Shareholder conflict: the story so far – and its relevance to evaluation
Two themes wrapped up together here.
Firstly, you will be sure to have noticed references to a ‘Shareholder Spring’ in which normally quiet and docile shareholders have been increasingly resistant to executives’ claims for ever higher rewards. There’s a link to a very handy summary below.
Secondly, this serves as a reminder of one of the several ways in which you can boost the evaluative component of your answers.
A detailed look inside Apple’s Foxconn factory
A fascinating and detailed look here at working conditions at Apple’s main supplier in China. This 15 minute video raises a lot of issues which students can develop; particularly useful for any discussion around CSR, but also excellent for operations and HRM. In the video, ABC News Nightline goes behind the scenes of the FoxConn factory - the operation which makes iPads and iPhones.
read more...»Revision Presentation - Business Legislation
This comprehensive study presentation guides students through the relationship between business and legislation (the “L” in PESTEL” analysis). It outlines the main purposes of legislation in the business environment, including consumer protection, environmental laws, competition policy and health & safety. It also provides some recent case studies of firms and industries affected by changes in legislation.
read more...»UK manufacturing - GlaxoSmithKline invests in 1,000 new jobs
The relationship between business and the government - one important element of this is government support for business investment through fiscal policy (taxation), regulation and legislation. Yesterday Glaxo announced that they were investing £500mn in a new factory in Cumbria which will provide 1,000 much needed jobs. And this extract from the BBC article about this shows how government has helped to bring this about:
Glaxo said it was motivated specifically by Chancellor George Osborne’s confirmation in the Budget on Wednesday that the government would introduce so-called patent boxes.
These allow corporations to pay a lower rate of tax on profits generated from UK-owned intellectual property.
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain,” said Glaxo chief executive Sir Andrew Witty.
“Consequently, we can confirm that we will build GSK’s first new UK factory for almost 40 years.”
A useful little piece of evidence to use if writing BUSS4 essays on this topic.
Legislation forces Coke and Pepsi to change their recipe
Coke and Pepsi are estimated to have a 90% share of the global market for fizzy drinks between them and both fiercely guard the ‘secret recipes’ which protect their strength in the market. However, the state of California has added the chemical 4-methylimidazol to its list of carcinogens, and both companies use this ingredient to add chemical colouring to their drinks. If they continue to use it, they would need to add a cancer warning label to their cans and bottles, to comply with California laws - and neither want to do that.
read more...»Business legislation - the cost to businesses
AQA BUSS4 students are likely to be covering Business Legislation and Business and the EU about now. News over the weekend about new regulations giving workers a legal right to extra time off work if they become ill while on holiday give a useful case study combining both areas, as the regulations are due to changes to the European Working Time Directive, and state that time taken off work for sickness, maternity and paternity leave must be given to workers in addition to their legal right to annual leave.
read more...»Pub landlady wins TV football court case: a crucial insight into EU law
You might reasonably believe that a legal squabble about screening Sky football matches in the pub had little to do with Business Studies. But in fact the recent ruling sheds a clear light on the single most important feature of the European Union to UK businesses.
read more...»Bullet point 5 and stakeholders again
Competitors and customers are both stakeholders, and can both be significantly impacted by a takeover or merger. Sir Richard Branson can always be relied upon to have a comment to make about anything that British Airways do, and he doesn’t let us down here as Virgin Atlantic have lodged a formal complaint on the proposed merger between IAG (owners of BA) and BMI to the European Commission.
Virgin has said passengers would be left with a “choice of one” on flights between Aberdeen and Edinburgh and Heathrow. There is some great data in this article about the complaint from both sides, about Virgin’s claims of reduction in services and increase in prices for passengers which are likely to result from the merger, and BA’s counter-claims about increases in viability of services between Heathrow and Scotland. There is clear reference here to bullet point 6 - the reasons why governments might support or intervene in takeovers and mergers - as well as Sir Richard calls on “regulatory authorities, in the UK as well as in Europe, give this merger the fullest possible scrutiny and ensure it is stopped.” Definitely one to add to the BUSS4 resources!
Vestas – has the wind gone out of their sales.
