expenses| 6,258,000| 6,026,000| 5. 85%| 6. 03%| Intellectual property & custom development income| 1,108,000| 1,154,000| 1. 04%| 1. 16%| Foreign currency transaction gains (losses)| (513,000)| (303,000)| -0. 48%| -0. 30%| Gains (losses) on derivative instruments| 113,000| 239,000| 0. 11%| 0. 24%| Interest income| 136,000| 92,000| 0. 13%| 0. 09%| Net gains from securities & investments assets| 227,000| (31,000)| 0. 1%| -0. 03%| Other income & (expense)| 58,000| 790,000| 0. 05%| 0. 79%| Total other income (expense)| 20,000| 787,000| 0. 02%| 0. 79%| Interest expense| 411,000| 368,000| 0. 38%| 0. 37%| Total expense & other income| 29,135,000| 26,291,000| 27. 25%| 26. 33%| Income (loss) bef income taxes – U. S. oper s| 9,716,000| 9,140,000| 9. 09%| 9. 15%| Income (loss) bef inc taxes – Non-U. S. opers| 11,287,000| 10,583,000| 10. 56%| 10. 60%| Income (loss) from continuing operations before income taxes| 21,003,000| 19,723,000| 19. 64%| 19. 75%| U. S federal income taxes (benefit) – current| 268,000| 190,000| 0. 5%| 0. 19%| U. S. federal income taxes (benef) – deferred| 909,000| 1,015,000| 0. 85%| 1. 02%| Total U. S. federal income taxes (benefit)| 1,177,000| 1,205,000| 1. 10%| 1. 21%| U. S. state & local inc tax (benef) – current| 429,000| 279,000| 0. 40%| 0. 28%| U. S. state & local inc tax (benef) – deferred| 81,000| 210,000| 0. 08%| 0. 21%| Total U. S. state & local income taxes (benef)| 510,000| 489,000| 0. 48%| 0. 49%| Non-U. S. income taxes (benefit) – current| 3,239,000| 3,127,000| 3. 03%| 3. 13%| Non-U. S. income taxes (benefit) – deferred| 222,000| 69,000| 0. 21%| 0. 07%| Total non-U. S. ncome taxes (benefit)| 3,461,000| 3,196,000| 3. 2 4%| 3. 20%| Provision for income taxes| 5,148,000| 4,890,000| 4. 81%| 4. 90%| Net income (loss)| 15,855,000| 14,833,000| 14. 83%| 14. 85%| Weighted average shares outstanding-basic| 1,196,951. 006| 1,268,789. 388| 1. 12%| 1. 27%| Weighted average shares outstanding-diluted| 1,213,767. 985| 1,287,355. 388| 1. 14%| 1. 29%| Year end shares outstanding| 1,163,182. 564| 1,227,993. 544| 1. 09%| 1. 23%| Net earnings (loss) per share-basic| 13. 25| 11. 69| 0. 00%| 0. 00%| Net earnings (loss) per share-diluted| 13. 06| 11. 52| 0. 00%| 0. 00%| Dividends per share of common stock| 2. | 2. 5| 0. 00%| 0. 00%| Total number of employees| 433,362| 426,751| 0. 41%| 0. 43%| Number of common stockholders| 504,093| 523,553| 0. 47%| 0. 52%| Appendix 3 | | | Common-size Percent| Report Date| 12/31/2011| 12/31/2010| 12/31/2011| 12/31/2010| Net income (loss)| 15,855,000| 14,833,000| 79. 89%| 75. 88%| Depreciation| 3,589,000| 3,657,000| 18. 08%| 18. 71%| Amortization of intangibles| 1,226,000| 1,174,000| 6. 18%| 6. 01%| Stock-based compensation| 697,000| 629,000| 3. 51%| 3. 22%| Deferred taxes| 1,212,000| 1,294,000| 6. 11%| 6. 62%| Net loss (gain) on asset sales & other| (342,000)| (801,000)| -1. 2%| -4. 10%| Receivables (including financing receivables)| (1,279,000)| (489,000)| -6. 44%| -2. 50%| Retirement related| (1,371,000)| (1,963,000)| -6. 91%| -10. 04%| Inventories| (163,000)| 92,000| -0. 82%| 0. 47%| Other assets/other liabilities| (28,000)| 949,000| -0. 14%| 4. 85%| Accounts payable| 451,000| 174,000| 2. 27%| 0. 89%| Net cash flows from operating activities| 19,846,000| 19,549,000| 100. 00%| 100. 00%| Payments for plant, rental machines & other property| (4,108,000)| (4,185,000)| -20. 70%| -21. 41%| Proc from disp of plant, rental machines & oth prop| 608,000| 770,000| 3. 06%| 3. 4%| Investment in software| (559,000)| (569,000)| -2. 82%| -2. 91%| Purchases of marketable securities & other investments| (1,594,000)| (6,129,000)| -8. 03%| -31. 35%| Proceeds from disposition of m arketable securities & other investments| 3,345,000| 7,877,000| 16. 85%| 40. 29%| Non-operating finance receivables – net| (291,000)| (405,000)| -1. 47%| -2. 07%| Acquisition of businesses, net of cash acquired| (1,811,000)| (5,922,000)| -9. 13%| -30. 29%| Divestiture of businesses, net of cash transferred| 14,000| 55,000| 0. 07%| 0. 28%| Net cash flows from investing activities| (4,396,000)| (8,507,000)| -22. 5%| -43. 52%| Proceeds from new debt| 9,996,000| 8,055,000| 50. 37%| 41. 20%| Payments to settle debt| (8,947,000)| (6,522,000)| -45. 08%| -33. 36%| Sht-tm borrows (repays)-less than 90 days-net| 1,321,000| 817,000| 6. 66%| 4. 18%| Common stock repurchases| (15,046,000)| (15,375,000)| -75. 81%| -78. 65%| Common stock transactions, other| 2,453,000| 3,774,000| 12. 36%| 19. 31%| Cash dividends paid| (3,473,000)| (3,177,000)| -17. 50%| -16. 25%| Net cash flows from financing activities| (13,696,000)| (12,429,000)| -69. 01%| -63. 58%| Eff of exch rate chngs on cash & cash e quivs| (493,000)| (135,000)| -2. 8%| -0. 69%| Net change in cash & cash equivalents| 1,262,000| (1,522,000)| 6. 36%| -7. 79%| Cash & cash equivalents, beginning of year| 10,661,000| 12,183,000| 53. 72%| 62. 32%| Cash & cash equivalents, end of year| 11,922,000| 10,661,000| 60. 07%| 54. 53%| Cash paid during the year for income taxes| 4,168,000| 3,238,000| 21. 00%| 16. 56%| Cash paid during the year for interest| 956,000| 951,000| 4. 82%| 4. 86%| Appendix 4 | Trend Percent| Report Date| 12/31/2011| 12/31/2010| 12/31/2009| Services revenue| 110. 15%| 103. 16%| 100. 00%| Sales| 115. 05%| 106. 36%| 100. 00%| Financing revenue| 91. 46%| 97. 5%| 100. 00%| Total revenue| 111. 65%| 104. 29%| 100. 00%| Cost of services| 109. 68%| 103. 33%| 100. 00%| Cost of sales| 110. 05%| 105. 64%| 100. 00%| Cost of financing| 87. 30%| 90. 16%| 100. 00%| Total cost| 109. 25%| 103. 62%| 100. 00%| Gross profit| 114. 51%| 105. 09%| 100. 00%| Selling, general & administrative – base expense| 112. 36%| 1 02. 93%| 100. 00%| Advertising & promotional expense| 109. 66%| 106. 79%| 100. 00%| Workforce reductions – ongoing expense| 92. 83%| 135. 23%| 100. 00%| Retirement-related expense| 187. 27%| 153. 42%| 100. 00%| Amortization expense-acquired intangibles| 101. 40%| 88. 7%| 100. 00%| Stock-based compensation| 123. 26%| 117. 03%| 100. 00%| Bad debt expense| 59. 86%| 27. 21%| 100. 00%| Total selling, general & administrative exps| 112. 61%| 104. 22%| 100. 00%| Research, development & engineering expenses| 107. 53%| 103. 54%| 100. 00%| Intellectual property & custom development income| 94. 14%| 98. 05%| 100. 00%| Foreign currency transaction gains (losses)| -51300. 00%| -30300. 00%| 100. 00%| Gains (losses) on derivative instruments| 941. 67%| 1991. 67%| 100. 00%| Interest income| 144. 68%| 97. 87%| 100. 00%| Net gains from securities & investments assets| -202. 8%| 27. 68%| 100. 00%| Net real gains (losses) from real est activs| -| -| 100. 