Accounting Ratios for Account Manipulation

Accounting Ratios for Account Manipulation How companies manipulate their accounts using accounting ratios? Abstract The emergence of accounting scandals in the US has shaken the world over. Professionals, stakeholders, shareholders and regulatory authorities blame a multitude of factors for the proliferation of cases like Enron, Tyco, WorldCom and Xerox etc. The researcher is of the view that the rising number of bankruptcies and fraud cases in the corporate sector has been the result of weakness within the financial system and regulatory standards. In the US especially the flexibility of the financial standards has given firms the opportunities to manipulate accounts with the help of financial and accounting professionals for the benefit of top management. These individuals have knowledge of GAAP (generally accepted accounting principle) and its loopholes. They capitalize on these loopholes to the extent of crippling the economy and professional standards. The following research investigates the rationale for firms that resort to accounts manipulation through financial ratios and how it could be curbed. It identifies the measures for counteracting unethical professional behaviour by outlining the core weaknesses within the accounting standards and systems. It also compares the US standards with those of the UK to conclude that the UK is less liable to fraudulent behaviour because its authority has taken measures to strictly regulate accounting professionals, auditors and top executives to avoid engage in accounting manipulation and fraud. Table of Contents Chapter 1 Introduction Background Rationale Objectives Scope Work Map Chapter 2 Literature review Introduction Enron WorldCom Ratios Differing Accounting Standards in the UK and US Chapter 3 Research Methodology Inductive and Deductive Reasoning Qualitative and Quantitative Research Secondary and Primary Resources Research Rationale Chapter 4 Data collection and analysis Chapter 5 Conclusion and Recommendations Bibliography Appendices Background The growing number of accounting scandals with the likes of Enron, Tyco, WorldCom and Xerox etc. has raised cause for concern for stakeholders, shareholders, professional bodies and trade authorities alike. They are of the view that corporate finance has undergone transformation for the worse in the last ten years. Williams’ research (2002) indicates that accuracy of revenues and earnings help in operational decision support and formulation of corporate strategy for almost 60 percent of the firms. Others, approximately 58 percent, feel financial reporting transparency and compliance (93 percent) with external reporting requirements imperative for effective corporate and industry performance. However, the growing number of scandals related to fraudulent earnings, inflated asset values and understated liabilities have undermined this system of corporate governance (Lev 2003). Investor confidence has been shaken as each scandal reveals the weak foundation of financial information system of public companies and regulatory authority that oversees them. When Enron filed for Chapter 11 bankruptcy on December 2, 2001 and WorldCom did the same later, investors blamed their business failures on accounting manipulations. This practice is not new. In fact according to Mishra and Drtina (2004) some 200 companies in the past five years have restated their earnings as a result of accounting manipulations. CFO Magazine survey indicates chief financial officers (CFOs) are forced to misrepresent earnings or are pressured to violate generally accepted accounting principles (GAAP) to satisfy shareholders and top executive management. Accounting manipulation not only offers the chance for companies like Enron and WorldCom to increase the asset valuation but also to understate liabilities that would appreciate stock prices, hide losses and increase company valuation. The practice is not limited to the US only. In the UK accounting manipulation is also known as creative accounting. According to Amat, Blake and Dowds (1999) creative accounting refers to a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business. Since the accounting process itself is flawed in the sense that it provides flexibility, and opportunities for manipulation and misstatement, financial professionals find it easy to engage in creative accounting. The practice helps in presenting increased profits, genuine economic growth and management efficiency whereas the opposite may also be true. According to Kamal Nasser (1993 qt. Amat, Blake and Dowds 1999) Creative accounting is the transformation of financial accounting figures from what they actually are to what preparers desire by taking advantage of the existing rules and/or ignoring some or all of them. The views of these authors indicate that accounting rules in Western countries are weak and offer plenty of room for manipulation. The damage resulting from accounting manipulation affects the accounting principles that the stakeholders, public and investors depend on and use to estimate, judge and predict corporate performance. The usefulness of accounting principles has regulated