Business profile of Sir Terry Leahy - Free Essay Example

Sample details Pages: 9 Words: 2805 Downloads: 1 Date added: 2017/06/26 Category Business Essay Type Case study Did you like this example? Any alteration in the senior management of a company is a significant experience in the life of that company. This level of executive leadership often headed by the CEO, is inevitably crucial to the overall performance of the business. The ability, preferences, and ultimate decisions of incumbent leaders of these establishments affect businesses through projects or initiatives undertaken, financial policies, and the corporate culture. Don’t waste time! Our writers will create an original "Business profile of Sir Terry Leahy" essay for you Create order Thus, contingent upon the variability of these attributes amongst those chief executives and the impact of their resulting decisions, changes at this hierarchy can negatively or positively alter the course of the company as well as its performance. Therefore, this paper investigates potentially important consequences of Tescos CEO Sir Terry Leahys resignation in June 2010. It shall examine the impact of this announcement on the companys equity performance in the stock market, staff morale and anticipate the challenges of the subsequent administration. In this investigation, the paper shall also briefly reflect on Sir Terrys leadership style and the effect it had on his administration. PROFILE OF SIR TERRY LEAHY In addressing the impact of Sir Terrys resignation from Tesco, let us start by reviewing his tenure in leadership 1997 2010. Prior to his ascendance, Sir Terry upon graduating from the University of Manchester Institute of Science and Technology (UMIST) in 1979 joine d the retail chain as a marketing executive. It however important to note at this point that; he previously worked part time for the supermarket as a shelf stacker whilst he was attending university. In spite of his humble beginning, thirteen years later, Sir Terry was appointed to Tescos board of directors in 1992 (Marketing Manager in 1981, Marketing Director 1984 -1986, Commercial Director 1986), and in1997 he attained the position of CEO as a 40yrs old. A remarkable achievement in his generation. Under his stewardship Tesco UK market increased to 24% by 2004 making it the market leader. At this point it was estimated that at least one in every eight pounds spent with a UK retailer ended up in Tescos coffers (BBC Archives). Sir Terry has metamorphosed this supermarket into a retail giant with dramatic expansion into new markets, both geographically and in terms of products and segments. Tescos international expansion has given it a presence in 11 markets in Ireland, Eastern Eu rope and Asia. The company branched out into new markets such as home telephony and insurance or finance deals, to name but a few. Sir Terrys many initiatives impressed investors and Tesco share price grew. In one year alone (2003/2004) Tescos share price outperformed the market by 13% (BBC news). Experts credit his success at Tesco to his hands-on style leadership and marketing prowess. Although Sir Terry Leahy places focus on experience and low-key leadership his achievements have not gone unnoticed. This modest retail guru has received several accolades from different magazines and establishment. These include Most Outstanding Individual Retailer (1998-2003) and Retail Leader of the Year (2008) by Retail Week, Knighted for services to food retailing in the 2002 New Year Honours, named European Businessman of the Year by Fortune Magazine in 2004, recognized by the Wall Street Journal and CNBC as European Business Leader of the Year 2005, voted as Britains Most Admired Leader 20 05 and 2006 by Management Today, and a Guardian Unlimited Politics panel found him to be the most influential non-elected person in Britain in 2007. In addition to these he has received the honour of the Freedom of the City of Liverpool. This accomplished CEO believed in the marketing dictate, the customer must come first. A principle he had live by. As a testament to this and a legacy of his creativity and marketing talent, he successfully devised and implemented the Tesco Club Card loyalty program. He takes pride in knowing what customers are buying or want and regularly visits those owned by the competition. Sir Terry also believes in employee motivation; hence, introduced several staff welfare schemes such as the save as you earn scheme. One day a week, he walks the floor of one of Tescos numerous stores, to understand first hand what the different jobs entail, what consumers are buying and what people want. However, Sir Terrys reign and business methods were not universal ly popular. Although the companys financial performance was outstanding, he was criticized on several counts, especially for the companys HR policies. The average wages paid by Tesco were among the lowest in the retailing industry in the UK. The salaries were paid on an hourly basis and the time taken off for tea breaks was not considered while calculating the total working hours. Tescos staff were not given any sick pay for the first three days they were off work. Tesco was further accused of disrupting the businesses of its smaller competitors and suppliers. In February 2004, the small supermarket chain Proudfoot complained Tesco through the Office of Fair Trading of predator pricing (https://www.telegraph.co.uk). In the same year, Tescos  £54 million acquisition of Adminstore was also referred to the Office of Fair Trading, with both supermarket and convenience store rivals urging the complaints authority to scrap the distinction between supermarkets and convenience stores. They accused Tesco of using its tremendous buying power to off cheaper prices than many traditional convenience stores. (Ref: profile: Tesco Chief Sir Terry Leahy by: Jorn Madslien (bbc news online business reporter) https://news.bbc.co.uk/1/hi/business/3624645.stm Last Updated: Tuesday, 20 April, 2004, 07:17 GMT 08:17 UK Below is a graphical representation of Sir Terry 13yrs reign at Tesco and provides comparison with the other major supermarkets in the UK. EXAMINING THE IMPACT To both internal and external stakeholders of Tesco, Sir Terry was exemplary. The fact that he had risen through the ranks from a shelf stacker to CEO, was significant for the Tesco Empire as it greatly helped towards projecting an image of the company as a responsible employer, one which recognises the hard work of employees and rewards them adequately. It is for this reason that he was much appraised as being a key source of inspiration for Tesco employees, with much emphasis placed on where his humble beginnings within the organisation. Furthermore, Sir Terrys very own democratic leadership style greatly contributed to his popularity. His leadership success can further be attributed to four principles; clarity of purpose, consumer focused, delegation and simplicity. In his words; we have been clear about what we wanted to achieve, we have listened to what our customers have told us, we have given responsibility to our managers and staff, and we have kept things simple. Thus o n 8th June 2010 when he announced his resignation, the entire industry was in total awe and shock. In post comments, He maintained he had achieved his two main ambitions of making Tesco Britains biggest supermarket chain and taking the business overseas. He aspired to develop a purpose and set of values that could sustain Tesco through its challenges as well as nurture future leaders. It took 14 years to see that strategy become a firm and complete reality. Conscientiousness Therefore, there was much speculation on the ripple effects of his resignation, with most experts envisaging a hit on share prices as investors react to this momentous change. Many feared for the impact it would on staff morale and the succeeding regime as is common in transitions and times of uncertainty. The anxiety of his resignation was further exacerbated by the economic climate and the global economic downturn. The market was nervous because his resignation coincided with supermarkets facing the toughe st trading environment for many years, as inflation which grocers benefit from, disappeared in the food business (e.g. rising prices had provided a crutch during the recession, consumer confidence is expected to be hit by the spending cuts anticipated in the emergency budget, rising cost of importing goods from the Far East and the expected rise in VAT will hit sales). The state of British retailing was compounded and equally worrisome by the wave other significant movements throughout the industry, with Dalton Phillips replacing Marc Bolland at Morrisons, Bolland moving to Marks Spencer and Andy Clarke being newly appointed as CEO of Asda. Many studies that had examined administrative transitions warned that change in administration can have significant impact on shareholders income as well as the companys operations if not managed properly. The impact this decision has on shareholders wealth is as a result of what is referred to as the signalling effect. Markets interpretation of such occurrence can be good or bad. In some cases the change depicts a performance worse than previously believed whilst others are more concern with the successors ability to improve performance. Furtado and Karan (1990) in their estimation of the signalling effect of CEO change over observed an abnormal downward variation of 25 -50 points on market value of the share prices of the companies engaged in such overhauling. Their finding came a year later after Bonnier and Bruner (1989) found a stronger positive return of about 2.5% when they isolated the effect administrative change overs at distressed companies. In the case of Tesco, share price on the London Stock Exchange dipped by 3% at the early hours of trading on the day Sir Terry Leahy announced his resignation. The table below shows the performance of Tescos share price at the London Stock Exchange since the announcement. The daily performance highlights the markets reaction to the news for the entire week in which the announcement was declared. There was an immediate 10p drop in price by the close of trading from the previous day (see 07/06/10 and 08/06/10 figures). However, though it the recovered in the next two days, the recover lived as share prices generally declined as seen in the weekly and monthly closing figures. TESCO PLC SHARE PRICE PERFORMANCE Monthly Performance Date Open High Low Close Avg Vol Adj Close Jul-10 377.4 407.2 368.4 390.65 20,540,100 390.65 Jun-10 409.6 420.9 379.2 380.05 26,323,400 380.05 May-10 439.4 441.75 389.4 411.6 30,442,100 411.6 Weekly Performance Date Open High Low Close Avg Vol Adj Close 28-Jun-10 398.3 400.1 368.4 381.56 29,833,500 381.56 21-Jun-10 394 402.75 379.5 398.65 30,752,100 398.65 14-Jun-10 398 400.15 387.6 390.75 29,080,900 390.75 07-Jun-10 406.2 413.4 392.25 394.2 25,255,400 394.2 01-Jun-10 409.6 420.9 402.7 412.25 16,352,700 412.25 Daily Performance Date Open High Low Close Avg Vol Adj Close 11-Jun-10 403.55 403.6 393.4 394.2 22,979,600 394.2 10-Jun-10 401.35 403 397.1 401.55 22,754,300 401.55 09-Jun-10 400 402.9 395 399.41 29,705,700 399.41 08-Jun-10 400 402.75 392.25 397.4 39,165,300 397.4 07-Jun-10 406.2 413.4 404.1 407.03 11,672,300 407.03 Source: Yahoo Finance The overall volatility in share prices cannot be limited to that executive decision but it fair to argue that the immediate market shock was reflected by the dip in share prices on the day of broadcast. It important to note at this point that increased volatility can alter a companys investment in the long run through an increased cost of capital, or by a reduction in the attractiveness of the companys shares as a medium for acquisitions or compensation. It can also affect the various agency relationships in the company; exacerbating conflicts between stockholders and bondholders, and hindering resolution of shareholder-management problems. (Hallman and Hartzell, 2003, Zhang and Nandini 2006) It is apparent in Sir Terry Leahys decision that he was mindful of these threats as he planned his succession strategy. The immediate appointment of Philip Clarke as his successor and the authority demonstrated by Sir Terry watered down markets suspicion that the change might have resulted by shareholders uneasiness about his strategy or ability to lead the company through this period of austerity in the UK economy. It was evident that he was not a scapegoat as Tesco financial performance is in a stronger shape coming through the recession. The markets reaction to Tescos internal state of operations would have been worse had he been forced to resign the post. The anxiety of the market often heightens and become intolerant to the change if a good leader is forced due to internal manipulations and corporate politics. Similarly, the market is sensitive to inside and outside successions. It is observed by Zhang and Nandini 2006 in cases of voluntary departures, volatility increases for outside than for inside succession. Hence, Tesco was able to swiftly recover from the initial dip in its share prices. So far the market reaction is sympathetic to Sir Terrys replacement. This is partly due to Tesco internal promotion culture. Philip Clarke, like his predecessor joined T esco from grass root position and worked his way upward. He became part of the board in 1998 and has worked wit Sir Terry since 1981. He currently heads the Asian and European operations, as well as IT department. However, Grinstein noted that the effects such a change is long-lived and can take up to two years after the event for the full impact to be realised. Another test of Sir Terrys remarkable decision is the effect it will have on staff moral. For long Sir Terry democratic and low key demeanour has served as a major source of inspiration for many employees. Despite the sporadic staff upheaval such as in 2006 which led to the resignation of two senior executives (Dido Harding and John Browett) to resign and the accusation of underpaying employees Tesco remained an excellent employer with over twenty thousand employees world wide. His personality and charisma made him approachable and got along with staff. He built around him a staff of disciples and enthusiasts. The conc ern for many now including the chairman of Tesco board who reckon that Sir Terry and given an unrivalled contribution to the progress of Tesco is can Philip Clarke adequately fill this void. Only time will tell. However, as the new administration unfolds next year, the role of corporate governance remains crucial. The new chief executive will need every support he can get to implement his plans and aspirations. At the moment he assumes office on a firm foundation as staff morale is high and Tesco leads the market share. In the eyes of the market and the media the companys operation is solid and its prospects lucrative. He needs to maintain if not improve on this enthusiasm and home grown motivation. Many employees are general loyal to the brand because of its internal recruitment policies of which the appointments of Sir Terry and Philip Clarke to the top job are testimonies. Tescos philosophy is in line with the theories of two American researchers Likert at Michigan and Stodgil l at Ohio (Arnold and Randall 2005) who argued that rather than selecting people with leadership traits, leaders could be trained in the form and style of their behaviours and relationship wit their followers or subordinates. Hence, with the appointment of Philip Clarke came a management reshuffle which experts believed was the right thing to do. It kept the tension and expectations of aspirants to the position at bay and enlisted their support for the new administration. CONCLUSION Career related issues are contentious and can be very stressful for the individual and company. For many employees career progression is of overriding importance. Employees are considered the companys most valued asset, as it is they who drive the business up or down. Thus administrative transition is crucial to the sustainability and image of the company. Therefore an excellent management of this change is essential to the future of the company. Against this premise, the sudden resignation of Sir Terry Leahy from Tesco presented the company with a huge challenge. A challenge of such magnitude needed to be managed with accuracy and precision as the stakes are high. This cosmic shift of power had the potential to make or break the company. Crucial to the entire change process and impact mitigation is the healthy financial performance and prevalent corporate culture of Tesco. These two factors have helped managed any damage to its sales turnover and corporate value. CEO transition s are a rare occurrence in the retail business unlike sports and entertainment. Hence, when these changes occur there is usually a high level of expectation on the new leader. There is normally great optimism if the market perceives the replacement as an excellent job. Even though the credentials of the new are sterling, the improvements that are supposed to come with a change in the CEO are greatly influenced by corporate governance within the company. It can be concluded that Tescos management of the change process was exemplary. Finally, away from the impacts on share price and staff motivation discussed, what seem to be omitted in the post mortem of Sir Terry Leahy decision is the psychological impact it had on staff and the market. The extent of this will be determined over time, however, the new administration must mobilise the commitment of managers to buy into ideologies of control and infuse motivation and support from employees. REFERENCES Arnold, J and R, Randall etal 2005, Work Psychology: Understanding Human Behaviour In the Work Place, 5th edition, Pearson Education Bonnier, K. A. and R. F. Bruner, 1989, An analysis of stock price reaction to management change in distressed firms, Journal of Accounting and Economics 11,pp. 95-106. Furtado, E.P.H, and V. Karan, 1990, Causes, Consequences and Shareholders Wealth Effect of Management Turnover: A Review of the Empirical Evidence Financial Management Hallman, G.J, C, Hartzell, 2005, Carrot and Sticks: The Threat of Dismissal and Incentive, University of Texas at Austin, Working Paper Zhang, Yan and Rajagopalan, Nandini, 2006, Grooming for the Top and Ending the CEO Succession Crisis, Organizational Dynamics, VOl25, No. 1