00%| Other income & (expense)| 16. 48%| 2 24. 43%| 100. 00%| Total other income (expense)| 5. 70%| 224. 22%| 100. 00%| Interest expense| 102. 24%| 91. 54%| 100. 00%| Total expense & other income| 113. 60%| 102. 51%| 100. 00%| Income (loss) bef income taxes – U. S. opers| 102. 02%| 95. 97%| 100. 00%| Income (loss) bef inc taxes – Non-U. S. opers| 131. 03%| 122. 86%| 100. 00%| Income (loss) from continuing operations before income taxes| 115. 80%| 108. 74%| 100. 00%| U. S federal income taxes (benefit) – current| 56. 6%| 40. 17%| 100. 00%| U. S. federal income taxes (benef) – deferred| 67. 79%| 75. 69%| 100. 00%| Total U. S. federal income taxes (benefit)| 64. 88%| 66. 43%| 100. 00%| U. S. state & local inc tax (benef) – current| 357. 50%| 232. 50%| 100. 00%| U. S. state & local inc tax (benef) – deferred| 43. 78%| 113. 51%| 100. 00%| Total U. S. state & local income taxes (benef)| 167. 21%| 160. 33%| 100. 00%| Non-U. S. income taxes (benefit) – current| 138. 01%| 133. 23%| 100 . 00%| Non-U. S. income taxes (benefit) – deferred| 89. 88%| 27. 94%| 100. 00%| Total non-U. S. income taxes (benefit)| 133. 2%| 123. 21%| 100. 00%| Provision for income taxes| 109. 23%| 103. 76%| 100. 00%| Income (loss) from continuing operations| -| -| 100. 00%| Net income (loss)| 118. 10%| 110. 49%| 100. 00%| Weighted average shares outstanding-basic| 90. 19%| 95. 60%| 100. 00%| Weighted average shares outstanding-diluted| 90. 49%| 95. 97%| 100. 00%| Year end shares outstanding| 89. 11%| 94. 07%| 100. 00%| Earnings (loss) per share from continuing operations-basic| -| -| 100. 00%| Net earnings (loss) per share-basic| 130. 93%| 115. 51%| 100. 00%| Earnings (loss) per share from continuing operations-diluted| -| -| 100. 0%| Net earnings (loss) per share-diluted| 130. 47%| 115. 08%| 100. 00%| Dividends per share of common stock| 134. 88%| 116. 28%| 100. 00%| Total number of employees| 98. 99%| 97. 48%| 100. 00%| Number of common stockholders| 92. 70%| 96. 28%| 100. 00%| Appen dix 5 | Trend percent| Report Date| 12/31/2011| 12/31/2010| 12/31/2009| Cash & cash equivalents| 97. 86%| 87. 51%| 100. 00%| Marketable securities| 0. 00%| 55. 28%| 100. 00%| Notes & accounts receivable – trade, net| 104. 13%| 100. 91%| 100. 00%| Short-term financing receivables| 113. 32%| 109. 00%| 100. 00%| Other accounts receivable| 129. 7%| 99. 21%| 100. 00%| Finished goods| 110. 51%| 81. 05%| 100. 00%| Work in process & raw materials| 102. 40%| 102. 96%| 100. 00%| Inventories| 104. 05%| 98. 24%| 100. 00%| Deferred taxes| 92. 54%| 90. 40%| 100. 00%| Prepaid expenses & other current assets| 133. 02%| 107. 10%| 100. 00%| Total current assets| 104. 07%| 98. 33%| 100. 00%| Land & land improvements| 106. 65%| 105. 43%| 100. 00%| Buildings & building improvements| 102. 33%| 101. 07%| 100. 00%| Plant, laboratory & office equipment| 103. 69%| 103. 04%| 100. 00%| Plant & other property, gross| 103. 39%| 102. 58%| 100. 0%| Less: accumulated depreciation| 105. 19%| 104. 05%| 100. 00 %| Plant & other property, net| 100. 02%| 99. 82%| 100. 00%| Rental machines, gross| 81. 07%| 93. 60%| 100. 00%| Less: Accumulated depreciation| 79. 03%| 90. 34%| 100. 00%| Rental machines, net| 83. 39%| 97. 37%| 100. 00%| Plant, rental machines & oth property, gross| 101. 33%| 101. 75%| 100. 00%| Less: Accumulated depreciation| 103. 19%| 103. 00%| 100. 00%| Plant, rental machines & other property, net| 98. 01%| 99. 51%| 100. 00%| Long-term financing receivables| 101. 24%| 99. 10%| 100. 00%| Prepaid pension assets| 94. 4%| 102. 23%| 100. 00%| Deferred taxes| 83. 50%| 76. 76%| 100. 00%| Goodwill| 129. 83%| 124. 50%| 100. 00%| Intangible assets, net| 134. 98%| 138. 80%| 100. 00%| Deferred transition & set-up costs & other deferred arrangements| 100. 68%| 104. 57%| 100. 00%| Derivatives, non-current| 133. 27%| 104. 07%| 100. 00%| Alliance investments – equity method| 113. 91%| 106. 09%| 100. 00%| Alliance investments – non-equity method| 26. 62%| 111. 32%| 100. 00%| Prepa id software| 74. 68%| 85. 90%| 100. 00%| Long-term deposits| 99. 03%| 112. 90%| 100. 00%| Other receivables| 33. 71%| 90. 76%| 100. 00%|Employee benefit related| 115. 46%| 95. 78%| 100. 00%| Prepaid income taxes| -| -| -| Other assets| 76. 37%| 84. 67%| 100. 00%| Total investments & sundry assets| 91. 00%| 107. 42%| 100. 00%| Total assets| 106. 80%| 104. 06%| 100. 00%| Taxes| 86. 59%| 110. 19%| 100. 00%| Commercial paper| 978. 72%| 486. 81%| 100. 00%| Short-term loans| 108. 65%| 94. 51%| 100. 00%| Long-term debt – current maturities| 193. 79%| 180. 78%| 100. 00%| Short-term debt| 203. 05%| 162. 62%| 100. 00%| Accounts payable| 114. 54%| 104. 95%| 100. 00%| Compensation & benefits| 113. 19%| 111. 61%| 100. 00%| Deferred income| 112. 7%| 106. 78%| 100. 00%| Other accrued expenses & liabilities| 86. 83%| 98. 72%| 100. 00%| Total current liabilities| 117. 00%| 112. 67%| 100. 00%| U. S dollar notes & debentures| 132. 58%| 119. 29%| 100. 00%| Other debt in Euros| 30. 26%| 55. 35%| 100. 00%| Other debt in Japanese yen| 71. 76%| 74. 25%| 100. 00%| Other debt in Swiss francs| 35. 74%| 111. 57%| 100. 00%| Other currencies debt| 62. 11%| 84. 21%| 100. 00%| Long-term debt| 111. 22%| 106. 66%| 100. 00%| Less: net unamortized premium (discount)| 101. 14%| 100. 76%| 100. 00%| Add: SFAS No. 133 fair value adjustment| 147. 70%| 117. 9%| 100. 00%| Long-term debt before current maturities| 112. 45%| 107. 08%| 100. 00%| Less: Current maturities| 193. 79%| 180. 78%| 100. 00%| Long-term debt| 104. 22%| 99. 61%| 100. 00%| Retire & nonpension postretire benef obligs| 115. 18%| 100. 16%| 100. 00%| Deferred income| 108. 00%| 102. 92%| 100. 00%| Income tax reserves| 109. 98%| 96. 11%| 100. 00%| Executive compensation accruals| 119. 66%| 112. 24%| 100. 00%| Disability benefits| 105. 03%| 92. 96%| 100. 00%| Derivatives liabilities| 25. 58%| 20. 80%| 100. 00%| Restructuring actions| 78. 68%| 90. 48%| 100. 00%| Workforce reductions| 89. 9%| 99. 27%| 100. 00%| Deferred taxes| 116. 81% | 80. 43%| 100. 00%| Enviromental accruals| 101. 63%| 101. 63%| 100. 00%| Non-current warranty accruals| 129. 37%| 103. 17%| 100. 00%| Asset retirement obligations| 143. 10%| 138. 79%| 100. 00%| Other liabilities| 99. 49%| 107. 68%| 100. 00%| Total other liabilities| 102. 01%| 93. 28%| 100. 00%| Total liabilities| 111. 51%| 104. 65%| 100. 00%| Common stock| 115. 11%| 108. 63%| 100. 00%| Retained earnings| 129. 61%| 114. 38%| 100. 00%| Treasury stock, at cost| 136. 58%| 118. 36%| 100. 00%| Net unreal gains (losses) on cash flow hedge derivatives| -14. 6%| 19. 96%| 100. 00%| Foreign currency translation adjustments| 96. 24%| 134. 97%| 100. 00%| Net change retirement-related

