Famous Canadian Killer Essay

Canadian Criminals are a major part of Canadian society. In our country if you were not the direct victim of a crime you tend to forget the members of society that take pleasure in causing societies grief. As in the case of James Hutchinson and Richard Ambrose, whose crimes were committed in December of 1974.1 They were convicted of killing two Moncton City Police officers. Today, years after the murders were committed Ambrose and Hutchinson are still the center of a major controversy that has plagued our parole system. In order to fully understand the controversy that Ambrose and Hutchinson posses you must look at the chronological order of events that lead up to the slaying. Richard Ambrose and James Hutchinson lived in the outskirts of Moncton, New Brunswick. Ambrose and Hutchinson committed two indictable offences under the Criminal Code of Canada (CCC). On Tuesday December 12, 1974 they violated section 279.1(c) of the Criminal Code with the kidnapping of Raymond Stein and by December 15, 1974 it was apparent that another crime had been committed. Ambrose and Hutchinson violated section 229(a)(i) of the Criminal Code, murder which would be defined under section 231(4)(a) of the Criminal Code; murder of a peace officer in the first degree.2 14-year-old Raymond Stein was the son of a Moncton restaurant owner and on the night of December 12, 1974 Raymond and his grandmother returned home from his father’s restaurant and found two men already in the house (Ambrose and Hutchinson). The duo tied the grandmother to a stair railing with tape and took the boy to an apartment somewhere on the western fringe of Moncton.3 Shortly before 1am on the 13th Mrs. Stein freed herself and telephoned the boys father and informed him of what had happened. Around 1am Mr. Stein received a phone call and a ransom demand was issued. Mr. Stein received two more calls at 2 and 3am. At 3am a ransom demand of $15 000 was agreed upon.4 Mr. Stein drove to a designated location somewhere close to the Riverview Mall around 3:15am. Mr. Stein drops the bag containing the $15 000 in a ditch about 100 yards in front of another car. The boy was released immediately and the car containing the two suspects  speeded off. At 3:50am Cpl. Bourgeois and Cst. O’Leary from the Moncton City Police were in the area of the drop-off in an unmarked police car and announced to dispatch that they would be going off air to investigate a suspicious car they had spotted.5 They were never heard from again. At 9am the unmarked police car was found in Salisbury locked and abandoned. There was no trace of the officers, their sidearms or a shotgun they were carrying. Around noon the RCMP turned over to Moncton City Police a man they had arrested after stopping a car that had matched the description of the car used for the ransom trade. In the car was a set of keys that fitted the unmarked police car and over $6000 believed to be part of the ransom money.6 By 2pm Moncton City Police arrested another man in the city and was questioning him in regards to the kidnapping case but later was released. At 6pm Moncton Police Chief C.M. (Moody) Weldon pleas on the radio for help by the public and offers $5000 in reward for information leading to the whereabouts of the 2 officers.7 At midnight Moncton Police announced they confirmed the presence of human blood on a glove that was seized from the abandoned car. 7:30am on the 14th over 300 searchers fan out over 125 square miles area in search for clues, between Riverview and Salisbury. At 11 am the Moncton City Police in conjunction with the RCMP held a press conference announcing that there would be two teams set up, each involving the Moncton Police and members of the RCMP, one team was responsible for the search of the officers and the other for investigating the crimes that Ambrose and Hutchinson committed. During the same conference policed reveled they have found what appears to be a bloodstained patch of snow in a field near Salisbury. At 5pm Cpl. Bourgeois’s torn drivers license was found by a covered bridge on Shediac River, approximately 15 miles east of Moncton. Due to the fact that sunset had past the police decided to cordon off the area and await daylight to continue the search.8 The next morning at 8am the search resumed with the aid of tracking dogs. Within an hour police found the missing revolvers, radio, pick and shovel in the water downstream. At 2:15pm the searchers found the graves on a hill near the covered bridge and at 1:30pm on December 15th, 1974 the police carried their fallen officers out of the woods wrapped in blankets.9 It was later determined that Ambrose and Hutchinson drove the two officers to the secluded wooded area and forced them to dig their own graves and then shot each of them in the back of the  head.10 Richard Ambrose 22 was already in custody at the time the bodies were recovered. Later on the December 15th a few minutes after 11pm James Hutchison 43 turned himself in to Sgt. Greg Cahoon of the RCMP. Hutchison stated that he turned himself in because he knew he was wanted by the police and he thought they would ‘shoot first and ask questions later’. Ambrose and Hutchinson were to have their first appearance in court on December 23rd. Both Ambrose and Hutchinson were found guilty and sentenced to death by hanging in 1976. When the Trudeau government repealed capital punishment later in 1976 Ambrose and Hutchinson’s sentence was dropped to life in prison.11 Hutchinson was serving time at Pittsburgh Institution outside of Kingston Ontario, a minimum-security prison, and escaped at the age of 73. Prison files show that Hutchinson has expressed deep hatred toward police and had thoughts of thrill killing. Hutchison had admitted to his life of crime that dates back to the 1940’s, which has stemmed from an insatiable hunger for excitement, and the thrill of outwitting authorities.12 The Ontario Provincial Police classified him as extremely dangerous and Staff Sgt. Rick Myers of the OPP Penitentiary Squad described him as â€Å"looking like anyone’s grandfather but capable of anything†. Prison officials also stated that Hutchison has been plotting his escape since he was jailed in 1974. In 1997, Hutchison persuaded the National Parole Board to grant him escorted temporary absences. His main argument was â€Å"the burnout theory† stating that in today’s workplace also applies to longtime criminals who lose their desire to keep breaking the law. Hutchison was denied parole because of numerous escape plots.13 Three years later the parole board reviewed several reports filed by a supportive case management officer, the board ruled his risk to the public was â€Å"manageable†. In 2000 Hutchinson was granted a leave to volunteer at a shelter for stray cats and dogs approximately 12 kilometers from Pittsburgh Institution. Hutchison finished cleaning the stalls around 2:30pm, laid down his broom and walked away as a free man. He was recaptured two days later. This however was not the first time Hutchison escaped custody. In 1966 Hutchison was serving a 10 year sentence for robbery and was being transferred from Kingston Penitentiary to Dorchester Penitentiary in New Brunswick. It was at this point where Hutchison made his first escape.14 He was arrested the same day at a train station in Moncton. Hutchinson made parole 4 years later, in 1974, that is when he murdered the  two Moncton Police officers. Hutchison lived with the prison’s Small Group Living Program. This is where prison officials believe that Hutchison did most of the planning for his escape. Prison files show Hutchison as having obvious planning skills. Prison psychologist used to consider Hutchison antisocial and sick enough to carve self-inflicted wounds.15 In this program inmates lived peacefully and less supervised. Although many reports stated that Hutchison was not rehabilitated, Deputy Warden Ron Fairly described Hutchison as a â€Å"model inmate.†16 Ambrose however, had quite a different prison life he was 22 when he was first arrested for the murder of the two police officers. Throughout Ambrose’s incarceration he claimed innocence and refused to speak about the crime. As well, he has expressed remorse and pleaded for life beyond prison. In the late 1980’s Ambrose got married in a prison ceremony and became a father to a baby girl in 1992. Ambrose told parole board members he is a reformed man, and deserves a life outside of the public’s eye. Ambrose changed his surname to Bergeron and in the summer of 2000 won full parole. According to a psychologist report prepared for Ambrose’s parole hearing indicated that he still posses a moderate to high risk to re-offend in a general and violent manner.17 On December 10, 1999 The Canadian Justice Foundation released an article alerting the public that Ambrose was granted day parole after he had changed his name to Richard Bergeron. The Canadian Justice Foundation has called on the Solicitor General to launch an investigation in regards to the parole. Shawn Howard, the Managing Director of The Canadian Justice Foundation said: â€Å"If inmates are allowed to change their name and erase their criminal identity, it poses a risk to public safety† he goes on to say â€Å"its obvious that Ambrose is trying to disappear by cloaking himself with a new identity†.18 Previous attempts to locate Ambrose have been unsuccessful since his original name was removed from the parole-hearing list. A Moncton reporter recently alerted the public that Ambrose had legally changed his name to Richard Bergeron and may return to Edmonton where his wife and child currently reside. The parole system in Canada has let out more ‘Cop Killers’ then Richard Ambrose. 19The list is long and in each case the criminal was perceived as a good inmate. When you look at the crimes committed by Richard Ambrose and James Hutchison with the murder of a two police officers that carries a sentence of life in prison as well as the kidnapping case that  carries a sentence of imprisonment for life and to a minimum punishment of imprisonment for a term of four years. However Richard Ambrose was granted parole 25 years after he showed no mercy to the two police officers that were only doing their job. In the Hutchison case a 73-year-old man who has made more then one attempt to break out of custody and who also stated squeezing the trigger, was a ‘reflex action’ was given the opportunity to work outside the prison, and was able to walk at a humane society for animals that he was allowed to work unsupervised. Many citizens are enraged that these two criminals were allowed to leave the prison system. They showed no respect for the law and killed two members of society who have sworn to uphold the law. Both persons were described as being a moderate to high risk to re-offending but are still allowed to go into the public unsupervised. James Hutchinson December 1974 Bibliography Final Tribute Paid To Slain Policemen. Mark Pedersen. Telegraph Journal. December 16th, 1974 Hunt to Resume Today For Missing Policemen. Don McLeod. Telegraph Journal. December 14th, 1974. May Have Been Forced To Dig Their Graves. Don McLean. Telegraph Journal. December 16th, 1974. Alan Cairns. Prisons a ‘disgrace’. The Toronto Sun. November 20, 2000 Dimmock,G. and A. Sands. Escaped murder kills for thrills: 73 year old fugitive. Retrieved from the World Wide Web September 9, 2002. http://www.dimmockreport.com/escapedmurderer.htm Howard, S. The Canadian Justice Foundation. June 10, 1999

