Adult children of alcoholics

inebriant wickedness and intoxicant dep expiryence within the family setting often results in a serious psychological and social disorder that some now consider a family disease. Truly, the family is not at ease, and the family relationships argon not only disrupted but also disrupting.Undeniably, each member of the family can be victimized by the disturbing effects of problem beverage on the stability, unity, values, attitudes, and goals of the family unit.Countless millions of American bounteouss have been exposed to problem-producing family drinking through endangered physical, noetic, social, economic, and all the same spectral welfare unhappy and unfulfilling marriages broken homes resulting from desertion and divorce impoverishment and sometimes violence involving both spouse shout out and child abuse.The family and marital interaction of alcohol-abusing race have become a growing area of research recently. We now know that evidence linking alcohol abuse and family v iolence is not simply atomic number 53 of cause and effect. Indeed, the husband who beats his wife is sometimes a battering father, but alcohol consumption may be coincidental to the circumstances that end with the abuse.Sometimes the drunken father is the target of violence from the wife and even the children. To complicate the family situation, violence is often interspersed with periods of calm that mistakenly encourage the victims to believe that the personal abuse allow not be repeated and in some instances, alcohol abusers can hold all other family members psychologically hostage to their threats of misbehavior or embarrassment, so that problem juicers will get their way and so non-problem drinkers allow the abuse to continue through their own silence and inaction.Adults and Children of AlcoholicsCurrently, it is estimated that there are 29 million Americans who may be designated as children of alcoholics (COA) or adult children of alcoholics (ACOA). Nearly 7 million of the m are under 18 years of age, and al well-nigh 3 million of this convention will likely develop alcoholism, other medicine problems, and other serious coping problems.About half of all ACOAs will likely get hitched with alcoholics and thus at risk of re-creating the same kind of stressful and unhealthy families in which they themselves grew up. There is no doubt that all children are affected adversely by family alcohol abuse and suffer negative consequences.The larger proportions of COAs & ACOAs seem to function fairly well and do not develop serious problems during childishness or adulthood. Many ACOAs & COAs make positive adjustments to their families alcoholism and other related-problems (Dunkel, 1994).Many children of alcoholics, however, are at an extremely high risk for developing alcohol and other drug problems, and often live with overwhelming tension, stress and fears. Some have high levels of anxiety and depression, others do poorly in discipline and still others expe rience problems with coping.Among the most frequently observed differences in ACOAs and COAs are deficits in mental functioning in perception, reasoning, intuition, and the lick of gaining knowledge. While these children tend to achieve lower scores, they nevertheless ravel within normal ranges for intelligence and knowledge of specific academic subjects.But they often experience school problems, repeat grades, fail to graduate from high school and supplicate referrals to school counselors and psychologists (Wegscheider, 1981).When COAs and ACOAs were first identified as a special population with unique needs and problems, a standard group of symptoms (the COA and ACOA syndrome) was formulated to describe children and adult children of alcoholics.The problems and symptoms were toleration of bizarre behavior displayed by parents as normal and acceptable, inability to trust others, difficulty in expressing inner feelings, experience of depression, and increased risk for mental illn ess.They tend to have development of guilt feelings for supposedly causing a parents alcoholism and have loss of egotism-esteem and perception of self-importance and family as oddities. These individual(a)s feel helpless in controlling their selves and life events.Children even have shown a depression in a magical person who will eventually save the child from harm and there is a development of an inward life focus to escape from the turmoil of the home.COAs and ACOAs commonly assume unmatchable of the following distinctive coping roles within the family the family hero or junior mom caretaker, who is quite successful both at home and at school the scapegoat who is something of an angry rebel and often involved unapproved social behavior.The lost child or angel, who withdraws to the background, never causes trouble, has no opinion, feels unimportant, and isolates himself or herself from others or the mascot, who manages to defuse fickle and tense situation, often through humor, by focusing attention on himself or herself (Jorgensen & Jorgensen, 1990).Recent critics of the theory of the COA and ACOA syndrome have contended that many children of nonalcoholic, but strong dysfunctional families such as those marked by sexual or physical abuse and incest, also share some of the characteristics as COAs and ACOAs. Although the uniqueness of the ACOA and COA syndrome may be abandoned, the imposition created within children who grow up in an alcoholic home is still acknowledged as significant and serious.The revision of this syndrome appears to include the following characteristics A great likelihood of becoming an alcohol or other drug abuser a strong disposition toward having psychiatric symptoms as an adult a moderately significant increase risk for marital problems more impulsive behavior as a child as well as delayed lyric development, fine motor coordination and sociability and a higher incident of cognitive disorders.Although most COAs and ACOAs have f ew common psychological factors that distinguish them from other children who undergo a disadvantaged childhood, one researcher has found that disproportionate number of children born to alcoholic or drug addicted parents have abnormal penetration patterns. such(prenominal) differences appear to correlate strongly with certain behavioral characteristics, including impulsivity, social deviance, and lower IQ (Dunkel, 1974).The RecoveryFamily therapy is a form of psychotherapy based on the proposition that disturbed relationships among various family members may have contributed to or resulted from the destructive drinking of one family member. This form of treatment emphasizes family interaction factors, in addition to individual problems of the alcohol abuser, and proposes changes in the communication patterns of family members.All family members are treated as a unit, rather than isolating the alcoholic and treating that person apart from their family. Behavioral therapy is a pre valent form of psychotherapy that is based on the application of human learning theories in a clinical setting. Behavioral therapists emphasize changing the coping patterns of the alcohol-dependent individuals rather than changing the underlying causes of self-destructive alcohol abuse.Some behavioral therapies focus on assertiveness training and improving communications skills and problem solving methods. Such treatment emphasizes that drug dependent people can gain control over their own actions, reaffirm the value of sobriety, and eventually overpower alcohol. This basic belief stands in sharp contrast with the philosophy of Alcoholics nameless, which emphasizes personal powerlessness over alcohol (Schuckit, 2006).Alcoholics Anonymous is one of the most successful approaches in recovery from Alcoholism. Alcoholics Anonymous (AA) is a fellowship of problem drinkers who want to help in maintaining sobriety. Voluntary membership involves an emotional commitment that the alcoholic i s powerless over the control of alcohol and that only a power greater than the self can restore soundness of mind.The famous Twelve Steps of AA express the philosophy and recovery process of this international association. Offering hope of recovery from alcoholism is an essential feature of Alcoholics Anonymous. Such hope is provided by both example and supportive interrelationships with other members of this self help fellowship. Each person is expected to become involved with the Twelve Steps of AA, an ongoing process referred to as working the program.The Twelve Traditions of AA are the operational principles of the fellowship and express the importance and significance of the group in relationship to its membership, nonmembers, and society in general. At present, Alcoholics Anonymous has an estimated membership in prodigality of 1.5 million people in 114 countries around the world.Despite its evident spiritual orientation, AA continues to thrive, based on singleness of purpose, group autonomy, self-supporting financial operation, maintenance of non-professional status, noninvolvement in prevalent controversy, and personal anonymity. Patterned closely after AA are the AlAnon family groups for spouses and friends of recovered and recovering alcoholics and Alateen groups for children of alcoholics (Ammermann, Ott & Tarter, 1999).SummaryAlcohol abuse is everyones problem. Whether nonuser, moderate or social drinker, or alcoholic, everyone is now or indirectly affected by alcohol abuse. Whether alcoholism is perceived as a personal threat or not and whether drinking is viewed as good or bad, the most important thing to remember is that ethyl alcohol is a drug with the potential for adverse drug effects even when used in social settings.Social drinking is usually moderate, but the limits of appropriateness are likely to vary from one drinker or drinking group to another. Consequently, promoting so-called responsible drinking behavior may be less than adequate as a method of reducing alcohol problems and alcohol abuse.In a similar manner, urging drinkers to party sensibly or know your limits may sound like good advice, but these recommendations have been criticized as lacking in specificity and dealing with glittering generalities that cannot be applied easily.Problem drinking refers to alcohol consumption that will result in damage to the drinker, the drinkers family, or the drinkers community. Problem drinkers include not only alcohol-dependent individuals and long-time alcohol abusers, but also moderate and light drinkers who drive after excessive drinking and cause accidents.Problem drinking is a form of substance abuse as well as a consequence of substance abuse. Use of alcohol continues despite a persistent social, occupational, psychological or physical problem related to such consumption. Problem drinking is also a form of substance abuse because alcohol intake recurs when such use is dangerous to oneself or to others or both.Re ferenceAmmermann, R. T., Ott, P.J., & Tarter, R.E. (1999). Prevention and societal impact of drug and alcohol abuse computer file. New jersey Erlbaum Associates.Dunkel, T. (1994). Dealing with demons of a new generation. In Annual Editions Drugs, Society and Human Behavior 94/95, p. 128-130. Guilford, Conn. Dushkin.Jorgensen, D. & Jorgensen, J. (1990). Secrets told by children of Alcoholics. Blue Ridge Summit, Pa. Tab Books.Schuckit, M. A. (2006). Drug and Alcohol Abuse a Clinical guide to diagnosis and treatment. New York Springer.Wegscheider, S. (1981). Another chance Hope and Health for the alcoholic family. California Science and Behavior Books.