A Case for Shared Parenting - 1644 Words

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Miss Julie Monologue Essay Paper Example For Students

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You were unattainable, but through the vision of you I was made to realize how hopeless it was to rise above the conditions of my birth. .u8775e3856676acf700e95c2f2e0ad7e6 , .u8775e3856676acf700e95c2f2e0ad7e6 .postImageUrl , .u8775e3856676acf700e95c2f2e0ad7e6 .centered-text-area { min-height: 80px; position: relative; } .u8775e3856676acf700e95c2f2e0ad7e6 , .u8775e3856676acf700e95c2f2e0ad7e6:hover , .u8775e3856676acf700e95c2f2e0ad7e6:visited , .u8775e3856676acf700e95c2f2e0ad7e6:active { border:0!important; } .u8775e3856676acf700e95c2f2e0ad7e6 .clearfix:after { content: ""; display: table; clear: both; } .u8775e3856676acf700e95c2f2e0ad7e6 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u8775e3856676acf700e95c2f2e0ad7e6:active , .u8775e3856676acf700e95c2f2e0ad7e6:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u8775e3856676acf700e95c2f2e0ad7e6 .centered-text-area { width: 100%; position: relative ; } .u8775e3856676acf700e95c2f2e0ad7e6 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u8775e3856676acf700e95c2f2e0ad7e6 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u8775e3856676acf700e95c2f2e0ad7e6 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u8775e3856676acf700e95c2f2e0ad7e6:hover .ctaButton { background-color: #34495E!important; } .u8775e3856676acf700e95c2f2e0ad7e6 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u8775e3856676acf700e95c2f2e0ad7e6 .u8775e3856676acf700e95c2f2e0ad7e6-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u8775e3856676acf700e95c2f2e0ad7e6:after { content: ""; display: block; clear: both; } READ: Sardanapalus monologue from the play by Lord Byron Essay

