Inventory Accounting Essay Example for Free

Inventory Accounting Essay 1.  Ã‚  Ã‚  Ã‚  Ã‚   Inventory costs: The use of LIFO for determining inventory costs under International Accounting Standards is prohibited, while it is permitted under US GAAP. 2.  Ã‚  Ã‚  Ã‚  Ã‚   Reversal of inventory write downs: Under IAS, it is required if certain criteria are met whereas US GAAP strictly prohibits it. 3.  Ã‚  Ã‚  Ã‚  Ã‚   Basis of Inventory valuation: Under IAS, the inventory is carried at the lower of cost or net realizable value (NRV). Under US GAAP, Carried at the lower of cost and market (market is the lower of replacement cost and NRV minus normal profit margin). 4.  Ã‚  Ã‚  Ã‚  Ã‚   Whether the costs of idle capacity and spoilage can be included in inventory Under IAS, it is prohibited. Under US GAAP, it is permitted. The change to IAS will avoid the biggest disadvantage of US GAAP that is; it permits LIFO to be used for inventory valuation where the oldest inventory costs are assigned to the inventory account which, when prices are changing can result in an inventory value that does not reflect the true current value. Also, in case of shift to IAS, US companies will not be able to show lower profits by using LIFO when prices are rising. US GAAP helped the companies to reduce their payment of taxes. Under US GAAP, extraordinary items are permitted but restricted to infrequent, unusual and rare items that affect profit and loss. However, it is prohibited under IAS. Thus, extraordinary items give companies somewhat of a hall pass with the markets, allowing them to sometimes report lower earnings but get credit for higher earnings. Obviously, it is tempting for companies to try to report every bad thing that happens as an extraordinary item. This can be avoided once IAS is in place. IAS is more comprehensive and clear. It would avoid misinterpretation by the companies.

Dickinsons The Spider holds a Silver Ball Essay -- Dickinson analysis

Dickinson's The Spider holds a Silver Ball Paradox baffles and inspires thinkers because it wipes out the greatest of conclusions, puts us intimately in touch with the very nature of inexplicable feeling, both simultaneously implodes and explodes the mind, and of course induces a certain sensation, as Dickinson puts it, â€Å"as if the top of my head were taken off.† It seems to me that in art this is the fix we desire, where sensation obliterates logic. Dickinson's poetry is one of the few places I have so far found the paradoxic tendency so profoundly expressed. Therefore, I will take up the notion of paradoxic tension created by Dickinson, her method of dealing with the inner and the outer, expansion and contraction, the creation and destruction of boundary, and the mysterious ways in which these things interact, especially through the symbol of the spider. In â€Å"The Spider holds a Silver Ball,† the spider, as creator, as weaver, contains â€Å"In unperceived Hands† (2) a glimmering medium of magic. From this silver ball, creation spins outward. The spider, viewed as poet, weaves outward from the center of inspiration. The hands are both somehow there and not there as they delicately â€Å"unwind† this intangeble yet â€Å"Silver† mass. The description of the invisible in physical terms characterizes one method by which Dickinson weaves paradox. The idea of the spider â€Å"dancing† portrays an outward movement, but Dickinson with a few words suddenly makes this action inward and private: â€Å"dancing softly to Himself† (3). The first stanza confirms the portrait of an â€Å"unperceived† artist performing her art outwardly and we find a sense of what art means to Dickinson—an outward gesture which originates in some unknown, private and inner pl... ...rtist accomplishes informing herself of the inexplicable nature of the mind through the â€Å"strategy† of â€Å"physiognomy† (8-9) or revealing the inner aspects outwardly. Dickinson reveals the intangible through physical means; her language uses hard images such as the spider and the silver ball to outwardly communicate the boundless capacity of inner emotion and feeling. In the process she must create boundary, it is the only way to explain the unexplainable feelings with which the mind occupies itself; however, her next move is to destroy the very boundaries that she creates, showing just where and how these feelings originate, bringing them back. Physiognomy is clearly the Dickinson strategy, and it is that last line of â€Å"A Spider sewed at Night† that Dickinson stands up and proclaims, I am the spider and the spider is me and we are both everything and nothing—so there. Dickinson's The Spider holds a Silver Ball Essay -- Dickinson analysis Dickinson's The Spider holds a Silver Ball Paradox baffles and inspires thinkers because it wipes out the greatest of conclusions, puts us intimately in touch with the very nature of inexplicable feeling, both simultaneously implodes and explodes the mind, and of course induces a certain sensation, as Dickinson puts it, â€Å"as if the top of my head were taken off.† It seems to me that in art this is the fix we desire, where sensation obliterates logic. Dickinson's poetry is one of the few places I have so far found the paradoxic tendency so profoundly expressed. Therefore, I will take up the notion of paradoxic tension created by Dickinson, her method of dealing with the inner and the outer, expansion and contraction, the creation and destruction of boundary, and the mysterious ways in which these things interact, especially through the symbol of the spider. In â€Å"The Spider holds a Silver Ball,† the spider, as creator, as weaver, contains â€Å"In unperceived Hands† (2) a glimmering medium of magic. From this silver ball, creation spins outward. The spider, viewed as poet, weaves outward from the center of inspiration. The hands are both somehow there and not there as they delicately â€Å"unwind† this intangeble yet â€Å"Silver† mass. The description of the invisible in physical terms characterizes one method by which Dickinson weaves paradox. The idea of the spider â€Å"dancing† portrays an outward movement, but Dickinson with a few words suddenly makes this action inward and private: â€Å"dancing softly to Himself† (3). The first stanza confirms the portrait of an â€Å"unperceived† artist performing her art outwardly and we find a sense of what art means to Dickinson—an outward gesture which originates in some unknown, private and inner pl... ...rtist accomplishes informing herself of the inexplicable nature of the mind through the â€Å"strategy† of â€Å"physiognomy† (8-9) or revealing the inner aspects outwardly. Dickinson reveals the intangible through physical means; her language uses hard images such as the spider and the silver ball to outwardly communicate the boundless capacity of inner emotion and feeling. In the process she must create boundary, it is the only way to explain the unexplainable feelings with which the mind occupies itself; however, her next move is to destroy the very boundaries that she creates, showing just where and how these feelings originate, bringing them back. Physiognomy is clearly the Dickinson strategy, and it is that last line of â€Å"A Spider sewed at Night† that Dickinson stands up and proclaims, I am the spider and the spider is me and we are both everything and nothing—so there.