industries, balanced investment flow and capitalization in the past. However, Enron and the likes have proved that accounting principles (that the masses have depended on in the past) are unreliable. The scandals prove that accounting tools like financial ratio analysis or fundamental analysis for accounts estimation and prediction do not tr uly reflect the value of the investment. Artificial transactions can be used to manipulate balance sheet amount; profits can be moved from period to period; and assets can be re-arranged to depict a positive financial standing. Amat, Blake and Dowds (1999) are also of the view that companies employ creative accounting to smooth income and report a steady growth. This is achieved by manipulating accounts to depict improved profits even in weak economic conditions to harmonize the ongoing income. Investors, following accounting principles often utilize accounting ratios to judge and estimate the performance of firms, consider steady income growth as stability and judge a non-volatile stock as a good investment. Similarly Fox (1997) is of the view that accounts manipulation is for the purpose of normalizing income so that the company’s management can boost share price by reducing the levels of borrowing, lower risks and generate capital through new shares. Using the accounting rules companies often arrange financial accounts so that they would not reflect in the balance sheet, income statement or cash flow statement. The problem arises when the flexibility within the financial principles allows accountants of companies to manipulate accounts to avert investors, banks and financial institutions scrutiny. This kind of flexibility is limited in some countries while it is more pronounced in others. In the US for example the FASB (Financial Accounting Standard Board) rules that income from extended warranties may be recognized at the time of sale. Banks may not recognize this when they calculate the debt to equity ratios to allow the company to borrow through inventory. In the UK on the other hand there is less provision for using bad debts and inventory as a means to decrease liabilities and inadvertently inflate profitability. Thus, accounting manipulation undermines the moral and ethical standards that are expected of public limited companies. Decreasing apparent volatility in income, inflating debts to avoid taxes, smoothing income to create artificial opportunities for investments and manipulating accounting principles to control market mechanisms depict the weakness within the economy. It also reflects on the ethical standards and moral of the profession of accounting and auditing. Despite the knowledge and acknowledgement of this fact, professionals in the UK from a survey (Nasser 1993) indicate creative accounting is a problem that can never be resolved (91 percent). In the US creative accounting is more regular because it capitalizes on the mandate for detailed accounting rather than broad principles, which makes it even harder to detect fraud. The trend in fraud indicates that the foundation of accounting measures and ratios that firms, institutions and public use to estimate financial statements are not reliable. According to Mishra and Drtina (2004) financial statement ratios tend to focus on profitability not quality of the performance of the company. Ratios such as return on assets and return on equity are not adequate to gauge the firms ability to meet debt obligations or to measure the financial distress it is in. Similarly, ratios that accounting models use to tract shifting revenues and expenses through cash flow statement information merely asses the firms cash level based on operations, financing or investing activities. It is limited in calculating the value of the firm based on free cash flows or net income that affect cash flows. As a result, often firms tend to resort to bankruptcy declarations because of the lack of cash inflows. Furthermore, company’s stock performance is based on the performance of the stock prices but these values are risk dependent and the prices are set with the assumption that market value of the firm is efficient and the stock prices reflect information in the financial statements. However, when analysts base their decisions on ratios such as price to earnings, dividend yield and price to book ratios they are wholly dependent on information in the financial statements, which may be fraudulent (Mishra and Drtina 2004). Rationale When firms are constrained by fraud risks such as: opportunities, pressure and rationalization of unethical management, company information itself forms the basis for high risk (Hillison, Pacini and Sinason 1999). According to Cressey (1973) non-sharable financial need is responsible for the unethical practice that result in fraud such as accounts manipulation. The urgency, which forces management to pressure accountants and auditors to commit fraud, is due to the need to appropriate assets and resources to curb financial losses. In the process they undermine their professional integrity (See Appendix 1) (Hillison, Pacini and Sinason 1999). Riahi-Belkaoui and Picur (2000) in their attempt to understand fraud in the