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TATA Group; A Critical Analysis

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TATA Group

Abstract

TATA Group is among the largest Indian conglomerates, which has grown immensely over the years to become a well-recognized brand. The company is mostly known for its major businesses including TATA Motors, TATA Steel, TATA Power, TATA Consultancy Services, Titan, TATA Teleservices, TATA Communications and TATA Global Beverages. In this report, TATA’s environment is analyzed to determine internal and external environment factors that affect the company’s performance.

Through the SWOT and PESTEL analysis, the business environment is assessed. The company’s steel business is currently undergoing challenges after British Steel’s closure decision. In this relation, the company must seek alternative areas to invest in to ensure that the business continues to thrive.

Spain and China are suggested as potential countries and these are discussed in regard to their attractiveness. The paper also provides recommendations for TATA based on information collected from the report. By the end of the report, the reader will have a greater understanding of TATA, its operations and factors that affect its performance.

TATA Group

Introduction

TATA Group has developed its niche as a leading multinational company in India and in the world, having evolved from a small family business began 148 years ago. Taking advantage of increasing globalization, the company has expanded its business across borders and increased the types of businesses that it deals with by venturing into different industries. TATA’s success is associated with the favorable macro-environment, particularly in India that helped the company grow significantly.

The company’s commitment to success cannot be underestimated either and it is notable that by leveraging its strengths and market opportunities, TATA has grown its portfolio tremendously. TATA continues to expand its operations internationally through global acquisitions. However, not all its ventures have been successful, owing to country-specific factors that influence its business operations.

Selecting a potential country for further global expansion therefore requires that TATA performs thorough market research to establish marketplaces in which the company is likely to thrive. This paper seeks to identify factors in the macro-environment, which may have influenced TATA’s success as a leading company in India. It also outlines some of the countries in which TATA could further expand its operations and provides a recommended country TATA’s steel business.

Company Background

TATA Group is considered one of India’s global pillar, whose multinational status has seen it become a major conglomerate in India. The company which was formed in 1868 is headquartered in Mumbai, Maharashtra. TATA owns several companies which are independently operated and has over 600,000 employees. Through the years, the company has made several acquisitions across the globe, further improving its international presence.

The company continues to enjoy a global reach and considerable profit levels, with the latest financial information indicating that the company garnered $108.7 billion in 2014/2015 financial year (tata.com). TATA Group consists of different sub-companies including TATA Motors, TATA Steel, TATA Power, TATA Consultancy Services, Titan, TATA Teleservices, TATA Communications and TATA Global Beverages.

Besides its many sub-companies, TATA’s growth can be attributed to the purchase of various businesses globally including Daewoo Commercial Vehicle Company, Land Rover, Jaguar Cars, Eight O’clock Coffee an Good Earth Corporation among others, propelling it to an internationally recognized organization (tata.com).

Discussion

Macro-environmental factors

SWOT Analysis

Strengths Strong financial performance Brand strength Foreign investment Diversification Management professionalism and regard to employee welfare International acquisitions and collaboration Corporate social responsibility/ Commitment towards national growth	Opportunities Favorable government policies Emerging markets and developing countries Strategic alliances and mergers New product lines Increasing per capita income Changing customer needs
Weaknesses Excessive debt Diversification Management and control Controversy on illegal land acquisition Environmental concerns	Threats Rising cost of material and manufacturing Competition Economic and business volatility

Strengths

TATA’s strong financial performance plays a major role in enhancing its performance. Based on its last financial results, the group collectively earned $108.7 billion in revenue and $6.7 billion in profits in the 2014/2015 financial year. The company also owns major assets and property, which further enhance its financial position. Lynch (2012) notes that when a company is financially stable, it is more likely to mitigate any threats within the market place.

Brand strength remains a major boost for TATA. The company is not only well known in India but also internationally, mostly for its motor vehicle and steel business. This means that customers are more likely to trust its products and services.

TATA has invested significantly in foreign markets through direct investment, subsidiaries, strategic alliances and subsidiaries (Au, Ayyagari and Spencer, 2015). This gives the company a strong ground in the global market and also promotes its financial performance. Due to its global presence, TATA has gained tremendous experience on international trade and is therefore capable of enhanced success in terms of internationalization.