Managerial Finance Essay

ASSIGNMENT BMMF5103 MANAGERIAL FINANCE 15 July 2013 QUESTION 1 a) Maximizing shareholder wealth is a â€Å"moral imperative† for financial manager means managers are supposed to work for shareholders who are the actual owners of a company or corporation. Shareholders elect company directors who in turn hire managers to run the company on day to day basis with the view to make profit for the company. Managers are paid for their services rendered to the company whereas the shareholders own the company. As such morally managers should pursue policies that enhance shareholder value with the primary objective focused on stockholder wealth maximization. b) Managers make key day-to-day decisions to maximize shareholder value. But how do the owners of a business know that managers are operating to maximize shareholder value? This lack of information is known as the principal-agent problems. The agent performs the tasks on shareholders’ behalf yet the shareholders cannot ensure that the agent performs precisely the way the shareholders would like. Agency costs as related to a corporation refers to the costs of preventing agents (e.g. managers) pursuing their own interests at the expense of shareholders. There might be conflicts between shareholders and the company managers. Shareholders who are owners want the managers to make decisions which will increase the share value. Managers who receive salaries prefer to expand the business with the view to increase their salaries which may not necessarily increase the share value. Thus, agency costs tend to decrease the value of a corporation because the rising costs make the share price low when there is substantial debt involved. Costs of monitoring will increase and thus reduce wealth maximization of shareholders. c) Business ethics is the acceptable set of moral values and corporate standards of conduct in running a business organization. It includes proper business policies and practices such as corporate governance, as a check against insider trading, bribery, discrimination and covers corporate social responsibility and fiduciary responsibilities. Business ethics is a basic framework providing proper conduct, it may be guided by law or put in placeso as to gain public confidence and acceptance. An example of business ethics is when an employee lie to a potential client to get him to sign for services or purchase the product offered. Business ethics is important to a corporation because it will determine its reputation. It will give public confidence towards the corporation. It is essential for the long-term survival and success of the corporation in business. Implementing an ethical program will foster a successful corporation culture, values and enhanced profitability. Business ethics will also influence the way the corporations conduct its business and affect all including customers, employees, suppliers, competitors, etc. d) Advantages i) There is no maturity period in common stock. Thus, eliminating future repayment obligation and enhances the desirability of common stock financing. ii) There is no obligation for repayment of the funds. Instead, there are others to share the risk of the business investment with. Since there is no debt obligation, there is no finance fee. iii) Issuing common stock can increase firm’s borrowing power.The more common stock is sold, the larger the firm’s equity base. Therefore, the more easily and cheaply long-term debt financing can be obtained. iv) Once capital is raised through stock, the corporation is free to use the proceeds in any way it pleases. Disadvantages i) Involves high cost.It may be the most expensive form of long-term financing. Dividends are not tax-deductible and common stock is a riskier  security than either debt or preferred stock. ii) Potential effects of dilution on earnings and voting power. When a company or corporation issues more shares, its financial results must be divided by a larger number of shares, causing dilution. This is because selling of shares of the company means giving each investor a piece of ownership. Because they own the share of the company, the investors have the right to demand explanations and justifications for business decisions. iii) Market perception that management think. Management issues involve examining perceptions about management and perceptions by management. It includes various judgments regarding the competence of current and future management team as well as issues related to insider buying such as future strategies to increase operations and market share.When management makes large purchases of their own stock with private funds, investors may feel that the company is undervalued or that a favorable company event will occur soon. e) The three main users of ratio analysis i) Owners: The owners of a firm are mainly interested in the firm’s profitability, liquidity and hence survival. Therefore, they need financial ratios to test the performance of their company such as profitability ratios to find outwhether management is able to convert sales dollars into profits and cash flow. The common ratios are gross margin, operating margin and net income margin. The gross margin is the ratio of gross profits to sales. The operating margin is the ratio of operating profits to sales and net income margin is the ratio of net income to sales. The return-on-asset ratio, which is the ratio of net income to total assets, measures a company’s effectiveness in deploying its assets to generate profits. The return-on-investment ratio, which is the ratio of net income to shareholders’ equity, indicates a company’s ability to generate a return for its owners. These ratios are useful to owners of companies. ii) Creditors Creditors are interested in a firm’s ability to pay their debts over a short period of time.The ratio analysis will evaluate the firm’s liquidity  position. Creditors use liquidity ratio, which is the ratio of current assets to current liabilitiestogauge the ability of the company to pay its short-term bills. A ratio of greater than one is usually a minimum because anything less than one means the company has more liabilities