Tata Corus

CONSOLIDATED FINANCIAL STATEMENT PROJECT TATA- CORUS ACQUISITION SUBMITTED TO: Dean Dr. Badrinath Prof. K. Govindarajan SUBMITTED BY BADRI NARAYANAN – 112071013 TABLE OF CONTENTS SR NO 1. PARTICULARS PART 1 †¢ Global steel industry †¢ About TATA Steel †¢ About Corus PART 2 †¢ Legal form †¢ Mergers and Acquisition †¢ Method †¢ Terms of transaction †¢ Valuation Matters 2. 3. PART -3 †¢ Reasons for the merger †¢ Objectives for a merger †¢ Culture differences †¢ Post – Acquisition 4. PART 4 †¢ Outcome of the merger – success or failure †¢ Financial indicators †¢ Milestones of the TATA Corus deal 5.CONCLUSION 6. BIBLIOGRAPHY PART – 1 GLOBAL STEEL INDUSTRY Steel was an alloy of iron and carbon containing less than 2 per cent carbon and 1per cent manganese and small amounts of silicon, phosphorus, sulphur and oxygen. Steel was the most important engineering and construction material in the world. It was used in every aspect of our lives, from automotive manufacture to construction products, from steel toecaps for protective footwear to refrigerators and washing machines and from cargo ships to the finest scalpel for hospital surgery. Most steel was made via one of two basic routes: 1.Integrated (blast furnace and basic oxygen furnace). 2. Electric arc furnace (EAF). The integrated route used raw materials (that is, iron ore, limestone and coke) and scrap to create steel. The EAF method used scrap as its principal input. The EAF method was much easier and faster since it only required scrap steel. Recycled steel was introduced into a furnace and re-melted along with some other additions to produce the end product. Steel could be produced by other methods such as open hearth. However, the amount of steel produced by these methods decreased every year.Of the steel produced in 2005, 65. 4per cent was produced via the integrated route, 31. 7percent via EAF and 2. 9 percen t via the open hearth and other methods. At a steel mill, the crude steel production process turned molten steel into ingots, blooms, billets or slabs. These were called semi-finished products. Semi-finished products were solid blocks of steel, usually with a square or rectangular cross section. A flat steel product was typically made by rolling steel through sets of rollers to produce the final thickness. There were two types of flat steel products- Plate products and Strip products.Supply of raw materials was a key issue for the world steel industry. IISI managed projects which looked at the availability of raw materials such as iron ore, coking coal, freight and scrap. Scrap iron was mainly used in electric arc furnace steelmaking. Apart from scrap arising in the making and using of steel, obsolete scrap from demolished structures and end-of life vehicles and machinery was recycled to make new steel. About 500 million tons of scrap was melted each year. Iron ore and coking coal w ere used mainly in the blast furnace process of iron making. For this process, coking coal was turned into coke, an lmost pure form of carbon which was used as the main fuel and reductant in a blast furnace. Typically, it took 1. 5 tons of iron ore and about 450kg of coke to produce a ton of pig iron, the raw iron that came out of a blast furnace. Some of the coke could be replaced by injecting pulverized coal into the blast furnace. Iron was a common mineral on the earth‘s surface. Most iron ore was extracted in opencast mines in Australia and Brazil, carried to dedicated ports by rail, and then shipped to steel plants in Asia and Europe. Iron ore and coking coal were primarily shipped in capsize essels, huge bulk carriers that could hold a cargo of 140,000 ton or more. Since the World War II, the steel industry had experienced three distinct phases- growth (195073), stagnation (1974-2001) and boom (2002-2006)3. The demand for steel grew at an annual rate of 5. 8per cent duri ng 1950-73 as the industrializing nations were building their civil infrastructure. The oil shocks of 1973 through 1979 slowed consumption in the second phase. The production of crude steel grew at 0. 6per cent p. a. over the entire period. Steel prices declined by 2-3 per cent p. a.During 1999-2001 the industry‘s overcapacity hovered near 25per cent globally. Only a few companies were able to sustain. Since 2002 the annual steel production had grown at 7-8per cent driven almost entirely by the double digit growth in China. The huge demand from China had caused a commensurate leap in steel prices. The industry had experienced a drop in the over capacity from 23per cent in 2001 to about 17per cent from 2003-2005. But the demand from China had also witnessed a structural change. From 2002-2004 China‘s capacity for producing crude steel increased on average by 55per cent. By 2005 China became a net exporter of steel.In the first half of 2006 China overtook Japan, Russia and the EU 25 to become the world‘s largest steel exporting country. In June 2006 that winning companies in the steel industry would have somewhere between 150m-200m tons of annual capacity by 2015 and that scale was crucial in the pursuit of value. Shanghai Baosteel, which, although founded in 1998, had already become the world‘s fifth largest steel maker producing 22. 7 m tons in 2005. The potential acquisition of Corus by Tata Steel would create a new entity with a production volume close to Baosteel‘s. CONTRIBUTION OF COUNTRIES TO GLOBAL STEEL INDUSTRYThe countries like China, Japan, India and South Korea are in the top of the above in steel production in Asian countries. China accounts for one third of total production i. e. 419m ton, Japan accounts for 9% i. e. 118m ton, India accounts for 53m ton and South Korea is accounted for 49m ton, which all totally becomes more than 50% of global production. Apart from this USA, BRAZIL, UK accounts for the major chunk of the whole growth. The steel industry has been witnessing robust growth in both domestic as well as international markets. In this article, let us have a look at how has the steel industry performed globally in 2007.ABOUT TATA & CORUS â€Å"Tata Steel has always believed that the principle of mutual benefit – between countries, corporations, customers, employees and communities – is the most effective route to profitable and sustainable growth. † Tata Steel Limited is a multinational steel company headquartered in Mumbai. It was established by Jamsetji Tata in year 1907 and changed its name TISCO to Tata Steel in 2005. It is the tenth-largest steel producing company in the world and the largest private-sector steel company in India measured by domestic production with an annual crude steel capacity of over 28 million tonnes per annum.It is now one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial pre sence in over 50 countries. They were world's 56th largest and India's 2nd largest steel company with an annual crude steel capacity of 3. 8 million tonnes. Based in Jamshedpur, India, it was part of the Tata group of companies. Tata Steel’s larger production facilities include those in India, the UK, the Netherlands, Thailand, Singapore, China and Australia.Operating companies within the Group include Tata Steel Limited (India), Tata Steel Europe Limited (formerly Corus), NatSteel, and Tata Steel Thailand (formerly Millennium Steel). Tata Steel’s vision is to be the world’s steel industry benchmark through the excellence of its people, its innovative approach and overall conduct. Underpinning this vision is a performance culture committed to aspiration targets, safety and social responsibility, continuous improvement, openness and transparency. Corus Group is a multinational steel-making company headquartered in London.It is the world's seventh largest and seco nd-largest steel-maker in Europe and now a subsidiary of Tata Steel. Corus Group was formed through the merger of Koninklijke Hoogovens and British Steel in 1999 forming the third largest producer of steel behind POSCO of South Korea and Nippon Steel of Japan and was a constituent of the FTSE 100 Index until it was acquired by Tata in 2007. In 2010 Corus announced it was changing its name to Tata Steel Europe and adopting the Tata corporate identity. British Steel Corporation was a large British steel producer, consisting of the assets of former private companies which had been nationalized.In 1988 the company was privatized as a result of the British Steel. Koninklijke Hoogovens was a Dutch steel producer founded in 1918, located in Ijmuiden. The Corus was having leading market position in construction and packaging in Europe with leading R&D. The Corus was the 9th largest steel producer in the world. PART 2 LEGAL FORM Generally, there are many forms of combination of two companies , such as acquisition, merger, takeover and hostile takeover etc.. They are different terminologies used under different situations.Though there is a thin line difference between them but the impact of each kind are completely different. Merger: A merger is when two companies which are about the same size or strength come together to form a single company. They combine their respective resources for mutual gains or to reduce competition. In such a case, the deal gets finalized on a friendly terms and both the companies share equal profits in the newly created entity. Acquisition: When one company acquires the other and rules all its business operations, it is known as acquisitions. In this process of restructuring, one company overpowers the other company.Among the two companies, the one that is financially stronger and bigger in all ways establishes it power. Then we can know that acquisition is usually happen when the company is different in size, and both the acquiring company an d subsidiary want the combination in the meantime, in another word, the subsidiary company is not resisted to the combination. It is frequently used to describe more friendly acquisition, or used in conjunction with the word merger, where the both companies are willing to join together. Takeover: Takeover also occurs when one company purchases another, it is the similar with acquisition, but takeover enerally happens when a company buys another company which is not doing well or has gone bankrupt, and when the transaction is done in an unfriendly manner in more or less a forceful way in which the company being acquired is resisting. The acquiring company usually initials the combination. Accounting Method: Pooling of interests: This is generally accomplished by a common stock swap at a specified ratio. For example: When M&I Bank merged with National City Bank Corporation, the common stock of the two companies were swapped at a ratio between . 55 and . 5363 shares of M&I for every sh are of National City. Such mergers are only allowed if they meet certain legal requirements. Purchase acquisition: This involves one company (the acquirer) purchasing the common stock or assets of the target company. The acquiring company offers to purchase the target company‘s stock at a given price in cash, securities or both. This offer is called a tender offer because the acquiring company offers to pay a certain price if the target‘s shareholders will surrender or tender their shares of stock.Generally, this offer is higher than the stock‘s current price to encourage the shareholders to tender their stocks. The difference between the share price and the tender offer is called the acquisition premium. Consolidation: The existing companies are dissolved and a new company is formed to combine the assets of the existing companies. Both companies’ stocks are surrendered and new stock is issued in its place. E. g. both Daimler-Benz and Chrysler ceased to exis t when the two firms merged and a new firm DaimlerChrysler was created. Some other related terms are horizontal, vertical and conglomerate mergers.Horizontal mergers happen when a company merges with another company which is a direct competitor in the same product lines and markets. A vertical merger occurs when the company merges with the suppliers or customers. Conglomerate mergers occur when the companies combined have no relationship to one another. It’s a friendly takeover and 100% acquisition was done by TATA steel. For the consolidation, TATA used acquisition method. TERMS: Following are some key terms of the transaction: 1. Tata Steel purchased a 100% stake in the Corus Group at 608 pence per share in an all cash deal cumulatively valued at $12. 4 billion. The deal was the largest Indian takeover of a foreign company and made Tata Steel the world’s fifth-largest steel group. And a wholly owned subsidiary, called Tata Steel UK would be set up by Tata Steel. 2. T ATA financed its acquisition not only through its own equity contribution but a package of market securities: a) Equity Capital from Tata Steel Ltd USD4. 10 billion. b) The non-recourse debt from a consortium of banks USD6. 14 billion from. c) Quasi–Equity funding at Tata Steel Asia Singapore USD1. 25 billion. d) Long term Capital funding at Tata Steel Asia Singapore USD1. 1 billion. 