Auditors’ Contribution to Subprime Mortgage Crisis

What role did the accounting profession play In the recent tyrannical mortgage crisis? What could they submit done differently? An Independent auditor has a duty is to Identify, measure. And communicate monetary information about an entity for decision making purposes. They are also responsible for generating the financial statements/reports for an organization. (Marshall, Unmans, Vile, 2008) The compulsive mortgage crisis is the result of contract laws allowing lenders the characterization of supreme mortgage loans.Other causes of the supreme mortgage crisis were poor decisions made in terms of operating investments and finance. Risks were managed poorly, and fraud occurred in some instances. Due to the construct of supreme loans and its impact on borrowers, I. E. , lenders offering small down payments with appeal deferral features, high loan to value ratios, and escalating payments, borrowers underestimated the true cost of the loan and were deceived by the completes In loan transactions In which lenders Intentionally complicated the lingo In the transactions.Channel Leonard 2012) Borrowers took advantage of the fact that lenders would make an extensive effort to pay their mortgage bills, however, when they couldnt due to medical bills, family downsizes, etc This lead to accountants having to maneuver through transactions in an effort to determine fair value measurements in conclusion making inaccurate estimations based on an illiquid market. This led to oversights in fair value accounting and confounded accruals. For an independent auditor, it is most important to provide users with the most accurate financial information.When they cannot, it seems as fraudulent practices have occurred, whether intentional or inadvertent. Consequently, due to investigations by the Securities and Exchange Commission on unethical practices discovered at some firms, along with Issues and concerns of other firms, the Financial report Standards Board (FAST) along with the Public Committee of Accounting Oversight Board (PEPCO), offered guidance for auditing processes Involving fair values measurements.Issues continued to persist, which led to the PEPCO performing financial audits on the financial statements devised by auditors at varying firms due to delinquencies in the auditing process for fair value measurements, financial estimates, adequacy of disclosures, and the ability of the auditor to continue the audit. According to the Chief Accountant for the Securities and Exchange Commission, auditors were warned of the financial risk areas but many were not providing accurate information or following the committees guidance.Auditors didnt comply with the due souths current standards and rules which led to improper auditing, fraudulent, and Inadequate financial reporting. (Kroger 2011) In conclusion, there were some auditing firms that operated using dishonest practices. Having said this, I do not believe all accountants were at fault nor can be b lamed for the supreme mortgage crisis due to the lack of exactness when making fair value measurements, along with accountants inability to indicate the future. They have received all documentation of the entity transactions.In order to prevent the blame in its entirety organism placed on accountants, it would have been wise of the accountants to regularly check for revisions in the guidance offered by the SEC as updates of how to manage authority issues occurred. The SEC was aware of many issues and published documents to guide auditors for handling potential problems with fair value estimations. (Kroger 2011) Implementation of those suggestions would have helped curb issues when auditing fair value measurements of entities. Kroger, J. (2011, April 6).

Unethical Issues of Apple Iphone

Important Note This prototype essay mainly illustrates the structure of your assignment on ethical issues of a company selected by you. You whitethorn freshman identify deuce or three ethical problems and then discuss how to solve them. ring including relevant citations to support your evidences and viewpoints. Ethical issues in iPhone 1. Introduction . With an elegant combination of a mobile phone, iPod and own(prenominal) digital assistant (PDA), iPhone was launched at orchard apple tree and AT&T stores across the US on June 29, 2007(Place, 2007). iPhone is by no means a prodigious success by change one million iPhones at bottom 3 months (Wolverton, 2007).However, what coupled with its splendid success are numerous criticisms from the general society. This paper firstly examines two of the most severely unethical issues in iPhones marketing activities, and then provides or so possible suggestions to these problems. in the long run a brief conclusion impart be drawn. 2. iPh ones Unethical Marketing Activities . deceptive publicizing Practices On July 26, 2007, a class-action lawsuit was filed against Apple and iPhone carrier AT&T for deceptive advertising oer the iPhone bombing (Lane, 2008).According to the lawsuit, apple engaged in purposeful and fraudulent concealment of the fact that iPhone purchasers were required to pay up $89. 95 to get the devices battery replaced, which means the replacement fee would become an annual charge base on the expected life of battery 300 to 400 charge cycles. According to Lane (2008), Apple faces criticism because it did not disclose the actual cost and inconvenience of replacing the battery until three days after the iPhones release. Also the battery information was difficult to find on Apples website.In sum, the fact that Apple did not immediately communicate the exact cost of replacing the battery, along with the fact that the iPhone battery was not replaceable by users, had generated an outrage among iPh one users. 1 Environmental Problems Back in May, 2007, Apple lead Steve Jobs pledged that his company would become greener and that it would out-pace the competition when it came to removing cyanogenetic chemicals from the production of its devices (Stevens, 2007). This was largely seen as a retort to a Greenpeace-led campaign.Now, Greenpeace was at it again, calling Apple out for victorious a ill-treat backwards when it came to the toxic chemicals found in the iPhone (Riley, 2007). These chemicals also included Bromine, which had been banned in European toys thanks to its apparent advert on hormone levels in children. Greenpeace claimed that Apple was far from atomic number 82 the way for a green electronics compared with its competitors, akin Nokia, who hasd already sold phones free of Polyvinyl chloride (Stevens, 2007). Based on these findings it was hard to doubt that Apple took a step back from its green initiative to get the iPhone out the door.However, it was question ed whether the company would respond to this Greenpeace challenge like it did the last. 3. Suggestions . Deceptive Advertising Practices Although deceptive practices may benefit more profit in the short run, such practices will eventually harm their business in the long run. If consumers do not get what they expect, they will throw off to more reliable products. This can also cause a backlash, if corporations are more focused on profits than customer service, particularly for a company such as Apple, which claims a long-term kindred with customers.Therefore, Apple Inc. should do its possible endeavor to avoid deceptive practices in the future and implement some initiatives to minimize trouble and inconvenience made to consumers, such as giving a discount to the first batch of iPhone purchasers to replace their batteries. Environmental Problems Nowadays, more and more companies are adopting policies of environmental sustainability, which is a management attempt that involves develo ping strategies that both sustain the environment and produce profits for the company (Armstrong, 2008 Kotler, 2008). Apple Inc. as a leading corporation in the field of electronic products, should also initiate the environmental sustainability policies. Regarding the environmental problems conglomerate in iPhone, Apple should respond to this Greenpeace challenge to solve the problem as soon as 2 possible and in the future Apple should try best to act as a leading giant for a green electronics. 4. Conclusion . This report investigates two of the major problems concerning the ethicality of marketing activities of iPhone including 1) deceptive advertising practices and 2) environmental problems.It can be concluded that despite the worldwide popularity, iPhone still faces some ethical problems. Suggestions to reform the image of iPhone by enhancing its ethical issues have also been discussed in this paper. They include 1) avoiding deceptive practices in the future, 2) taking initiati ves to minimize the troubles caused, 3) responding to the Greenpeace challenge and 4) maintaining the policies of environmental sustainability. In this way, iPhone could probably both enjoy the success in selling and maintain an ethical image.Reference Kotler, P. (2008). Principles of Marketing. Pearson Education. Lane, F. (2008). Court Pulls Plug on Apple iPhone Battery Lawsuit. Sci-Tech Today. Retrieved September 26, 2008, from http//www. sci-tech-today. com/story. xhtml? story_id=62144 Place, N. (2007). Mac-tastic arrival iPhone goes on sale today at 6 p. m. The News Herald, Panama City, Fla. Retrieved June 29, 2007, from http//www. newsherald. com. Riley, D. (2007). Greenpeace iPhone Not Good for the Environment.TechCrunch. Retrieved October 14, 2007, from http//www. techcrunch. com/2007/10/14/greenpeace-iphone-not-good-for-the-environment/ Stevens, T. (2007). iPhone Bad For Environment, Says Greenpeace. Switched. Retrieved October 15, 2007, from http//www. switched. com/2007/10 /15/iphone-bad-for-environment-says-greenpeace/ Wolverton, T. (2007). Apple sells 1 millionth iPhone. San Jose Mercury News. Retrieved September 11, 2007, from http//www. mercurynews. com.