Irish Literature free essay sample

When the Normans came to Ireland in the 12th century after having invaded southern Britain a century earlier, the cycle of invasion gave way to a cycle of British colonization and Ireland remains, at least in the North, in an imperial relationship with Great Britain to this day. This relationship has had political, economic, social, and cultural effects on Ireland and its people that have developed over hundreds of years and created situations, some unique to Ireland, others not, that Ireland is still struggling with today in its efforts to become a modern nation state with a distinct and productive culture. Its long history as a colony and the long-term effects of that history make the Irish struggle for and subsequent but problematic realization of nationhood, both imaginatively and politically, a major component of Irish identity. The nationalist struggle for independence, gathering force in the latter half of the 19th century and culminating in (some would argue partial) success in 1921, is an integral part of the islands recent history and was a core movement around which centered not only political activists but writers, poets, and artists who attempted to give voice to an Irish national spirit. We will write a custom essay sample on Irish Literature or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page I would like to look at three literary works that are framed around the years closely preceding and following the creation of the Irish Free State and that touch on some of the issues and problems associated with the Irish nationalist struggle and its aftermath. These will be the short story by James Joyce entitled Ivy Day in the Committee Room, the poem by William Butler Yeats called Easter, 1916, and the short story Rock-in-the-Mass by Daniel Corkery. Colonial History of Ireland However, before discussing these works, it might be useful to present a brief synopsis of the political situation in Ireland from the 1600s until the period of the first story, Ivy Day , which is set between 1900 and 1910, since an understanding of these historical conditions can only deepen an appreciation of the chosen works. Ian Lustick points out in his study State- Building Failure in British Ireland French Algeria that few historians of British imperialism include Ireland within the purview of their studies and tend to treat Ireland and the Irish question as idiosyncratic, or as the great exception (77); this, I suppose, because Ireland has neither successfully assimilated into the British state as Wales and Scotland have nor completely broken with Great Britain in a successful bid for independence as most of Britains former colonies have (British troops still occupy Northern Ireland). Lusticks explanation for Irelands unique situation is clarifying and intriguing. He writes that as early as 1557 under Henry the VIII, the English Crown desired ultimately to incorporate Ireland into the realm of British authority and the vehicle for this was seen to be the implantation of British settlers into Ireland who would Anglicize the natives (6-7). There were successive waves of these settlers until the 18th century but the effect was not to legitimize British rule among the Catholic majority but rather the large settler populations interrupted the processes of the British co-option of the local elites and the extension of political rights to the native population that Lustick maintains is necessary to redirect loyalty to new central authorities and are processes essential in successful state-building (8).

Profile of Serial Killer Jerry Brudos, AKA the Lust Killer

Profile of Serial Killer Jerry Brudos, AKA the Lust Killer Jerry Brudos was a shoe fetishist, serial killer, rapist, torturer, and necrophiliac who stalked women around Portland, Oregon in 1968 and 1969. The Early Years Jerry Brudos love for shoes began at the age of five after he rescued a pair of high-heel shoes from the garbage. As he grew older, his unusual interest in shoes developed into a fetish which he satisfied by breaking into homes to steal shoes and womens underwear. When he was in his teens he added violence to his repertoire and began knocking down girls, choking them until they were unconscious, then stealing their shoes. At age 17 he was sent to the Oregon State Hospital psychiatric ward after he confessed to holding a girl at knife-point in a hole he dug in the side of a hill for the purpose of keeping sex slaves. There he forced her to pose nude while he took pictures. Brudos was released from the hospital after nine months, even though it was clear he had developed a need to act out his violent fantasies towards women. According to his hospital records, his violence toward women developed from a deep hatred he felt for his mother. Married With Children Once out of the hospital he finished high school and became an electronics technician. Whether he refrained from acting out on his obsessions over the next few years or he just didnt get caught is unknown. What is known is that he married, moved to Portland, Oregon and he and his wife had two children. His mother later joined the family in their small suburban home. Brudos relationship with his wife began to falter after he approached her dressed in womens underwear. Up to that point, she had gone along with his strange bedroom habits, including his request that she walk around the house nude. Rejected by her lack of understanding of his need to wear womens underwear, he retreated to his workshop which was off-limits to the family. No longer intimate, the two remained married despite his wife discovering pictures of nude women and an odd molded breast among her husbands possessions. Brudos Known Victims Between 1968 and 1969 women in and around the Portland area began to disappear. In January 1968, Linda Slawson, 19, working as a door-to-door encyclopedia salesperson, happened to knock on Brudos door. He later confessed to killing her, then cutting off her left foot to use as a model for his collection of stolen shoes. His next victim was Jan Whitney, 23, whose car broke down while driving home from college in November 1968. Brudos later admitted to strangling Whitney in her car, then having sex with her body and bringing her corpse back to his workshop where he continued to violate the body for several days while it hung from a hook on his ceiling. Before disposing of her body he cut off her right breast in order to make a mold from it in the hopes of making paperweights. On March 27, 1969, Karen Sprinker, 19, vanished from the parking garage of a department store where she was to meet her mother for lunch. Brudos later confessed to forcing her into his car at gunpoint, then bringing her to his workshop where he raped her and forced her to put on various womens underwear and pose for pictures. He then killed her by hanging her from the hook in his ceiling. As with his other victims, he violated her corpse, then removed both breasts and disposed of her body. Linda Salee, 22, became Brudos next and last known victim. In April 1969 he kidnapped her from a shopping mall, brought her to his home and raped and then strangled her to death. Like all of his victims, he disposed of her body in a nearby lake. The End of the Killing Spree During the two-year killing spree, Brudos attacked several other women who managed to escape. The clues they were able to provide police eventually led them to Brudos door. While in custody at police headquarters, Brudos gave a detailed confession of the four murders. A search of his home gave police the additional evidence they needed to convict Brudos of three of the four murders. Included in the evidence were various photographs he took of his victims posed in his collection of womens underwear, parts of the corpses which had been found in a lake, along with some of his victims body parts stored in his home. He was convicted and given the death penalty and a life sentence. On March 28, 2006, Brudos, 67, was found dead in his cell at Oregon State Penitentiary. It was determined that he died of natural causes. Source Rule, Ann. Lust Killer. Books: Lust Killer by Ann Rule

When to Use Whom vs. Who

When to Use Whom vs. Who Knowing when to use whom versus who can be difficult for even the most careful writers and speakers. Many writers and grammarians hope the day comes when whom is cast aside and designated by dictionaries as archaic. Indeed, Paul Brians, a professor in the Department of English at Washington State University, says, Whom has been dying an agonizing death for decades. Until the last nail is placed in the coffin, however, it will be helpful to learn when to use whom versus who in various circumstances. How and When to Use Whom Put simply, use whom- which is a pronoun- when it is the object of a sentence. If you can replace the word with her, him, or them for example, use whom. Youll know when to use whom if the pronoun is used in the objective case, or action is being done to the pronoun. Take the sentence: Whom  do you believe? The sentence may sound pretentious, even snobbish. But it is correct because whom is the subject of the infinitive to, as well as the object of the sentence as a whole. Turn the sentence around so that the object is at the end: You were talking to whom? When you replace whom with him, it becomes even clearer: You were talking to him.Were you talking to him? When to Use Who If whom is used for the objective case, who is used for the subjective case- when the pronoun is the subject of the sentence, or the person creating the action. Take the sentence: Who is at the door? The pronoun who is the subject of the sentence. Check this by replacing who with a subjective pronoun, swapping in she or he for who, as in: She is at the door.He is at the door. Who is always used as the subject of a sentence or clause, and whom is always used as an object. Examples In the following sentences, who is correctly used in the subjective case. You can check this by replacing the pronoun who with another subjective pronoun, such as she, he, or you, for example: Who is coming to dinner? (He is coming to dinner?)Who was that masked man? (He was that masked man? or He was the masked man.)Sally is the woman who got the job. (She got the job.) As previously noted, youll know when to use whom if the pronoun is used in the objective case, or action is being done to the pronoun, as in: To Whom It May Concern. (It may concern him.)I dont know from whom the love letter came. (The love letter came from him.)They fought over whom? (They fought over him? or They fought over them?)After whom do I enter the stage? (I enter the stage after him.)Whom did you recommend for the job? (I recommended him for the job.)For Whom the Bell Tolls (The title of this famous Ernest Hemingway novel is saying, The Bell Rings for Him.) Some of these sentences may sound odd, and this is why the word whom will probably disappear from the English language one day. As used in these examples, whom sounds a little awkward, even when its technically correct. How to Remember the Difference The key to understanding when to use whom or who is knowing the difference between  subjective  and  objective  case. Once you can easily identify the subject and the object of a sentence or clause, you will be able to figure out the correct usage of who and whom. For instance, if you want to decide which is correct in this sentence: Who/Whom should I consider as a college recommendation? Rearrange the sentence so that it will make sense using him or he. Youll come up with the following choices: I should consider him for the college recommendation.I should consider he for the college recommendation. The pronoun him is clearly better. Therefore, the correct word in the sentence above will be whom. Remember this simple trick, and youll always know when to use whom and when to use who.