3. A new board for the new entity after acquisition: This consists Ratan N. Tata, chairman of Tata Steel, Jim Leng of the Corus group, Muthuraman, Managing Director of Tata Steel, Ishaat Hussain and Arun Gandhi, directors of Tata Sons was formulated to develop and execute the integration and further growth plans. It is the group of top managers from both companies; it can help the new entity fit in much quickly with different culture. Investors in a company that is aiming to take over another one must determine whether the purchase will be beneficial to them.In order to do so, they must ask thems elves how much the company being acquired is really worth. Naturally, both sides of an M&A deal will have different ideas about the worth of a target company: its seller will tend to value the company at as high of a price as possible, while the buyer will try to get the lowest price that he can. There are, however, many legitimate ways to value companies. The most common method is to look at comparable companies in an industry, but deal makers employ a variety of other methods and tools when assessing a target company. Here are just a few of them: 1.Comparative Ratios – The following are two examples of the many comparative metrics on which acquiring companies may base their offers: Price-Earnings Ratio (P/E Ratio) – With the use of this ratio, an acquiring company makes an offer that is a multiple of the earnings of the target company. Looking at the P/E for all the stocks within the same industry group will give the acquiring company good guidance for what the targe t's P/E multiple should be. ? Enterprise-Value-to-Sales Ratio (EV/Sales) – With this ratio, the acquiring company makes an offer as a multiple of the revenues, again, while being aware of the price-to-sales ratio of other ompanies in the industry. ? 2. Replacement Cost In a few cases, acquisitions are based on the cost of replacing the target company. For simplicity's sake, suppose the value of a company is simply the sum of all its equipment and staffing costs. The acquiring company can literally order the target to sell at that price, or it will create a competitor for the same cost. Naturally, it takes a long time to assemble good management, acquire property and get the right equipment.This method of establishing a price certainly wouldn't make much sense in a service industry where the key assets – people and ideas – are hard to value and develop. 3. Discounted Cash Flow (DCF) A key valuation tool in M, discounted cash flow analysis determines a company's c urrent value according to its estimated future cash flows. Forecasted free cash flows (operating profit + depreciation + amortization of goodwill – capital expenditures – cash taxes – change in working capital) are discounted to a present value using the company's weighted average costs of capital (WACC).Admittedly, DCF is tricky to get right, but few tools can rival this valuation method. Synergy: The Premium for Potential Success For the most part, acquiring companies nearly always pay a substantial premium on the stock market value of the companies they buy. The justification for doing so nearly always boils down to the notion of synergy; a merger benefits shareholders when a company's post-merger share price increases by the value of potential synergy. Let's face it, it would be highly unlikely for rational owners to sell if they would benefit more by not selling.That means buyers will need to pay a premium if they hope to acquire the company, regardless of what pre-merger valuation tells them. For sellers, that premium represents their company's future prospects. For buyers, the premium represents part of the post-merger synergy they expect can be achieved. The equation solves for the minimum required synergy: In other words, the success of a merger is measured by whether the value of the buyer is enhanced by the action. However, the practical constraints of mergers, which discussed often, prevent the expected benefits from being fully achieved.Alas, the synergy promised by deal makers might just fall short. PART 3 REASONS FOR MERGER Synergies from the TATA-CORUS Deal I. Tata Steel would get an access to the European market. Corus has already a welldefined network in European Market. If Tata Steel had independently entered the European market, it would have taken a considerable time to develop a wellestablished network. In the post deal scenario it will become a global player with the balanced presence in developed European market and fast growing Asian Market. II.Tata Steel will have a strong position in construction, automotive and packaging market sector. III. It will have a low cost position in Europe and South East Asia. IV. It can double the size and profitability V. The deal has expanded scale from 7 MTPA to 25 MTPA and reaps significant economies of scale. VI. The merged entity would become world’s 6th largest steel company with 25. 6 MTPA of crude steel production. VII. The combined entity will have more efficient operations through enhanced optionality to optimize asset base and material flow, including sourcing of raw materials, and semi-finished steel.VIII. Better equipped to race intensifying competition arising from consolidation in the industry globally. IX. Both Tata Steel and Corus are a strong cultural fit. X. Tata Steel would benefit from Corus’s pan-European distribution network. XI. The acquisition gets with Tata Steel’s stated objective of having a global distribution n etwork. XII. There a strong cultural fit both the two companies. Both Tata Steel and Corus have strong commercial relationship. OBJECTIVES OF THE MERGER Tata’s objectives for buying Corus 1. Tata is looking to manufacture finished products in mature markets of Europe. . At present manufactures low value long and flat steel products while Corus produces high value stripped products 3. A diversified product mix will reduce risks while higher end products will add to bottom line. 4. Corus holds a number of patents and R & D facility. 5. Cost of acquisition is lower than setting up a green field plant and marketing and distribution channels 6. Tata is known for efficient handling of labour and it aims at reducing employee cost and improving productivity at Corus 7. It had already expanded its capacities in India. . It will move from 55th in world to 5th in production of steel globally. 9. Corus, being the second largest steelmaker in Europe, would provide Tata Steel access to som e of the largest steel buyers open new markets and product segments for Tata Steel, which would help the company to de-risk its businesses through wider geographical reach. 10. A presence in mature markets would also provide Tata Steel an opportunity to go further up the value chain as demand for specialized and high value-added products in these markets is high. 11.Corus is also very strong in research and technology development, which would add to the competitive strength for Tata Steel in future. 12. As stated by Tata, the initial motive behind the completion of the deal was not Corus’ revenue size, but rather its market value. Even though Corus is larger in size compared to Tata, the company was valued less than Tata (at approximately $6 billion) at the time when the deal negotiations started. Corus’ objectives for selling 1. Corus needs supply of raw material at lower cost 2. Total debt of Corus is 1. 6bn GBP 3.Though Corus has revenues of $18. 06bn, its profit wa s just $626mn (Tata’s revenue was $4. 84 bn & profit $ 824mn) 4. Corus facilities were relatively old with high cost of production 5. Employee cost is 15 %( Tata steel- 9%) 6. From Corus’ point of view, the basic reason for supporting this deal were the expected synergies between the two entities. Corus has supported the Tata acquisition due to different motives. With the Tata acquisition Corus has gained a great and profitable opportunity to make an exit as the company has been looking out for a potential buyer for quite some time.Benefit for the Tata’s stakeholders: Any advantage and profits from this deal will merge only when Tata Steel would be in a position to export low-cost slabs toCorus. †¢ There may be restraints to exports as Tata Steel will need to heed the requirements of its other acquired companies in South East Asia of NatSteel and Millennium Steel. †¢ This effect may change if the Tatas can acquire businesses in the low-cost regions suc h as Latin America, opening up an assured source of slab-making that can be exported to Corus’s plants in the UK. †¢ Iron ore policy in India undergoes a major change in the coming years. If global consolidation becomes possible with the merger of Thyssen Krupp with Nucor or Severstal with Gerdau or any the top five players. The possibility of pricing stability may ease the performance pressures on Tata-Corus and moderate the risks of restructuring at high cost plants in UK. †¢ If Tata considers global listing say in London it may help the group commands a much higher price-earning multiple and give it more flexibility in managing its finances. Objectives – Achieved or not: Going by the stock market reaction initially, the acquisition was a big blunder.The stock tanked 10. 5 per cent after the deal was announced and another 1. 6 per cent. Investors were worried about the financial risks of such a costly deal. But after successfully acquiring Corus, Tata Steel became the fifth largest producer of steel in the world, up from fifty-sixth position. There were many likely synergies between Tata Steel, the lowest-cost producer of steel in the world, and Corus, a large player with a significant presence in value-added steel segment and a strong distribution network in Europe.Among the benefits to Tata Steel was the fact that it would be able to supply semi-finished steel to Corus for finishing at its plants, which were located closer to the high-value markets. Managing the obstacles: Coping with a merger can create many problems, some of which are, i. Can make top managers spread their time too thinly and neglect their core business, spelling doom. ii. Potential difficulties seem trivial to managers caught up in the thrill of the big deal. iii. The chances for success are further hampered if the corporate cultures of the companies are very different. iv.The companies often focus too intently on cutting costs following mergers, while revenues, and ultimately, profits, suffer. Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business, thereby prompting nervous customers to flee. In view of the Tata- Corus acquisition, the main obstacles were, 1. The acquisition was not cheap for Tata. The price that they paid represents a very high 49% premium over the closing mid market share price of Corus on 4 October, 2006 and a premium of over 68% over the average closing market share price over the twelve month period.Moreover, since the deal was paid for in cash automatically makes it more expensive, implying a cash outflow from Tata Steel in the amount of ? 1. 84 billion. 2. Tata has reportedly financed only $4 billion of the Corus purchase from internal company resources, meaning that more than two – thirds of the deal has had to be financed through loans from major banks. 3. The day after the acquisition was officially announced, Tata Steel’s share fell by 10. 7 percen t on the Bombay stock market. 4.Tata’s new debt amounting to $8 billion due to the acquisition, financed with Corus’ cash flows, is expected to generate up to $640 million in annual interest charges (8% annual interest cost). 5. Corus had existing interest debt charges of $400 million on an annual basis which implies that the combined entity’s interest obligation will amount to approximately $725 million after the acquisition. 6. Corus, being the second largest steelmaker in Europe, would provide Tata Steel access to some of the largest steel buyers. The acquisition would open new arkets and product segments for Tata Steel, which would help the company to de-risk its businesses through wider geographical reach. CULTURAL DIFFERENCES There has been a great deal of suspicion on how well the two entities, Tata Steel and Corus would integrate post acquisition. This concern has been expressed since the culture and perspectives of the two companies and the people are s eemingly very different from each other. Ratan Tata however, has been confident that the post-acquisition management will not be too difficult as the two organizational cultures will be effectively integrated.Ratan Tata has said he is confident the two companies will have â€Å"a cultural fit and similar work practices. † Tata Corus has made developed some management structure to deal with the smooth operation of the two entities. It has also adopted several system integrations in both the entities to smoothen the transactions between the two entities. Tata Steel has formed a seven- member integration committee to spearhead its union with Corus group. While Ratan Tata, chairman of the Tata group, heads the committee, three of the members are from Tata Steel and the other three are from Corus group.Members of the integration committee from Tata Steel include Managing Director B Muthuraman, Deputy Managing Director (steel) T Mukherjee, and chief financial officer Kaushik Chatte rjee. The Corus group is represented in the committee by CEO Phillipe Varin, executive director(finance) David Lloyd, and division director (strip products) Rauke Henstra. The company has also created several Taskforce Teams to ensure integration of specific set of activities in the two entities for smoother transaction. For instance, the company has created a task force to integrate the UK/EU model in construction to the Indian market.To achieve, a taskforce comprising of following executives from both the entities was formed. Members from Corus Mr. Matthew Poole (Director Strategy Long Products Corus) Mr. Colin Ostler (GM Corus Construction Centre) Mr. Darayus Shroff (Corus International) Members from Tata Steel: Mr. Sangeeta Prasad (CSM South, Flat Products) Mr. Pritish Kumar Sen (Market Research Group) Mr. Rajeev Sahay (Head Planning & Scheduling, TGS) The scope of the taskforce will be to: 1. Ensure smooth market knowledge exchange between Tata Corus and Tata Bluescope and iden tify Knowledge gaps. . Complete mapping of construction sector for Indian market using external resource if necessary. 