accounting environment write 59 percent of a KPMG 1998 Fraud Survey respondents believe fraud will become more prominent in the future. The reasons they cite include economic pressures, inadequate punishment for conviction, weakening social values, insufficient emphasis on prevention and detection, and criminal sophistication. Accounts manipulation is the result of favourable situations in which criminals recognize flexibility within the financial reporting system and audit failure to detect manipulation. Furthermore, when institutions gain power, privileges and position to create an environment conducive to white collar crime, members are likely to acquire earnings management knowledge that are within the framework of the accounting policies and alternatives. Abdelghany (2005) notes that earnings management help financial managers select certain target and tailor the financial results of the firm to match it. The basic premise is that management can manipulate soft numbers resulting from accrual accounting. As mentioned earlier firms engage in accounts manipulation due to several reasons some are unethical while others are due to the environment in which they operate. The approach to manipulate accounting principles to benefit from persistent high quality earnings and influence process decisions motivate firms to smooth income, inflate revenues, restate earnings and deflate liabilities. They try to meet the analysts expectations and company performance predictions (Abdelghany 2005). Other reasons include debt covenant avoidance, costs of investment, sustainable long-term performance and meeting up with bonus plan requirements etc. among others. The pressures of management performance, leadership, market failure, and future losses tend to motivate top management to conceal internal misappropriations and misstatements. The influence of these pressures on the reported statements is great as analysts depend on the information to make investment decisions, debt covenant, and professional pre diction. Abuse in the form of manipulating accounts affects not only the firm but also the industry and the economy at large. Given the above rationale the researcher is of the view that there is a great need to study accounts manipulation and its affect on industries, the public, accounting and auditing professionals, and the investment environment as a whole. Objectives The objectives of this study are as follows: To investigate how firms like Enron and WorldCom engage in accounts manipulation using financial ratios. To investigate the ethical and professional implications of financial ratios manipulation through accounting misstatements, earnings management and restatements. To study the role of the regulatory authority in contributing or deterring accounts manipulation by comparing the accounting standards in the US and UK. Scope The researcher aims to evaluate pertinent industry practice by evaluating case studies of Enron and WorldCom. The researcher shall also delve into issues of accounting principles weaknesses and the role of the authority in contributing to the current trend of accounting fraud and manipulation. Consequently, the study shall benefit professionals who are in the field, trying to find solutions for the current trend and how to curb it. Academicians might find the use of theoretical frameworks to study a current accounting dilemma interesting and contributory to future works. Moreover, the researcher expects the results of the study enumerating to both students and academicians alike who are interested in the study of accounting fraud and manipulation. However, readers might find the scope of this study limited in the sense that it will be focused on accounts manipulation particularly in the use of financial ratios. There are other methods of accounting manipulations, which will be covered briefly in the research. Overall, readers will find the findings useful and informative. Work Map The study shall be divided into the following sections: Chapter 1 introduces the topic through a brief overview of the current norms and practices in accounts manipulation. It also points out reasons why there is a need for the study with objectives for directing the topic for discussion in the following chapters. Chapter 2 is a Literature Review, which shall trace the Enron and WorldCom scandals in the light of accounts manipulation. It also reviews literature on financial ratios fraud and its effects. Lastly, it shall study the accounting standards adopted by the UK and US to compare which one is more prone to accounts manipulation. Chapter 3 shall outline the various methods considered and chosen for the development of the current study. Chapter 4 is an analysis of the data collected and evaluated from the researchers point of view based on the expertise of the scholars discussed in the Literature Review. Chapter 5 shall conclude the findings, and offers some recommendations to resolve the issues outlined in the objectives. Overview An efficient capital market is one that allows prices to shift rapidly in response to the latest information because public information is conveyed efficiently, interpreted and analyzed to make