Should drugs be legalized Essay Example | Topics and Well Written Essays - 1250 words

Should drugs be legalized - Essay Example The congress in Canada set up a commission of enquiry to look into the issues that had been raised by the public and the lawyers. Many recommendations were made. To date, those recommendations are yet to be implemented. They have asked the question several times, ‘Should drugs be legalized?’ Before this question is answered, here is background information about substance abuse. Substance abuse is the use of mind controlling harmful drugs and other activity enhancing substances that are not approved for use by any qualified professional medical practitioner. These substances include alcohol, narcotics, cannabis, glue types, stimulants, sedatives, and hallucinogens. Some of these substances are abused against the regulations of bodies such as FIFA. Activity enhancing drugs have been banned from their use in sporting activities. The focus of this article is on the narcotics, such as cannabis, methamphetamine, opium, heroin, and cocaine. Substance abuse means the same as drug abuse. This is because of the dependency effect of the drugs that cause the users to become drug addicts. In a bid to curb drug trafficking and drug abuse, the Drug Enforcement Agency in the United States was formed. Many issues have been raised on whether this business should be made legal since the war on drugs seems a long road without success. Gore Vidal of The New York Times and Will iam Bennett have opinions on this topic that form the basis of this discussion. Should drugs be legalized? Gore Vidal in his article â€Å"Drugs: Case for Legalizing Marijuana,† gives the opinion that the substance abuse in the United States can be a thing of the past if only all drugs are made available but at a high cost. All drugs available should have a clear, accurate, and well-labeled description of the effects of the substance use. According to this writer, the bill of rights in the United States was paramount. Every citizen of the United

Answers For Final Essay Example | Topics and Well Written Essays - 750 words

Answers For Final - Essay Example The freedom that they long for is bleak. However, the author (Luther Para 6) gives the hope through his dream that the situations will change in future across the entire nation. The sons of the oppressed and the oppressors will one day embrace each other. There is hope that racial segregation and discrimination will come to an end and freedom and justice will in turn reign across the nation. He hopefully asserts that freedom will prevail across all the races, religion, and every individual will embrace each other irrespective of the dynamics and differences between them. The author uses division and analysis method to illustrate his opinion and perception to the audience. For an instant, he has divided his all his dreams of the American population in reference to the injustices and practices after which he analyses the implications of the consequences of each dream. For example, he dreams on the day, the Mississippi state known for sweltering heat of injustice and oppression will be transformed into a state characterized by an oasis of justice inclusive of freedom. The other method the author employs is the use of argument and persuasion. Luther explains the predicaments of the oppressed black community and the tribulations that they are undergoing such as being exile in their mother country. However, despite these challenges, he provides hope to them and urges them to soldier on with the preemption that they are definition the future of their generation. Brady on her literature titled I want a wife attempts to explain the role of a women in the perspective of a man’s opinion. The character in the literature explains the reasons he wants a wife and he is he derives an encouragement from his recently divorced friend who despite his marriage predicament is also searching for a wife (Brad Para 3). The main character in need of a wife

Georgia Atlantic Company Essay Example for Free

Georgia Atlantic Company Essay During the depression of the 1930s, Ben Jenkins, Sr., a wealthy, expansion-oriented lumberman whose family had been in the lumber business in the southeastern United States for several generations, began to acquire small, depressed sawmills and wholesale lumber companies. These businesses prospered during World War II. After the war, Jenkins anticipated that the demand for lumber would surge, so he aggressively sought new timberlands to supply his sawmills. In 1954, all of Jenkins’s companies were consolidated, along with some other independent lumber and milling companies, into a single corporation, the Georgia Atlantic Company. By the end of 1992, Georgia Atlantic was a major force in the lumber industry, though not one of the giants. Still, it possessed more timber and timberlands in relation to its use of timber than any other lumber company. Worldwide demand for lumber was strong in spite of a soft world economy, and its timber supply should have put Georgia Atlantic in a good position. With its assured supply of pulpwood, the company could run its mills at a steady rate and, thus, at a low per-unit production cost. However, the company does not have sufficient manufacturing capacity to fully utilize its timber supplies; so it has been forced to sell raw timber to other lumber companies to generate cash flow, losing potential profits in the process. Georgia Atlantic has enjoyed rapid growth in both sales and assets. This rapid growth has, however, caused some financial problems as indicated in Table 1. The condensed balance sheets shown in the table reveal that Georgia Atlantic’s financial leverage has increased substantially in the last 10 years, while the firm’s liquidity position markedly deteriorated over the same period. Remember, though, that the balance sheet figures reflect historical costs, and that the market values of the assets could be much higher than the values shown on the balance sheet. For example, Georgia Atlantic purchased 10,000 acres of cut timberland in southern Georgia in 1961 for $10 per acre, then planted trees which are now mature. The value of this acreage and its timber is estimated at $2,750 per acre, even though it is shown on the firm’s balance sheet at $230 per acre, the original $10 plus capitalized planting costs. Note also that this particular asset and others like it have produced zero accounting income; indeed, expenses associated with this acreage have produced accounting losses. When Georgia Atlantic was originally organized, most of the outstanding stock was owned by the senior Jenkins and members of his family. Over time, however, the family’s ownership position has gradually declined due to the sale of new common stock to fund expansion. In 1987, Ben Jenkins, Sr. died; the presidency of the firm was passed to his son, Ben Jenkins, Jr., who was 61 at the time. By the end of 1992, the Jenkins family held only about 35 percent of Georgia Atlantic’s common stock, and this represented essentially their entire net worth. The family has sought to finance the firm’s growth with internally generated funds to the greatest extent possible. Hence, Georgia Atlantic has never declared a cash dividend, nor has it had a stock dividend or a stock split. Due to the plowback of earnings, the stock currently sells for almost $2,000 per share. The family has stated a strong belief that investors prefer low-payout stocks because of their tax advantages, and they also think that stock dividends and stock splits serve no useful purpose—they merely create more pieces of paper but no incremental value for shareholders. Finally, the family feels that higher-priced stocks are more attractive to investors because the percentage brokerage commissions on small purchases of higher-priced stocks are lower than on large purchases of lower-priced shares. They cite the example of Berkshire-Hathaway, whose stock price has risen phenomenally even though it now sells for over $15,000 per share and pays no dividends. (The family does acknowledge, though, that Warren Buffett, Berkshire’s chairman, has done a superb job of managing the company’s assets, and that the rise of its stock price reflects that factor as well as Buffett’s financial policies.) As the date for Georgia Atlantic’s annual stockholders’ meeting approached, Mary Goalshen, the corporate secretary, informed Ben Jenkins, Jr., who is commonly called â€Å"Junior† at the company, that an unusually low number of shareholders had sent in their proxies. Goalshen felt that this might be due to rising discontent over the firm’s dividend policy. During the last two years, the average payout for firms in the paper and forest products industry has been about 35 percent; yet for the 58th straight year, Georgia Atlantic’s board, under the Jenkins family’s dominance, chose not to pay a dividend in 1992. The Jenkins family was also aware that several reports in the financial press in recent months indicated that Georgia Atlantic was a possible target of a takeover attempt. Since the family did not want to lose control of the company, they were anxious to keep the firm’s stockholders as happy as possible. Accordingly, Junior announced that the directors would hold a special meeting immediately after the annual meeting to consider whether the firm’s dividend policy should be changed. Junior instructed Abe Markowitz, Georgia Atlantic’s financial vice president, to identify and then evaluate alternative dividend policies in preparation for the special board meeting. He asked Markowitz to consider cash dividends, stock dividends, and stock splits. Markowitz then identified six proposals that he thought deserved further consideration: (1) No Cash Dividends, No Stock Dividend or Split. This was the position Markowitz was certain that Junior and the family would support, both for the reasons given above and also because he thought the company, as evidenced by the balance sheet, was in no position to pay cash dividends. (2) Immediate Cash Dividend, but No Stock Dividend or Split. This was simply the opposite of the no dividend policy. If a cash dividend policy were instituted, its size would still be an issue. (3) Immediate Cash Dividend plus a Large Stock Split. The stock split would be designed to lower the price of the firm’s stock from its current price of almost $2,000 per share to somewhere in the average price range of other large forest products stocks, or from $20 to $40 per share. (4) Immediate Cash Dividend plus a Large Stock Dividend. The reasoning underlying this policy would be essentially the same as that of Alternative 3. (5) Cash Dividend, Stock Split, and Periodic Stock Dividends. This policy would require the company to declare an immediate cash dividend and, simultaneously, to announce a sizable stock split. This policy would go further than Alternatives 3 and 4 in that, after the cash dividend and stock split or large stock dividend, the company would periodically declare smaller stock dividends equal in value to the earnings retained during the period. In effect, if the firm earned $3 per share in any given period-quarter, semi-annual period, and so on—and retained $1.50 per share, the company would also declare a stock dividend of a percentage amount equal to $1.50 divided by the market price of the stock. Thus, if the firm’s shares were selling for $30 when the cash dividend was paid, a 5 percent stock dividend would be declared. (6) Share Repurchase Plan. This plan is based on the premise that investors in the aggregate would like to see the company distribute some cash, but that some stockholders would not want to receive cash dividends because they want to minimize their taxes. Under the repurchase plan, individual stockholders could decide for themselves whether or not to sell some or all of their hares and thus to realize some cash and some capital gains, depending on their own situations. To begin his evaluation, Markowitz collected the data shown in Tables 2 and 3. As he was looking over these figures, Markowitz wondered what effect, if any, Georgia Atlantic’s dividend policy had on the company’s stock price as compared to the prices of other stocks. Markowitz is also aware of one other issue, but it is one that neither he nor anyone else has had the nerve to bring up. Junior is now 66 years old, which is hardly ancient; but he is in poor health, and in recent years he has been almost obsessed with the idea of avoiding taxes. Further, the federal estate tax rate is currently 60 percent, and additional state estate taxes would be due; so well over half of Junior’s net worth as of the date of his death will have to be paid out in estate taxes. Since estate taxes are based on the value of the estate on the date of death, to minimize his estate’s taxes, Junior might not want the value of the company to be maximized until after his death. Markowitz does not know Junior’s view of this, but he does know that his tax advisors have thought it through and have explained it to him. Finally, Markowitz knows that several Wall Street firms have been analyzing Georgia Atlantic’s â€Å"breakup value,† or the value of the company if it were broken up and sold in pieces. He has heard breakup value estimates as high as $3,500 per share, primarily because other lumber companies, including Japanese and European companies, are eager to buy prime properties such as those owned by Georgia Atlantic. Of course, Georgia Atlantic could sell assets on its own, but Markowitz does not expect that to happen as long as Junior is in control. Now assume that you are an outside consultant and have been hired by Abe Markowitz to help him with the analysis and make a presentation to the executive committee. First, Abe is not sure whether an announced dividend policy is a good idea. He believes an announced policy could cause the firm to feel forced to take actions that otherwise would be undesirable. He has also expressed concern about signaling and clientele effects. As old man Jenkins used to say, â€Å"If it ain’t broke, don’t fix it.† Thus, analyze the firm’s present dividend policy to determine how well the company has performed compared to other firms in the industry before discussing the implications of the alternative dividend policies and making a recommendation. Markowitz also wants you to discuss whether the firm’s historical rate of return on investment has been affected by its dividend policy, the estate tax issue, and the takeover issue. Junior is famous for asking tough questions and then crucifying the person being questioned if he or she has trouble responding. That is probably why Markowitz wants you to make the presentation. So be sure that you thoroughly understand the issues and your answers so that you can handle any follow-up questions that you might receive.