3. Understand key drivers for construction through knowledge gained from stakeholders of the construction community. 4. Map key competencies of Tata Corus against market drivers/ requirements. 5. Develop a five- year strategy. The reasons why cultural integration is a huge challenge are: 1. Corporate culture is an amalgamation of: National culture, Religious culture, and professional culture. These cultural dimensions are often invisible – but ever present & relevant. 2.Need to balance the local needs and the global needs during the post-acquisition period. These needs may be the local community demands, business demands, investor’s demands etc. 3. Need to meet the high expectations of the shareholders post-acquisition. Often times these acquisitions are financed through LBO or debt, and this needs good cash flows to sustain. In addition, the managemen t will be under pressure to show the benefits of acquisition as promised before the acquisition 4. Lack of Experience in dealing with a different culture. This applies equally to Indian & foreign company managers.Most managers lack the cross-cultural skills needed during the post-acquisition integration. POST ACQUISITION TATA †¢ Tata Steel has formed a seven-member integration committee to spearhead its union with Corus group. While Ratan Tata, chairman of the Tata group, heads the committee, three of the members are from Tata Steel and the other three are from Corus group. The acquisition by Tata amounted to a total of 608 pence per ordinary share or ? 6. 2 billion (US $12 billion) which was paid in cash. First of all, the general assumption is that the acquisition was not cheap for Tata.The price that they paid represents a very high 49% premium over the closing midmarket share price of Corus on 4 October, 2006 and a premium of over 68% over the average closing market share p rice over the twelve month period. Moreover, since the deal was paid for in cash automatically makes it more expensive, implying a cash outflow from Tata Steel in the amount of ? 1. 84 billion. Tata has reportedly financed only $4 billion of the Corus purchase from internal company resources, meaning that more than two-thirds of the deal has had to be financed through loans from major banks.The day after the acquisition was officially announced, Tata Steel’s share fell by 10. 7% on the Bombay stock market. Despite its four times smaller size and smaller capacity, Tata Steel’s operating profit for 2006, earning $840 million on sales of 5. 3 million tonnes, were very close in amount to those generated by Corus ($860 million in profits on sales of 18. 6 million tons). Tata’s new debt amounting to $8 billion due to the acquisition, financed with Corus’ cash flows, is expected to generate up to $640 million in annual interest charges (8% †¢ †¢ †¢ †¢ †¢ †¢ annual interest cost). This amount combined with Corus’ existing interest debt charges of $400 million on an annual basis implies that the combined entity’s interest obligation will amount to approximately $725 million after the acquisition. The debate whether Tata Steel has overpaid for acquiring Corus is most likely to be certain, since just based on the numbers alone it turns out that at the end of the bidding conflict with CSN Tata ended up paying approximately 68% above the average price of Corus’ shares.Another pressing issue resulting for this deal that has created a dilemma between experts and analysts opinions is whether this acquisition for the right move for Tata Steel in the first place. The fact that Tata has managed to acquire a British steel maker that has been a symbol of Britain’s industrial power and at the same time its dominion over India has been perceived as quite ironic. Only time will show whether Tata wil l be able to truly benefit from the many expected synergies for the deal and not make the typical mistakes made in many large M&A deal during this beginning period.PART 4 OUTCOME OF THE MERGER – SUCCESS OR FAILURE Many financial analysts felt that Tata Steel overpaid for the Corus acquisition. Immediately after the acquisition announcement, Tata Steel‘s share price fell by 10. 7 percent to Rs. 463. 95 on the Bombay Stock Exchange. According to Martin Stanley, London based head of spread betting at the brokerage firm of GFT Global Markets, ? The consensus view seems to be that Tata have probably overpaid, but if further consolidation in this sector occurs going forward then this will look like very fair value? International Herald Tribune, 1/30/07). Additional concerns were raised about the debt liability of Tata Steel which borrowed more money to fund the acquisition. According to Standard & Poor‘s analyst Anushkant Taneja, ? The size of the Tata acquisition and t he potential cash outflow in Tata Steel‘s offer for Corus could have an adverse impact on its financial risk profile. Standard & Poor‘s rating service in India, Crisil, placed Tata Steel on the ? negative implications watch list after its Corus acquisition.The contention was that Tata Steel had overstretched itself due to execution risk and lack of experience by Indian companies in acquiring international businesses (Range, 2007, April 26). Moody‘s Investor Services downgraded Tata Steel‘s rating from Baa2 (investment grade) to Ba1 (speculative grade). The primary reason cited was Tata Steel‘s weakened balance sheet liquidity and financial profile resulting from its largely debt-funded acquisition of Corus. Moody‘s Senior V. P. Alan Greene stated Tata Steel‘s current high leverage constrains its financial strength and flexibility and ? he main challenge facing management is to de-risk the large capital structure while not neglecting existing operations and opportunities for rapid growth in Asia.? He further stated that ? Tata Steel‘s ambitious capacity expansion plan will lead to higher project execution risk over several years and materially elevate financial leverage unless it is deferred.? (Businessline, 2007, July 7). According to Sreesankar, head of research at Il&Fs investments in Mumbai, ? They (Tata Steel) wanted the company and they have got it. But we have to see how the finding happens and how the integration progresses.One distinction is that EBITDA (earning before income taxes and depreciation allowance) margins for Tatas are about 40 percent and for Corus is about 7 percent.? Clearly, the financial industry analysts were skeptical about the long-term financial viability of this acquisition. According to Shriram Iyer, head of research at Edelweiss in mumbai, ? †¦the time horizons of investors and of the company may not be aligned MANAGEMENT’S POINT OF VIEW This proposed acquisition repres ents a defining moment for Tata Steel and is entirely consistent with our strategy of growth through international expansion.This creates a well balanced company, strategically well placed to compete in an increasingly competitive global environment. (Ratan Tata quoted in Financial Express; 2007, February 13) The Tata Steel board of directors approved the project to acquire Corus, as it was consistent with stated objectives of growth and globalization. Although Tata Steel ended up paying more for Corus than its original bid, its management felt that there were many favorable strategic and financial outcomes to be realized. To begin with, this acquisition would position the combined group as the fifth largest steel company in the world by production output.The new entity would have a meaningful market presence in both Europe (where Corus was a well established brand name) and Asia (where Tata was a well established brand name). Combining the low cost upstream production in India FINA NCIAL INDICATORS: KEY MILESTONES OF THE TATA CORUS DEAL September 20, 2006:-Corus Steel has decided to acquire a strategic partnership with a Company that is a low cost producer October 5, 2006:- The Indian steel giant, Tata Steel wants to fulfill its ambition to Expand its business further. October 6, 2006:- The initial offer from Tata Steel is considered to be too low both by Corus and analysts.October 17, 2006:- Tata Steel has kept its offer to 455p per share. October 18, 2006:- Tata still doesn’t react to Corus and its bid price remains the same. October 20, 2006:- Corus accepts terms of ? 4. 3 billion takeover bid from Tata Steel. October 23, 2006:- The Brazilian Steel Group CSN recruits a leading investment bank to offer advice on possible counter- offer to Tata Steel’s bid. October 27, 2006:- Corus is criticized by the chairman of JCB, Sir Anthony Bamford, for its decision to accept an offer from Tata. November 3, 2006:- The Russian steel giant Severstal announc es officially that it will not make a bid for Corus.November 18, 2006:- The battle over Corus intensifies when Brazilian group CSN approached the board of the company with a bid of 475p per share. November 27, 2006:- The board of Corus decides that it is in the best interest of its will shareholders to give more time to CSN to satisfy the pre- conditions and decide whether it issue forward a formal offer December 18, 2006:- Within hours of Tata Steel increasing its original bid for Corus to500 pence per share, Brazil's CSN made its formal counter bid for Corus at 515 pence per share in cash, 3% more than Tata Steel's Offer.January 31, 2007:- Britain's Takeover Panel announces in an e- mailed statement that after an auction Tata Steel had agreed to offer Corus investors 608 pence per share in cash April 2, 2007:- Tata Steel manages to win the acquisition to CSN and has the full voting support form Corus’ shareholders CONCLUSION Steel prices, raw material supplies and interest costs on the $8-billion debt have been raised to fund the deal. Soon they may also have to deal with the sensitive issue of possible job There is no doubt that Tata has pulled off a coup — Corus makes nearly four times more steel than Tata Steel.Together, the combine becomes the fifth largest producer in the world and the second in Europe. But to make the most of the deal, Tata has to manage several variables including cuts in Corus’s manufacturing plants. There are also the usual sets of integration challenges that come with such large buyouts. The deal may be done, but the hard work is just beginning. In the run up to the auction, Tata had maintained a low profile despite CSN’s aggressive stance. They underestimated our firepower,† says Gandhi, who admits that even bankers to the transaction — ABN Amro and Deutsche Bank — were in the dark as to how far Ratan Tata was willing to go. The only blip, though, was the way the stock markets reacte d. Tata Steel has lost a billion dollars in market capitalization since it first announced its intention to buy Corus in October last year. (The BSE Sensex rose 18 per cent during the same period. ) The market perception is that the Tata Group paid too much for this acquisition.Several brokerage houses have pointed out that the deal implies a high enterprise value/ earnings before interest, taxes, depreciation and amortization (EV/EBITDA) multiple of 9 for Corus versus 4. 6 for Tata Steel. (L. N. Mittal paid 5. 8 times EBITDA for Arcelor. ) Ratan Tata disagrees: â€Å"We believe that, looking back in time, the price today will prove to be one that was worthwhile because the price of steel companies is likely to be even higher in the coming year. † But tying up the funding is the immediate priority. The Corus acquisition is being routed through a special purpose vehicle (SPV) called Tata Steel, UK. A similar structure was used for the Tetley buy in 2000. ) So far, the Tatas ha ve indicated that group holding company Tata Sons will pump in $4. 1 billion as equity into the SPV. The balance $8 billion will be raised by junk bonds and senior term loans (part of it has been tied up with banks like ABN Amro, Deutsche Bank and CSFB). These loans will be serviced out of Corus’s profits; Tata Steel need not repay this. This has effectively ring-fenced Tata Steel shareholders. Few will disagree. The Tata Steel managing director is likely to look for more acquisitions as he aims to increase the company’s total capacity to 100 mt by 2015.To reach that destination, a lot will depend on whether the group can make Corus fly. BIBILIOGRAPHY http://www. worldsteel. org/? action=programs=53 http://www. bseindia. com/bseplus/StockReach/AdvanceStockReach. aspx? scripcode=500470 http://www. motilaloswal. com/Research/ http://74. 125. 155. 132/scholar? q=cache:1p4SLlOZDcQJ:scholar. google. com/ +tata+corus+acquisition=en=2000 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1358681 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1431588 http://papers. ssrn. com/sol3/papers. cfm? abstract_id=1118306 http://www. nvestopedia. com/university/mergers/mergers1. asp#axzz1zwZQv0dz http://www. mergersandacquisitions. in/index. htm http://www. tatasteel. com/default. asp . http://www. equitymaster. com/detail. asp? date=11/13/2006=1=Tata-Steel-Corus-AWin-Win-Situation http://tejas-iimb. org/articles/04. php? print=true http://arunkottolli. blogspot. ca/2007/11/cultural-integration-post-m. html http://www. scribd. com/doc/22947163/Merger-of-Tata-Steel-and-Corus http://bcgindia. com http://www. worldsteel. org/ http://www. tatasteel. co. in http://www. tatasteel. com http://www. bseindia. com