TATA has invested in numerous industries and this form of diversification is of great significance to its portfolio. To begin with, it means that the company can shield itself in times of financial crisis by benefitting from companies that are performing well. In essence, other companies can support the company’s performance in the event that certain industries are affected by business or environmental factors; thus enhancing continuity (Ramachandran, Manikandan and Pant, 2013).

Management professionalism and regard to employee welfare has ensured retention of professional managers and high performing employees. TATA is known for its hands-off approach where managers are allowed to make independent decisions without influence from the owners. This hastens business processes and is therefore considered a major strength for the company. It also provides attractive benefits for its employees and is thereby considered an employer of choice.

International acquisitions and collaboration ensure that the company’s international presence continues to grow. These add to the company’s financial performance and international experience and are therefore of major significance.

TATA is known for its commitment to corporate social responsibility, having undertaken numerous projects to promote living standards in India. TATA has invested in education, research, art, sports and cultural endeavors and is well known for its philanthropy. In 2007, TATA received the Carnegie Medal of Philanthropy (Carnegie, 2015). Corporate social responsibility is hailed in the business world as an efficient way to create a strong brand by creating community trust (Grant, 2016).

Opportunities

Favorable government policies have ensured that TATA conducts its business effectively. The company has received major support from the government of India and this has to a great extent enhanced its performance. TATA has also been well received in other countries where it operates. This is an opportunity that the TATA could utilize by investing more in its business.

Emerging markets including rural areas and developing countries present a good opportunity for TATA to exploit. The company should therefore work towards reaching these markets before they are exploited by others.

Strategic alliances and mergers are still a lucrative approach towards enhancing the company’s global market. It is notable that many companies across the globe are seeking companies they can collaborate with to achieve various goals including technological innovation. Companies considering buy-outs due to financial difficulties are also increasing and TATA could take advantage of such opportunities for growth.

TATA Group can enhance its performance through diversifying into new product lines. This will enhance their performance and hence promote is global position.

Weaknesses

TATA operates numerous companies and is constantly engaging in investment activities that require large amounts of money, such that it has accumulated a significant level of debt. These are repaid from its business proceeds and this means that in the event that business is affected by unforeseen risks, it may be difficult for the company to effectively repay the loans (Boone and Kurtz, 2012).

Diversification is considered a positive aspect of business performance. However, it may also present difficulties in management, such that the company fails to ensure optimal performance for each product (Boone and Kurtz, 2012). This could threaten TATA’s performance.

The TATA family is no longer managing the group of companies and this has been delegated to independent companies, which work under the board. Management and control issues could therefore be experienced if the respective managers are not as committed to success as the owners.

Controversy on illegal land acquisition has tainted TATA’s image to a significant extent. The company was a victim of public uproar on land grabbing accusations. This has affected TATA Tea and TATA Steel in India, where communities have claimed ownership of land possessed by TATA.

Environmental concerns have also emerged, with the company being accused of encroaching natural endowments and polluting the environment (Masani, 2015). This may affect the company’s reputation and thus limit its performance.

Threats

The rise in the number of businesses globally cannot be underestimated and TATA therefore faces stiff competition from emerging and existing businesses.

Rising cost of material and manufacturing is affecting the company’s productivity, given that it has to contend with lower profits than it would if the conditions remained the same.

TATA like any other company faces a major challenge in the form of economic and business volatility. According to Grant (2016), the world economy is highly unstable and components including interest rates, inflation, availability of credit, per capita income and customer demand keep changing. This is a major risk for global companies such as TATA.

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PESTEL Analysis

Political Factors

These refer to factors in the political environment in which a company operates. India enjoys a generally stable political environment that is suitable for business. TATA is however exposed to changes in government regimes that may influence the business environment through new regulations and policies (Beneke et al, 2013).