effective decisions. Disclosure therefore is an obligation imposed by law to facilitate market performance. Companies are obligated to provide information so that investors and the public can interpret information to participate in the market decisions. Professional ethics is relegated through understanding among accountants, auditors, management and executives on the premise that the market is entitled to receive full accounts and reports of companies’ performance as per regulatory authority. The form and content of the individual or consolidated accounts is regulated by the company law and by accounting standards issued to the accounting professionals and auditors. However, sometimes publicly traded company financial position becomes tradeoffs due to limited liability, losses and perf ormance pressure. Any compromise in their performance results in negative market reaction, as they are bound by standards and targets set by the public. This kind of market behaviour force companies to resort to unethical practices (Ferran 1999). Alternatively, when regulations change in response to the demand of the market, companies have to reshuffle their internal systems to comply with them. The preparation of accounts in accordance to applicable accounting standards often conflict with the companys standards and values. New accounting information requirements and standards are often viewed with apprehension as they put pressure on the statutory requirements. For example the Listing Rules of the London Stock Exchange require annual reports and accounts of companies to contain â€Å"additional information†. The changing environment therefore creates a problem for companies to align current with past performances (Ferran 1999). To gauge a companys financial standing, analysts use ratios to estimate and evaluate its performance by comparing it with the current status or against the industrys standards. Financial managers of companies are aware of the use of this tool to evaluate companys performance. Within the framework of legal accounting standards they employ planning and capital structure decisions to measure the performance of firms. Ratios such as price to earning, for example, are of particular interest to investors interested in gauging the performance of the company they want to invest in (Pike and Neale 1996). When pressured, accountants can manipulate accounts information, such as interests, liabilities, and pre-tax profits etc, to substantially inflate or deflate certain accounts according to the needs of the firms objectives for the short or long term. For example some companies might inflate earnings per share to depict higher dividend to increase the companys investment attractiveness. Others might deflate liabilities to depict low debt to equity ratio, to create opportunities for borrowing. Whichever the cause, the fact is that firms engage in accounts manipulation within the accounting principles framework. They are within their legal rights to employ such methods, which allow them to create a positive picture to investors, creditors and institutions. How far can firms employ such methods and to what extent constitutes unethical or illegal practice will be investigated in the following sections. Enron Among the recent cases of accounts manipulation is Enron. Enron products and services relate to gas and energy wholesale, as well as retail to a host of customers. The company is considered one of the most innovative with an efficient management team and a leader who is the envy of the industry. According to Mishra and Drtina (2004) Enron filed bankruptcy in 2001 when it had just revealed its strategic plans in the light of asset and non-asset expansions. The companys plan had been to expand into energy trading expertise with a host of new products and services. At the time its share had been traded at $90. From 1999 to 2001 the company underwent great changes in terms of its earnings per share from $1.27 in 1999 to $0.999 in 2000. To deflect speculation, Enron used off-balance sheet partnerships to finance and sustain its investment growth and rating (Mishra and Drtina 2004). This method is not a new practice but is employed by 27 percent of companies. Enron however used it to hide its massive debts by inflating revenue with gain from sale of assets to off-balance sheet partnerships by guaranteeing the partnerships debt with stocks. As a result Enron had to restate its earnings from time to time to reflect the reduction in shareholders’ equity due to the partnership. The stock price started to decline to less than $1 in November 2001 despite the fact that the company had been considered one of the fastest growing companies in the industry. While the book value of the assets tripled from $23.5 billion in 1997 to $65.5 billion in 2000, in actuality Enron had been deteriorating in its market capitalization (Kedia and Philippon 2005). Enron is a typical example of accounts manipulation where misreporting to show increased investment value and simulated income have created artificial resources whereas the company had been running into high level of debt s. The real cost of manipulation eventually reflects in the earnings. Earnings