A Case Analysis: Integra and Intex’s Problem Project

Marketing and promoting new technology has always been undemanding due to the growing trend in business and commerce of going electronic. However, not all technology is successful in their entry into the world of business.One very good example of this incident is that of Integra and Intex’s Banking and Loan Insurance Software System (BLISS) project. Although the software was completed, it was never introduced to credit unions. What happened then? How come such a very innovative project became a wasted product?   What were the mistakes made? Most significantly, what can the two businesses do to cope with the damaging effects the project has brought about?Case BackgroundThe BLISS project was spearheaded by two firms, namely, Integra Financial Corporation and Intex Consulting. Integra Financial Corporation, a life insurance company based in Quebec, Canada, is active in insurance, trust services, securities brokerage and asset and portfolio management (Roy, 2003, p. 445). The co rporation is responsible for approximately 8 billion dollars of assets while the work force consists of more than 2,200 permanent employees (Roy, 2003, p. 445).On the other hand, the partner company, Intex Consulting is a firm that specializes in the installation and design of information systems. It is actually a Canadian branch of a large international information system integration firm who wishes to gain its prominent place in Canadian banking business (Roy, 2003, p. 445). The firm is widely known for its expertise in the U.S. banking industry concerning system integration and development (Roy, 2003, p. 447).Although Integra has a competitive share in the insurance banking business, it does not have the whole of Canada. The company only emerges in Quebec due to one of its unique insurance plan. This plan is the Loan and Mortgage Insurance plan, also called the corporation’s â€Å"cash cow† (Roy, 2003, p. 446).What makes it different from plans of other insurance co rporations is its special software that enables a customized calculation of the expenses per client and directly links Integra’s database with the participating banking institutions. However, the software is limited for use only in Quebec where the banking institutions have somewhat similar structures. When it comes to the national market, Integra cannot venture into it since the different banking structures and institutions are diverging and dissimilar. Thus, the loan insurance plan was inapplicable.This very challenge has allowed the search for a way to penetrate the loan insurance business in the national network. It is in this situation that contact was made with Intex Consulting regarding Integra’s dream software. Thus, after the meeting of the two business establishments, the BLISS project was born and launched in the beginning of 1996 (Roy, 2003, p. 448).The primary goal of the joint project was to develop an appropriate technology solution to connect Integraâ⠂¬â„¢s loan insurance systems with its prospective clients’ banking and loan systems, particularly, a software system that can bridge the differences of the different structures of the diverse banking institutions and loan systems (Roy, 2003, p. 447).Key persons in both companies were then appointed for the project’s completion. Everyone was eager to see the results and was very optimistic because at that time, the project was a major endeavor and a promising success.Everyone saw the proposal as a means to expand the company. In addition, everyone was confident with the decision of pursuing the project. One would actually ask why but why not? Everyone believed that Integra is capable of doing so, due to its very long and successful experience in loan insurance business and that Intex has the guts of designing and developing an error-free software system since the firm is known for its competitiveness (Roy, 2003, p. 448).