An example of a new law that is bound to affect TATA is the new rule on corporate social responsibility, where companies may be expected to give 2% of net profit earned towards community development. Given that TATA operates in different countries, the risk of international trade regulations is eminent. An example is the adoption of policies aimed at protecting local organizations, which is bound to affect international companies in a significant manner.

Economic Factors

The global economic conditions in recent years have been volatile and this to s significant extent affects company performance. The global economic crisis for example hit most companies, affecting their profitability. The collapse of British Steel following market factors is also a demonstration of economic impact on the business. India’s steel market remains among the largest in the world and this has ensured that TATA’s steel business grows steadily.

Social

The community in which TATA operates has influenced the company’s operations both positively and negatively. As the company expands, there are greater expectations from the company to give back to the community (Masani, 2015). This is further exacerbated by competitive pressure. TATA must therefore invest more in community social responsibility in order to create a good name for itself. Globalization has led to changes in indigenous culture and this has prompted TATA to invest in activities aimed at preserving the Indian culture.

Technological

In a world where technology is evolving rapidly, TATA is faced by the need to keep investing in newer technology. Customers are increasingly demanding highly sophisticated products and TATA is affected through increased expenditure for these products. In car manufacturing for example, the acquisition of Jaguar and Land Rover presents the company with a daunting task in terms of innovation, which will ensure that these cars maintain their class. The company must therefore be in touch with advances in technology to maintain its competitive position (Masani, 2015).

Environmental

There is growing pressure for companies to preserve the environment through exercising safe environmental practices; including the preservation of natural resources and reducing pollution. The company is striving to protect the environment through taking specific measures such as producing low fuel consumption cars and reducing gas emissions.

The company also participates in activities aimed at reducing industrial pollution, such as “Green Earth” campaigns; and preventing deforestation (tata.com). In the past, TATA has received criticism over river pollution, air pollution through gas emissions and natural resources encroachment.

Legal

TATA operates in different countries where varying laws governing business operations and issues such as taxation, employment and environmental responsibility among other factors (Beneke, 2013). The company has also been exposed to various legal battles during its existence, including legal cases challenging land ownership such as the Kerala Government law suit. In this case, TATA Tea was accused of grabbing 3,000 acres of government land in Munnar.

Potential international marketplaces for TATA foreign acquisition

As the world becomes increasingly interconnected following globalization, TATA may choose to invest in other countries, which also demonstrate great potential for business. Some of the countries in which TATA could invest in are discussed below.

Spain

The Forbes Magazine ranks Spain as the second-best country to invest in (Rapoza, 2015). This is based on its stable economic environment and the business environment has improved tremendously. The government recently reduced corporate taxation from 30-28% and tax rate on income from 56-47% (Rapoza, 2015). Tax on savings has also decreased, meaning that disposable income among consumers is bound to increase.

These conditions are favorable for the company and TATA should therefore consider investing in Spain. Currently, Spain’s GDP per capita is $1.7 trillion. At more than 3% per year, Spain’s economic growth can be considered strong; having recovered from the property boom effects. The country is highly ranked 16^th in terms of purchasing power parity globally. TATA could therefore benefit significantly through investing in Spain for its steel business due to market availability.

China

China has been considered an attractive market to invest in, mostly based on its vibrant economic growth and the low cost of inputs and resources, including cheap labor. China has in the recent past attracted major investors who seek to capitalize on the favorable business conditions and government policy aimed at attracting foreign direct investment (Jalil and Feridun, 2011). The country also enjoys a stable political environment. It is notable that China is slowing down in terms of inward foreign direct investment and increasingly favoring alliances (Davies, 2013). This is therefore a great opportunity for TATA to leverage on.

In recent years, China has witnessed increased economic strength. Until 2015 when India overtook China as the fastest growing economy, China was taking the lead and this still presents the country as a lucrative marketplace to invest in. The country’s growth has averaged 10% over the last 30 years and its GDP per capita was $19.392 trillion in 2015 (IMF, 2016). The GDP growth in 2015 was recorded at 6.9%.