Last Wednesday, Vestas the leading supplier of wind turbines posted a substantial operating loss of €166m on its operations. This has led to the resignation of the Chief Financial Officer Henrik Norremark, and the Chairman Bent Carlsen and two other main board directors. Norremark was about to be promoted to Chief Operating Officer, in control of the firm’s manufacturing operations.
read more...»Glenstrata - Glencore proposes merger with Xstrata
Yesterday morning’s business news has been dominated by the proposed merger of Glencore and Xstrata. Glencore’s 34% holding of Xstrata shares had made a third party approach for Xstrata very difficult if not impossible.
read more...»PEST - IAG and BMI acquisition
International Airlines Group or BA and Iberia are trying to acquire BMI from Lufthansa.
A move which would allow IAG would gain c. 56 additional take-off and landing slots at Heathrow. Lufthansa had bought up most of BMI’s shares in 2008 but has failed to prevent the group losing money.
Integration, integration, integration
HP is an example of a firm which is struggling to integrate acquisitions, and the perils of diversification.
German works councils enforce VW’s work-life balance!
Germany has long been noted for the strength of its trade unions, and the power of the works councils in manufacturing industries. Concerned about the blurring of the divide between work and home life, Volkswagen’s powerful works council has struck an agreement with management that most employees who use a company BlackBerry will be subject to new email restrictions. The company’s email server will cease routing messages 30 minutes after the end of an employee’s shift and will only begin sending mails again half an hour before the next working day begins.
read more...»Great product, bad management?
At first glance, Olympus is a market leader in the endoscope market, miniature cameras used in micro surgery and engineering inspections.
CGI modelling gauze and effect
Photographs of flawless models with tiny waists, perfect bums and endless legs, may hold the attention of consumers, but is it ethical to use computer generated images to promote a firm’s clothing ranges?
The Boston Matrix, whisky and booming exports
Don’t know why I keep using alcoholic beverages as examples in my lessons, but a recent discussion of the famous Boston Matrix got us all thinking which drinks belong in which Boston Box category. We decided that Guinness probably represents a cash cow for its producer, Diageo. In Europe, the market for beers is stable, or shrinking. But Guinness is a popular brand, with a large market share. It’s a good earner for the drinks giant.
But the Boston Matrix hints that there are better marketing opportunities out there: like grabbing a large share of fast growing markets – and developing star products. And that’s what Diageo have done, with whisky exports to China of popular brands like Johnnie Walker rising so fast the industry is struggling to meet demand.
read more...»Stakeholders argue over executive pay
It seems that this debate isn’t going to go away, which will surprise few of you. At a time when the economy is struggling, unemployment is rising and living standards are stagnant, why is one group in society getting so much wealthier? One pressure group, calling itself the ‘High Pay Commission’ (they are obviously trying to draw parallels with the government’s own Low Pay Commission) is in the news for publishing a report describing high executive pay as ‘corrosive’.
read more...»Olympus Epic Fail
The scale of the failings in corporate governance at Olympus is breathtaking. The company has misled, shareholders, banks, auditors, stock markets, Japan’s government, and staff about the true state of its finances over a 20 year period. It is Corporate Social Irresponsibility on the grandest of scales.
read more...»Corporate Irresponsibility at Olympus
Recent problems at Japan’s Olympus Corporation highlight the importance of corporate culture, ethics, Corporate Social Responsibility and management responsibility to shareholders and other stakeholders.
Problem for Pupil - PEST Solution
Entrepreneurs are risk takers, they spot gaps in a market where customers’ needs are left unfulfilled. They have to balance cash flow management against overstocking, anticipate the likely responses of intelligent rivals and the capricious behaviour of external regulators or governments.
read more...»A level playing field for football on TV
Pubs and clubs that want to show live football, cricket or rugby on Sky TV have to be extremely confident that it will raise their profits - the monthly cost of subscription runs to over £500 per month. For many, showing live sport is a way to keep customers coming to the pub rather than drinking at home, so may be the only strategy available to stay in business.You can easily see the benefit of finding a cheaper source of satellite broadcasts if possible, and this is the background to the well-publicised case in which Karen Murphy, landlady of a pub in Portsmouth, was taken to court by Sky and the Premier League for using a cheaper Greek decoder to bypass controls over match screening. The European Court of Justice has ruled that national laws which prohibit the import, sale or use of foreign decoder cards are contrary to the freedom to provide services.
read more...»Stakeholders gripped by the bad news coming from BAE Systems
Bad news this week from Britain’s second biggest manufacturing employer (the biggest is here), BAE Systems (formerly British Aerospace). The company is threatening to cut 3,000 jobs, many of them in highly skilled and technical roles making aircraft.
The reasons for this are interesting enough, but I was drawn to an article because I’d been thinking about business stakeholders. Bad business news – on this scale – reveals just how many people have a stake in the business.