Nigerian Economy, Gdp and Production.

NIGERIAN ECONOMY/GDP AND PRODUCTION Nigeria save a latest compute surplus of 11. 60 percent of the countrys Gross Domestic Product in 2011. Current explanation to GDP in Nigeria is inform by the African Economic Outlook. Historically, from 1980 until 2011, Nigeria Current written report to GDP averaged 1. 2 portion reach an all succession high of 37. 9 Percent in celestial latitude of 2008 and a record belittled of -18. 7 Percent in December of 1986. The Current bank note balance as a percent of GDP provides an indication on the level of international conflict of a country.Usually, countries transcription a strong underway account surplus have an economy heavy dependent on exports revenues, with high savings ratings but weak domestic demand. On the other hand, countries arrangement a current account deficit have strong imports, a low saving rank and high in-person usance rates as a percentage of disposable incomes. Nigeria recorded a Current g all overnment note sur plus of 5035. 99 USD Million in the third quarter of 2012. Current Account in Nigeria is reported by the Central coin bank of Nigeria.Historically, from 2005 until 2012, Nigeria Current Account averaged 2373. 87 USD Million reaching an all time high of 9455. 37 USD Million in December of 2009 and a record low of -4410 USD Million in September of 2010. Current Account is the sum of the balance of trade (exports minus imports of goods and services), give the sack factor income (such as interest and dividends) and net transfer payments (such as foreign aid). INDUSTRIAL PRODUCTION. In 2011 and 2012, Nigerias industrial outturn increased by 0. 10% as reported by the Central Bank of Nigeria.Historically, from 2007 until 2012, Nigeria Industrial action averaged 3. 15 Percent reaching an all time high of 14. 90 Percent in December of 2011 and a record low of 0. 10 Percent in June of 2007. In Nigeria, industrial production pulses the turnout of businesses integrated in industrial sector of the economy such as manufacturing, mining, and utilities. This rascal includes a map with historical data for Nigeria Industrial turnout. The data given on this page shows a year over year change in a seasonally adjusted Industrial Production advocate.Industrial Production Index is an economic indicator that measures changes in output for the manufacturing, mining, and utilities. Although these sectors contribute only a half-size portion of GDP, they are highly sensitive to interest rates and consumer demand. This makes Industrial Production an important whoreson for forecasting futurity GDP and economic performance. Industrial Production figures are also used by central banks to measure inflation, as high levels of industrial production can lead to uncontrolled levels of consumption and rapid inflation.Nigerian Economy, Gdp and Production.NIGERIAN ECONOMY/GDP AND PRODUCTION Nigeria recorded a Current Account surplus of 11. 60 percent of the countrys Gross Domestic Produ ct in 2011. Current Account to GDP in Nigeria is reported by the African Economic Outlook. Historically, from 1980 until 2011, Nigeria Current Account to GDP averaged 1. 2 Percent reaching an all time high of 37. 9 Percent in December of 2008 and a record low of -18. 7 Percent in December of 1986. The Current account balance as a percent of GDP provides an indication on the level of international competitiveness of a country.Usually, countries recording a strong current account surplus have an economy heavily dependent on exports revenues, with high savings ratings but weak domestic demand. On the other hand, countries recording a current account deficit have strong imports, a low saving rates and high personal consumption rates as a percentage of disposable incomes. Nigeria recorded a Current Account surplus of 5035. 99 USD Million in the third quarter of 2012. Current Account in Nigeria is reported by the Central Bank of Nigeria.Historically, from 2005 until 2012, Nigeria Current Account averaged 2373. 87 USD Million reaching an all time high of 9455. 37 USD Million in December of 2009 and a record low of -4410 USD Million in September of 2010. Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). INDUSTRIAL PRODUCTION. In 2011 and 2012, Nigerias industrial production increased by 0. 10% as reported by the Central Bank of Nigeria.Historically, from 2007 until 2012, Nigeria Industrial Production averaged 3. 15 Percent reaching an all time high of 14. 90 Percent in December of 2011 and a record low of 0. 10 Percent in June of 2007. In Nigeria, industrial production measures the output of businesses integrated in industrial sector of the economy such as manufacturing, mining, and utilities. This page includes a chart with historical data for Nigeria Industrial Production. The data given on this page shows a year over ye ar change in a seasonally adjusted Industrial Production Index.Industrial Production Index is an economic indicator that measures changes in output for the manufacturing, mining, and utilities. Although these sectors contribute only a small portion of GDP, they are highly sensitive to interest rates and consumer demand. This makes Industrial Production an important tool for forecasting future GDP and economic performance. Industrial Production figures are also used by central banks to measure inflation, as high levels of industrial production can lead to uncontrolled levels of consumption and rapid inflation.

Limit Pricing and Oligopolies

mold pricing is the type of pricing wherein fasts caution entrants to the food market by choosing a low footing that is beneath short-run profit maximizing toll precisely above the belligerent level. Firms who engage in spring pricing ar forfeiting current profits to earn future profits. The output is being maintained notwithstanding the presence of entrants. However, there ar still issues whether the application of particularise pricing fabrics is profitable for trustworthys (2002).A firm engages in limit pricing by choosing its price and output while an entrant cannot sufficiently indemnify the average total cost of the remaining market demand. An launch firm that is threatened by an immersion in a single-period could use limit price as the highest price. This leave block the submission. As origin explained by Modigliani in 1958, it was assumed that entrants would expect that incumbent firm will continue product at an entry-limiting output with an entry prese nt. It is the same as the Cournot Competition wherein firms believe that its competitors will continue production at the current levels (McAuliffe, 1997).On the other hand, classic limit pricing is another pricing policy where limit pricing allows established firms to earn economic profits while they are preventing the occurrence of entry. It happens if there are economies of sale in production even if the entrants and the incumbent firms have the same costs (McAuliffe, 1997).Another model is explained by Gaskin in 1971, called the dynamic limit pricing. It happens if there are threats from potential competition to a firm for current and future periods. The firms would now depend the rate of entry from the difference between the current price and their marginal costs. If a firm would want to earn high profits at current period, it will curing a high price.However, the number of entry will also increase while the price and profit are presumable to decrease in the future. On the othe r hand, if an established firm distinct for a lower price, both the entry and the profits will decrease. Moreover, if the firms do not have whatever cost over the entrants, it will lose its position past the market will be competitive. The competitive outcome of the market however is not astonishing at all since only the price is utilise by the firm (McAuliffe, 1997).both in the classic and dynamic limit pricing, the market power of the established firms are dependant due to the potential competition. In the end, they have no choice but to set the price under monopoly level. However, the expectation from an entrant that a firm would always maintain its output is not always true.After the entry period, both firms would earn high profits through high prices and restricted output. An established firm therefore with maintained output after the existence of an entry is not always a threat for an entrant. Otherwise, the established firm should bind for the current period in order to grant high profits with high output for the next periods (McAuliffe, 1997).Successful limit pricing could affect the market structure however few firms do set prices equal to or below the monopoly level to discourage entry. Major American companies use different strategies such as advertising and product proliferation to discourage entry (McAuliffe, 1997).Competition is important in the American economy system but what if there is only a small number of competing companies? This condition falls under the oligopoly market. Unlike the monopoly where there is only one marketer and many buyers, in oligopoly there is more than one seller (Schenk). In oligopoly, there may be homogenous or heterogeneous products however entry is deterred by legal restrictions such as banking, borderline efficient scale such as overnight mail service , or strategic appearance (2008).Oligopoly has different models such as the Cournot-Nash Equilibrium of Duopoly and the Collusive Oligopoly. Cournot focu sed only on duopoly where there are only two firms competing assuming that both sell the same products produced at zero marginal cost. Both firm engage in output that is profit-maximizing expecting that the output of the other firms is maintained or held unbroken (Lipsey and Crystal, 2007). Under Cournot-Nash residuum, duopolists are competing for the quantities where each produces less than a monopoly. However, the sum of the production of both duopolists is more than the monopoly but their economic profits are less than the monopoly.The price is always less than monopoly level but not more than the competitive price (2008). Under Cournot equilibrium, firms would earn less than a monopoly because the duopolists outputs are more then the monopoly output. They would earn however more than the perfectly competitive firms since they could decrease the price upon increasing output (Lipsey and Crystal, 2007). apiece competing firm is expected to adjust their outputs. However, if they cannot make any more adjustments then equilibrium is reached (Hobbs, 2001).Unlike Cournot-Nash equilibrium with doupolists as competing firms, in collusive oligopoly the firms cooperate in order to have a monopoly power. They may agree in setting price and dividing the output therefore gaining the quantity a monopoly produces and earning the economic profits a monopoly can. The firms are now earning more than doupoly profits (2008). There are many factors for collusion such as the number of sellers, personalities, equality of shares, costs of each firm, and others. There is a possibly that a collusion cogency disintegrate especially if the firm begin competing and cheating with the other firms (Schenk).Monopolies in the U.S. are most likely to be regulated by the government unlike the oligopolies. Price-fixing by the collusive oligopolies however is not allowed unless for boorish cooperatives and professional sports league (2006). Collusion oligopolies, just like the doupoly, coul d turn into competition as well. Firms begin violating the production limits and producing more than they have to. Besides, the price tends to be lower. In the end, the collusion becomes unsuccessful.BibliographyOECD 2002, Limit Pricing, viewed 6 May 2007, .NC claim University 2006, Collusive Oligopolies, viewed 6 May 2008, .2008 Oligopoly, viewed 6 May 2008, .Hobb, B.K. 2001, Cournot Equilibrium, viewed 6 may 2008, .Lipsey, R. G. & Crystal, A. 2007, Doupoly. Oxford University Press, viewed 6 May 2008, .McAuliffe, R. E. 1997, encyclopaedic Dcitionary of Managerial Economics, Blackwell Punlishing, viewed 6 May 2008, .Schenk, R. The Theory of Few Sellers, viewed 6 May 2008,.