How much more is Jane Eyre than just a piece of romantic fiction? :: Free Essay Writer

How much more is Jane Eyre than just a piece of romantic fiction? All the qualities of a typical romantic fiction are certainly found in ‘Jane Eyre’. The usual qualities found in romances are a Hero and Heroine. They can have some tension between them before finally falling in love but something gets in their way, eventually they over come all odds and get to be together in the end. Obviously Jane is the Heroine and Mr. Rochester is the Hero, and as in most romances, the story is told through the eyes of the Heroine. ‘Jane Eyre’ starts off with Jane’s childhood to allow the reader to get to know Jane and sympathize with all her views and feelings. When Jane first moves to Thornfield Hall the romance starts. To build up the tension for the reader Jane is at first denying her feeling. â€Å"it was rather a trial to appear thus formally summoned in Mr. Rochester’s presence† It is obvious to the reader what is going to happen and frustrating that Jane will not admit that she likes him this is very typical of a romance. It follows on conforming to the romance stereotype when Jane admits her feelings but something gets in the way. At first this is Blanche Ingram, Jane is convinced by things people have said that she is going to Marry Mr. Rochester. â€Å"And did I now think Miss Ingram such a choice as Mr. Rochester would be likely to make?† This is providing a barrier against them getting together in the straight forward way of just Blanche Ingram but she also stands to represent looks and class. She is a lot prettier than Jane and this tests Mr. Rochester to see if he is the deep thinking man Jane thinks he is. Also Jane is of a lot lower class than Blanche Ingram and it would have seemed strange at the time ‘Jane Eyre’ was written for Mr. Rochester to chose Jane. This is pushed aside and it seems like everything has started to go right for Jane. Then follows the clichà ©d romantic twist. Jane discovers Mr. Rochester’s wife. â€Å"this gentleman’s wife is still living† Everything falls apart for Jane. She runs away and begins to start a new life till the end of the novel when Jane finds out Mr. Rochester’s wife has died and they get married. â€Å"My Edward and I then are happy† As in all romances it comes to the happy ending to make the reader feel happy and satisfied. These were the ways in which ‘Jane Eyre’ followed the typical romance patterns for general romances. But there is much more to this novel.

Planning Assessment Essay

When planning assessment you need to gauge a clear idea of what level the candidate is at to see if they are ready to complete your planned assessment. There are many ways of achieving this knowledge. One method is observation in performance or another by taking an initial assessment test which have seven levels with the basic entry level 1 being the first. Once this knowledge has been gained, further knowledge is needed to suit their needs. What is their preferred learning style, is it part of a group or on a one to one basis. You will need to find out their strengths and weaknesses to get the most out of their abilities but also to work around and improve on different area that need to be worked on. When this has all been achieved the learners will need to be given information about the planned assessment. First of all they will need to have an understanding of what they are about to study, explaining what they need to do to meet the criteria set by OFQUAL – the governing body of the qualifications. They will need to understand what is expected of them when attending the course by giving them the code of conduct for them to follow. It is important that the health and safety procedures are explained to ensure their safety throughout their assessment. After this has been completed, the learners will be given the folder to look through and their assessment plan to see how they will complete it. 3. 3 EXPLAIN HOW TO PLAN A HOLISTIC APPROACH TO ASSESSMENT By taking a holistic approach to assessment, it can provide the learner with a more in depth report on their progress by covering all the different methods – observations, session plans, witness testimonies, knowledge evidence and professional discussion across all the units in one go. This allows me to understand the different kind of approaches each individual learner feels comfortable with to achieve the highest possible grade. 3. 5 EXPLAIN HOW TO MINIMIZE RISKS THROUGH THE PLANNING PROCESS It is the responsibility of the assessor to minimise the risks by making sure all of the health and safety procedures are covered such as risk assessment of the facilities. The assessor needs to gather information that is personal from the learner in order to adapt and provide special needs that they might have. Also the assessor will need to treat all learners equally, ensuring that equality and diversity issue are met. Once this information has been gained, the assessor can then produce an action plan for the learner which is both realistic and achievable so they are comfortable to achieve the best possible results. 4. 1 EXPLAIN THE IMPORTANCE OF INVOLVING THE LEARNER AND OTHERS IN THE ASSESSMENT PROCESS Peer and Self Assessment is an effective way to get the learners involved and it gives a clear idea of what the learner is currently at and what action is needed to meet the standards and criteria. This can be done through feedback. Feedback is a vital part of the assessment process as it gives the assessor an idea of if the learner has met the criteria set and if they haven’t, what action is needed to achieve the criteria. If there is a disagreement with the assessments carried out then the learners can follow the organisational procedures that are set in place which include grievance procedures, systems for appeals and confidentiality procedures. 4. 2 SUMMARISE TYPES OF INFORMATION THAT SHOULD BE MADE AVAILABLE TO LEARNERS AND OTHERS INVOLVED IN THE ASSESSMENT PROCESS. The first thing that should be made available to the learners and those involved in the assessment process is what the reason is for assessment. The NVQ award is structured for a candidate to provide evidence through practical assignments and portfolio evidence that is gained throughout the qualification. They will also need to know how long they have to complete the course which is up to the assessor. By giving them information on deadlines then it will ensure tasks are not left until the last minute which could affect the standards of the work. One other type of information that they will need to know is what the criteria is for them to achieve the grade. Each qualification has a minimum requirement needed to be met and once they learner knows this, they can work towards meeting it and gaining the qualification. 4. 3 EXPLAIN HOW PEER AND SELF ASSESSMENT CAN BE USED EFFECTIVELY TO PROMOTE LEARNER INVOLVEMENT AND PERSONAL RESPONSIBILITY IN THE ASSESSMENT OF LEARNING Peer and Self-Assessment can be used effectively within the learners when one of the group has difficulty within a task. Learners can interact with each other and help each other out which would be a lot less intimidating and in some situations embarrassing for shy and insecure learners than an assessor telling them they are right or wrong in front of the rest of the group. 6. 3 SUMMARISE THE PROCEDURES TO FOLLOW WHEN THERE ARE DISPUTES CONCERNING ASSESSMENT IN OWN AREA OF PRACTICE If there are disputes concerning assessment in own area of practice then the procedures to follow are as follows: First of all the assessor has to be available to discuss the problem as it could be sorted out quickly and effectively through discussion. If the learner feels they want to take it further then they can take the steps to show their disagreement which will be listed in their ‘Student Handbook’ given to them at the beginning of the course. This includes a formal written complaint to the assessor’s superior which they will then deal with in an efficient and non-discriminatory way, treating the claim with upmost confidentiality where they will decided whether to uphold or overturn the assessor’s original decision. 7. 2 EXPLAIN HOW FEEDBACK AND QUESTIONING CONTRIBUTE TO THE ASSESSMENT PROCESS Feedback and Questioning can help learners improve on a specific task. Feedback provides correction and improvement on a piece of work. Not only can it correct or improve the work but it can be used as encouragement or motivation to a learner especially when they are doing well or think they are not doing well.