management has been used to boost stock prices so that managers can profit from the share trading but in effect undermine the organizations value. In theory the use of earnings management helps firms to manipulate price earning ratios to, firstly show firms potential activities, and secondly to restate the value of the firm. However, as a consequence, the earnings created theoretical growth in investment and employment depicting strong growth (Kedia and Philippon 2005; Healy and Wahlen 1999). According to the authors, Kedia and Philippon (2005), Enron used an earnings manipulation model, which has resulted real time inefficiencies, as it does not account for the fundamental value of the firms equity or account for the allocation of resources. Wamy’s (2004) investigation reveals that Enron inflated profits by nearly one billion dollars and top employees raked in millions of dollars (they should not have received) through complex and special partnerships to hide debt, inflate profits and to engage in allied unethical and heinous business practices. The companys unique business model depicts human capital as the leveraging point for its investments, instead of fixed assets. Since its people are considered physical assets, it could allocate earnings to these individuals to create higher value for the firm that owns them. Theorists blame the companys manipulated accounts as the basis for its bankruptcy in 2001. Others (Barlev and Haddad 2004; Wamy 2004) blame it on the transition within the accounting framework. Barlev and Haddad (2004) attribute the shift of accounting practices due to the inclusion of the new paradigm of fair value accounting has increased the pace of reporting in firms. The authors in their research prove that the new paradigm improved full disclosure, transparency and management efficiency mandates. However, the weak control system that governs accounts information contributed to abuse and manipulations. It has allowed Enron to sell its stakes to special purpose entities thereby minimizing reported activities. Since Enron took the position that as a result of the decrease in its ownership interest, it no longer controlled [SPEs] and was not required to consolidate [SPEs] in its balance sheet. SPEs had been acquired through bank loans and debt issuance, which resulted in high debt to equity ratio, but hidden from the investors. As business transactions at Enron grew, the company is also confronted with its inability to pay for these transactions (Dodd 2002). Further, the company has also abused the fair value framework by using hedging instruments such as changing fair value of assets and liabilities, variable cash flows and foreign currency exposure to emphasize on its valuation (Barlev and Haddad 2004) by recording inaccurate revenue and earnings growth. Enron reported prices and recognized fictitious unrealized gains to account for pretax income worth $1.41 billion for the year 2000, which is attested by its auditors as being true (Makkawi and Schick 2003). WorldCom WorldCom (now MCI) is one of the largest distance phone companies in the US to declare bankruptcy in 2004. The reason had been accounting irregularities that equal to $11 billion. According to Scharff (2005) the companys declaration had been one of the largest accounting frauds in the US history. The author writes of the perpetrator as being the organizational structure, group processes and culture, which mitigate fraud that had become an integral part of WorldComs operations. WorldComs rationale for following a corrupt course of action stems from groupthink behaviour and competitive industry environment that pressurize members of the organization to make decisions to pursue fraudulent activities (Whyte 1989). Scharff (2005) traces the development of WorldComs bankruptcy and notes that during the 1990s the company had been under strong pressure to maintain cash flows and earnings before interest. As the telecommunication industry is subjected to strict regulations, WorldCom executives resorted to fraud to allocate costs of capital as prepaid. Similarly, it also engaged in improper release of accruals so as to reduce current year expenses to increase earnings. Not only this, the company also ensured that minor revenue entries are made to increase operating earnings (Scharff 2005). The finance and accounts department had been encouraged by top management to engage in fraudulent behaviours (See Appendix 2) to cover for the invulnerable position the organization had been in. However, the most important issue had been when the company found out about loopholes in the GAAP that would support the entries the executives wanted to include. Through them, the company also managed to inflate cash flows for five quarters with the assumption that the company received cash flows from operations whereas most of its activities had been based on accruals. According to Tergesen (2002) the accounts manipulation engaged at WorldCom had been aimed at inflating consolidated cash flows to present a positive operation picture so that investors are attracted in buying its stocks to increase capitalization. Realizing that investors are risk averse, and avoid company