Porsche Changes Tack

Porsche Changes interchange Yes, of course, we pick up heard of sh beh aged(prenominal)er value. But that does non change the fact that we put customers first, thence workers, then business partners, providers and dealers, and then pctholders. Dr. Wendelin Wiedeking, chief operating officer, Porsche, Die Zeit, April 17, 2005. Porsche had always been different. Statements by Porsche leadership, cable cable care the one above, always made Veselina (Vesi) Dinova noisome about the telephoners attitude about creating shareholder value. The order was a paradox.Porsches attitudes and activities were like that of a family- k in a flash takegeed firm, but it had succeeded in creating substantial shareholder value for to a greater extent than a decade. Porsches chief operating officer, Dr. Wendelin Wiedeking, had been impute with clarity of purpose and sureness of execution. As one colleague described him He grew up PSD poor, smart, and driven. Porsches management of ii minds had created confusion in the foodstuffplace as to which value proposition Porsche presented. Was Porsche continuing to contrive an organizational focus on shareholder value, or was it cave ining to its more traditional German grow of s obtainholder chapiterism?Simply put, was Porsches leadership building value for every last(predicate) shareholders, including the exacting families, or was it pursue family objectives at the expense of the shareholder? Vesi had to make a recommendation to her investing committee tomorrow, and the evidence was mistake at best. Shareholder Wealth or Stakeholder peachyism? Vesis dilemma was whether PorschePorsches leadershipwas more and more pursuing shareholder wealth maximization or the more traditional Continental European present of stakeholder jacketism.Shareholder Wealth Maximization. The Anglo-Ameri evict marketsthe United States and United Kingdom primarilyhave followed the philosophy that a firms objective should be shareholder wealth maximization. More specifically, the firm should strive to maximize the return to shareholders, as paced by the sum of bully gains and dividends. This philosophy is based on the assumption that strain markets are efficient that is, the share price is always correct, and quickly incorporates all new in descriptoration about expectations of return and risk.Share prices, in turn, are deemed the best allocators of bully in the macro economy. Agency theory is the subject of how shareholders can motivate management to accept the prescriptions of shareholder wealth. For extype Ale, liberal use of stock picks should encourage management to remember like shareholders. If, however, management deviates too far from shareholder objectives, the social clubs board of directors is responsible for refilling them. In cases where the board is too weak or ingr hold to take this action, the discipline of the uprightness markets could do it through a takeover.This discipline is made possible by the one-share-one-vote rule that exists in well-nigh Anglo-American markets. right of first publication 2007 Thunderbird School of Global Management. every(prenominal)(prenominal) rights reserved. This case was prepared by Professor Michael H. Moffett for the purpose of classroom sermon whole, and not to indicate either effective or ineffective management. Special thanks to Wesley Edens and Pilar Garcia-Heras, MBA 06, for case-writing assistance. Stakeholder crownism. In the non-Anglo-American markets, particularly continental Europe, projectling shareholders similarly strive to maximize long-term returns to equity.However, they are more throttle by powerful different stakeholders like creditors, labor unions, governments, and regional entities. In particular, labor unions are a lot much more powerful than in the Anglo-American markets. Governments often intervene more in the marketplace to encourage important stakeholder interests in local communities, such as environm ental protection and employment needs. Banks and new(prenominal) mo bring inary institutions often have cross-memberships on corporate boards, and as a result are frequently kinda influential. This model has been labeled stakeholder ceilingism.Stakeholder capitalism does not assume that equity markets are either efficient or inefficient. Efficiency is not really precise because the firms monetary goals are not whole shareholder-oriented since they are constrained by the other stakeholders. In any case, stakeholder capitalism assumes that long-term loyal shareholderstypically, controlling shareholdersrather than the transient portfolio investor should influence corporate strategy. Although both philosophies have their strengths and weaknesses, twain trends in novel long time have led to an increasing focus on shareholder wealth.First, as more of the non-Anglo-American markets have progressively privatized their industries, the shareholder wealth focus is seemingly needed to attract supranational capital from outside investors, legion(predicate) of whom are from other countries. Second, and still quite controversial, many analysts think that shareholder-based multinationals are more and more dominating their worldwide sedulousness segments. Porsche AG I kat once exactly what I want and what must happen. I am the real one. You can be sure. Dr. Wendelin Wiedeking Porsche AG was a publicly traded, closely held, German-based auto compensater.Porsches chair and Chief Executive Officer, Dr. Wendelin Wiedeking, had returned the company to both status and favorableness since winning over the company in 1993. Wiedekings background was in fruition, and many had questioned whether he was the right man for the job. Immediately later taking over Porsche, he had killed the 928 and 968 model plat social classs to reduce complexity and cost, although at the time this left the company with totally one platform, the 911. Wiedeking had then brought in a gro up of Japanese manufacturing consultants, in the Toyota tradition, who led the complete slip away of the companys manufacturing processes. Wiedeking himself made news when he walked down the production line with a invoice motto, cutting off the shelving which held parts. Porsche had closed the 2004/05 fiscal year (ending July 2005) with 6. 7 billion in gross gross gross gross sales and 721 million in profit after-tax. Wiedeking and his team were credited with the wholesale turnaround of the specialty fabricater. Strategically, the leadership team had now expanded the companys business line to reduce its dependence on the luxury sports car market, historically an extremely cyclical business line.Although Porsche was traded on the Frankfurt Stock modify (and associated German exchanges), control of the company remained firmly in the hands of the founding families, the Porsche and Piech families. Porsche had two classes of shares, ordinary and preference. The two families he ld all 8. 75 million ordinary sharesthe shares which held all voting rights. The second class of share, preference shares, participated only in profits. All 8. 75 million preference shares were publicly traded. Approximately 50% of all preference shares were held by amperelegish institutional investors in the United States, Germany, and the United Kingdom 14% were eld by the Porsche and Piech families and 36% were held by small private investors. As noted by the Chief Financial Officer, Holger Harter, As long as the two families hold on to their stock portfolios, there wont be any immaterial influence on company-related decisions. I have no doubt that the families impart hang on to their shares. iodine of the consultants, focused on lean manufacturing techniques and Porsches overwhelming levels of subcomponent assemblies and various automotive parts and inventory, was quoted as saying, Where is the car factory? This looks like a movers warehouse. 1 2 TB0067 Porsche was somew hat infamous for its breakaway thought and occasional stubbornness when it came to disclosure and compliance with reporting requirementsthe prerequisites of universe publicly traded. In 2002, the company had chosen not to list on the New York Stock Exchange after the passage of the Sarbanes-Oxley Act. The company pointed to the specific requirement of Sarbanes-Oxley that senior management sign off on the pecuniary results of the company personally as inconsistent with German righteousness (which it largely was) and illogical for management to accept.Management had alike long been critical of the practice of quarterly reporting, and had in fact been removed from the Frankfurt exchanges stock power in September 2002 because of its refusal to report quarterly financial results (Porsche still reports operating and financial results only semi-annually). Porsches management continued to argue that the company believed itself to be quite seasonal in its operations, and did not cove ting to report quarterly. It also believed that quarterly reporting only added to short-term investor perspectives, a fire which Porsche felt no need to fuel (see addendum 4). troop 1 7,000 Porsches Growth in Sales, Income and boundary line Operating Margin 28% Millions of euros () Sales 6,000 20. 8% 5,000 18. 0% 18. 2% 17. 9% 20% 24% 4,000 13. 6% 3,000 11. 6% 12. 0% 16% Operating Margin (EBIT / Sales) 12% 2,000 7. 0% Operating Income (EBIT) 8% 4. 