A Multinational state

Through this, each nation is granted with certain powers within the state. The positive side in this is that it is easier to regulate, since these nations manage themselves. However, it could lead to problems resulting to competition between these nations. They should be given proper delimitations to avoid further conflicts (Xhaferi, 1998). Another method to maintain peace in a multinational state is the secession or the withdrawal of a nation within the state. This is achieved by complete separation of the nations. An example would be the separation of Czechoslovakia where Slovakia has seceded thus leaving Czech Republic. The positive side of this secession is that the nations become completely separated. They become individual nations which is greatly different back when they are still merged with the other nations. The problem however, is that division of these nations would take them back to scratch, wherein they would have to work on becoming an individual nation. It is like starting a new country or nation from square one. This would require the attention of the whole nation wherein their cooperation is the biggest help in the success of their newly separated nation. They will also have to work on establishing their international relations (Xhaferi, 1998). There is also another method to maintain peace in a multi-national state. This involves public mobility which could lead to civil wars. This would force the nation to take action which would lead to the formation of federations or the initiation of secession. This would however be very costly as well as damaging for those who will engage in the civil war. A Multinational state Through this, each nation is granted with certain powers within the state. The positive side in this is that it is easier to regulate, since these nations manage themselves. However, it could lead to problems resulting to competition between these nations. They should be given proper delimitations to avoid further conflicts (Xhaferi, 1998). Another method to maintain peace in a multinational state is the secession or the withdrawal of a nation within the state. This is achieved by complete separation of the nations. An example would be the separation of Czechoslovakia where Slovakia has seceded thus leaving Czech Republic. The positive side of this secession is that the nations become completely separated. They become individual nations which is greatly different back when they are still merged with the other nations. The problem however, is that division of these nations would take them back to scratch, wherein they would have to work on becoming an individual nation. It is like starting a new country or nation from square one. This would require the attention of the whole nation wherein their cooperation is the biggest help in the success of their newly separated nation. They will also have to work on establishing their international relations (Xhaferi, 1998). There is also another method to maintain peace in a multi-national state. This involves public mobility which could lead to civil wars. This would force the nation to take action which would lead to the formation of federations or the initiation of secession. This would however be very costly as well as damaging for those who will engage in the civil war.

Week 7 discussion replies Essay Example | Topics and Well Written Essays - 500 words

Week 7 discussion replies - Essay Example If the doors are not supposed to be closed, or it is allowable for the students to hang their arms or other body parts out of the vw, then it is not only unsafe to travel by the vw but also this discussion is out of context since the question is about fitting the students within the volume of the vw. Most of your answer is based on inculcating the concept of volume and size in the elementary students, and you have hardly touched upon the real point which is how to estimate the maximum number of students that fit in the vw. You need to discuss the volume of the vw and the average volume of a student, and compare the former to the latter to determine how many students can fit in the vw. While I agree with you on most part of your answer, I do not consent that all students have to be equally tall and weighty for the estimate to be accurate. Firstly, the problem requires you to determine the number of students that can fit in the vw without specifying that they have to be of equal height and weight, and secondly, some level of inaccuracy will always persist even if you select students of same height and weight because of numerous reasons. One reason can be that some students sit with their legs opened wider as compared to others. I find your description of the example of paper squares for the surface area very confusing and did not really understand its purpose. However, I agree to your method of calculating the volumes of the vw and the students, though you need to discuss how you would fit the students, as there are numerous ways; the students may just occupy the seats in the vw, they may sit in each other’s lap, some may sit in the empty area between the rear and front seats. These factors need to be discussed. I agree that there is space of five passengers in an average car, but here, the matter is of fitting the students in the vw,

Business Report Coursework Example | Topics and Well Written Essays - 1500 words - 1

Business Report - Coursework Example We will also ensure that we maximise our profit. There are financial risks that occur in this type of business. Furthermore, some problems with the customers may occur. All these problems should be solved in order to achieve our goals. 2. Introduction Through our research, we found out that Witney; in Oxfordshire do not have an independent shop that sells toys. Our main targets are the kids. We realised that the demand of electronic and traditional toys at this town is very high. Jay and I have decided to run this new business venture. We agreed to start a partnered business. This business will have two stakeholders i.e. Jay and me. Our vision in this business venture is to ensure that our customers are served with the best products in the market as well as ensuring that we achieve our business goals which maximising profit with minimal costs. It is our responsibility to ensure that this vision is achieved without incurring unnecessary costs. We will also ensure that risks are reduce d to the best of our ability. Our starting cost will include ?25,000 that we borrowed from the bank and ?25, 000 from my savings account. Jay will not contribute anything from his account. This report will deal with the type of business we chose and the research we have done on this business. It discusses the reasons why we chose this business. It will also touch on our target customers and the possible problems that we will face in this business. 3. Main body The type of business we decided to operate in is the general partnership business. This is a business entity that involves two or more partners who agreed to do a business. We chose this business entity because it is easy for two of us to run. We will be sharing profit and losses equally. In addition, both of us are liable to any debts that may occur. This business entity was also the best for us because it does not require a notarial deed. We will make our agreement private i.e. the agreement will only be between me and Jay. 3.1 Procedures for General Partnership establishment Weiss et al. says there is no formality in forming our general partnership. This is because our agreement is private. We decided to write an agreement in order to avoid future misunderstandings. However, there are rules that govern the business partnership. For our partnership to exist, we must first register it by following the rules from Company Act 2006 (Van, 2007:21). For us to form this company, we must first give our names to the memorandum of association and ensure that we comply with the requirements that are needed for one to register our company. The registrar must receive the memorandum of association form our company. For us to be registered, we must submit our company name, postal address location and business entity of the company. We should also state that our company is a private one. After all these, the application will to be delivering to the England’s registrar of companies (Degenhardt, 2010:54). After o ur company has been approved, Partnership act 1890 should also be adhered to. For our partnership to exist, there rules that must be followed. The partnership should ensure that we share profits equally as stated by our agreement. Both of us will be liable to all company’s debt. Our partnership will now have a firm name. We will manage our business fairly. Profits and control of assets will be done equally (Degenhardt, 2010:59). 3.2 Financial risks There are possible financial risks that are likely