stocks that raise cash through financings, such as debts or investment related activities such as assets, WorldCom managed to pose a positive and attractive picture through accounts manipulation. It managed to secure operations cash flows through securitizing, which is the selling of account receivables. Selling of receivables is recognized as cash collections, even though they are collected in the future. Although this practice is regular, the timing and the manner of entry makes it culpably the basis for accounts manipulation. Not only this, Tergesen also notes that WorldCom engaged in capitalizing expenses. This practice involves the capitalization of costs of assets in the bala nce sheet and writing it off as annual instalments. To compensate for the lack of cash, WorldCom also manipulated the GAAP rules of allowing cash raised through securities sales recorded in the â€Å"cash from operations† section, even though the activity is not related to cash flow. (Tergesen 2002). The motivation according to Zekany, Braun and Warder (2004) stemmed from the pressure to meet analysts and investors’ expectations. WorldCom had been closely connected with the stock market and a favourite of investors. To meet analysts’ forecast expectations, WorldCom used its public relation as guidance for meeting such expectations. These expectations are derived from earnings estimates, securities performance and market position of its stocks. WorldCom, pressured from the intensity of investment demand and analysts’ expectations, devised financial measures to meet the financial requirements. To increase the stock market value, the top executive had to engage in expansionary acquisitions, to increase revenue growth. At the same time the companys performance deteriorated along with the industry yet it had to prove that it performs above the others (Zekany, Braun and Warder 2004). The accounting department at WorldCom had become an important functional component under the directives of its executives engaged in accounts manipulation activities to boost E/R ratio. The authors explain that WorldCom adopted the line cost accruals system to compensate for the accrual revenue and the liability reported in the balance sheet. However, since the accrual system is highly risky, it is difficult to make provision for its accurate reportage. The pressure to meet up with the line cost accruals motivated executives to find creative accounting ideas to reduce and save costs. This approach would have been successful, however since the industry had been strived by deterioration, earnings could not be inflated to achieve the expected levels to portray a positive E/R ratio. E/R is basically a ratio to measure the return on business resources available to the management. It is similar to a measure of shareholder equity and management effectiveness. (Alexander 2001). Ratios Fraudulent financial reporting has given new dimensions to corporate fraud. Both external and internal auditors are striving with the legal liability to detect fraudulent financial statements, so as to save damage to their professional reputation and to prevent public dissatisfaction (Kaminski and Wetzel 2004). Previously professionals relied on the efficiency of ratios to detect expectation errors to make decision pertaining to stock prices, risks and value of stocks for future growth. Subsequent decisions are based on the credible reportage. Investors, borrowing institutions and the public, use accounting ratios to predict returns or performance. Ratios rely on earnings and book value to measure a firms value. Performance is predicted by a cross-sectional aggregate and indicators from figures in the financial statements. Investors use strategies such as fundamental ratio analysis, accruals analysis and fundamental value analysis, to account for their decisions and treatment of inve stment portfolios. However, Daniela, Hirshleifer and Teohb (2001) are of the view that these strategies are not effective predictors of future stock returns. They write: Earnings reported on firms financial statements differ from cash flows by accounting adjustments known as accruals. These are designed in principle to reflect better economic circumstanceshigh accruals predict negative long-run future returns. (Daniela, Hirshleifer and Teohb 2001) This strategy is affected by the discretionary working capital accrual and new equity. This is so because investors are fixated by earnings numbers. Consequently they tend to underestimate other accrual factors. Similarly, the authors also note that the fundamental value analysis strategy to predict future stock returns, relies on stock prices from an imputed value based on a fundamental value model (Daniela, Hirshleifer and Teohb 2001). Even in this model the discounted value of expected future residual earnings are defined in the context of normal return employed in future years. In re

Impact of Ww1 on Canada