Case study of Mcdonalds Essay Example | Topics and Well Written Essays - 1500 words

Case study of Mcdonalds - Essay Example The rapid decline of revenues and deteriorating market position of 1990s could be contributed to number of factors like highly competitive global business environment, tough market conditions, tough labour conditions, lowering of costs of products, lack of new products etc. But under the stewardship of James Cantalupo, who took charge in 2003, the firm started making a definite turnaround. Efficient exploitation of the internal resources of the firm was the major contributory element which helped it to regain its market. McDonald’s corporate strategy mainly relies on creating value through customer satisfaction. It has been able to gain effective leverage against its rivals by exploiting its internal resources which are: brand equity, quality products and exemplary service. It has evolved into the best fast food centre through customer satisfaction and meeting their changing preferences. The use of technology and uniformity in its products has been the hallmark of its fast food across the world. The unmatched efficiency in the delivery of its services and the uniform quality of its food has become the unique feature of all its outlets. They provide quality food at low prices and give ‘value’ to the customers. Indeed, McDonald is the first food chain that has truly become global in its operation and values. The managerial leadership realized the importance of identifying the changing eating habits and accordingly introduced changes within its products. The burgers have been its main products that it has maintained by customising it as per the preference of the customers. It has also introduced wide variety of salads and healthy food in its menu while at the same time, localizing the products by adding local flavour. They differentiated the products by customising it according to the demands of the customers. The use of technology and uniformity in its

Reflection about the yellow wallpaper story Essay

Reflection about the yellow wallpaper story - Essay Example The woman is suffering from a condition of nervous depression that significantly affects her social life. When she comes back to the mansion that her husband had bought, she feels that there was something queer about the mansion, which had for so long had no occupants. Her husband who is her doctor confines her in a room upstairs because as he said the treatment the woman required that she engaged in no activity and particularly forbid her from writing and working. All this was done so she could achieve mental wellbeing. Separated from any form of intellectual stimulation and only her journal the woman starts a descent into obsession. The woman gets into a kind of fixation with the yellow wallpaper on the wall, this happens to be the only visual stimulation present within the room and around her confinement. Due to the isolation, the woman begins to perceive that there was another woman attempting to break free who was creeping in the room behind the wallpaper. In a bid to rescue the imprisoned woman, the narrator tears down pieces of the wallpaper to set her free. This story reflects the social norms present in the 19th century where the feminine gender was expected to fulfill duties of being mothers and wives and be content with the dominion of men over them. Women were consequently doomed to spend solely their lives in domestic spheres. Although John can be seen the dominant villain of the story; he is just but a reflection of the society that pushed women to the lowest society level when they tried to enter the masculine

Person-centred Planning Essay Example | Topics and Well Written Essays - 1500 words

Person-centred Planning - Essay Example But in order to successfully organize a person-centred mode of planning it is incumbent that all the factors and elements are in place. This form of service delivery relies heavily on a professional approach combined with the human touch. The chief players are the facilitators in the different care providing roles. The group that forms the care givers include both professionals as well as family members. So it is obvious that coordination and cooperation among all the team members is the primary criterion in successful implementation of the planning. Task/role assignment According to Molly (2006) the most important aspect of person-centred planning is the roles of the care providers for they are the ones who are in direct charge of the care receiver. It is important that the individual service providers have a clear cut picture of what they have to do and the task they have to perform. They should be aware of their specific role in the care facilitating service. Molly (2006) stresses upon the importance of the ‘circle of support’ which consists of both the professional care givers and the family members. In this context it is important that each one of the care providers have a distinctive task to perform so that the care receiver gets proper service. It has been found that in cases where there is no proper task or role assignment the care receiver suffers. The care giving system takes over the needs of the individual being and the whole focus shifts from catering to the person to meeting the needs of the system (Molly, 2006). Molly refers to two distinct cases of Frances and Crystal to show how well a service facilitating system can work if roles and tasks are definitively allotted so that every member of the team contributes as per his/her responsibility. The defined role in fact helps to build a distinctive relationship between the care receiver and the care provider, for one of the most important criterion of a care provider is to care for the dependent. In fact it is the care receiver who gets to make a choice of his/her care givers. This explains the significance of the role that the care giver has to play. Coordination & collaboration in the team When building a person-centred planning team it is important that all the team members are assigned uniform responsibility in their respective roles. It would not only prevent grudges among team members but optimise the full potential and strength of the team. In their study of client-centric approach Sumsion and Lencucha (2009) have pointed out the challenges and difficulties faced by the teams when working in an interprofessional, person-centric module. They throw light on the common areas of discontent like time management, interpersonal and professional differences and hierarchies. These issues could be effectively sorted out by addressing appropriate team goals, properly distributing roles and responsibilities and through a continuous process of sharing information relati ng to the background and management of the client (Sumsion & Lencucha, 2009). Moreover through information dissemination at all levels members could coordinate better and know the functioning methods of each other. In their research Sumsion and

Creating a Unit and Assessing Performance Assignment

Creating a Unit and Assessing Performance - Assignment Example This paper will focus on Social studies of Second Graders in Schools in Florida. Social Studies Skills and Concepts Matrix is structured in a manner to help the classroom teacher to assess the essential skills and perceptions of the students throughout the pre K 12 education. This curriculum is clearly constructed so that teachers can understand the introduction, development, mastery and the reinforcement of social studies and language Arts skills in order to ease the planning process. This also facilitates that there is uniform acquisition of these concepts and skills by the students across Florida. The social studies skills and concept matrix has four categories research skills, civil awareness concepts, geographical skills and concepts and social studies skills. The specific skills have been listed for each grade level. The introduction bench mark signifies the corresponding social studies with each skill that is introduced. The social studies skills should be evaluate using other core subjects to determine the overall Performance of the subject. To do this a year table that has been split between every nine weeks of teaching will be effective. It will be categorized with other subjects like language arts, Math, Reading and science. There is a lot of information in Social Studies that the second grade students of the state of Florida can obtain from the pacing guide if properly followed by the teacher. By the first nine weeks, a second grader studying Social Studies should know the responsibilities of a Citizenship, construction and use of simple maps and globes. The second nine weeks should teach on the contributions of American Indians and describing regions, communities and environment. By the third nine weeks the student should know the famous Americans and their contributions. The fourth nine weeks will let them understand barter trade system and holocaust. For ever set of nine weeks the student finishes there are special factors

CSR Essay Example | Topics and Well Written Essays - 500 words

CSR - Essay Example or a number of years, IMB has worked in line with other organizations that are of likeminded opinions in ensuring effective delivery of sustainable services to the members of the society. Amongst the benefits that have been successfully delivered to the local society includes sustainable management by offering modern types of machines that, emits less carbon footprints to the environment. Moreover, the company has developed an environmental sustainability and leadership strategy that helps to the implementation of the environmental policy affair to ensure that the organization is at the forefront in advocating for environmental protection worldwide1. The organization also ensures the maximum consideration of the well being of all the staff members throughout all the branches. IBM incorporates the employees in all the aspects of strategic business plan globally as a way of ensuring that health, safety as well as the environment where the workforce takes place meets the required standards. since organizations are often associated by challenges of health from the workforce, some other extra programs have been implemented which, aims at promoting the physical well being while improving the psychological status of each and every employee who works within the IBM organization. Consequently, IBM is committed to supportive workplace environment by giving their workers freedom and liberty. For such reasons, the employees are given chances and opportunities to seek for other additional benefits with flexible working environments. This practice has been evidenced through launching of childcare in iterative and the creating of global work l ife fund which concerns the quality independent care of communities while helping the employees to manage their personal issues2. IBM has also partnered with most of the leading educational institutions and universities to help foster and strengthen information system studies. This has been done to ensure that the students become