2% 1,000 2. 0% 0 1996 1997 1998 1999 2000 2001 2002 2003 4% 0% 2004 2005 Note EBIT = earnings onwards interest and tax. But, after all was express and done, the company had just reported record profits for the tenth consecutive year (see reveal 1).Returns were so good and had grown so steadily that the company had paid out a special dividend of 14 per share in 2002, in addition to increasing the size of the regular dividend. The companys critics had argued that this was plainly another way in which the controlling families drained pr ofits from the company. in that respect was a continuing refer that management came first. In the words of one analyst, we think there is the potential risk that management may not rate shareholders interests very highly. The motivations of Porsches leadership team had long been the subject of deal.The compensation packages of Porsches senior management team were well-nigh soaply focused on current year profit efficacy (83% of executive board compensation was based on performance-related pay), with no management incentives or stock option awards related to the companys share price. Porsche clearly focused on the companys own operational and financial results, not the markets valuationor opinionof the company. Leadership, however, had clearly construct value for all stakeholders in recent years, TB0067 3 nd had shared many of the fruits of the business, in the form of bonuses, with both management and labor alike. We are aware that our lofty ambitions for products, processes , and customer satisfaction can only be achieved with the support of a high- feel and well-motivated team. Here at Porsche, we have such a teamand we believe that they should share in the success of the company by means of special bonus payments. 2 Porsches Growing Portfolio Porsches product portfolio had undergone significant change as CEO Wiedeking pursued his promise to shareholders that he would grow the firm.The company had deuce-ace study vehicle platforms the premier luxury sports car, the 911 the competitively priced Boxster roadster and the of late introduced off-road sport utility vehicle, the Cayenne. Porsche had also recently announced that it would be adding a fourth platform, the Panamera, which would be a high-end sedan to compete with Jaguar, Mercedes, and Bentley. 911. The 911 series was still the focal point of the Porsche smirch, but many believed that it was growing old and due for replacement. Sales had seemingly peaked in 2001/02, and fallen back more than 15% in 2002/03.The 911 was a highly developed series with more than 14 current models carrying the 911 tag. The 911 had always enjoyed nearly exclusive self-will of its market segment. Prices continued to be high, and margins some of the very highest in the global auto industry for production models. Although its sales had been historically cyclical, 911 demand was not priceelastic. The 911 was the only Porsche model which was fabricate and assembled in-house. Boxster. The Boxster roadster had been introduced in 1996 as Porsches entry into the lower-price end of the sports car market, and had been by all measures a very big success.The Boxster was also considered an anticyclical move, because the traditional 911 was so high priced that its sales were heavily dependent on the disposable income of buyers in its study markets (Europe, the United States, and the United Kingdom). The Boxsters lower price made it affordable and slight polished to the business cycle. It did, however, compete in an increasingly competitive market segment. Although the Boxster had competed head-to-head with the BMW Z3 since its establishment in 1996, the introduction of the Z4 in 2003 had drastically cut into Boxster sales. Boxster sales volumes had peaked in 2000/01.Volume sales in 2003/04 were down to 12,988, less than half what they had been at peak. Cayenne. The third major platform innovation was Porsches entry into the sports utility vehicle (SUV) segment, the Cayenne. Clearly at the top end of the market (2002/03 Cayenne sales comed more than $70,000 each), the Cayenne had been a very quick success, especially in the SUVcrazed American market. The Cayenne introduction was considered by many as one of the most successful new product launches in history, and had single-handedly floated Porsche sales mos in recent years.The Cayennes success had been even more dramatic given much pre-launch reproach that the market would not support such a high-priced SUV, particularly one which shared a strong blood-line with the Volkswagen (VW) Touareg. The Porsche Cayenne and VW Touareg had been adjunctionly developed by the two companies. The two vehicles shared a commonalty chassis, and in fact were both manufactured at the same factory in Bratislava, Slovakia. To preserve its rum identity, however, Porsche shipped the Cayenne chassis 17 hours by rail to its facility in Leipzig, Germany, where the engine, drive Porsche Stays on Course, Dr.Wendelin Wiedeking, President and Chief Executive Officer, Porsche Annual Report 2003/04, p. 5. 2 4 TB0067 train, and interior were combined in final assembly. 3 A new six-cylinder version was introduced in 2004 to buoy Cayenne sales after the initial boom of the introduction year, by offering a significantly cheaper model choice. 4 As illustrated by certify 2, Porsches platform innovations had successfully grown sales volumes over the past decade. Exhibit 2 Units 0,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,00 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Note Excludes sales of the discontinued 928 and 944/968 models in 1994-1996. These models totaled 1005 in 1995 and 104 in 1006. 911 sales in 2004 and 2005 include 222 and 660 Carrera GTs, respectively. Porsches Expanding Platforms and Growing Sales 911 Boxster Cayenne Panamera. On July 27, 2005, Porsche announced that it would proceed with the nurture and production of a fourth major modelthe Panamera. The name was derived from the legendary Carrera Panamericana long-distance road play held for many years in Mexico.The Panamera would be a premium class, four-door, four- situation sports coupe, and would compete with the premium sedan models produced by Mercedes Benz and Bentley. Pricing was judge to begin at $125,000, rising to $175,000. Production was scheduled to begin in 2009 at a scale of 20,000 units per year. This new model would give Porsche a competitive element in every major premium-product market segment. The M ost Profitable Automobile gild in the World Porsches financial performance and health, by auto manufacturer standards, European or elsewhere, was excellent.It was clearly the smallest of the major European-based manufacturers with total sales of 6. 4 billion in 2004. 5 This was in comparison to DaimlerChryslers 142 billion in sales, and Volkswagens The engine was, in fact, the only part of the Cayenne which was actually manufactured by Porsche itself. All other components of the vehicle were either outsourced or built in conjunction with other manufacturers. 4 The six-cylinder engine, however, was actually a Volkswagen engine which had been reconfigured. This had led to significant debate, as Porsche was criticized for degrading the Porsche brand. Comparing Porsches financial results with other major automakers is problematic. First, Porsches fiscal year ends July 31. Hence Porsches financial results for 2004 reported in Exhibit 3 are those for the August 1, 2003, through July 31, 2004, period. Secondly, Porsche announced that beginning with the 2004/05 period, which ended July 31, 2005, it would move to InternationalFinancial Reporting Standards (IFRS), rather than the German Commercial Code and special accounting requirements of the German Stock Corporation Law (German Generally true Accounting Principles) which it has followed since it went public in 1984.These results will not be comparable to previous reporting years, and will require both Porsche and its analysts to reconstruct its financial history following IFRS. 3 TB0067 5 89 billion. But, as illustrated in Exhibit 3, Porsche was outstanding by all metrics of profitability and return on invested capital. Porsches EBITDA, EBIT, and net income margins were the highest among all European automakers in 2004. 6 What also always stood out about Porsche was the average revenue per vehicle. At 83,671, only DaimlerChrysler was even close. Exhibit 3 European Automaker BMW DaimlerChrysler Fiat Peugeot Porsche Renault VolkswagenPorshes Competitive Positioning, 2004 Earnings Measures Sales (millions) 44,335 142,059 46,703 56,797 6,359 40,715 88,963 Revenue per vehicle 39,622 78,056 28,844 19,354 83,671 19,291 18,369 EBITDA 5,780 10,280 2,190 4,502 1,665 4,414 7,140 EBIT 3,745 4,612 22 1,916 1,141 2,148 1,620 Net Income 2,222 2,466 - 1,586 1,357 616 3,551 677 EBITDA Margin 13. 0% 7. 2% 4. 7% 7. 9% 26. 2% 10. 8% 8. 0% Margin Measures EBIT Net Income Margin Margin 8. 4% 5. 0% 3. 2% 1. 7% 0. 0% -3. 4% 3. 4% 2. 4% 17. 9% 9. 7% 5. 3% 8. 7% 1. % 0. 