than assets. iii) Management Management team comprising financial managers regularly use ratio analysis to evaluate financial policies and decisions they have made. It is the overall responsibilities of the management team to make sure available resources are used most effectively and efficiently and that the financial positions of the company is sound.Management uses profitability ratios to analyze the company’s ability to convert sales dollars into profits and cash flow. For example, the return-on-investment ratio, which is the ratio of net income to shareholders’ equity, indicates a company’s ability to generate a return for its owners. Examples of ratio formula: Example 1: Gross margin ratio Gross Margin = Gross Profit Revenue Gross profit and revenue figures are obtained from the income statement of a business. Alternatively, gross profit can be calculated by subtracting cost of goods sold from revenue. Thus gross margin formula may be restated as: Gross Margin = Revenue − Cost of Goods Sold Revenue Example 2: Operating margin ratio Operating income is same as earnings before interest and tax. Operating income and revenue figures is available from the income statement of a company. Operating Margin = Operating Income Revenue QUESTION 2 a) There are five different categories of financial ratios. They are: i) Liquidity ratio is used to measurecompany’s ability to pay its short-term debt obligations. As such, they focus on the firm’s current assets and current liabilities on the balance sheet.The most common liquidity ratios used is the current ratio mainly to give an idea of the company’s ability to pay back its short-term liabilities such as debt and payables with its short-term assets such as cash, inventory and receivables. ii) Debt ratio is used to measure company’s ability to meet its long-term debt obligations. The ratio indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. iii) Financial leverage ratio measure the extent to which a business or investor is using the borrowed money. A company having high leverage is considered to be at risk of bankruptcy in the event the company is unable to repay the debts. The most common financial leverage ratio is the debt-to-equity ratio calculated as total debt divided by shareholders equity iv) Asset efficiency or turnover ratios measure the efficiency a company uses its assets to produce sales. The most common asset efficiency ratios are the inventory turnover ratio, the receivables turnover ratio, the days’ sales in inventory ratio, the days’ sales in receivables ratio, the net working capital ratio, the fixed asset turnover ratio, and the total asset turnover ratio. v) The profitability ratios measure the company’s ability to generate a profit and an adequate return on assets and equity. The ratios measure how efficiently the firm uses its assets and how effectively it manages its operations. An example is the Net profit margin ratio is a ratio of profitability calculated as after-tax net income (net profits) divided by sales (revenue). It shows the amount of each sales dollar left over after all expenses have been paid. Limitations of financial ratios i) Although financial ratios can be effective tools for gauging financial performance and managerial effectiveness, they rarely provide answers. Ratios will not say why something is going wrong and what to do about a particular situation; they only pinpoint where a problem is. ii) There is no international standards on the use of financial ratios. Limitation of ratios interpretation emerges when a particular set of ratios of a company is compared to other company or business. For example, for calculating the inventory turnover one company may use the cost of goods sold as the numerator, while another may use its sales figures. A company may use the operating profit to calculate its total assets turnover, while another may use the net income after taxes. iii) Benchmark for assessing company’s financial position is needed. Different operating methodologies may be employed to run a company may render the comparison of financial ratios irrelevant. Example, a company prefers to lease most of its assets while another company may own them. Thus, some of the ratios, such as debt to total assets, fixed-charge coverage, total assets turnover, and return on total assets, would be unrelated. iv) The inflation factor can make the ratio of a particular company look good or bad. Inventory turnover may have deteriorated over a three-year period; the problem may not due to the increase in physical inventory, but rather, to increase in the cost of the goods. b) Effect of an increase in a company’s debt ratio to its return on equity. An increase on debt-ratio will be increase in the return of equity. If a company finances itself through debt, the creditors shoulder the risk. If the debt results in increased earnings, the return on shareholder investment is exponential. Total liabilities include both the current and non-current liabilities. The formula to calculate the debt ratio is: Debt Ratio = Total Liabilities Total Assets Return on Equity is expressed as a percentage and calculated as: ROE = Net Income/Common Equity c) Long-term interest rate = (RM13,000,000) (8/100) = RM1,040,000 Short-term interest rate = RM1,300,000 – RM1,040,000 = RM260,000 Short-term interest rate = RM260,000/RM1,546,000 = 0.168 Rate of interest on notes payable is 16.8% d) Changes in value of equity (in millions) (RM in millions) Shareholders’ beginning equity 537 Shareholders’ ending equity 485 Difference beginning & ending equity 52 Net income 128 Less: Paid dividends 57 Difference 71 Stock/shares purchased in the year (52+71) 123 Shares purchased throughout the year is RM123 million e) If the current ratio of corporation is 5.65 when industry average is 1.42, this disparity means that the corporation is having: i) an excess build-up in inventory. When the corporation holds a high level of inventory, it ties up business funds that could have been used in other areas such as in development or marketing. The cost of the inventory is not recovered by the corporation until it sells the inventory. ii) aged account