Harnischfeger Corporation

Financial Reporting & Analysis April 19th, 2013 Case Study- Harnischfeger Corporation 1. Describe clearly the accounting changes Harnischfeger made in 1984 as stated in Note 2 of its financial statements. The accelerated depreciation method was changed from to straight-line on all company assets that caused to increase after-tax net income for 1984 by $11. 005 million. The cumulative effect of change in 1984 there will be no reduction in the depreciation expense due to change. in 1984 decreased by $7. 0 million over the previous year.Most of this reduction was a result of the company's agreement with Kobe Steel, Ltd. Under this agreement, Kobe agreed to reimburse Harnischfeger up to $17. 0 million dollars of R;D expense over a period of three years. However, some students argue that Harnischfeger may be cutting its research budget since the actual reduction in Harnischfeger's    1984 R&D expense is more than one-third of this amount. (See Exhibit 4, Notes 6 and 9, in the case. ) 8 . Effective 1984, Harnischfeger began to include in its net sales products purchased from Kobe Steel, Ltd. , and sold to third parties by Harnischfeger.Previously only the gross margin on Kobe-originated equipment was included in Harnischfeger's financial statements. This increased Harnischfeger's sales in 1984 by $28. 0 million but had no impact on its profits. Some students would mistakenly argue that this had an impact on Harnischfeger's net income. (See Exhibit 4, Note 2, in the case. ) Although some of the above are pure accounting decisions with no direct cash-flow consequences, the other decisions affect the company's reported profits as well as its cash flow. The instructor should ask the class to identify the latter-type decisions among the above.Discussion of Question 2 The above analysis shows that most, if not all, of the reported profits of Harnischfeger in 1984 are produced by accounting changes. Therefore, the accounting changes helped the management report a signific ant profit rather than a modest loss. The instructor should point this out to the class and ask: Why do you think the management of Harnischfeger made these accounting changes? Students point out a number of possible motives for the accounting changes: 1. Boost the company's stock price so that the company could raise new capital, 2.Meet the earnings targets of the company's top management compensation plan, 3. Avoid the violation of debt covenant restrictions, and 4. Improve the company's image with the customers, dealers, and prospective employees. Some students argue that the analysis in Question (1) shows that it is too complicated for an average investor to â€Å"see through† the impact of all the accounting changes. They further point out that, even if many analysts recognize the effect of the company's accounting decisions on the 1984 profits, it is quite unlikely that the analysts would be able to assess the impact of these changes in future years.Other students are l ikely to argue that the market processes the reported profit numbers efficiently. They argue that there are some sophisticated analysts who could perform the analysis that was done in the class. The instructor should encourage this discussion. At some point in the discussion, the instructor should intervene and summarize the evidence from the research literature: 1. There is considerable evidence in finance and accounting literature that shows that the capital markets are generally efficient. 2.For stock prices to reflect reality in an unbiased manner, it is not necessary that everyone in the market has to process the information correctly. As long as there are some sophisticated investors who can â€Å"see through† the company's accounting changes, the stock price will reflect this due to the possibility of arbitrage by these investors. 3. The accounting studies that examine the stock market reaction to accounting changes conclude that the market is not fooled by the account ing decisions of firms. However, the evidence presented in these studies is not conclusive.Also, these studies do not examine whether the stock market recognizes the recurring effects of accounting changes. Without additional research, it is difficult to make conclusive statements on this issue. 4. Even if capital markets see through the effects of accounting changes, managers may believe otherwise in making accounting decisions. This is likely to happen if there are no significant penalties associated with such behavior. Even if investors fully recognize the impact of Harnischfeger's accounting decisions, there are other reasons for the company's managers to make these decisions.As Exhibit 2 in the case indicates, the top management of the company is awarded significant bonuses based on the company's reported profits. This provides an incentive for the managers to boost profits through accounting changes. However, if the compensation committee of the company's board of directors re cognizes this possibility, the committee could adjust the reported profits before awarding management bonuses. The instructor should challenge the students by asking: If investors can see through these changes from public information, why can't the board do it, especially when it has access to additional information in the firm?The third possible motive that is mentioned by the students is the desire of Harnischfeger's management to avoid the violation of debt covenant restrictions. Since the company recently experienced the painful consequences of violating these restrictions, it is plausible that the management changed the accounting policies to avoid future violations of the debt restrictions. If debt covenants are specified in terms of accounting numbers, managers have an incentive to choose accounting policies to minimize the violation of the covenants.However, if lenders recognize this possibility, lending agreements would be modified to avoid this possibility as long as the c ost of such a modification is not significant. The fourth possibility is that the accounting decisions are motivated by a desire to convince the company's customers, suppliers, dealers, and employees that Harnischfeger is again back on track and is viable. Given the nature of the company's products, a lack of confidence in the company's viability is likely to impair the company's ability to sell its products.In fact, the company was negotiating long-term contracts in 1984 with the governments of Turkey and China. It is quite possible that the company's return to profitability might have helped the management in this respect. Similarly, the company's ability to attract and retain talented employees might have been helped by the image that the company was back on track. During my visit to the company, Harnischfeger's management pointed out one additional factor in the company's accounting decisions: the role of internal management considerations.The company used the same set of accoun ting rules for external reporting and for internal management accounting. The company's product pricing was based on fully allocated product costs, and therefore its accelerated depreciation policies apparently caused its products to be overpriced relative to competition. In addition, the higher depreciation charges led to increased capital reinvestment demands from its divisions for maintaining and replacing the company's fixed assets.The company's management mentioned three principal reasons for its accounting decisions: (1) a belief that the external users of accounting data did not adjust for Harnischfeger's conservative financial reporting when comparing the company's performance with other companies in the industry, (2) the unpleasant experience with its debt covenant restrictions, and (3) the interaction between management accounting and external reporting. These reasons are discussed in greater detail in my paper, â€Å"The Anatomy of an Accounting Change. â€Å"Underlying all the accounting changes was a reporting philosophy outlined by the then chief financial officer and the current president of the company: In accounting there is no such thing as absolute truth. The same underlying reality can be accounted for using a range of assumptions. The earlier philosophy of this company was to choose the conservative alternative whenever there was a choice. Now we have decided to change this. We would like to tell the world that we are alive and well. We wish to tell the truth but do not want to be overly conservative in doing so.When the outside world compares our financial performance with that of other companies, they may or may not take the time and effort to untangle the effects of the differences in financial policies that various companies follow. My own belief is that people adjust for the obvious things like one-time gains and losses but have difficulty in adjusting for ongoing differences. In any case, these adjustments impose a cost on the user . If people adjust for the differences in accounting policies when they compare us with other companies, then it should not matter whether we follow conservative or liberal policies.But suppose they do not adjust. Then clearly we are better off following the more liberal policies than conservative policies. I am not sure whether people make the adjustments or not, but either way we wish to present an optimistic version of the picture and let people figure out what to do with the numbers. As a company you have to put the best foot forward if you want to raise capital, convince customers that you are a viable company, and attract talented people to work for the company. I feel that the financial reporting should help rather than hinder the implementation of our operating trategy. In my opinion, the changed accounting format highlights the effectiveness of our strategy better than the old policies do. The instructor can sum up the class discussion on question (2) by mentioning the view s of the management described above. Discussion of Question 3 After completing the analysis of Harnischfeger's accounting policy changes, the class should be asked to assess the company's future. At this point, I go back to my original question to the class, namely, â€Å"Is it worthwhile to invest in the company's stock in early 1985?    