Cased based essay- Treatment, rationale and management of the iskemic Essay

Cased based - Treatment, rationale and management of the iskemic ulcer - Essay Example Other important findings in the history include presence of intermittent claudication of the left lower limb since one year. John is a chronic smoker. He decreased smoking since one year after onset of claudication symptoms, following advice from a physician. However, he has not been able to completely quit smoking. During the current visit to the hospital, there is no history of fever or any other symptoms. The patient complains that the onset of ulcer started after he began to wear new slip-on shoes with narrow toe box. The patient reported being allergic to penicillin. There is no history suggestive of occupational injury, trauma, varicose veins, previous history of lower limb wounds/ulcers/gangrene, history of amputations and history of any other surgeries. There is no family history of similar ulcers either. The patient is not suffering from any collagen diseases. He is not on any anti-inflammatory drugs or steroids. The condition of the patient is stable. He is afebrile. He looks well nourished. Vitals signs are stable. Systemic examination is within normal limits. The ulcer is located over the lateral malleolus of the left leg. The size of the ulcer is 3cm in length, 2 cm in width and about 0.5 cm in depth. The borders are regular and the wound appears punched out and clean. The color of the ulcer is yellowish. There is minimal granulation tissue. The exudate from the ulcer is mainly serous and minimal. The surrounding skin appears pale, non-edematous, shiny and has decreased hair. Dorsalis pedis pulsation appears normal. Lower extremity ulcers are very common in patients with diabetes and infact, these are the most common causes for limb amputation in diabetic population (Armstrong and Lavery, 1998). Factors which contribute to the development of ulcers in the diabetic population are diabetic neuropathy, peripheral arterial disease and structural deformity (Armstrong and Lavery, 1998). From a podiatrician perspective, it is very

Environmental Impact of Products Essay Example | Topics and Well Written Essays - 1250 words

Environmental Impact of Products - Essay Example Their examples can be used to show how companies had to change their products and their processes in order to become more environmentally friendly. Environmental degradation has become a very important topic for the world today watchdog groups as well as concerned bodies focus on various ways and means in which they can force giant companies to help the environment rather than harm it (Green, 2005). Government regulation, think tank pressure, as well as the opinions of various consumer groups, can force companies to become friendlier towards the environment (Schulte, 2006). Undoubtedly, human activities including the actions taken by corporations have had a visible impact on the global environment and this has been noted by the scientific community at large. While the government can make laws to regulate a bare minimum to be done by corporations, consumers have to ensure that they do not support those companies which are hurting the environment (VonAncken, 2006). Consumers who have access to vast amounts of information about the companies they make purchases from can demand that the brands or businesses which they support behave ethically and show their responsibility for not hurting the environment. Organisations have to show that they are ethical producers since consumer wish to be ethical themselves and may make the purchase decisions based on knowing if the company is helping the environment rather than hurting it (Ethical Consumer, 2006). By being friendly to the environment, companies such as Apple and Cadbury Schweppes are helping their shareholders and investors (Phillips, 2003). Through the scientific developments in recycling, proper water conservation, and more efficient technologies for generating energy, individuals and companies have made great advances in becoming more environmentally responsible. At the same time, these efforts fall short of what will be needed in the world for sustained long-term prosperity.

Who Are Stakeholders Stakeholder Theory Essay Example | Topics and Well Written Essays - 3000 words

Who Are Stakeholders Stakeholder Theory - Essay Example "the social community (state authorities;..and civil society)." From this definition we see that shareholders are both internal and external members of the organisation community. Milton Friedman's (1912) stipulated that the only social responsibility of corporations is to provide a profit for its owners stands in direct contrast to those who claim that a corporation's responsibilities extend to non-stockholder interests as well. Such a broad conception would include suppliers, customers, stockholders, employees, the media, political action groups, communities, and governments. A more narrow view of stakeholder would include employees, suppliers, customers, financial institutions, and local communities where the corporation does its business. But in either case, the claims on corporate conscience are considerably greater than the imperatives of maximizing financial return to stockholders. Today, a handful of researchers have gone as far as arguing that, the reasons for corporate restructuring or change are either competitive pressures, changing outside environments which in most cases is made up of mostly the stakeholders (Anderson et al. 2001). In the changing company environment, researchers have even gone as commending stakeholder approach as a key factor of organisational survival and success. Therefore, our caution to organisation management is that, they should skillfully consider how to treat particular groups of stakeholders and how to communicate with them responsively, being aware of the consequences of an omission or mistreatment. Having said this, this paper seeks to identify and analyse the issue of power and interests of stakeholder groups for the University of Central Lancashire (UCLAN). In the section that follows, using the stakeholder theory and framework I will analyse the interest and power of the various stakeholders on the activities of the University of Central Lancashire. Stakeholder Theory Friedman (1963) as sited in Anderson et al. (2005) argues that a corporation is socially responsible only to its shareholders. In this regard, other corporate constituencies (stakeholders) can easily be overlooked. However, stakeholder theory strongly suggests that overlooking these other stakeholders is unwise and ethically unjustified. To this extent, stakeholder theory participates in a broader debate about business and ethics (Algas et al. 2006, Donaldson & Preston 1995) Descriptively, some research on stakeholder theory assumes that managers who wish to maximize their firm's potential will take broader stakeholder interests into account. This gives rise to a number of studies on how managers, firms, and stakeholders do in fact interact (Friedman 1970, Steiner & Steiner 1997).Stakeholder theory has been articulated in a number of ways, but in each of these ways stakeholders represent a broader constituency for corporate responsibility than stockholders (Friedman 1970, Steiner & Steiner 1997). In sharp contrast, according to stakeholder theory, managers should make decisions so as to take

The Boko Haram Insurgency in Nigeria Essay Example | Topics and Well Written Essays - 500 words

The Boko Haram Insurgency in Nigeria - Essay Example The group is a leading concern for U.S policymakers. Boko Haram’s declaration that it has instituted an Islamic caliphate has stirred up international concerns over the insurgents’ brisk ascent in Nigeria (Smith, 2014). Policymakers should refrain from categorizing Boko Haram as simply another enemy in the war against international terrorism. Although the group’s activities are principally local, if allowed to grow in magnitude, the consequences could be dire for the entire international system. Â  The United States government designated Boko Haram as a Foreign Terrorist Organization (FTO) and as a Specially Designated Global Terrorist under Executive Order (E.O) 13224 on November 14, 2013 (Smith, 2014). These designations are a crucial step in the comprehensive approach towards countering the impact of Boko Haram. The Boko Haram rebellion is an express consequence of chronic poor governance from the federal and state governments of Nigeria that has resulted in the political marginalization of various regions in Northeast Nigeria (Smith, 2014). The region’s accelerating state of poverty further worsens the situation. The rebel movement has instituted several attacks in the northeastern region of Nigeria and has gone as far as kidnapping young females (Smith, 2014). The Nigerian government, under the leadership of former President Jonathan Goodluck, made limited progress towards handling the political situation (Smith, 2014). The United States remains profoundly conce rned about the situation. The United States has policies in place that supports the sharing of information, as well as programs aimed at supplying affirmative alternatives to societies at risk of radicalization and terrorist recruitment (Smith, 2014). The United States has the remarkable capacity in its military to protect its welfare around the globe.

World Geogrpahy Essay Example | Topics and Well Written Essays - 750 words

World Geogrpahy - Essay Example We begin by reading the testimony of a stampede that took place on Aug. 31, 2005 over a bridge over the Tigris River in Baghdad in which about 1,000 pilgrims lost their lives. Here we get to be introduced to Othman al-Obeidi, a Sunni who lost his life while trying to save Shi’ite from drowning in the river. Shi’ite consider him a martyr, some Sunnis too, while on the other hand a majority of Sunnis believe that he, â€Å"wasted his life for those animals† (Ghosh, p.1). The basic issue here is that there are mixed feelings between people on both ends. Some are friendly, while others have nothing but malice against each other. The origins of this fight began right after the death of Prophet Muhammad, with there being two groups of people; one who wished Muhammad’s Cousin Ali to be the Caliph, while others, the majority wanting Abu Bakr to become Caliph. After some years, a battle in the ground of Karbala took place in which the grandson of Muhammad, namely Hussein was martyred by Yazeed, the son of Muawiyah. Shi’ite mourns the death of Hussein each year on â€Å"Ashura† with â€Å"faithful march in the streets, beating their chests and crying in sorrow. The extremely devout flagellate themselves with swords and whips.† (Ghosh, p.2). Those who remained true to Muawiyah came to be known as Sunnis. Majority of Muslims across the world are Sunnis, but those who feel oppressed by their rulers are always attracted by the Shi’ite belief, which form a majority in countries like Iraq, Iran, Bahrain, Azerbaijan, Saudi Arabia, Lebanon and Pakistan. However, no matter how big the population be, it has generally been noted that Sunnis have remained politically in power in all the aforementioned countries (except Iran perhaps). Sunni leaders always upheld their domination by not including Shiites in the armed forces and bureaucracy. The