receivables which is the amounts owed to the company by its customers. The corporation’s account receivables reports will identify problems with receivables management process and identify accounts that require collection action. QUESTION 3 a) Although ownership of stock represents ownership in a company, not all stock is created equal. Therefore there are two basic types of stock: common stock and preferred stock. Preferred stock is sometimes referred to as a hybrid security because it has features of common stocks and bonds. A company’s preferred stock trades independently of its common stock and offers preferred stockholders a different set of benefits. Preferred stocks paid amount of dividends just as fixed interest bond. It is not debt but equity like common stocks. b) Preferred stock par value of RM100 with annual dividend 10%. Annual rate of return is 11.5%. i) RM100 X10/100% = RM10. Yield of 11.5% 11.5%/100 = 0.115 = RM86.96 ii) As the risk-free rate increases, the required rate of return will increase and the price will drop. When rates increase, the price of the preferred stock will likely fall. If price falls, the issuer will likely call the preferred stock and replace it with a new preferred stock issue at a lower rate, conventional debt, or perhaps even common stock c) RM4.63(1+0.05)/(0.12-0.05) = 4.8615/0.07 = 69.46 The value of the company’s stock if the required rate of return is 12% is RM69.46 d) Before change in price per share, r =5% + (8% -5%) beta 1.3 = 8.9% After change in price per share, r = 4% + (10% – 4%) 1.5 = 13% Therefore, the change in price per share is RM4.87 e) Formula for constant growth is rs = r RE + (rm – rRE)b = 6% + 5% (1.4) = 13% 2013 = RM0 dividen 2015 = RM1.00 2016 = RM1.00 (1.2) = RM1.20 2017 = RM1.00 RM1.44 2018 = RM1.00 RM1.728 2019 = RM1.00 RM1.849 Calculate growth between constant rate = The price of the stock is RM20.16 QUESTION 4 a) Needs RM40,000/year during retirement period n = 10 yrs, i = 9 % PVA = PMT (PVIFA) = RM40,000 (9.129) = RM365,160 PV = RM365,160 (0.422) = RM154,097.52 The Mirians should deposit RM154,097.52 b) Model A: PV = PMT (PVIFA) = RM5,000 (3.993) = RM19,965 Model B: Year Payment (RM) PVIF PV 1 7,000 0.926 6,482 2 6,000 0.857 5,142 3 5,000 0.794 3,970 4 4,000 0.735 2,940 5 3,000 0.681 2,043 Total: 20,577 I would purchase/buy model A because it is cheaper by RM612 compared to model B. c) Which option to be chosen? Option 1 PMT = RM3,500/2.487 = RM1,407,318.05 Option 2 PMT = RM3,500/3.102 = RM1,128,304.32 Option 3 PMT = RM3,500/3.605 = RM970,873.79 The company should choose option 3 because lower by RM157,430.53 compared to option 2 which is second lowest d) Present value is exact invest of the compound interest calculations. Applying compound interest calculation is to find the future value of a present amount. Using the present value calculation a present value amount is found to be received in future. e) Over certain period the principle amount increases as a result of the installment payments resulting in lower amount of interest that is charged by the bank. QUESTION 5 a) When an investor buys a bond, the investor is lending money to the bond issuer, which could be a government, corporation, etc. The issuer promises to pay a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it â€Å"matures,† or comes due after a set period of time. Thus bonds provide interest payment and principal payment. Payment of interest is done annually or semi-annually. Coupon payments are paid periodically. When bond matures a principal sum is paid which is a lump sum payment. b) Bond prices and interest rates are related. Interest rates and bond prices have â€Å"inverse relationship†, when one goes up, the other goes down. If interest rates is high enough, bond prices would fall. If interest rates is low, bond prices would rise. Prices of short-term bonds do not fluctuate  more often compared to long-term bond. Premium bond is sold when the stated rate of interests exceed the required rate of return. Example, if rates dropped to below original coupon rate of 7% for RM1,000 bond, it would be priced at a premium since it would be carrying a higher interest rate than what was currently available in the market. A bond will sell at a discount when the stated rate of interest is less than the required return. Bond is sold equal to the par value when the stated rate of interest is equal to the required return. c) Param does not have enough money to buy 10 bonds if the required rate of return is 9%. This is because the required rate of return which is 9% is less than the coupon rate of the bond which is 10%. The price of the bond is greater than the par value of RM1,000. Considering there are 10 bonds, the total price is greater than RM10,000. That is the reason why Param would not have enough money to buy the 10 bonds. d) FV = RM1,000 PMT =150 N = 10 PV = RM1,250 1/YR = 10.79% e) Interest rate risk is the risk of decline in bond values due to the increase in interest whereas reinvestment risk is the risk of an income decline due to a drop in interest rates. Bond holders who bought long-term bond is greatly at risk to the interest rate risk. QUESTION 6 a) [(RM18+RM4+RM3+RM2-RM24)/24] X 100% = 12.5%. Therefore, Billie jean’s realized rate of return during the three years holding period is 12.5% b) (i) Stock 1 8 + 0.8 (12 – 8) = 11.2% Stock 2 8 + 1.2 (12 – 8) = 12.8% Stock 3 8 + 0.6 (12 – 8) = 10.4% (ii) Stock 3 is undervalued due since E (R) ≠¥ RR c) Beta is the measurement for market risk which is non-diversifiable. The risk must be dealt with by the portfolio manager. Diversifiable risk should be diversified away by portfolio manager so that it would not pose a problem to the investment. As such all market risks is all relevant to the portfolio manager since it is his job and responsibility in balancing the likely risk and return. d) The situation suggest that investors are more risk adverse compared to before the shift taking place. On the portfolio, a risk premium of 11% (16% – 5%) is required whereas previously 10% (15% – 5%). If slope were to change downward, it means investors are less aversion to risk. e) Expected return: 0.9(12%) + 0.1 (20%) = 12.8% Beta: 0.9(1.2) + 0.1(2.0) = 1.28%