World War One had an impact on Canada both over seas and on the Canadian home front. It helped Canada develop a sense of national identity by gaining international status overseas. It gave women more jobs than working at home and but during the war there was the Conscription Crisis. These points impacted Canada greatly during and after WWI. In 1914 when World War One started, Canada was a legislative union, but Britain still controlled the foreign policy of all its dominions. So when Britain declared war on Germany the whole British empire was involved including Canada.As the war ended Canada met in Paris for the â€Å"Paris Peace Conference†. The conference was a big step towards Canada's independence. The main reason was, Prime minister Borden demanded that Canada have its own seat in the conference. Although there was great debate, in the end Canada acquired the seat. Fr the first time ever Canada was recognized as independent internationally. Before the war a woman's main job was to stay at home and look after the children as well as cook and clean. It was a while different story during the war.A mere 2800 woman served in the army as nurses in oversea hospitals. Other woman worked in Canada on jobs which would usually be called a â€Å"mans job†. For example woman where working in industrial sites since most of the men had left to war and there needed to be someone to supply and build arms as well as general items. Woman also worked operating fishing boats and working on farms. With this new era of woman working the government took notice that the woman weren't as fragile as they once believed. Woman seemed to be able to do a mans job good if not better.Then in 1918 women were granted the right to vote in federal elections, with the exception of aboriginal and immigrant woman. When war ended women stayed in the job force and worked alongside men. The conscription Crisis was a big deal off-seas as well as in Canada. This is because in 1917 thou sands of Canadians were killed or injured making the need to supply more soldiers immediate. Borden had promised there would be no conscription but as the war proceeded it became apparent they would need more soldiers if they wanted to win the war.Borden introduced the â€Å"Military Service Act†, which stated everyone able and fit under the guidelines of the act would have to fight in the war. There was outrage but unless the person hid there was no way of escaping going to war. World War One did have an impact on Canada both over seas and on the Canadian home front. It affected the woman and the men. The aboriginals and the immigrants. Almost everyone was affected by World War One one way or another.

CP

Nowadays, CAP has thousands of branches around the oral and number one chicken import and export in Asia and number one on animal food producer in the world. If we want to talk about CAP strategies, we have to go through Cap's history in 1962. In 1962, CAP was competed with many other crops companies to sell crop to Thai farmer in Thailand. However, at that time, farmers did not trust the crops that came from the companies because there were cases of rotten crops and the quality was very bad.CAP, at that time, depended mainly on animal crop which were the main revenues for CAP. Danni, owner of CAP, had the idea that will throw the competitors off the amen. He mixed and sold crops in packages instead of actual food for animals. He hired the specialist to control the product which it is rarely new in Thailand. CAP promised to every farmer that they willing to pay for everything that happen related to their products. Therefore, CAP gains farmer's trust since then. CAP slowly changed fro m selling animal crop to chickens due to the demand of chicken in Asia.In 1 967, CAP conducted four new minor companies to give opportunities for the one who has potential to show their management skill and CAP bought 90% of stock market on chicken packaging.. In 1 995, CAP has over 57 factories in 50 cities throughout Asia and Europe. Nowadays, CAP bought everything that help their business grows and reduces many competitors. For example, CAP bought 7-11 which are American Franchise Company and Macro as well. CAP revenues do not from only CAP product itself, but also other companies that CAP bought as well. There are Chester Grill, True Co-operation, Dang Motors, Pin An insurance and Asia Telecoms.So CAP basically sells cars, telephone, insurance and cable television too. That what make CAP so big that other companies do not want to compete with. In my opinion, this is one kind of the strategy too. Talking about mission and vision, CAP has set high standard on these two aspects. Ca p's vision basically to become most professional food company that fulfill the demands of their client and increases life quality for everyone which is of course their responsibility. Just the vision of the company makes me want to buy CAP product now.Cap's mission is to develop agricultural industries and become the leader of creating healthy eating habits to consumers by giving high quality and reliable product to ones who lacked protein. There are three main benefits in investment philosophy Of the CAP group which are benefit Of the country CAP invested in, benefits of people of that country invested in, and finally, the benefit of CAP Company. CAP strategies are based on these vision and missions. CAP keeps moving forward and expands their company bigger and bigger every day. CAP