Business Ethics Essay Example | Topics and Well Written Essays - 750 words - 5

Business Ethics - Essay Example This is geared toward embracing the responsibility of the firm to other issues which could affect the society (Mallin, 2009:16). For example, some firms are engaged in activities which highlight the need for an environment that is free from pollution. The society will take this as an initiative that is created by the corporate to make the world a better place for humanity. There are a number of key elements that are used as approaches to corporate social responsibility. Firms have the right to select a number of these approaches to arrive at a habitable world. These are strategies that are used to attract potential clients that will engage the firm in other businesses. However, some firms that are financially endowed take part in all the approaches of social responsibility. This heightens their supremacy in the market as many people notice their commitment to social welfare (Kotler and Lee, 2011:9). The first approach to social responsibility is the accommodative approach. This appro ach focuses on a number of activities that tend to accommodate everyone in the society. These are collective activities that are geared toward supporting the whole society. Such activities involve shareholders, the community and other neighbouring and relevant entities. Many organisations come up with long-term ventures that are geared towards supporting the community and other entities that are connected to the firm. In this strategy, the firm has to go to huge lengths in ensuring the society and other entities accrue the advantages of such ventures. As earlier mentioned, some firms are geared towards reducing the amount of pollution in the world. As such they have to part with their resources to sponsor all the activities that reduce pollution of a certain kind (Bacher, 2007:13). A succinct example is when the firm pays some of the activities that are indulged in reducing pollution. Some of the activities need some amounts of cash and will need financial assistance. Some firms tak e the responsibility of running such activities at their expense (Mallin, 2009:12). Though they may spend substantial cash, their interests are well fulfilled in the long run. Similarly, when the firms engage in these activities, it is positivity to the stakeholders. Some stakeholders are liable for some of these activities and taking it as their social responsibility lessens their work. For example, some firms pollute the environment and have to make sure they clean such a mess. In taking social responsibility in such activities, the firm fulfils its responsibility by cleaning the environment. The second approach to social responsibility is where managers have to engage in social activities, which is geared towards promotion of other people’s interest. Managers have their ostensible tasks and they should stick to these tasks. However, at some point, the managers tend to accept commitment to social responsibility and perform these tasks. Some of these tasks are demanding and will require a proactive manager. The manager in charge has to ensure all the activities are fully executed and with their corporation. For example, some managers take part in charity activities. Since they are the flag bearers, they have to show their presence in such activities (Kotler and Lee, 2011:17). This creates a scenario where managers have attracted a larger audience to participate in these activities. When the managers are present, it is almost certain that the

The Role of Self- Reflection in Fifth Business By Brooke von Schilling Essay Example for Free

The Role of Self- Reflection in Fifth Business By Brooke von Schilling Essay Self-reflection makes happiness more accessible. This is shown in the book Fifth Business by a contrast of characters, such as introvert and extrovert. In the book Dunstan Ramezay is shown as an introvert and spends his entire life focusing on the spiritual aspect of himself and others. Dunstan is a self-reflecting person who does not find joy in material things, but finds happiness in the wisdom of the spirit. On the contrary, Percy Staunton only finds joy in the material things that life brings him. Percy must have the best of everything and finds joy in showing those things to the world. He loves to prove that he is better than everyone else because of the things he has. Although Percy is joyous for a small amount of time, he is always searching for something bigger and better than what he already has. Other characters show the importance of spiritual aspects of the world and how humans have destroyed the freedom of wonder and self-reflection. To make sense of life and all its marvels you must be self-reflecting. Dunstan is taught that in order to move forward and become successful he must reflect in himself and forgive himself for doing what all humans do. Father Blazon says â€Å"forgive yourself for being a human creature, Ramezay. That is the beginning of wisdom. † Blazon is saying that by letting go of the average mistakes Dunstan will be able to focus on what he needs to and have better knowledge of himself because he is not stuck on his small mistakes. This quote can relate to all humans because everyone needs to be able to forgive himself or herself to move past what they have done. This proves that self-reflection makes happiness more accessible because by moving past the insignificant things the spirit is able to focus on becoming greater. By self-reflecting one is able to see the marvels in everyday. People are always trying to find marvels in material items but by seeing the marvels that one holds within will make one truly happy. â€Å"Why do people all over the world and at all times want marvels that defy all verifiable fact? And are the marvels brought into being by their desire, or is their desire and assurance rising from some deep knowledge, not to be directly experienced and questioned, that the marvelous is indeed an aspect of the real. (202) This quote is made by Liesl, she is saying that people spend too much time obsessing over the things in life that wont bring you true happiness instead of focusing on the inner desires. This quote is saying that the marvels that are desired by the spirit are what will bring happiness. This point is also shown by Father Blazon when he states â€Å"Life itself is too great a miracle to make so much of a fuss about dotty little reversals of the natural order. † By self-reflection one is able to look past the small details and see what a miracle everyday life is. Also, this quote teaches that one needs to be able to make sense of themselves so they can make sense of life and all of its wonder. It is easier for one to make their own happiness than to wait upon others. By relying on yourself you can find out what you truly need and find ways to receive it, but if you depend on others then you only think about what others are willing to provide. This is shown in the quote: â€Å"He had to run his mission by begging, and that sometimes begging yielded nothing; when this happened he prayed for help and had never been refused what he needed. (118) When the man relied on others to get what he needed he did not always succeed but when he found it within himself to pray for what he needed then he was more successful. By praying the man looked inside himself and thought about what he really needed and asked for it, instead of just taking what anyone would give him. This quote proves that happiness is more accessible when you self reflect because he accepted the fact that he needed help, he knew exactly what he needed, and he received it when he looked inside himself. The only way someone can be truly happy is if they rely upon themselves. Dunstan states that nobody- not even my mother- was to be trusted in a strange world that showed so very little of itself in the surface. Dunstan is saying that everyone has their inner desires and needs but they dont show them on the surface. He is saying that you should trust nobody but yourself because youre the only one that knows exactly what you want. In this quote Dunstan relates to his mother because she is the one h should be able to trust the most but really the only person he can trust is himself. You never know what others truly think of you or your desires so you should only listen to your inner self. By self-reflecting Dunstan is able to know his desires and figure out a way to reach them, because he cant show the things he want on the surface. Education does not teach one to self-reflect or to show their true desires. One simply has to look within themselves to realize what you want. Our world relies so much on education that people forget to strive for their passion. Eisengrim teaches this when he states We have educated ourselves into a world from which wonder and fear and dread and splendor and freedom of wonder have been banished. This quote is saying that People are so focused on what they need to learn to be successful that they forget to look within themselves and find their aspiration. Eisengrim is a magician and he looked within himself to figure out what he really wanted to be. He is one of the best at what he does so this teaches that if you look inside yourself and find your true desire you can be great at anything you do. Education was not needed for Eisengrim to be great at what he did because unlike most people, he felt the freedom to wonder what his passion was. Eisengrim is a great example to show that self-reflection makes happiness more accessible. You cannot always rely on others to make you happy, sometimes the best way to be happy is to know what excites you and keep doing whatever that may be. Even if the world is trying to bring you down, if you know yourself and the reasons you did the things you did, you can always be happy. Mrs. Dempster showed this when Dunstan explains that: She knew she was in disgrace with the world, but did not feel disgraced; she knew she was jeered at, but felt no humiliation. She lived by a light that arose from within. Dunstan explains that even though the whole world is against Mrs. Dempster she was still happy because she was happy with herself. This proves that self-reflection makes happiness more accessible because if she had not been happy with herself then she would feel disgraced and humiliated. She knew the reasons why she did what she did so there was no need to let what others said bother her. Because Mrs. Dempster was an introvert she did not feel the need to have a good reputation, all she needed was her own approval. Self-reflection is all one needs to be truly happy with themselves.