Why company should start saving on electricity

Why company should start saving on electricity Nowadays, electricity is a common utilities used everywhere especially on every company. There is numerous ways to save electricity especially on the company premise. Saving on electricity will give many good factors also beside that some negative factors. Paying bills will be more less compare to the previous as of result of the electricity saving. However, the electricity company will get impact for their annual profit because the revenue will be decreasing as a result of the less amount electricity bills by some company.Every company also will be able to minimize the maintenance cost from the electricity saving. This shows by fewer Jobs done by electrical devices such as air conditioner, office lamp and others. As an example, the company will do servicing or replacing filters Inside air conditioner at the longer gap time compare to the previous. On the other hand, the maintenance servicing company will get less work also less revenue because of the action. The company also will be gain higher profit as a result of the electricity saving.Generally, the electricity cost is among major cost of every company operations yearly. In addition, company will be able to pay more bonus and Increment to their respective staff. Unfortunately, the motivation for some staff will be decrease because of the easily company to pay high bonus and increment to their staff. Moreover, at the end of every year they Just wait for company to pay them bonus without them to produce higher productivity. Name: – Mood January Bin Bad Jaws sol 1630 Date: – 04/09/2014

The Future Of Hierarchical Management Structures The WritePass Journal

The Future Of Hierarchical Management Structures Introduction The Future Of Hierarchical Management Structures ). The current competition between companies has changed and is more inclined to creativity than prices of goods and services. The nature of work within organizations is also transforming from repetitive pre-arranged tasks to tasks that are more cognitive and spontaneous. This also applies to the managing styles and employee expectations. Effective adaptation to these inevitable changes requires companies to encourage a creative and innovative organizational culture (Singh Waddell, 2004). There are many organizations that are being run by the hierarchical management structure, which is characterized by strict adherence to chains of command (Daft Marcic, 2010). This limits the flexibility of an organization by slowing down decision making processes. As a result, such structures limit creativity in organizations (Bilton Cummings, 2010; Tseng, 2011). With the future expected to have a higher demand on creativity and change management, it is highly likely that hierarchical organizational structures shall be replaced by structures that emphasize more on innovation and creativity. Despite the increase in the focus on creativity and innovation, it is difficult to abolish the hierarchical structure. While some companies such as Apple, Microsoft and Google stand out for having abolished hierarchical management structures, such traditional organizational approaches still remain appropriate for many companies. It is difficult for current hierarchies to self-destruct. Whether such structures shall be replaced by an innovative and creative culture in the near future is a subject of debate. In this regard, this paper discusses whether in the near future, management in organizations shall involve nurturing of creativity and innovation, which shall reduce hierarchy in organizations. Some of the areas that are covered in relation to this include changes in the global economy, factors affecting innovation in the workplace and change management in organizations. Changes and Shifts in the Global Economy According to Henry and Bruin (2011), there is an on-going shift from a traditional knowledge economy to a creative economy. Creativity, in this context, can be defined as the process by which novel ideas are created. Not long ago, creativity was confined to arts like photography, music and painting. However, many companies have started to realize that creativity can also be applied in business, albeit, in a manner that is somewhat different from that of arts and humanities. Whilst creativity in business is about developing new ideas, it also involves solving issues that affect the business operations innovatively (Burkus, 2013). The current fast moving economy has made companies push their efficiencies to the limit so as to keep up with the market competition and ensure effective delivery of goods and services to clients. To overcome the limits that knowledge based organizations have in delivering quality and satisfaction to clients, many companies are opting to differentiate themselves from their competitors by becoming innovative and creative (Brown Osborne, 2012). An example can be drawn from the use of technology over the years. For most companies, getting ahead of the competition simply required the acquisition of the latest technology that existed at the time. For instance, the invention of computer technology revolutionized record keeping, communication and other operations. Organizations that acquired and utilized this technology gained an edge over their competitors. However, the accessibility of computer technology has become easier with time and currently, almost every company utilizes it. Therefore, being ahead of the competition in business has shifted from simply acquiring computer technology to acquiring and utilizing it in a way that is creative and unique in the industry. This is points out to the fact that lack of creativity in present-day organizations can be detrimental to organizational performance. Technological development, globalization forces, increased competition, market demand and expectations have all led to the growi ng interest on nurturing employee creativity in the workplace. Some of the companies that have been known to nurture creativity and innovation include Apple, Facebook, Microsoft and Google. Even during the