Samsung seeks a ban on Apple products
Samsung and Apple are the world’s two biggest manufacturers of smartphones, and Samsung’s Galaxy Tab has become a huge-selling rival to the iPad, which has dominated the growing market for the touchscreen devices. Rather than focus on competing with each other on price or promotion, the two are focusing on features of their products and at each other’s throats at the moment over allegations of breach of patent. In the current round of claim and counter claim, Apple started it in April by accusing Samsung of copying its smartphones and tablet computers. Apple claimed that the Galaxy phones and tablets ‘slavishly’ copied its own designs for icons and other design features, while Samsung said that the look of their products was the results of market research and not copying. Later in April Samsung responded with their own claim that Apple was copying Samsung features in the area of wireless communications standards and mobile device user interface, and breaking patent legislation in five countries. The escalation has now reached the stage at which Samsung has asked the US International Trade Commission to ban the import of Apple products into the United States.
read more...»The Irresistible (?) Rise of the Super Rich
I wasn’t surprised to pick up on the news that the world’s wealthiest people are now richer than before the credit crunch. A striking feature of the last thirty years has been the emergence of a tiny group of people capturing a relatively enormous slice of national income. You may be astonished to learn that in the UK, the wealthiest 1000 people have assets worth more than £330 billion (that figure alone represents a sum equivalent to almost 40% of the entire debts of the UK government).
This raises a number of issues in Business. Firstly, you might focus on the marketing opportunities this offers to some firms. Equally, you might reflect on the CSR and ethical implications of this state of affairs. And finally: will it last? Might the tide be turning, with the next thirty years seeing attitudes change and tolerance for this situation coming under attack from electorates and their governments?
read more...»A2 Business: Six key global trends that are shaping business strategy
Students who can point to some overriding trends which help shape strategic direction and choices are much more likely to write interesting, persuasive and evaluative essays. This new report by consultants Ernst & Young is a pinch of gold dust for such students, as it examines in a reasonably accessible way six broad, long-term developments which shape business around the globe.
read more...»Economic environment: Emerging Markets
We’ve lived through an extraordinary period in world economic history. Sustained economic growth outside the areas once seen as the ‘rich world’ - primarily Western Europe, the US and Japan – is reordering the global balance of economic power.
The ‘emerging markets’ is a term used by commentators to group together some of these awakening giants. You may have heard of the BRIC economies - Brazil, Russia, India and China - a label that serves as a handy acronym to remind you of some of the key players. But there are plenty more. What does this mean for business?
read more...»Most Controversial Adverts of 2010
It’s been a bit lacklustre this year, without any of the same-sex kisses, knives and religious references that upset so many people in previous years. Try and have a think what adverts have been aired in 2010 that have the capacity to offend, before looking at the list.
read more...»CSR and Business Legislation - The Bribery Act comes to town
From the first of July, businesses will have another piece of legislation to deal with when the Bribery Act comes into law. This was proposed and passed in 2010 just before the election last May, and in the last year the government have been determining the precise way in which it should be put into practice. There are good reasons for it, to establish the country’s position as a global leader in the fight against business corruption – the UK currently holds a strong position in the World Bank’s rankings of economies for their ease of doing business. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm, and in June 2010 the UK was fourth on this register (behind Singapore, Hong Kong and New Zealand). London was ranked top amongst the Top 50 Cities for Doing Business, and the regulatory environment is a key aspect of this.
read more...»Workers’ rights and CSR – 100 year anniversary of note
I’ve read a bit of history this week that was quite moving, and serves as a reminder how far we’ve come in recognising the struggle between profit, principle and the law. Through time, this has lead to the creation of the legal and regulatory environment firms operate in today.
A major milestone was a catastrophic factory fire in New York City in March 1911.
read more...»CSR and Equality - Walmart accused of gender discrimination
Walmart is the worlds largest private sector employer; it employs 2.1 million people worldwide and nearly 900,000 of them are women. They claim that they have “strong policies against discrimination and these policies are there to ensure women are promoted and paid well” - yet in 2001 the average female Walmart manager earned $14,500 less than their male counterpart.
In the US Walmart is now facing a lawsuit from six of their female employees who believe they and Walmart’s other female staff were paid less and missed out on promotion because of their gender.
This story is worth reading - could be a valuable piece of EVIDENCE to quote in BUSS4 essays about social responsibility towards employees, and the need for government intervention to assist with ensuring those responsibilities are met.