How Does John Steinbeck Present the Character of Crooks Essay Example for Free

How Does John Steinbeck Present the Character of Crooks Essay Crooks (named for his crooked back) is the stable buck who works with the ranch horses. He lives in the harness room by himself because of the segregation law set by Jim Crow; he is also the only black man on the ranch. Crooks likes to read books this shows he is cleverer than the other men on the ranch and likes to keep his room neat, but he has been so beaten down by loneliness and prejudicial treatment of that he is also starting to treat people with hatred. His Physical disability is one of the many ways that he suffers on the ranch. John Steinbeck tries to make the novel realistic by showing how black people were treated and isolated in 1930s America. Crooks may not be the main character in the novel, he is important because he fitted in the society at the time of the novel in 1930s America. Steinbeck uses Crooks to show how life was for black people in 1930s America. The Character is firstly introduced when candy was showing George and Lennie around and when he was talking about how angry the boss was when George and Lennie were late to work. Candy tells them that the boss takes his anger on crooks,† Ya see the stable bucks a nigger†, â€Å"the boss gives him hell when he is mad†. White People in 1930s America had no discomfort in using derogatory language, this was normal for people it was the local language in 1930s. Candy says â€Å"nice fella too† and â€Å"he reads a lot† Proving he is intelligen t and nice guy. People show hatred towards him because of the colour of his skin. He and many coloured people were separated from the whites in 1930, because of the Jim Crow laws. George asks Candy ‘‘what kind of man is the boss’’ he quickly brings up that the boss had brought whisky for them at Christmas, he also explains what happened when they let crooks in, Crooks got into a fight one Christmas with a white man. Steinbeck presents the character of Crooks in a detailed description; John Steinbeck tells us that Crooks’ room is in the harness where all the horses sleep, this shows that he is segregated from all the other men on the ranch.