past recession period, entrepreneurs in Silicon Valley continued to establish start-up companies founded on creativity. According to Dervitsiotis (2011), the success of Apple has been achieved by recognizing the crucial role that innovation plays in present day businesses. To attain its business objectives, Apple Inc hires employees that are dedicated to creating innovative and unique products. With reference Jobs’ interview published in The New Yorker by Surowiecki (2011), the company has maintains its competitiveness in the computer industry by designing products that are user friendly to a wide range of customers. Some of these products include the iPod and iMac computer that were innovatively manufactured and advertised, making Apple to stand out among its competitors. As companies recognize the need to be creative in the design of their products and services, they have also realized the importance of creativity in their management. According to Von Held (2012), effective management of a creative workforce requires motivation and inclusion. Companies ought to create a culture or environment that allows employees across all ranks to feel important by encouraging them to make contributions towards organizational development. One of the ways in which this has been achieved is through encouraging open horizontal communication structures. Whereas the trend has been towards a creative and innovative work environment, critics have pointed out several setbacks that creativity and innovation can cause in an organization. One typical characteristic of innovation is the fact that it involves taking risks, which may even threaten the existence of the organization. In addition, outcomes of innovative ideas or changes within the organization are usually unknown. Whilst some innovative ideas have positive revolutionary outcomes, there are also chances of failure (Henry Bruin, 2011). Failed innovations may be detrimental to organizations, especially if the innovation involved high costs. Factors to be managed to Enhance Creativity in Organizations There are several factors affecting creativity that have been identified by researchers. According to Andriopoulos and Lowe (2000), organizational creativity is affected by the organizational culture, organizational environment, management styles and structures, skills and resources. Amabile et al. (2004) argued that creativity is influenced by employee motivation, management practices, organizational resources and group characteristics. Other factors affecting individual creativity include personality, IQ levels, capabilities and dispositions, among others. This section explains how management of these factors can enhance creativity and innovation at the workplace. Employee Motivation Researchers have established that for employees to be innovative in the organization, they ought to have the passion and drive to do so. Employee motivation can increase their passion for innovation if it is managed appropriately. As argued by Daft and Marcic (2010), employee motivation is a complex issue that is influenced by social, biological, emotional and intellectual factors. Therefore, there are several strategies that have to be effectively managed so as to keep employees motivated and encouraged to be innovative. One of the strategies that can be used by corporations to increase employee motivation is communication. While vertical communication that characterizes hierarchical management structures may be ideal in some situations, innovative organizations thrive more on horizontal communication structures (Tidd Bessant, 2011). It is necessary for the organization’s management to frequently communicate with its employees on the organization’s vision. In addition, organizations also need to recognize and reward individual innovative contributes towards the overall good of the company.   Rewards motivate employees to compete constructively and as a result, encourage innovativeness and creativity. Organizational Resources According to Yazdani et al. (2011), employees are among the most important resource in the organization. Therefore, innovative organizations ought to hire employees that have the personality and intelligence needed to make creative contributions. . a classic example of a creative individual was Einstein, who made contributions in various fields are . In addition to his contributions to Physics, it is documented that he had interests in visual arts (Runco, 2010) . Other traits that human resource managers need to look for when hiring include mental flexibility, originality in thinking self-confidence and the will to take risks. Time and financial resources also have an influence on the creativity or innovation in an organization. These resources ought to be managed effectively because their availability can either support or suppress creativity of employees (Amabile et al., 2004). Organizations need to establish a â€Å"threshold of sufficiency† within which these resources can positively contribute to creativity. Once this threshold is set, companies can be able to avoid allocating either insufficient or too much time and financial resources. Organizational Environment and Culture The conduciveness of an organizational environment for creativity can be gauged from the levels of employee participation, employee freedom of expression and experimentation and other creativity stimuli available within the organization (Amabile et al., 2004). One organization that has effectively managed its culture and environment to encourage creativity among employees is Google. For instance, the company offers social amenities to employees that are not offered by other companies. These include cafà © stations that offer free food for employees, rooms for exercising and entertainment rooms where employees can play several games. Whilst these amenities do not directly contribute to the profitability of the company, they create an environment that allows them focus more on their contribution towards that growth of the company without thinking about how they will cater for these needs while at work. Hierarchical barriers at Google are limited, encouraging employees to