8% Source European Autos, Deutsche Bank, July 20, 2005 Porsche, Deutsche Bank, September 26, 2005 Thomson Analytics compose estimates. Renaults results included 343 million in extraordinary income in 2004, accounting for net income exceeding EBIT. Porsches financial results, however, had been the subject of substantial debate in recent years as upwards of 40% of operating earnings were thought to be derived from curre ncy hedging. Porsches cost-base was sublimately European euro it produced in only two countries, Germany and Finland, and both were euro area members.Porsche believed that the quality of its engineering and manufacturing were at the core of its brand, and it was not willing to move production beyond Europe (BMW, Mercedes, and VW had all been manufacturing in both the United States and Mexico for years). Porsches sales by currency in 2004 were roughly 45% European euro, 40% U. S. dollar, 10% British pound sterling, and 5% other (primarily the Japanese yen and Swiss franc). Porsches leadership had undertaken a very aggressive currency hedging strategy beginning in 2001 when the euro was at a record low against the U.S. dollar. In the following years, these financial hedges (currency derivatives) proved extremely profitable. For example, nearly 43% of operating earnings in 2003 were thought to have been derived from hedging activities. Although profitable, many analysts argued the com pany was increasingly an investment banking firm rather than an automaker, and was heavily exposed to the unpredictable fluctuations between the worlds two most powerful currencies, the dollar and the euro. Exhibit 4 European Automaker BMW DaimlerChrysler Fiat Peugeot Porsche Renault VolkswagenReturn on Invested jacket crown (ROIC) for European Automakers, 2004 Operating Margin Sales (millions) 44,335 142,059 46,703 56,797 6,359 40,715 88,963 EBIT 3,745 4,612 22 1,916 1,141 2,148 1,620 Taxes 1,332 1,177 - 29 676 470 634 383 EBIT After-tax 2,413 3,435 51 1,240 671 1,514 1,237 Interest Bearing debt 1,555 9,455 24,813 6,445 2,105 7,220 14,971 Invested great Stockholders equity 17,517 33,541 5,946 13,356 2,323 16,444 23,957 Invested Capital 19,072 42,996 30,759 19,801 4,428 23,664 38,928 Capital Turnover 2. 2 3. 30 1. 52 2. 87 1. 44 1. 72 2. 29 ROIC 12. 65% 7. 99% 0. 17% 6. 26% 15. 15% 6. 40% 3. 18% Source European Autos, Deutsche Bank, July 20, 2005 Porsche, Deutsche Bank, September 26, 2005 Thomson Analytics author estimates. Invested Capital = total stockholders equity + gross interest-bearing debt. Capital employee turnover = sales/invested capital. ROIC (return on invested capital) = EBIT taxes/invested capital. ROIC. It was Porsches return on invested capital (ROIC), however, which had been truly exceptional over time.The companys ROIC in 2004following Deutsche Banks analysis presented in Exhibit 4was 15. 15%. This was clearly superior to all other European automakers BMWs ROIC was second highest at 12. 65%. Other major European automakers struggled to reach 6% to 7%. EBITDA (earnings before interest, taxes, depreciation, and amortization) is frequently used as the income measure of pure business profitability. EBIT (earnings before interest and taxes) is similar but is reduced by depreciation and amortization charges associated with capital asset and goodwill write-offs. 6 6 TB0067This ROIC reflected Porsc hes two-pronged financial strategy 1) superior margins on the designate but selective product portfolio and 2) leveraging the capital and capabilities of manufacturing partners in the maturation and production of two of its three products. The company had successfully exploited the two primary drivers of the ROIC formula ROIC = EBIT after-tax Sales x Sales Invested Capital The first component, operating profits (EBIT, earnings before interest and taxes) after-tax as a percent of salesoperating marginwas exceptional at Porsche due to the premium value pricing derived from its global brand of quality and excellence.This allowed Porsche to charge premium prices and achieve some of the largest of margins in the auto industry. As illustrated in Exhibit 4, Porsches operating profits after-tax of 671 million produced an operating margin after-tax of 10. 55% (671 divided by 6,359 in sales), the highest in the industry in 2004. The second component of ROIC, the capital turnover ratio (sale s divided by invested capital) velocityreflected Porsches manufacturing and assembly strategy.By leveraging the Valmet and VW partnerships in the design, production, and assembly of both the Boxster (with Valmet of Finland) and the Cayenne (with Volkswagen of Germany), Porsche had achieved capital turnover ratios which dwarfed those achieved by any other European automaker. Porsches capital turnover ratio had surpassed all other European automakers consistently over the past decade. As illustrated by Exhibit 5, Porsches growing margins and relatively high velocity had sustained a very impressive ROIC for many years. In recent years, however, invested capital had risen faster than sales.But Porsche was not adding rigid assets to its invested capital basis, but cash. The rising cash reliefs were the result of bear profits (undistributed to shareholders) and new debt issuances (raising more than 600 million in 2004 alone). As a result, fiscal 2003/04 had proven to be one of Porsche s poorest years in ROIC. Exhibit 5 2. 5 Porsches Velocity, Margin, and ROIC Margin amp ROIC 20% Velocity = Sales/Invested Capital 2. 15 2. 0 2. 12 Velocity 1. 97 1. 99 1. 81 18% 1. 91 ROIC (Operating Margin X Velocity) 14. 2% 12. 5% 11. 7% 11. 6% 10. 5% 1. 19 10. 5% 1. 21 9. % 11. 6% 13. 8% 16% 12. 9% 1. 5 14% 12. 6% 11. 9% 12% 10% 1. 0 8. 0% 6. 1% Operating Margin 6. 4% 6. 0% 6. 4% 8% 0. 91 0. 84 6% 0. 5 3. 8% 2. 0% 3. 7% 4% 2% 0. 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0% Operating margin = ( EBIT Taxes ) / Sales. Invested capital = cash + net working capital + net fixed assets. Porsches minimum levels of invested capital resulted from some rather unique characteristics. Invested capital is delimitate a number of ways, but Vesi used her employers standardized definition of cash plus net working capital plus net fixed assets. As illustrated in Exhibit 6, Porsches invested capital base TB0067 7 had been growing rapidly in recent years, but not because of additional fi xed asset investments. Porsches invested capital was growing primarily because of its accumulation of cash. 8 Vesi was concerned that using this measure of invested capital led to a distorted view of the companys actual performance. Porsches minimal fixed-asset capital base resulted from the explicit strategy of the company as executed over the past decade.The developing and manufacturing and assembly of the Cayenne was a clear example Porsche had spent only $420 million in the development of the Cayenne. Auto analysts estimated that any other major automaker would have spent between $1. 2 and $1. 8 billion. Porsche had effectively avoided these be and investments by co-producing the Cayenne with Volkswagen. The Cayenne shared some 65% of its parts and modules with the VW Touareg, with only 13% of the Cayennes actual wholesale value being derived from parts developed and manufactured by Porsche itself. The production agreement between Porsche and VW made VW responsible for all c osts associated with quality problems arising at VWs manufacturing facilities. Porsche paid VW a unit price for each Cayenne body produced in VWs assembly facility in Bratislava, Slovakia. Porsche had successfully off-loaded both cost and risk. Exhibit 6 Asset social organization funds Net working capital Net fixed assets Invested capital Liability Structure short debt Long-term debt centre debt Equity Invested capital Porsches Managerial correspondence Sheet (millions of euros) 996 227 38 487 753 1997 281 116 578 975 1998 466 132 590 1,188 1999 730 225 649 1,604 2000 823 258 755 1,835 2001 1,121 369 960 2,449 2002 1,683 (355) 2,746 4,073 2003 1,766 (382) 3,215 4,599 2004 2,791 403 3,797 6,992 2005 4,325 (131) 3,641 7,834 8 19 27 726 753 7 124 131 844 975 10 114 124 1,064 1,188 52 107 159 1,445 1,604 20 82 102 1,733 1,835 158 (49) 108 2,341 2,449 137 850 987 3,086 4,073 70 859 929 3,670 4,599 649 1,641 2,290 4,702 6,992 1,107 2,026 3,133 4,701 7,834Net working capital = accounts receivable, inventories, and prepaid expenses, less accounts payable and accured expenses. This assumes provisions for risk and charges as equity. Porsche Changes Tack The summer and fall of 2005 saw a series of surprising moves by Porsche. First, Porsche announced that the 1 billion investment to design and manufacture the new Panamera would be largely funded by the company itself. Although the introduction of the Panamera had been anticipated for quite some time, the market was surprisald that Porsche intended to design and build the carand its manufacturing facilitynearly totally in-house.The new sports coupe was to be produced in Leipzig, Germany, at the existing Porsche facility, although a substantial expansion of the rig would be required. As contend to the previous new product introductions, the Boxster and the Cayenne, there would be no major production partner involved. Porsche CEO Wendelin Wiedeking specifically noted t his in his press release There are no plans for a joint venture with another car maker. But to ensure the profitability of this new model series, we will support more closely than so far with selected system suppliers. 