Impact of Globalization on the Employment Market

Impact of Globalization on the Employment Market 1. Explore briefly the major contemporary debates about globalization and the impact of globalization on employment markets and practices. There are several recurring issues related to the contemporary debate on globalization. One of this issues is the competitive pressure globalization is exerting on the European Unions industrial sector. In this sector the topic most debated on is the effect on welfare systems and national economics. Global shareholders and competitors exert increasing pressure on industrial corporations while on the other hand policy makers major concern is on producers (taxpayers and job-providers) who are outsourcing work overseas or closing domestic production sites. This is what has made policy makers and companies to have a mutual interest where each seeks to ensure there is company competitiveness in global competition context. There are also debates on social demands with policy makers advocating for environmental protection since globalization has contributed a great deal to global warming and environmental depletion. Under globalization, debates assert that social, economic and political fac tors have changed the position of many nations. Some regions are said to be more globalized than others and cultures are being spread across the world with the speed of communication being affected. There are different effects of globalization that most countries are not happy with especially nation-states having a diluted power required to coordinate economic and social policies. There are global organizations and events that have been affecting the role of individual states. Globalization pessimists claim that it is a practice that is eroding working conditions and wages for workers for both emerging and advanced economies. Globalization has affected the quality and quantity of employment for example in the automotive industry. For the past ten years, the quantity of employment has remained less constant. For example, there was an addition of only 103,000 workers for the period between 1993 and 1996. At this period, there was an erosion of job quality major as a result of work shi ft from workers to suppliers and pay in this case is lower. Potential for downsizing is also higher since in most countries, vehicle manufacturing is shifting to new locations. Globalization has lead to an increase in the number of low quality jobs that have minimal advancement options. There is growth of insecure causal employment. Recent technological advancement in the global industry has affected employment patterns. For example, women mostly work in insecure and undercapitalized production sectors and these are areas with inadequate access of services, land, production inputs and credit. 2. Appraise processes by which your organization identifies their goals and values touching on how it interacts with any three (3) of its stakeholders. Rolls -Royce employees are one of the major stakeholders as it is the case in every organization. This is hinged on the fact employees are a very vital part of every company because they are the means through which it attains its objectives. In this regard, every business must endear to make sure that it has the right team of employees capable of steering it to the held of business success. Renowned successful companies are known to have effective and equally efficient human capital policies which are partly responsible for their success. Human resource department is the faculty charged with the responsibility of ensuring that the organization has the right team of employees in reference to skills, number and other aspects pertinent to good performance. Organizations should also continually ensure that its employees are appreciated in various ways to motivate them. They should be made to feel part of the organization to make them work hard not just for their own financial objectives but also for the success of the organization. In crafting its goals, an organization should consider the employees and how the goals crafted augur with those of the employees. This means that a relevant framework of gathering information on the relationship between the organization goals and those of the employees should be employed. Different organizations have different methods of achieving this end depending on the existing policies. For a company of Rolls-Royce stature, its important to ensure that they deliver excellent products to its customers who are also one of the major Rolls- Royce stakeholders. However, this will not be possible if there is no cooperation with the employees or where employees are not involved or made to understand their importance in helping achieve this goal. To lobby for this support Rolls -Royce strives to recruit and retain the best individuals by fostering an all inclusive work environment. This environment is also very conducive for enhancing capab ility, flexibility, and involvement and performance improvement. The prime process used to create understanding between the two parties (Rolls-Royce and its employees) is consultations. The company has created a Global Council which is charged with the responsibility of enhancing employees engagement and consultations. Employees representatives are chosen (40) and meets with the council twice per year (Rolls-Royce, 2009, p. 52). There are also regular meeting involving an executive committee of 8 delegates who are elected with the sole objective of supporting constant dialogue and consultations which are timely between the meetings of the council. General meetings which are delivered face to face to the company employees in the globe ensures that they have an excellent understanding of the companys key objectives and the contribution each individual employee should make. Another goal of Rolls- Royce which is also a goal for every organization operating in the market place is to be a socially responsible business. Businesses must be socially responsible to ensure acceptability in the communities where they are operating. This also reinforces their future expansion efforts. General public is a vital stakeholder because the success of the business is partially determined by its image. On the other hand, what a business does in reference to the public or the surrounding community mars or builds its image. A company may have fantastic products but they may never attain marketing success if the general public is not contented with its image. In Rolls- Royce, corporate responsibility is a basic part of its business strategy. Its an integral part of its operations which is not conducted as a self contained activity or separately (Rolls-Royce, 2009, p. 42). This aspect of conducting business has contributed significantly to the overall success of the company. The company strives to carry out its business operations in a responsible and ethical manner which in turn helps it build a competitive advantage. The competitive advantage is brought about by the ability to attract and keep the best individuals, to maintain excellent working relationships with suppliers, customers and governments and build goodwill as well as supporting the diverse communities. The process used in achieving is adhering to the Global Code of Business Ethics (Rolls-Royce, 2009, p. 46). This structures the stakeholders relationships in various parts of the world and has greatly reinforced its ability to create a good reputation. Its corporate responsibility goal is concentrated on four areas, these are business ethics, employees, health, safety and environment and the society. This brings two main stakeholders together (employees and society). 3. Explore the business external and contextual environment, technological developments and their potential impact month strategic business environment of the organization Through its corporate responsibility functions, Rolls-Royce has managed to foster excellent external and contextual (social) environments. This has enabled it to create mutual business benefits, reduce environ metal impacts on the operations of the business, encourage high ethical behavior standards and support human rights. One of the players in the external and social environment of Royce is its suppliers. Through its quality system, the company has ensured that they (suppliers) have maintained a rigorous performance standard. It also employs Suppliers Advanced Business Relationship (SABRs) which uses a supplier code of conduct (Rolls-Royce, 2009, p. 56). This code of conduct is further complemented by the companys purchasing code of conduct with the objective of ensuring that employees and suppliers adhere to the same standards. Royce aims at integrating sustainable procurement into its sourcing decision course. This has greatly helped it build a good external and contextual envir onment. The other factor in the external and social environment which Royce has paid close attention to is in environmental issues. In this regard, it has always ensured that its carbon emissions are declared publicly and voluntarily. This is done by taking the data for analyses by the Carbon Disclosure Project (CDP). It has also gone a step further by encouraging its suppliers to follow its example of declaring their carbon emissions. The initiative (carbon emission declaration) has been very successful since it was initiated. It goes a long war in creating a favorable external and social environment especially at this age when there is a great emphasis on cleaner and greener environment. Royce has also joined hands wit its suppliers to eradicate waste. This has been coupled with recycling of metals to minimize the waste output. It has also taken some measures to help its suppliers follow the same course. Its customers have also been drawn into the initiative by asking them to take their time expired engine parts to the company for recycling. Royce has also ensured adherence to local sourcing policies in order to support disadvantaged and small businesses (Rolls-Royce, 2009, p. 56). Another important factor in the external environment which Royce had continually sought to address is community investment. The company has always strived to support the local communities through community investment. This has been achieved through sponsorship contributions, gifts in kind, employee time and cash. For example in 2009 Royce contributed a total of 6.7 million Euros across the above named areas. The main focus in sponsorship and donation is mainly on causes which are mainly related to engineering, educational and scientific objectives as well as other social objectives linked to Royces business and position in the larger community. A total of 2.3 million Euros in charitable donations was made. One such donation was to a homeless people and benevolent funds. Royce also seeks to work closely with institutions and the government to underpin the numerous career opportunities available in the earth and science field. It has also instituted a flagship education program which s eeks to recognize innovative and excellent teaching of science in the United Kingdom (Rolls-Royce, 2009, p. 57). From another social perspective, the company also extends employees time to the welfare of the community. This is provided by allowing them to participate in community projects and other team building affairs with some societal benefits. Royce has also developed a scheme via which employees are allowed to make some donations to their preferred charities. These donations are tax free and are deducted from the employees salary voluntarily. Technological development poses as a threat to many companies especially those unable to keep pace with the current rate of technological advancements. One of the care characteristics of Royce is technological superiority where it seeks to gain a competitive advantage via constantly investing in technology. This is very significant in the light of future growth considering that competition is building up daily. An operational capacity nee ds to be increased and this is catered for by ensuring that it continually remains innovative and alert to technological changes in the outside environment. This kind of involvement in the community has played a very pivotal role in shaping the companys external and contextual environment. Its dedication to adhering to the regulations set by the government has provided it with ample time to work towards its set objectives. The involvement has built its image among the local communities enhancing acceptability. This is important in facilitating its expansion objectives as well as sourcing initiatives. For example focusing on local sourcing goes a long way in ensuring that the company thrives with no conflicts with small and disadvantaged companies. This enables it to focus on major issues pertinent to the company instead of being involved in issues like legal struggles brought about by unfair overtures aimed at these small companies. Investing in the community has greatly impacts crucial areas which act as a locus of the companys success. Some of these areas are employees recruitment and retention particularly by investing in the skills t he company needs, employees engagement by fostering loyalty, motivation and pride in the organization, personal and professional skills development including leadership, teamwork ethical behavior and adaptability and lastly reputation through encouraging mutually beneficial and proactive relationships in the local communities within which Royce operates. 