work closely and learn from each other regardless of their positions in the firm. Therefore, creating an ideal organizational environment, keeping employees motivated and allocating resources that are within the threshold of sufficiency for creativity are among the ways of encouraging creativity and innovation among employees. The Change Management Process With the inevitability of change in present day organizations, several researchers have established steps that ought to be undertaken in managing change. Reasons that necessitate change include the need to overcome challenges that are posed by the dynamism of the business environment (Kotter, 2007). The need for organizations to effectively manage change is drawn from the fact that it may affect several business stakeholders that include suppliers, employees, customers and distributors. Whereas good change management procedures and practices are likely to improve the brand position of the company, poor change management is likely to adversely affect its performance. Anderson and Anderson (2010) point out that some of the impacts of poor change management include reduction in morale among employees and a drop in the company’s competitive capability. Kotter (2007) suggested an eight-step model of managing change in an organization. In establishing this model, he identified the errors that are commonly made by leaders in initiating change and based his change management model on these errors. The eight steps presented in the table below. Table 1: Kotter’s Change Management Process Step of Management Explanation 1.  Ã‚  Ã‚  Ã‚  Ã‚   Establishing urgency This involves the creation of a sense of urgency within the organization to motivate involved parties to start the change process. 2.  Ã‚  Ã‚  Ã‚  Ã‚   Forming a powerful spearheading coalition Involves identification of organizational members to form a cross-level team that is capable of leading the rest of the company in implementing the identified change. 3.  Ã‚  Ã‚  Ã‚  Ã‚   Development of the change strategy Involves formulating a strategy for implementing the change process. This should consider all the factors influencing the change process. 4.  Ã‚  Ã‚  Ã‚  Ã‚   Communicating the change   strategy The change vision should be presented to all organizational members and stakeholders that will be involved in the process. The most effective communication paths ought to be used to ensure speedy and efficient message delivery in the organization. 5.  Ã‚  Ã‚  Ã‚  Ã‚   Elimination of barriers This involves empowering a broad based action that removes barriers to the change process and targets certain elements of change in the transformation of the organization. 6.  Ã‚  Ã‚  Ã‚  Ã‚   Generating short-term wins This is achieved by setting short-term goals that contribute to a larger long-term goal. Short term wins can be generated by rewarding employees who contribute towards meeting the short-term goals to keep them motivated. 7.  Ã‚  Ã‚  Ã‚  Ã‚   Consolidating the short-term gains Credibility from several sort term wins is collected to create a bigger change. Here, a reinvigoration is brought to the process. 8.  Ã‚  Ã‚  Ã‚  Ã‚   Anchoring changes into the organization. Involves reinforcement of transformations made to be part of the organizational culture. This enables the change to be passed on in case of a change in the management or when employing new members of staff. Adapted from Kotter (2007) Even though Kotter’s approach has been approved by many researchers, critics have pointed out some flaws associated with it. For instance, O’keefe argues that it assumes that changes are one-time processes that promise stability if managed meticulously. However, the existing global uncertainty does not give an assurance that the intended goals of the change will be attained (O’Keefe, 2013). According to Anderson and Anderson (2010), effective change management benefits individuals and the overall organization. It benefits individuals by enabling them to maintain or improve their morale and performance before, during and after the change process. It also increases the acceptance of employees to the change process (Andriopoulos Dawson, 2009).Benefits of change management to the organization include enabling it to respond effectively to client demands even during the change process. It also enables the company to assess its performance by comparing its state before and after implementation of the change. Ineffective change management, on the other hand, can distort the transition of the company from its old state to the intended new state. With reference to Kotter’s eight steps, inefficient change management may cause the process to stick in one of middle stages. Therefore, it is important for organizations to ensure that they avoid negative impacts associated with the change process by ensuring that it is managed effectively. Conclusion This paper has presented an in-depth discussion on the need of change and innovation in present-day organizations. While the hierarchical structure of management has several benefits, the need for organizations to adjust to the current dynamism in economic and social conditions has prompted many companies to go for management techniques that nurture creativity and innovation. Some of the organizations that have attained high levels of success through encouraging innovation and creativity include Apple and Google. The shift in the global economy from knowledge to creativity has also been extensively discussed, which also explains why hierarchical management structures are likely to be less evident. Among the factors that have to be effectively managed to enhance creativity are employee motivation, the organizational culture and the organization’s resources. Steps to be undertaken in managing change as suggested by several researchers have also been extensively discussed. References Amabile, T. M., Schatzel, E. A., Moneta, G.B. Kramer, S.J., 2004. Leader behaviors and the work environment for creativity: perceived leader support. Leadership Quarterly , 15(1), pp.5-32. Anderson, D. Anderson, L‎. A., 2010. Beyond Change Management: How to Achieve Breakthrough Results Through Concious Change Leadership. New Jersey: John Wiley Sons. Andriopoulos, C. Dawson, P., 2009. Managing Change, Creativity and Innovation. London:   Ã‚  Ã‚   Sage Publications Ltd. Andriopoulos, C. Lowe, A., 2000. Enhancing organisational creativity: the process of perpetual challenging. Management Decision, 38(10), pp.734-42. Bilton, C. Cummings, S‎., 2010. Creative Strategy: Reconnecting Business and Innovation. West Sussex: John Wiley Sons. Brown, K. Osborne, S‎. P., 2012. Managing Change and Innovation in Public Service Organizations. Oxford: Routledge. Burkus, D., 2013. 