I call on a student who considers the company's stock a good investment and ask him or her to explain why. Harnischfeger's turnaround strategy consists of four elements: (1) changes in top management, (2) cost reductions to lower the company's break-even point, (3) reorientation of the company's business, and (4) restructuring the company's finances to facilitate the implementation of the reorientation strategy. The changes in the top management seem to be good. The new chief executive officer (CEO) has considerable experience in Harnischfeger's industry.The new CEO demonstrated his credibility with the financial community by successfully negoti ating with the company's lenders to restructure the company's debt. The new management has taken several steps in the right direction. The company's cost-reduction programs seem to be paying off. These programs were helpful in reducing the company's losses in 1984. The financial management of the company also seems to be sound. The cost-reduction programs and the pension restructuring have improved the company's cash flow.The total cash-flow analysis, shown in Exhibit 1, indicates that the company has been able to generate positive cash flow from its operations in 1984. The company raised substantial new capital through a public offering of debentures and common stock and used the proceeds to pay off all of the company's restructured debt. Finally, the company's business strategy seems to be sound. The management recognized the potential to exploit the company's strength in the material handling equipment business.Through its Harnischfeger Engineers subsidiary, the company planned t o expand in this area and concentrate on the high margin â€Å"systems† business. This strategy is likely to help the company to move away from the mining and construction equipment business, which is a low-growth and cyclical industry, to a higher-growth and more stable business. Students who are optimistic about the company's future cite the above factors as the reasons for their support for the company and its management.They argue that these factors indicate that the company's new management has the right ideas and knows how to turn the company around. These students suggest that the management's accounting decisions were part of its attempt to implement the company's strategy and are therefore constructive. The instructor should wrap up the case discussion by reviewing the company's motives for its accounting decisions. The instructor should point out that understanding these motives is essential for an analyst who is interested in assessing the company's current perform ance and its future potential.The instructor may end the class by taking a second vote on the investment potential of the company's stock and sharing with the class the subsequent events described below. SUBSEQUENT DEVELOPMENTS The following events describe the developments subsequent to the time of the case. As can be seen, Harnischfeger seems to have succeeded in implementing its strategy effectively. Also, the company continued to liberalize its financial reporting policies. 1985 1. The company changed its accounting for duration patterns and tooling. Previously, the cost of the patterns and tooling was expensed in the year of acquisition.Under the new method, these costs are capitalized and amortized over their estimated useful lives. 2. Harnischfeger reported a net profit of $0. 74 per share for fiscal 1985. The accounting change described above contributed $0. 24 per share to the reported profits. 3. The company raised $147 million by issuing preferred stock. 1986 1. Mr. Goess el was appointed as the chairman and CEO of the company, and Mr. Grade was appointed as the president and chief operating officer (COO). Previously, Mr. Goessel was the president and COO, and Mr. Grade was the CFO. 2.Harnischfeger acquired Beloit Corporation, a producer of papermaking machinery and systems, for $175 million in cash. Later in the year, stock equivalent to a 20% equity interest in Beloit was sold to Mitsubishi Heavy Industries, Ltd. , for $60 million in cash. 3. The company acquired Syscon Corporation, a firm based in Washington, DC for $92 million in cash. Syscon developed advanced computer systems for military markets. 4. Harnischfeger announced a plan to sell the company's Construction Equipment Division for approximately $17 million in cash and $55 million in debentures. . The company reported that Harnischfeger Engineers received a major order for the design of an automated car assembly plant. 6. Harnischfeger reported a net loss of $1. 14 per share for fiscal 19 86. This consisted of a profit of $2. 15 per share from continuing operations, a loss of $4. 45 per share from discontinued operations (Construction Equipment Division), and a gain of $1. 16 per share from the adoption of the new pension accounting rules. 1987 1. Harnischfeger received a takeover offer from Columbia Ventures, Inc. , for $19 per share in cash.The company considered the offer inadequate and rejected it. Exhibit 1 Total Cash-Flow Analysis ($ in thousands) |                                                                                                          |1984                         |1982                         |1981                         | |                                                                                                          |                               |                               |                               | |Working capital from operations                                                          | $ 2,961                   | $ 1,763                   | $ (55,902)             | |(Increase)/decrease n accounts receivable                                           |(23,908)                   |(5,327)                   |42,293                      | |(Increase)/decrease in inventories                                                       |9,282                      |56,904                      |26,124                      | |(Increase)/decrease in refundable income taxes and related interest    |                               |                               |                               | |                                                                                                          |11,289                      |(2,584)                   |(6,268)                   | |(Increase)/decrease in other current assets                                        |259                         |10,008                      |(439)                      | |Increase/(decrease) in accounts payable                                              |16,488                      |(1,757)                   |(3,302)                   | |Increase (decrease) in employee compensation and benefits payable       |                               |                               | |                                                                                                          |698                         |(15,564)                   |(3,702)                   | |Increase/(decrease) in accrued plant closing costs                               |(3,888)                   |(14,148)                   |20,496                      | |Increase (decrease) in other current liabilities                                  |    (3,181)                |    (15,927)                |    (3,030)                | |Cash from operating cycle                                                                   | $ 10,000                | $ 13,368                | $ 16,270                | |Minus plant and equipment additions                                                    |    (5,546)                |    (1,871)                |    (10,819)                | |Cash before dividends, investments, and    external financing                |                               |                               |                               | |                                                                                                          |$ 4,454                   |$ 11,497                   |$ 5,451                   | |Minus cash dividends                                                                   à ‚         |    0                         |    0                         |    (2,369)                | |Cash before investments and external financing                                     | $ 4,454                   | $ 11,497                | $ 3,082                   | |Minus advances to unconsolidated companies                                           |(2,882)                   |0                            |0                            | |Plus other                                                                                           |    269                      |    1,531                   |    848                      | |Cash before external financing                                                             | $ 1,841                   | $ 13,128                | $ 3,930                   | |                                                                                                          |                               |                               |                               | |External Financing:                                                                            |                               |                               |                               | |                                                                                                          |                               |                               |                               | |Proceeds from senior notes and subordinated                                        |                               |                               |                               | |Debentures                                                                                           |$ 120,530                |$ 0                         |$ 0                         | |Conversion of export and factored receivable sales to debt                   |                               |                               |                               | | 0                            |23,919                      |0                            | |Restructured debt                                                                               |0                            |158,058                   |0                            | |Debt replaced, including conversion of    receivable sales of 23,919       |                               |                               |                               | |                                                                                                          |0                            |(158,058)                |0                            | |Repayments of debt                                                                               |(161,500)                |(760)                      |(9,409)                   | |Increase (repayment) of short-term bank notes payable                         |2,107                      |(3,982)                   |(2,016)                   | |Other increases in debt                                                                      |1,474                      |0                            |25,698                      | |Issuance of common stock                                                                      |21,310                      |0                            |449                         | |Issua nce of common stock warrants                                                       |6,663                      |0                            |0                            | |Salaried pension assets reversion                                                       |    39,307                   |    0                         |    0                         | |Cash from external financing                                                                | $ 29,891                | $ 19,177                | $ 14,722                | |Net increase (decrease) in cash    and temporary investments                   |                               |                               |                               | |                                                                                                          |$ 31,732                   |$ 32,205                   |$ 18,652                   | 2. What is the effect of the depreciation accounting method change on the reported income in 1984? How will this change affect profits in future years? It increased the net income to $11 million for 1984 or $. 