Criminal Theory Essay Example for Free

Criminal Theory Essay People with anti-social behaviors are defined by â€Å"A persuasive pattern of disregard for, and violation, of the rights of others that begins in early childhood or early adolescence and continues into adulthood. † (Walsh and Hemmens page 238) People with this disorder are up for greater health risks, for the disorder makes a person be a risk taker, usually engaging in smoking, alcohol, risky sexual behavior’s and drugs. Their also at risk for they are prone to depression, inflicting self-wounds and violent acts towards others. In this state of mind people are emotional, non-cognitive, and have low self-esteem. Making them act out in violent manners. This behavior is linked to childhood. As a child if something wasn’t right, they were shy or forgotten they probably put on a mask and faked being what society views as normal. They are not connected with society. And they do not understand social norms. They have become experts on faking feelings, and they do not know emotion or empathy. These people are deceitful, manipulative, egocentric, selfish and lacking guilt. Dealing with regards of crime and Anti-social disorder, the criminals often view that their victims were not â€Å"wrong†. Drug users viewing their addiction to a social norm that isn’t there. They do not understand what they are doing is wrong and have no sense of guilt or cognitive thinking process. They do not feel any kind of remorse for the things of which they have done simply because they cannot empathize with the people or actions against which they are offending. Neutralization theory was created by Skyes and Matza. This theory explains that the offender has a positive view on the crime he or she has committed. Also similar to Anti-Social individuals these criminals view that they have done nothing wrong. Unlike Anti-Social disorder, Neutralization theory states that the offender puts the excuses in their own head, not merely understanding the social norms. There are five techniques that Neutralization theory uses in justifying their crimes. The first way people neutralize their crimes and actions they have done is called â€Å"Denial of Responsibility† which is shifting the blame from the offender to the victim. An example is when a rapist says in court â€Å"she was asking for it the way she was dressed and or acting. † They feel absolutely no guilt for the crimes that they have committed. They feel no responsibility at all for the victim and their injuries. The second technique is called â€Å"Denial of Injury†. This is where the offender has no attachment to the crime and has not caused any real injury or offenses. An example of this would be a person breaking a entering and smashing a window in and claiming â€Å"the insurance will cover it. † â€Å"Denial of Victim† is the third technique. This is where the offender says the victim received what they deserved, almost viewed as karma. Most domestic cases portray this, saying significant other or victim got what they deserved from these actions. The fourth technique is â€Å"Condemnation of the Condemners† where the offender states part of the blame on the condemners. These condemners are police, parents, probation officers, etc. An example of this would be the criminal blaming the officer for planting evidence on them or the crime scene and not taking any of the responsibility that it was there’s. Number five is â€Å"Appeal to a Higher Loyalty†. This is where the offender in committed and or loyal to something or someone in their life for the greater good according to their beliefs. Things that would fall under this category re murder or assault. A good example of this would be a person under mafia rule murdering someone for the leader or the greater good of that mafia. Ted Bundy was made famous for his criminal actions. His five-state murder spree was not lightly forgotten. Bundy killed over 100 women and only gave information about where the bodies were of fifty of the acclaimed victims. Comparing hi s life, actions, and behavior point to Anti-Social Behavioral theory and Neutralization theory the most. Putting these theories to the test trying to profile a serial killer. Theodore Robert Cowell was born in 1946 to an single mother that moved in with her parents. He grew up thinking his grandparents were is parents and his mother was his sister. Later in life his mother married and he became Ted Bundy. Growing up he was a â€Å"normal† child, he was an attractive teen that was well liked in school. He did relatively well in his academics. He was known for being shy; people profiled him to be socially awkward. He never did grow out of this stage and the profile followed him to college. Bundy went first to the University of Puget Sound. It was a highly regarded school and many of its students were wealthy. This made ted feel inadequate and inferior due to financial aspects. He left and went to University of Washington. His shyness held him back with social activities and dating, but Bundy did find someone that he fell for. They had the same skiing passion, spending most of days on the slopes. And he soon fell in love and became obsessive. He tried impressing her with receiving scholarships and accomplishments but they fell flat. She ended the relationship saying he wasn’t going anywhere in life and wasn’t husband material. This haunted him for the rest of his life and fell into an extreme depression. While in this depression he had dropped out of school. His anti-social behavior got worse. Also during this time he found out who his mother actually was. Bundy was a on a slippery slope downhill, he was labeled as a petty thief. He soon came out of his depression had false bravo, went back to college and got a bachelor’s degree in psychology. With his new found self he was on top of the world. He was with a new woman that adored him and his first love wanted him back. He had one foot in the political arena. During his time at college women had gone missing from campus. They narrowed the quest down to a man asking for help then kidnapping the women. Bundy being smart realized it was only just a matter of time till local officials connected the dots. So Bundy moved to Utah and enrolled in the University of Utah. He didn’t stop his attacks just because he had moved. Women were being abducted and reported missing at the campus and malls around the city. While in Utah police had discovered a graveyard of bones. They eventually put the dots together and figured out it was Ted. They now knew that he was dealing with a criminal that could go across state lines. Bundy didn’t stop at Utah he also went to Colorado during ski season and killed women there before he was finally caught due to a car suspicion. He was charged with kidnapping charges. During his trial he was charged with murder of one known victim. But he escaped out the library widow being his own attorney. He made his way down to Florida where he rented a house at Florida State University. He was known for his sorority house killings. Ted Bundy was arrested again due to evidence of teeth impressions on a victim’s chest. He was charged with murder and recieved a plea bargain of three twenty five year sentences. He refused the plea and wanted another trail during this time new evidence came forward and at the new trail he was sentenced to death by means of the electric chair. Prior to his death he attempted over 100 murders, keeping some heads of his victims and necrophilia. When asked why he did everything he blamed it on his early exposures to pornography as his stimulants to his obsession with murder. Ted Bundy falls under a lot of different theories but Anti-Social Behavioral theory is most demanding. He was awkward in his youth, not in a strong stable family life, had difficulty dating and participating in other social events. He wore a mask covering himself from the world. He knew he was different and had to change or it would be noticed, so he became a well-known member of society and was respected. He felt no remorse for things that he had done. This action falls under Psychopathy, he found pleasure in re-living kills. Going towards Neutralization theory he blamed the women for the things that he had done. He connected them to his college girlfriend that had dumped him. That they needed to die because of what she did to him. That neutralized any feeling he had towards making these killings. He strongly viewed he was not at fault, and he plead not guilty until he was on the electric chair. In an interview he states â€Å"I don’t know what made people want to be friends. I don’t know what made people attractive to one another. I don’t know what underlays in these social interactions. † The above statement proves my point of the Anti-Social Behavior. He was lacking things that we as â€Å"normal† human beings understand. He goes on to answer the question â€Å"Are murders born or made? Nature vs. nurture? † it’s still an ongoing debate to this day. In my opinion and conclusion Ted Bundy was nurtured.