4. Apply and assess SWOT, PEST and PESTEL tools and change management to differentiate the organizations development and their potential impact on the strategic business environment After carrying out a SWOT analysis of Rolls-Royce, one is able to understand why its such a force to reckon with in the industry. The following analysis provides information on Rolls-Royces strengths, weaknesses, opportunities and threats. One of the strengths possessed by this company is the strong entry barriers which bars new entrants into the industry. This has consequently reduced competition which has allowed the company to focus on its growth and expansion objectives unperturbed by any impeding new competition. The other strength is its focused RD (Market Research.com, 2009, p. 1). This has enabled to keep pace with the advancing technology to make sure that its products do not become obsolete. It also has a great degree of operational efficiency which has greatly boosted its ability to operate profitably. Its presence in the market also poses as a strong hold considering its market share. The other strength is its supply chain which is very well established. This has provided it with the ability to distribute its products to the end consumers very effectively thus increasing customer satisfaction and reducing costs. It also enjoys the advantage of skilled workforce which has enabled it achieve its present day success. The other strength is its long term growth and high demand of its products which has always increased sales. Long term growth strategy has provided it with the financial stability for future growth. Among the weaknesses are high leverage and decline in net profit margin. One of the opportunities available for Rolls-Royce is environmental pressure which is continually gaining momentum on the global fronts. Seeking to be on the fore front to lobbying for a cleaner environment will go a long way in improving its image. Maintain a healthy backlog is also another opportunity capable of improving its stand in the market. It also possesses the potential to improve its supply chain to further facilitate its distribution efforts. Notably, a key opp ortunity at the disposal of Rolls-Royce is the emerging market especially the current increment in spending on defense and the US aerospace industry which is projected to grow highly into the future. The difference between organizations today and in future is determined by its ability to capture the emerging market. Rolls-Royce has a great opportunity of addressing the needs of the emerging markets to enable it stay ahead of competition and facilitate growth efforts. Rolls-Royce can also aggressively invest to enlarge its scope and potential. It has also made an agreement with Dell computers which is a potentially promising market opportunity. There is also the rise in the demand for energy obtained from renewable sources which is a promising opportunity for Rolls- Royce. One of the threats facing Rolls- Royce is substitutes for the renewable energy sources. In the event of this threat, the company is bound to lose it strength as stated in the strengths section above. There is also the competitive pressure and the declining economic indicators. PEST/PESTEL Analysis Rolls-Royce is affected by numerous political forces in United Kingdom which in one way or the other may reduce its ability to exploit its full potential. One of such forces is European Union harmonization laws like employment and euro. This definitely limits its ability to execute its recruitment and retention policies based on the organization requirements (Wiseall, Kelly Kelly, 2001, p. 2). It has adherence to the set guidelines. There has also been a greater emphasis on education, mobility and training. One of the economic forces facing Rolls-Royce is globalization as discussed in the first section. There is also a reduction in manpower and productivity. Strategic partnerships are very prevalent today as well as revenue and risk sharing partnership. The number of suppliers is reducing who are also joining hands together. There is also frequent organizational change. Among the social factors the environmental issues, multi-skilling, ageing population and multicultural work enviro nment. Technical factors include knowledge management and e-, growth and application of computing power, common and standardization methods, integration as well as knowledge re-use and internet and internets. Environmental factors are increasingly gaining references in the business circles as climatic changes become more rampant. This has put many companies under pressure on the same scale. Royce has not been excluded either as such forces has demanded for more environmental friendly products like environmental friendly engines. Legal factors have also affected Royce especially on local sourcing and recruitment issues. Legislation of laws which requires the company to exercise its business in a given predetermined way forces it to revise its policies and growth objectives. It has to strive to make sure that these objectives are achieved within the context of the stipulated laws. The above detailed analysis directly impacts the way Royce conducts is business. It has to use its strengths to overcome is weaknesses and its opportunities to subdue its threats. Rolls-Royce also has to consider all the forces highlighted in the PERST and PESTEL to ensure that its operations are successful. The ability to relate a company with its external environment is a key ingredient of success. Failure to do that is the beginning of failure which culminates with a business exiting from the market. 5. How the organization apply new technologies and their impact on people and process. Critically analyze the impact on the business strategy of the external business environment Rolls-Royce has reported a shift on technological advancement by launching tunnel thruster in a bid to capture greater market share for competitive reasons. This new brand will see the firm target and entrench marine market niche by introducing an advanced level of rim drive as form of integrated system that combines hydrodynamic, mechanical and electrical component for efficiency purposes. There two greatest impact that the new technology will have on the firms capacity to meet the dynamic technological needs as well as the perceived divesture capacity in the changing technological world. First, the firm will record an increase in market share and subsequent increase in electronic and mechanical components sales volumes. Its worth noting that the technology comes at time when the need for business unit expansion is evident in Rolls-Royce Plc. As such the firm moves in by including viral features aimed at providing advantages to various consumers. As confirmed by Gunnar Johnsen the firms RT project manager, the numbers of trials subjected to the new invent guarantees consumers good quality product not only in Sweden but across cultures. Secondly, consumers being key external stakeholders will greatly appreciate the introduction of efficient fuel vessels aimed at reducing running costs associated with their work, and possibly increase their profit margins. For example, with the introduction of Olympics UT 712L, consumers have repeatedly identified with the product as one of the modernized DP2-dynamic positioning as well as efficient equipment/system that has considerably made work at the dock safer. As drawn from fiscal 2009, the firm has considered an improvement on civil nuclear business segment by establishing a modernized firm in UK to center on testing as well as assembling nuclear components for various nuclear power stations. Additionally, the new technological advancement will see the firm advance in the supply of assorted digital instrumentation as well as control systems. With the new shift in technology more operational procedures at engineering level will advance in meeting civil aerospace business requirements. 6. Look into the current and likely future demographic trends in the UK and internationally. Also explore the causes of key social and ethical management trends in the UK. According to the UK social institutions and policies are based on the supposition of a nuclear family with a male who is the breadwinner. Marriage is viewed as a contract between the two parties (male and female) and roles are divided between the two principals (Finch, n.d, p. 1). However, women are deemed to be more dependent on their husbands as well as the marriage institution for their economic sustainability. It is also viewed as a circle within which sex, love and childbearing occur. However, this has all changed in the last century spurred by the emergence of contraceptives, equal opportunities liberation, broadening of white collar jobs, rise in individualism and the availability of jobs for the subsistence earners. Women have now assumed a moirà © instrumental role in the society especially in education and labor market. Gender equity in these areas has greatly improved as women continue pushing for their rights. Besides the changing role of women in the society in UK, the population has also increased (Finch, n.d, p. 2). This has been complemented by changes in family composition with an increase in the number of ethnic minority groups. According to the current demographic trends marriage is continually losing its importance where its role as n economic essential for women is waning. This is because they now able to work away from home thus gaining independence. This has reduced the number of marriages occurring in the UK. Particularly, first marriages are rare to in the current and economic and social environment characterized by independence. Divorces are also on the rise which has been attributed to privatization and individualization of marriages (Finch, n.d, p. 2). Separations have also increased in the last decade. There has also been a decline in remarriages as people now prefer to seek their happiness elsewhere outside the marriage institution. However, a notable demographic trend in UK is the low birth rate. Its believed that the current fer tility rate is incapable of replacing the population for the next 30 years (National Statistics, 2005, p. 1). Its imperative to note that the birth rate surpasses the death even the fertility rates are low. This is an echo of the international scenario where population is increasing exponentially especially in the third world countries. Into the future, there is a projected increase in the number of household. This will result from an increase in population in the next ten years being projected to clock 65 million. The number of immigrants is also set to increase while emigrating and retiring Britons are also set to decline in the future. Marriages are bound to decrease as women gain economic liberation more and more. The changes in the social and ethical management trends in the UK has been prompted by changes in issues like globalization, changes in competitive environment, demographic trends, regulation, social trends and government policies. These changes have created a very tur bulent environment and volatile. In this regard, they have been forced to come up with measure and strategy to ensure their survival. 7. Evaluate the evaluation of regulation of business activity and discuss enterprises corporate governance concept Regulation of business activity is an ancient exercise which has been practiced for years. It is done to ensure that business activities are carried out in the right way. Its importance increased with the onset of industrialization as the scope of business activities enlarged. Industrialization led to emergence of big business and small businesses alike. Ensuring that every business had a fair playing ground was important. This was ensured by making social reforms and laws which regulated how business activities should be conducted. Being a form of government involvement, it continued to increase as complex business activities emerged and as cross trade affairs increased. Along the way enroute to the current level of government regulation, the general public and the business have been forced to lobby for reduced business activity regulation at times. This is in cases where the government has tightened the regulations too much. Massive changes in the economies which characterized the 21st century prompted the government to play a more vibrant role in overseeing business activities. This is the period when numerous business scandals rocked the corporate world. They had devastating impacts on the larger economy and that is why the government had and has to continually intervene. Today, business activity regulation is equally effective and that is why the todays business environment stable and promising. Rolls- Royce has a strong reference to corporate governance. This is the contextual framework through which it is managed, directed and controlled in the best interests of all involved stakeholders. It has a combined code on corporate governance which lays down the standards of good practice (Rolls-Royce, 2009, p. 66). These issues relate to remuneration, board composition, accountability and audit as well as relations with stakeholders. The company board is comprised of a chairman who is non executive, CEO, 4 executive directors and 7 non-executive directors. The non executive directors are independent of the companys management and are appointed by the board. The Group Executive runs the company within the strategy which is determined by the board. There are also principal board committees which includes nomination, remuneration and audit committees.