has achieved their goal 10 years ago. Talking about CAP competitions, if in Thailand, there is none.CAP has influences among those who do food company. Other word, it is on CAPS side. Many of the food c ompanies choose to work with the CAP instead of competing with it. The company that competes with CAP is Chinese COFFS Corporation Company in China which sold tea, wine, cooking oil, and chicken. There is also Eek Chord China Motors which compete with CAPS ASIA and Dang Motors which of course the size of the organization is not even comparable. Can overcome many obstacles and use their strategies to overcome every environmental aspect including Thai flooding, world economic crisis, and Thai on-going protest.In my opinion, the main strategy of CAP is to gain consumers trust and expectations. CAP does many charities and of course, Donating is a ere popular among Thai people and society. CAP is the professional to win the heart of the people. CAP also provides varieties of foods and not just chickens. Because of there is no competition to begin with, CAP can sold their products daily every;here and not afraid of other things but politic. Politic can really hurt big company such as CAP. In 2012, Thai government increase wages per worker to 300 baths a day which there is no strategy to help solving it.CAP and every other CEO and Chairman need to lost more money in employee costs. CAP is not affected at all. They are still standing to this very day. There is new CAP campaign called â€Å"Life Stations† which is targeted mainly on young people such as high-school, university students and office people. It is located in China with in the middle of office districts in Guanos. CAP understands the market well and designs Life Station to fit the personalities of those people who is going to be customers. For example, life station near the schools, it going to provide not just breakfast, milk, or bakery products. It also has stationery shop as well.If Life Station is near the office, it will provide ere wife and of course, many kinds of coffee. If Life Station opens in the city area, it will provide varieties of foods and provide best quality. The main strategy of L ife Station is the design of actual branch and gain more information on consumer to find opportunities in future products of CAP. Life stations are designed to fit people's life styles. The design will attract lots of people and they are willing to try new things. The best ways to be profitable is to reduce the cost of products which is cooking ingredients which CAP already as factories and farms around the world.The cost of products is cheap, that is why it is profitable. There will be obstacle such as economy and sometime lack of customers. Life Station will carry out promotion plan to attract more customers which are marketing departments job by using buy one gets one free or anything necessary to gain more consumers. Research and development department will work with human resources department to gain the information about people in the Life Station's area to develop an insight on consumers and gain more idea what to develop in the future.

The Rise of Drug Abuse in Hong Kong - 1065 Words

Goretti Wong 6B (27) Say NO to drugs Drug abuse is on the rise among young people in Hong Kong which is a serious and alarming phenomenon that every one of us should face squarely to. Before we figure out ways to help them, we must first understand the reasons for teenagers to take drugs. Peer influence is the dominant reason for teenagers to take drugs. Usually, friends among a group share same interests and their behaviors are expected to be consistent with one another. At the same time, teenagers try to gain respect and recognition from their friends by involving in common activities. If their groups of friends take drugs, they would be repelled and teased if they rejected to do the same. In order not to be excluded from the†¦show more content†¦In a long run, drugs spoil our organs like kidneys and gall bladder. Kidney is responsible for detoxification, taking too much drug will increase the work load of it, and eventually leads to malfunctioning. When gall bladder is damaged by drugs, we will have to urinate more frequently than normal which, on the other hand, seriously affect our normal life routine. Taking drugs may cause serious allergic reactions. Some people are allergic to a certain kind of drugs. This may be unknown to them. But once they take them, it will be too late for them to avoid it afterwards because the effects are instant. In trivial case, it causes headache or swelling of face. In severe case, it causes suffocation which may lead to death. Actually, drug education is essential, especially when we see that there is a rising trend here in Hong Kong. However, as our targets are teenagers, anti-drug messages will be more acceptable if we are not using the traditional way of educating – teaching theories in books. Celebrities are the best way to arouse teenagers’ attention. The government can invite famous singers or stars to attend different functions like mini-concerts or sharing to spread anti-drug messages. 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