10 Practices from the Most Innovative Organizations. [Online] Available at:  Ã‚   creativitypost.com/business/10_practices_from_the_most_innovative_organizations [Accessed 3 November 2013]. Coy, C., 2013. Office hierarchies which one is best for your business? {viewed on 28th November 2013} available from   Ã‚   cornerstoneondemand.com/blog/office-   hierarchies#.Updr99KshsI Daft, R.L. Marcic, D‎., 2010. Understanding Management. Mason: Cengage Learning. Dervitsiotis, K.N., 2011. The challenge of adaptation through innovation based on the quality of the innovation process. Total Quality Management Business Excellence, 22(5), pp.553-66. Von Held, F., 2012. Collective Creativity: Exploring Creativity in Social Network Development as Part of Organizational learning. Munich: Springer. Henry, C. de Bruin, A‎., 2011. Entrepreneurship and the Creative Economy: Process, Practice and Policy. Glos: Edward Elgar Publishing. Hinks, G., 2013. The failure of hierarchical management structures. [viewed on 28th November 2013] available from   Ã‚   financialdirector.co.uk/financial- director/feature/2282581/the-failure-of-hierarchical-management-structures Kottler, J., 2011. Hierarchy and network: two structures, one organization. Harvard Business   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Review. {viewed on 28th November 2013} available from   Ã‚  Ã‚  Ã‚  Ã‚   http://blogs.hbr.org/2011/05/two-structures-one-organizatio/ Kotter, J.P., 2007. Leading Change: Why Transformation Efforts Fail. Harvard Business Review, pp.1-10. Kreitner, R. Cassidy, ‎C. M., 2011. Management. Mason: Cengage Learning. Lawrence, J., 2013. Conflict in the matrix the challenges of moving away from hierarchical   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   structures. {Viewed on 28th November 2013} available from   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   hrzone.com/topic/strategies/conflict-matrix-challenges-moving-away-  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   hierarchical-structures/139398 O’Keefe, K., 2013. Where Kotter’s 8 Steps Gets it Wrong. [Online] Available at: executiveboard.com/communications-blog/where-kotters-8-steps-gets-it-wrong/   [Accessed 3 November 2013]. Runco, M.A., 2010. 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Apple Inc. Health and Safety Measures Research Paper

Apple Inc. Health and Safety Measures - Research Paper Example The company is not free of controversies as it has been criticized for its business practices, labor, practices and its own environmental practices, some of them revealing horrific experiences. Particularly, where touch screens are produced, campaigners reveal horrific injuries that say they suffered due to being exposed to deplorable working conditions in factories which are said to have led to some of the staff committing suicide in the last two years. Protests have been seen in areas such as outside a flagship store in Hong Kong as pictures have allegedly shown injuries suffered under terrible conditions as well in Hezhou, China. Recent complaints and campaign by SATCOM add on the many complaints that have been aired in relation to the ill-treatment of employees in the apple Smartphone producing companies in china. One of the assertions of SATCOM is that the employees are forced to work for long hours; 11 hours a day, seven days a week and with just a 24hour break at the end of th e month. The SATCOM activists assert that the factories making Apple iPads and iPhones in China resulted to asking employees to sign pledges not to commit suicide, (Keize, 2013). This was attributed to 14 workers committing suicide 16months after employment on the basis of poor working conditions and inhumane treatment in the factories.... ent in the factories (Daily Mail Reporter, 2013) In addition, interviews with 170 workers and supervisors in several Foxconn factories in Shenzen and Zhengshou show that punishments are the primary management tools in the factories as SACOM (Students and Scholars against Corporate Misbehavior) says the workers had often been told to clean toilets, sweep lawns and confessions pinned on the notice boards or red out to colleagues, The Foxconn campus dormitories retain their pathetic living conditions with 20-39 workers sharing three bedroom flats; sleeping eight in a room in bunk beds. The workers are also not allowed to use electric items such as kettles or laptops and as well not allowed to sit when working as standing is ascertained as a means to keep them nimble enough to do their work effectively and for long, as reported by The Guardian, (2012). Other complaints in the media concerning the employee and Apple products users’ welfare include a recent story in the newspapers c oncerning an attempt by Apple to replace chargers in UK after iPhone injuries were reported on the use of the chargers. This followed after massive reports of people serious injured from faulty phone chargers; the chargers were said to have exploded on the users’ face as they connected them for charging. For example, the report from china asserts that a woman suffered eye injuries after her iPhone exploded on her face while talking on the phone. This is an indication that Apple has been providing faulty products to consumers and are thus in a hurry to fix the problem by replacing the faulty chargers (Apple Inc. 2013). Another related issue is the resend lawsuit by a woman on Apple on the assertion that her iPhone exploded on her face. This occurred while lying on her bed with the iPhone beside

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