93 per common and common equivalent share. The straight-line method will allow the assets to continue to depreciate in the same amount for the life of the asset.This change will increase profit in future years even thought the depreciation expense in strait-line will be higher that would’ve been with accelerated method. 3. What is the effect of the depreciation lives change? How will this change affect future reported profits? As a result of going t o strait-line the company also has changed its estimated depreciation lives on certain U. S. plants, machinery and equipment and residual values on certain machinery and equipment, which increased net income for 1984 by $3. 2 million or $. 27 per share. No income tax effect was applied to this change. This change should report higher profits in the coming years. $3. 2 million or $. 27 per share. No income tax effect was applied to this change. This change should report higher profits in the coming years. 4.The depreciation accounting changes assume that Harnischfeger’s plant and machinery will last longer and will lose their value more slowly. Given the business conditions Harnischfeger was facing in its primary industries in 1984, are these economic assumptions justified? Not necessarily, they can not fully predict the outcome of these changes but history shows them that as long as their plant machinery are more up to date production will perform at a better rate which shoul d lead to valuable resources needed to conduct good business. 5. In Note 7, Harnischfeger describes the effect of LIFO inventory liquidation on its reported profits in 1984.Describe what is meant by LIFO liquidation and how liquidation affects a company’s income statement and balance sheet. By LIFO liquidation means when a company’s accounting sells its oldest inventory since the current sales are higher then current purchases then the liquidation will occur, meaning that older inventory will be sold. The effect of the LIFO liquidation on the company’s income statement is an increase in net income by $2. 4 million or $. 20 in fiscal year 1984. There is no income tax effect. On the balance sheet there is a decrease of inventory, due to liquidation. 4. The depreciation accounting changes assume that Harnischfeger’s plant and machinery will last longer and will lose their value more slowly.Given the business conditions Harnischfeger was facing in its primary industries in 1984, are these economic assumptions justified? They cannot fully predict the outcome of these changes but history shows; however, we know they were experiencing a drop in sales this would also mean that they were giving less use to their machinery, and that would cause less wear and tear to the machinery justifying and increase on the useful life of the asset. 5. In Note 7, Harnischfeger describes the effect of LIFO inventory liquidation on its reported profits in 1984. Describe what is meant by LIFO liquidation and how liquidation affects a company’s income statement and balance sheet.The liquidation means selling of older inventory since the current sales are higher then current purchases then the liquidation will occur and as result any inventory not sold in previous periods must be liquidated. The company will benefit by an increase in net income by $2. 4 million or $. 20 in fiscal year 1984. Meaning that the net loss of previous year 1983 was reduced by a pproximately 15. 6 million. The balance sheet would have decrease of inventory from 12. 6 mil in 1983 to 5. 5 mil in 1984. 6. Note 8, states Harnischfeger’s allowance for doubtful accounts. Compute the ratio of the allowance to gross receivables (receivables before the allowance) in 1983 and 1984.What would the allowance have been if the company maintained the ratio at the 1983 level? How much did the pre-tax income increase as a result of the changed ratio in 1984? The company's provision for doubtful accounts receivables as a percentage of total receivables was 8. 4% in 1984. The corresponding percentage in 1983 was 11. 3%. If the company maintained the same percentage provision in the two years, the bad debt expense in 1984 would have been $1. 5 million more than the reported expense. 7. Note 9, page 216, states that Harnischfeger decreased R&D expense in 1984 relative to the previous two years. Do you think this change was motivated by business considerations or accountin g considerations?How did this change affect the company’s reported profits in 1984? Also R&D expense in 1984 decreased by $7. 0 million over the previous year. Most of this reduction was a result of the company's agreement with Kobe Steel, Ltd. Under this agreement, Kobe agreed to reimburse Harnischfeger up to $17. 0 million dollars of R;D expense over a period of three years plus the company was reduced in its size so there was no need to that big expenditures on R;D. 8. Note 11, describes a number of changes in Harnischfeger’s pension plans in 1984. Describe these changes as clearly as you can. What are the economic consequences of these changes to Harnischfeger and its workers?The reduction in benefits and wedges were significant from 1982 to 1984. In 1984 the pension expenses accounted for 1. 9 million, 1983 for 6. 5 million and 1982 for 12. 2 million The change in the return on investment assumption is for all US plans. The economic consequence is that there will be less expenditure made by these pension owners during the lifetime of their pension. The company established a new plan, which goal was an improvement in the minimum pension benefit. This constituted in a restructure of the Salaried Employees’ Retirement Plan. From one side that decision could help the company to rebuild the trust of customers and suppliers for continuing in business.From the other side, the workers would suffer a significant economic lost and could lose the motivation to work for the company. But there is a possibility that a positive view could emerge because they could appreciate the company’s efforts to keep them working there, and then cooperate to take the company to the next level. 9. How did the pension plan changes affect Harnischfeger’s financial statements in 1984? Are these changes likely to affect future profits? The effect of the changes in the investment return assumption rates for all U. S. plans, together with the 1984 restruc turing of the U. S. Salaried Employees' Plan, was to reduce pension expense by approximately $4. 0 million in 1984 and $2. million in 1983, and the actuarial present value of accumulated plan benefits by approximately $60. 0 million in 1984. This may have an effect on future profits. The pension plan changes affected positively the statements in 1984. Less assets were available for benefits; therefore, more income was reflected in the financial statements, which contributed to the cash to pay debt obligations. Furthermore, if reducing the debt, company could recover the banks and shareholder’s trust. 10. Summarize all the accounting changes Harnischfeger made in 1984, and their effects on pre-tax profits and cash flows in 1984. 1. Change in the recognition of some types of sales. This resulted in a change in sales calculation.Harnischfeger incorporated products purchased from Kobe Steel, which were re-sold by the company, into its net sales. This increased aggregate sales and cost of sales by $28 million. The effect of the change in sales calculation was an increase in both aggregate sales and cost of sales by $28 million. Also, profit margin dropped from 1. 55% to 1. 44%, which represented a 7. 1% change in profit margin. 2. Change in the fiscal year for some foreign subsidiaries. By changing the fiscal year of foreign subsidiaries (ending period of September 30 instead of July 31), the effect was the lengthening of the 1984 reporting period for the subsidiaries from 12 months to 14 months.This increased sales by $5. 4 million. 3. Change in the depreciation methods on assets. The depreciation policy for financial reporting purposes was changed to a straight-line method from a principally accelerated method. The effect of the change in depreciation method (straight-line method) was a net income of $11 million realized in 1984. Overall, depreciation charges resulted in an increase of $3. 2 million in net income in 1984. 4. Change in the use LIFO liquidat ion in inventory valuation. The effect of LIFO inventory liquidation was an increase in 1984 net income by $2. 4 million, as gains. 5. Change in the allowance for doubtful accounts.The company adjusted its allowance for doubtful accounts to 6. 7% of sales for 1984 from 10% of sales in 1983. The effect of the change in the allowance for doubtful accounts was that it resulted in $2. 9 million in operating income for 1984. 6. Change in the R&D expenses. Harnischfeger significantly reduced its R&D expenses to $5. 1 million in 1984, from 412. 1 million in 1983. The effect of the change in R&D expenses was an increase in operating profit by $9. 1 million. 7. Change in employee pension plans. The effect of the change in pension plans was a reduction in pension expenses by $14 million and increase in net income by $3. 9 million, and a positive cash flow. 11.Accounting statements are used by investors, lenders, customers, employees, and governments in dealing with Harnischfeger. Among these groups, who is most likely to â€Å"see through† the above accounting changes, and who is least likely to do so? The least likely to â€Å"see through† the accounting changes are just normal people who don’t know accounting concepts because some methods of reporting can overstate or understate the numbers without a sustainable change so investors, lenders, and governments should be the ones to most likely â€Å"see through† the change and based on what they see they make a decisions. Employees in accounting, finance, and upper management should be able to â€Å"see through† the changes. 12.Are the accounting changes likely to help or to hinder Harnischfeger’s ability to implement its business plan? Be as specific as possible. Even thought the changes indicate an optimistic move, it does not guarantee that the company is going to be able to implement its business plan. The changes made strongly justify company’s boost in the periods an alyzed. From my point of view, company reflects a positive result on management through its financial reports. Basically the mission to satisfy shareholders and business related entities such as banks and suppliers was accomplished by showing the ability to overcome financial problems through management based on the financial statements.However, the accounting practice can be a matter of numbers’ convenience and it can be altered just to show easy actions. 13. Overall, what is your assessment of Harnischfeger’s future as of 1984? The company is taking a risk by expecting that the one-time boost in income and cash in 1984 will enable the company to successfully expand internationally and grow in new high tech areas and become profitable once again. They wanted to make their financial statements look pretty so that investors would buy their stocks and suppliers would continue giving credit for being able to produce product and sell. They need to stop playing with account ing methods and hiding the true story otherwise they will be in danger to not survive in a long run.