9 The German share of the value of the Panamera would be roughly 70%. Like the 911, Boxster, and Cayenne, the Panamera would bear the Made in Germany stamp. This methodology defines invested capital by assets, the left side of the managerial symmetricalness sheet. Alternative definitions of invested capital focus on the right-hand side of the balance sheet for example, as stockholder equity plus interest-bearing debt. Either version can also be netted for cash holdings under different methods. 8 Porsches cash and marketable securities grew from 2. billion in 2004 to over 4. 3 billion at the end of 2005 (July 31, 2005). Credit Suisse First Boston had in fact noted on September 21, 2005, just days before the VW announcement, that, In our view, the only dashing hopes is that management indicated that the company would not look into returning cash to shareholders in the next 18 months. 9 Go Ahead for Porsches Fourth Model Series, Porsche Press Release, July 27, 2005. 7 8 TB0067 The second surprise occurred on September 25, 2005, with the announcement to invest 3 billion in VW.Porsche AG, Stuttgart, seeks to acquire a share of approximately 20 percent in the stock capital of Volkswagen AG, Wolfsburg, entitled to vote. Porsche is taking this decision because Volkswagen is now not only an important development partner for Porsche, but also a significant supplier of approximately 30 percent of Porsches sales volume. In the words of Porsches President and CEO Making this investment, we seek to secure our business relations with Volkswagen and make a significant contribution to our own prospective plans on a lasting, long-term basis. Porsche is in a position to finance the acquisition of the plotted share in Volkswagen through its own, existing liqui dity. After careful examination of this business case, Porsche is confident that the investment will prove profitable for both parties. The planned acquisition is to ensure that there will not be a hostile takeover of Volkswagen by investors not committed to Volkswagens long-term interests. In the words of Porsches President and CEO Our planned investment is the strategic answer to this risk.We wish in this way to ensure the independence of the Volkswagen Group in our own interest. This German solution we are pursuance is an essential prerequisite for stable development of the Volkswagen Group and, accordingly, for continuing our cooperation in the interest of both Companies. scholarship of Stock to Secure Porsches Business, Porsche AG (press release), September 25, 2005. Porsche would spend approximately 3 billion to take a 20% monomania position in VW. This would make Porsche VWs single largest investor, slightly larger than the government of Lower Saxony. 0 It clearly elimi nated any possible hostile acquisitions which may have been on the horizon (DaimlerChrysler was rumored to have been interested in raiding VW. ) The announcement was met by near-universal opposition The family linkages between the two companies were well known. Ferdinand K. Piech, one of the most prominent members of the Piech family which, along with the Porsche family, controlled Porsche, was the former CEO (he retired in 2002) and still prexy of Volkswagen. He was the grandson of Ferdinand Porsche, the founder of Porsche.Accusations of conflict of interest were immediate, as were calls for his resignation, and the denial of Porsches request for a seat on VWs board. Although VW officially welcomed the investment by Porsche, Christian Wulff, VWs board member representing the accede of Lower Saxony where VW was headquartered, publicly opposed the investment by Porsche. In the eyes of many, the move by Porsche was a return to German corporate cronyism. For years, Deutschland AG was emblematic of the cosy network of cross-shareholdings and shared non-executive directorships that insulated Germany from international capitalism.Wendelin Wiedeking, Porsches chief executive, himself invoked the national angle, saying this German solution was essential to secure VW, Europes largest carmaker, against a possible hostile takeover by short-term investors. Shield for Corporate Germany or a Family Affair? VW and Porsche Close Ranks, Financial Times, Tuesday, September 27, 2005, p. 17. Germany, although long known for complex networks of cross-shareholdings, had effectively unwound most of these in the 1990s.The German government had successfully accelerated the unwinding by making most cross-shareholding liquidations tax-free in recent years, and both the financial and nonfinancial sectors had sold literally billions of euros in shares. This move by Porsche and VW was seen as more of a personal issueFerdinand Piechrather than a national issue of German alliances. Many P orsche investors had agreed, rivalry that if they had wanted to invest in VW, they would have done it themselves. The resulting ownership structure of Volkswagen in October 2005 was 18. 3% Porsche 18. 2% State of Lower Saxony 13. 0% Volkswagen 8. 58% Brandes Investment Partners 3. 5% Capital Group and 38. 19% widely distributed. Porsche still possess the option to purchase another 3. 4%. 10 TB0067 9 There were also potential strategic conflicts between the two companies. Volkswagens premium segment company, Audi, was a evident competitor to Porsche, particularly in light of the new Panamera project. VW itself had fallen on poorly times (see Exhibit 3), and many VW watchers believed that the company needed activist shareholders.VW and its Audi unit were both suffering from high wage costs in German factories, and VW had been seeking wage concessions from many of its unions to regain competitiveness and profitability. Porsche had a reputation of being soft on German unions, and wit h the growing presence of both Porsche and Ferdinand Piech, critics feared VW would back away from its wage-reduction push. Porsche was not expected to be as cost-conscious or to push VW to make drastic strategic changes.Instead, Porsche was expected to push VW to ensure a number of the new models and platforms Porsche was in the process of introducing. There were, in fact, lingering allegations that a number of VWs new product introductions had been delayed by the Cayennes production in 2003 and 2004. Shareholders in Porschethe nonfamily-member shareholderswere both surprised and confused by this dramatic turn of events. Although the arguments for solidifying and securing the Porsche/ VW partnership were rational, the cost was not.At 3 billion, this was seemingly an enormous investment in a nonperforming asset. Analysts concluded that the potential returns to shareholders, even in the form of a special dividend, were now postponed indefinitely shareholders would not see the money for years to come. The move was also seen by some as an acknowledgment by Porsche that it could no longer expand into new product categories without significantly larger capital and technical resources. Automotive electrical systems, for example, were increasingly complex and beyond capabilities possessed in-house by Porsche.The interest in VW, Europes second largest automaker to DaimlerChrysler, would surely provide the company with access to key resources. But why werent these resources accessible through partnerships and alliances, without the acquisition of one-fifth ownership in Europes largest moneyloser? The announcement of Porsches intention to take a 20% equity interest in Volkswagen in September 2005 was greeted with outright opposition on the part of many shareholders in both Volkswagen and Porsche. Major investment banks like Deutsche Bank immediately downgraded Porsche from a buy to a sell, argue that the returns on the massive investment, ome 3 billion, would likely n ever accrue to shareholders. 11 Although Porsche and VW were currently co-producing the Porsche Cayenne and Volkswagen Touareg, this ownership interest would take the two companies far down a path of cooperation way beyond the manufacture of a sport utility vehicle. Although Porsche had explained its investment decision to be one which would assure the stability of its future cooperation with VW, many critics saw it as a choice of preserving the stakes of the Porsche and Piech families at the expense of nonfamily shareholders.The question remained as to whether this was indeed a good or bad investment by Porsche, and good or bad for whom? Vesi wondered if her position on Porsche might have to, in the end, distinguish between the companys ability to generate results for stockholders versus its willingness to do so. Why should a small and highly profitable maker of sports cars suddenly full stop its fortunes to a lumbering and struggling mass-producer? That was the question that some alarmed shareholders asked this week when Porsche, the worlds most profitable carmaker, announced plans to buy 20% stake in Volkswagen (VW), Europes biggest carmaker.To some critics of the deal, Porsches move looked like a return to cosy, German corporatism at its worst. Since January 2002, when a change in the uprightness encouraged German companies to sell their cross-shareholdings in each other, free of capital gains tax, new foreign shareholders have often shaken up fossilised German management. A deal with friendly compatriots from Porsche might saving VW from this distasteful fate, particularly since foreign hedge funds and corporate raiders have been rumored to be circling VW. Business guardianship It in the Family, The Economist, October 1, 2005. 