Objectives of the Firm Essay Example for Free

Objectives of the Firm Essay The standard economic assumption underlying the analysis of firms is profit maximization. Real world firms, however, might not, and many times do not, make decisions based on the profit-maximization objective, or at least exclusively on the profit-maximization objective. Other objectives include: (1) sales maximization, (2) pursuit of personal welfare, and (3) pursuit of social welfare. Although firms are assumed to make decisions that increase profit in standard economic analysis, real world firms often pursue other objectives on a day-to-day basis. Some firms set their sights on maximizing sales. For other firms the owners or employees are inclined to enhance personal living standards. And more than a few firms take steps that promote the overall welfare of society. In some cases, these other objectives help a firm pursue profit maximization. In other cases, they prevent a firm from maximizing profit. Profit Maximization Profit maximization is the process of obtaining the highest possible level of profit through the production and sale of goods and services. This is the guiding principle underlying the analysis of short-run production by a firm. In particular, economic analysis is assumed that firms undertake actions and make the decisions that increase profit. Profit is the difference between the total revenue a firm receives from selling output and the total cost of producing that output. Profit-maximization means that a firm seeks the production level that generates the greatest difference between total revenue and total cost. Consider how profit maximization might work for The Wacky Willy Company. Suppose that The Wacky Willy Company generates $100,000 of profit by producing 100,000 Stuffed Amigos, the difference between $1,000,000 of revenue and $900,000 of cost. * If profit falls from this $100,000 level when The Wacky Willy Company produces more (100,001) or fewer (99,999) Stuffed Amigos, then it is maximizing profit at 100,000. Alternatively, if profit can be increased by producing more or less, then The Wacky Willy Company is NOT maximizing profit at the current level of production. Suppose, for example, that producing 100,001 Stuffed Amigos adds an extra $11 to revenue but only $9 to cost. In this case, profit can be increased by $2, reaching $100,002, by producing one more Stuffed Amigo. As such 100,000 is NOT the profit maximizing level of production. * In contrast, suppose that producing 99,999 Stuffed Amigos reduces cost by $11 but only reduces revenue by only $9. In this case, profit can also be increased by $2, reaching $100,002, by producing one fewer Stuffed Amigo. As such 100,000 is NOT the profit maximizing level of production. Sales Maximization A reasonable, and often pursued objective of firms is to maximize sales, that is, to sell as much output as possible. Clearly sales lead to revenue, meaning that maximizing sales is also bound to maximize revenue. But as the analysis of short-run production indicates, maximizing sales does NOT necessarily maximize profit. So why do firms do it? Are firms unreasonable? Are they irrational? Do they NOT understand the basic economic principles of short-run production? For some firms, the answers to these questions could be yes. But for other firms, sales maximization is actually a reasonable, even better, alternative to profit maximization. Consider, the day-to-day production of Wacky Willy Stuffed Amigos. Suppose the President of The Wacky Willy Company, William J. Wackowski, issues a corporate directive to sell as many Stuffed Amigos as possible, to maximize sales. Is Willy Wackowski wacky? It might be that Mr. Wackowski has no knowledge of basic economic principles. Alternatively Wacky William might have more business sense than it appears. In particular, if the price received from selling Stuffed Amigos is greater than the cost of producing each one, and looks to remain that way regardless of the quantity produced, then a reasonable goal is to maximize sales. If sales are greater, then so too is profit. Wacky Willy does NOT maximize profit under these circumstances. That is, it does not produce the quantity that achieves the highest possible profit. However, with each Stuffed Amigo produced, profit increases. In fact, Wacky Willy might not KNOW the profit-maximizing production level. All it knows is that selling more Stuffed Amigos, increases profit. While sales maximization can serve as a means of pursing profit maximization, it can also prevent a firm from maximizing profit. The reason, of course, is that if sales become so large that the cost of production increases such that marginal cost exceeds marginal revenue, the maximizing sales does not maximize profit. Pursuit of Personal Welfare The people who make decisions for a business are, in fact, people. They have likes and dislikes. They have personal goals and aspirations just like people who do not make decisions for firms. On occasion these people use the firm to pursue their own personal welfare. When they do, their actions could enhance the firms profit maximization or, in many cases, prevent profit maximization. How about a few examples? Once again, consider William J. Wackowski, the president of The Wacky Willy Company. Perhaps Willy enjoys the finer things in lifea large house, fancy cars, and expensive vacationswhich require a hefty income. As the primary stockholder of The Wacky Willy Company, when the business maximizes profit, then William J. Wackowski benefits with more income. In this case, the pursuit of personal welfare coincides with profit maximization. Alternatively, suppose that the Mr. Wackowski hates the color purple. He simply refuse to produce ANY purple Stuffed Amigos. However, market studies clearly indicate that buyers want purple Stuffed Amigos. Moreover, the purple fabric that would be used to produce purple Stuffed Amigos is significantly less expensive than other colors. Mr. Willy clearly is wacky in this case. His purple-phobia prevents profit maximization. William the Wackster might also decide to enhance his corporate lifestyle at the expense of corporate profit. He could, for example, give himself a bigger, more luxurious (but unneeded) office, a higher (but unneeded) salary, a company jet (also unneeded), season tickets to Shady Valley Primadonnas baseball team (clearly unneeded) and other (unneeded) amenities that are NOT needed to profitably produce Stuffed Amigos. These improve Williams personal welfare, but at the expense of corporate profit. Pursuit of Social Welfare The people who make decisions for firms also have social consciences. Part of their likes and dislikes might be related to the overall state of society. As such, they might use the firm to pursue social welfare, which could enhance or prevent the firms profit maximization. How might William J. Wackowskis pursuit of social welfare enhance or prevent profit maximization of The Wacky Willy Company? Suppose that William wants a cleaner environment. As such, he might implement more costly environmentally friendly production techniques and materials. He does his part to clean the environment, but at the expense of company profit. Then again, Mr. Wackowski might feel that government environmental quality regulations restrict capital investment and economic growth. As such, William might have The Wacky Willy Company use part of its advertising budget to promote this view point. He might even use company revenue to set up the Wackowski Foundation for Policy Studies that is both a scientific think tank and a special interest lobbying organization with the goal of reducing environmental quality regulations. While the pursuit of social welfare is likely to reduce company profit, it could have the opposite effect as well. Such activities could give The Wacky Willy Company a likeable public image that motivates people to buy more Stuffed Amigos than they would otherwise. In fact, some firms use the pursuit of social welfare as one aspect of their overall advertising efforts. They enhance their public image at the same time they do something good for society. Natural Selection Whichever objective a firm pursues on a day-to-day basis, the notion of natural selection suggests that successful firms intentionally or unintentionally maximize profit. That is, the firms best suited to the economic environment, and thus generate the most profit, are the ones that tend to survive. The natural selection of business firms is an adaptation of the biological process of natural selection, in which biological entities best suited to the natural environment are the ones that survive. The concept of economic natural selection means that those firms that generate the greatest profit are the ones that avoid bankruptcy and survive to produce another day. While firms might pursue sales maximization, personal welfare, or social welfare, only those firms that also maximize profit remain in business. 2) The following   is from chapter one in the text   Financial Management and Policy, by James C. Van Horne, Copyright 1974 by Prentice-Hall. It is classic finance. THE OBJECTIVE OF THE FIRM In this [course], we assume that the objective of the firm is to maximize its value to its shareholders. Value is represented by the market price of the company’s common stock, which, in turn, is a reflection of the firm’s investment, financing, and dividend decisions. Profit Maximization vs. Wealth Maximization Frequently, maximization of profits is regarded as the proper objective of the firm, but it is not as inclusive a goal as that of maximizing shareholder wealth. For one thing, total profits are not as important as earnings per share. A firm could always raise total profits by issuing stock and using the proceeds to invest in Treasury bills. Even maximization of earnings per share, however, is not a fully appropriate objective, partly because it does not specify the timing or duration of expected returns. Is the investment project that will produce $100,000 return 5 years from now more valuable than the project that will produce annual returns of $15,000 in each of the next 5 years? An answer to this question depends upon the time value of money to the firm and to investors at the margin. Few existing stockholders would think favorably of a project that promised its first return in 100 years. We must take into account the time pattern of returns in our analysis. Another shortcoming of the objective of maximizing earnings per share is that it does not consider the risk or uncertainty of the prospective earnings stream. Some investment projects are far more risky than others. As a result, the prospective stream of earnings per share would be more uncertain if these projects were undertaken. In addition, a company will be more or less risky depending upon the amount of debt in relation to equity in its capital structure. This risk is known as financial risk; and it, too, contributes to the uncertainty of the prospective stream of earnings per share. Two companies may have the same expected future earnings per share, but if the earnings stream of one is subject to considerably more uncertainty than the earnings stream of the other, the market price per share of its stock may be less. For the reasons above, an objective of maximizing earnings per share may not be the same as maximizing market price per share. The market price of a firm’s stock represents the focal judgment of all market participants as to what the value is of the particular firm. It takes into account present and prospective future earnings per share, the timing, duration, and risk of these earnings, and any other factors that bear upon the market price of stock. The market price serves as a performance index or report card of the firm’s progress; it indicates how well management is doing in behalf of its stockholders. Management vs. Stockholders In certain situations the objectives of management may differ from those of the firms stockholders. In a large corporation whose stock is widely held, stockholders exert very little control or influence over the operations of the company. When the control of a company is separate from its ownership, management may not always act in the best interests of the stockholders [Agency Theory]. [Managers] sometimes are said to be satisficers rather than maximizers; they may be content to play it safe and seek an acceptable level of growth, being more concerned with perpetuating their own existence than with maximizing the value of the firm to its shareholders. The most important goal to a management [team]of this sort may be its own survival. As a result, it may be unwilling to take reasonable risks for fear of making a mistake, thereby becoming conspicuous to the outside suppliers of capital. In turn, these suppliers may pose a threat to management’s survival. It is true that in order to survive over the long run, management may have to behave in a manner that is reasonably consistent with maximizing shareholder wealth. Nevertheless, the goals of the two parties do not necessarily have to be the same. Maximization of shareholder wealth, then, is an appropriate guide for how a firm should act. When management does not act in a manner consistent with this objective, we must recognize this as a constraint and determine the opportunity cost. This cost is measurable only if we determine what the outcome would have been had the firm attempted to maximize shareholder wealth. A Normative Goal Because the principal of maximization of shareholder wealth provides a rational guide for running a business and for the efficient allocation of resources in society, we use it as our assumed objective in considering how financial decisions should be made. The purpose of capital markets is to efficiently allocate savings in an economy from ultimate savers to ultimate users of funds who invest in real assets. If savings are to be channeled to the most promising investment opportunities, a rational economic criteria must exist that governs their flow. By and large, the allocation of savings in an economy occurs on the basis of expected return and risk. The market value of a firm’s stock embodies both of these factors. It therefore reflects the market’s tradeoff between risk and return. If decisions are made in keeping with the likely effect upon the market value of its stock, a firm will attract capital only when its investment opportunities justify the use of that capital in the overall economy. Put another way, the equilibration process by which savings are allocated in an economy occurs on the basis of expected return and risk. Holding risk constant, those economic units (business firms, households, financial institutions, or governments) willing to pay the highest yield are the ones entitled to the use of funds. If rationality prevails, the economic units bidding the highest yields will be the ones with the most promising investment opportunities. As a result, savings will tend to be allocated to the most efficient users. Maximization of shareholder wealth then embodies the risk-return tradeoff of the market and is the focal point by which funds should be allocated within and among business firms. Any other objective is likely to result in the suboptimal allocation of funds and therefore lead to less than optimal level of economic want satisfaction. This is not to say that management should ignore the question of social responsibility. As related to business firms, social responsibility concerns such things as protecting the consumer, paying fair wages to employees, maintaining fair hiring practices, supporting education, and becoming actively involved in environmental issues like clean air and water. Many people feel that a firm has no choice but to act in socially responsible ways; they argue that shareholder wealth and, perhaps, the corporations vary existence depends upon its being socially responsible. However, the criteria for social responsibility are not clearly defined, making formulation of a consistent objective function difficult. Moreover, social responsibility creates certain problems for the firm. One is that it falls unevenly on different corporations. Another is that it sometimes conflicts with the objective of wealth maximization. Certain social actions, from a long-range point of view, unmistakably are in the best interests of stockholders, and there is little question that they should be undertaken. Other actions are less clear, and to engage in them may result in a decline of profits and in shareholder wealth in the long run. From the standpoint of society, this decline may produce a conflict. What is gained in having a socially desirable goal achieved may be offset in whole or part by an accompanying less efficient allocation of resources in society. The latter will result in a less than optimal growth of the economy and a lower total level of economic want satisfaction. In an era of unfilled wants and scarcity, the allocation process is extremely important. Many people feel that management should not be called upon to resolve the conflict posed above. Rather, society, with its broad general perspective, should make the decisions necessary in this area. Only society, acting through Congress and other representative governmental bodies, can judge the relative tradeoff between the achievement of a social goal and the sacrifice in the efficiency of apportioning resources that may accompany realization of the goal. With these decisions made, corporations can engage in wealth maximization and thereby efficiently allocate resources, subject, of course, to certain governmental constraints. Under such a system, corporations can be viewed as producing both private and social goods, and the maximization of shareholder wealth remains a viable corporate objective.