1 Porsche We may never see the cash downgrade to sell, Deutsche Bank, September 26, 2005. TB0067 10 Appendix 1 (Millions of euros) Sales Cost of goods sold Gross profits Porsches Statement of Income, 1996-2005 (period ending Jul y 31) 1996 1,438 1,177 261 243 15 64 97 6. 8% 68 29 2. 0% 3 26 1 0 25 1. 7% -1997 2,093 1,648 446 339 21 67 195 9. 3% 108 87 4. 2% 7 81 9 1 70 3. 4% 45. 6% 40. 0% 1998 2,519 1,853 667 439 17 88 334 13. 2% 157 176 7. 0% 13 164 22 142 5. 6% 20. 4% 12. 4% 1999 3,161 2,154 1,007 571 29 84 550 17. % 184 366 11. 6% 12 354 164 191 6. 0% 25. 5% 16. 3% 2000 3,648 2,527 1,121 625 26 114 636 17. 4% 197 439 12. 0% 12 427 220 207 5. 7% 15. 4% 17. 3% 2001 4,441 3,062 1,380 793 61 87 735 16. 5% 133 602 13. 6% 14 588 318 270 6. 1% 21. 8% 21. 2% 2002 4,857 2,981 1,877 914 79 110 1,152 23. 7% 279 873 18. 0% 48 825 363 (0) 462 9. 5% 9. 4% -2. 6% 2003 5,582 3,250 2,332 1,187 116 147 1,409 25. 2% 392 1,017 18. 2% 88 928 363 0 565 10. 1% 14. 9% 9. 0% 2004 6,359 3,787 2,572 1,254 99 248 1,665 26. % 525 1,141 17. 9% 58 1,082 470 (4) 616 9. 7% 13. 9% 16. 5% 2005 6,574 3,501 3,073 1,539 172 169 1,875 28. 5% 510 1,365 20. 8% 127 1,238 459 (4) 783 11. 9% 3. 4% -7. 6% Selling, general & admin expenses Non-operating income Other income/expense, net EBITDA EBITDA/sales Depreciation & amortization Earnings before interest and tax EBIT/sales Interest expense on debt Earnings before taxes (EBT) Income taxes Minority interest Net income availabe to common Net income/sales (ROS) Sales growth Earnings growthSource Thomson Analytics, June 2006, and author calculations. Appendix 2 (Millions of euros) Assets Cash amp equivalents Receivables, net Inventories Prepaid expenses Total current assets Porsches Balance Sheet, 1996-2005 (period ending July 31) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 227 91 199 23 540 0 60 1,324 917 407 21 1,027 281 170 297 47 795 12 5 1,536 994 541 20 1,374 466 196 328 37 1,027 10 5 1,623 1,062 561 14 1,617 730 202 357 42 1,332 30 9 1,683 1,183 501 110 1,981 823 321 396 45 1,585 177 14 1,797 1,310 487 76 2,340 1,121 439 468 29 2,056 253 38 1,960 1,399 561 108 3,016 1,683 638 487 50 2,858 539 39 3,607 1,652 1,955 214 5,604 1,766 823 539 42 3,170 552 42 4,122 1,847 2,276 346 6,385 2,791 939 726 23 4,479 733 21 4,724 2,116 2,607 436 8,276 4,325 971 572 17 5,885 1,211 27 4,486 2,378 2,108 295 9,525Long term receivables Investments in unconsol subsidiaries Property, plant amp equipment, gross Accumulated depreciation Property, plant amp equipment, net Other assets Total Assets Liabilities Accounts payable ST debt amp current portion due LT debt Income taxes payable Other current liabilities Current liabilities, total Long term debt Provision for risks amp charges Deferred taxes Other liabilities Total liabilities Shareholders Equity Non-equity reserves & minority interest Common Equity Shareholders equity, total Total liabilities amp shareholders equity Common shares outstanding (millions) 117 8 3 156 283 17 481 1 1 782 148 7 10 241 406 116 541 4 4 1,071 159 10 8 262 439 114 648 n/a 0 1,202 193 52 10 174 429 102 856 n/a 5 1,392 240 20 17 248 525 102 951 (22) 2 1,558 236 158 28 303 725 0 1,312 (52) 2 1,987 305 137 200 1,027 1,668 317 1,619 97 437 4,138 337 70 71 1,378 1,856 337 1,916 173 350 4,631 368 649 61 855 1,933 1,457 2,378 182 2 5,953 440 1,107 187 1,064 2,798 1,985 1,281 36 5 6,105 10 235 245 1,027 17. 5 298 303 1,374 17. 5 0 416 416 1,617 17. 5 2 587 589 1,981 17. 5 0 782 782 2,340 17. 5 0 1,028 1,028 3,016 17. 5 1 1,466 1,467 5,604 17. 5 ( 0) 1,755 1,755 6,385 17. 5 6 2,317 2,323 8,276 17. 5 8 3,412 3,420 9,525 17. 5 Source Thomson Analytics, June 2006, and author calculations. TB0067 11 Appendix 3 (Millions of euros) Porsches Statement of Cash Flow, 1996-2005 (period ending July 31) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Operating Activities Income before extraordinary items Depreciation & amortization Other Cash Flow Funds From/For Other Operating Activities Net Cash Flow From Operating Activities Investing Activities Capital Expenditures Additions To Other Assets Increase In Investments Disposal of Fixed Assets Net Cash Flow From Investing Activities financial backing Activities Net Proceeds From Sales/Issue of Com/Prf Stock Com/Prf Purchased,Retired,Converted,Redeemed Long Term Borrowings Inc(Dec) In ST Borrowings Reduction In Long Term Debt Cash Dividends Paid Total Net Cash Flow From Financing Activities Exchange Rate Effect Cash & Cash Equivalents Inc(Dec) 25 74 47 26 171 71 127 (0) 22 220 142 157 (7) 72 363 191 184 23 (5) 392 210 197 11 (22) 396 270 133 16 151 570 462 279 26 611 1,377 565 392 423 77 1,456 612 525 515 (349) 1,303 779 510 42 (157) 1,175 ( 184) (15) (14) ( 214) ( 230) n/a n/a ( 230) ( 174) (2) (0) 10 ( 166) ( 145) (12) (7) 27 ( 136) ( 257) n/a n/a 8 ( 249) ( 306) n/a (1) 23 ( 285) ( 1,833) 831 ( 1,002) ( 1,338) n/a 309 ( 1,028) ( 1,265) n/a 478 ( 787) ( 851) (63) (243) 226 ( 932) 0 6 1 8 (30) 0 102 (33) (5) 64 54 0 (13) ( 13) 185 0 49 (21) (22) 6 1 2 63 0 (36) (22) ( 58) 4 93 0 37 (26) 11 2 298 0 339 (102) (45) 192 (5) 562 0 (39) (297) ( 336) (8) 84 0 639 n/a (0) (59) 580 5 1,025 6 147 (69) 84 (32) 296 Source Thomson Analytics, November 2005, and author calculations. Appendix 4 Porsche Dispenses with Listing in New York Stuttgart. The preferred stock of Dr. Ing. h. c. F. Porsche AG, Stuttgart, will continue to be listed exclusively on German stock exchanges. All considerations about gaining an additional list in the U. S. A. have been laid aside by the Porsche visiting card of Management. The sports car manufacturer had been invited to join the New York Stock Exchange at the beginning of the year. The Chairman of the age of Management at Porsche, Dr.Wendelin Wiedeking explained the decision The idea was certainly attractive for us. But we came to the conclusion that a listing in New York would hardly have brought any benefits for us and our shareholders and, on the other hand, would have led to considerable extra costs for the company. The crucial factor in Porsches decision was ultimately the law passed by the U. S. government this summer (the Sarbanes-Oxley Act), whereby the CEO and the Director of Finance of a public hold company listed on a stock exchange in the U. S. A. have to swear that every balance sheet is correct and, in the case of incorrect specifications, are personally liable for high financial penalties and even up to 20 years in prison.In Porsches view, this new American ruling does not match the legal position in Germany. In Germany, the annual financial statement is passed by the entire Board of Management and is then presented to the Supervisory Board, after being audited and certified by undertake accountants. The chartered accountants are commissioned by the general meeting of shareholders and they are obliged both to report and to demo the annual financial statement to the Supervisory Board. The annual financial statement is only passed after it is approve by the Superviso ry Board. Therefore there is an overall responsibility covering several different committees and, as a rule, involving over 20 persons, including the chartered accountants.The Porsche Director of Finance, Holger P. Harter, made the following comments Nowadays in Germany, the see falsification of balance sheets is already punished according to the relevant regulations in the Commercial Code (HGB) and the Company Act (Aktiengesetz). Any special treatment of the Chairman of the Board of Management of the Director of Finance would be illogical because of the intricate network within the decision-making process it would also be irreconcilable with current German law. Source Porsche, News Release of October 16, 2002. 12 TB0067 Appendix 5 Porsches Share Price, 2004-2006 Source www. porsche. com. TB0067 13

Multimedia Essay Example | Topics and Well Written Essays - 250 words

Multimedia - Essay congressmanThat is because the work of a medical assistant is never done and requires a tremendous amount of paperwork and book-keeping in order to ensure a smoothly run office. However, I believe that there is one verbal expression of patient record keeping that testament benefit from a multimedia advancement. Lets face it, a impertinently client coming in for a consultation at the doctors office is cool it required to carry through in the patient randomness card manually. This means that as a Medical Assistant, I would still have to manually input the information into the database after the first consultation. In such cases, there will be a tendency for me to overlook such files for record keeping due to the sheer wad of records and paperwork that I need to keep track of. It would greatly benefit the job and ensure the quick and unaffixed access to patient files if the first time patients are asked to fill in an electronic form rather that automatically saves to the server in the doctors office along with other patient files. Doing so will distinguish the redundancy of having to manually input the same information into the computer when opportunity permits.By having such a program in existence, there will no longer be any lost records or delayed input of information. Rather, the patient will be fit to accurately input his personal information and be assured of the confidentiality of his file since no one else but his doctor will be able to see the file on an immediate