Preferred international marketplace for TATA Steel

TATA Steel faces a major challenge as British Steel heads for closure. Based on the discussion of potential global marketplaces where TATA could seek further acquisitions in China is recommended as the preferred location to further internationalize its steel making business. This is based on its favorability in terms of investment environment, government policy and steady economic environment. Johnson et al. (2014) notes that in order to make a decision on investment, the macro-environment within the country must be effectively studied to ensure that it will enhance business performance.

One of the first indicators of a conducive business environment is the economic environment, which should favor business growth and continuity. In this case, it can be established that the company is performing well and that potential for growth is high. Secondly, government accommodation towards foreign companies is also an important consideration for TATA to consider (Au, Ayyagari and Spencer, 2012). The survey on China indicates that the government policy supports foreign direct investment and TATA can therefore invest with confidence.

China’s government is on a mission to promote economic performance and reduce poverty; which has resulted in aggressive approaches aimed at increasing investment within the country. According to the Five-year Plan for 2016-2020, China aims at eliminating poverty and enhancing China’s development through creating a ‘new normal’, where China will no longer be viewed as a ‘cheap’ hub but an established economy (Hong, Cheung and Sit, 2015). One of the major ways this will be achieved is through promoting innovation investment, which TATA could leverage.

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Conclusion

This report explores TATA Group and its environment, establishing that it is influenced by various factors in its internal and external environments. It can be established that the company is performing exceptionally and that its current approach of managerial independence has contributed to its growth.

Owing to the high level of diversification, the company’s risks are spread across many sectors and this creates financial security. The company like any other company faces stiff competition and factors in the environment affect its operations. An example is British Steel which has been affected by economic factors, threatening its closure. In order to further expand its operations to other international markets, TATA could choose between Spain and China.

These two countries present perfect opportunities for the company, although China is considered as having greater potential for growth. This is because of its high economic growth and the fact that its steel industry has grown significantly.

Recommendations

TATA faces significant threats as established in the SWOT analysis. To address these challenges, the company needs to capitalize on its major strengths and opportunities to recover from such threats. An example is utilizing its strong financial position to invest more in new technology and innovation to create a competitive edge.

Continued diversification efforts by TATA need to be managed in order to ensure that they do not overwhelm the company. As noted in Masani (2015), too much diversification may hurt the company’s prospects and it is best that it engages in only what is achievable.

The need to protect the company from legal issues is imperative. This means that TATA should seek to refrain from activities that expose the company to such, including environmental degradation. In this relation, it should get more vigilant in terms of environmental conservation.

In its quest to invest more in the international market, the company must ensure that a thorough background is conducted to ensure that the country will accommodate the company.

Secondly, TATA needs to determine the possible unforeseen risks that may emerge in the market and thus develop a risk mitigation plan that can be applied in such a case.

References

Au, L. A., Ayyagari, M., & Spencer, J. (2015). Strategic Responses to FDI in Emerging Markets: Are Core Members More Responsive Than Peripheral Members Of Business Groups? Academy Of Management Journal, 58(6), 1869-1894. doi:10.5465/amj.2012.0521 Retrieved from eds.b.ebscohost.com/ehost/detail/detail?vid=5&sid=a0b3dfef-e1fe-4e6f-a386-ec4d7de005a4%40sessionmgr106&hid=103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=111855985&db=bth

Beneke, J., et al. (2013). The influence of perceived product quality, relative price and risk on customer value and willingness to buy: a study of private label merchandise. Journal of Product & Brand Management, 22(3), pp.218-228.

Boone, L. E., & Kurtz, D. L. (2012). Contemporary Marketing. New York: Cengage Learning. Carnegie. (2015). Announcing the 2015 Carnegie Medal of Philanthropy Honorees. Retrieved from https://www.carnegie.org/news/articles/announcing-the-2015-carnegie-medal-of-philanthropy/

Grant, R. M. (2016). Contemporary Strategy Analysis: text and cases, 9th edn. Chichester: Wiley & Sons.

Hong, W., Cheung, D. & Sit, D. (2015). China’s 13th Five-Year Plan (2016-2020): Redefining China’s development paradigm under the New Normal. Retrieved from https://www.fbicgroup.com/sites/default/files/China’s%2013th%20Five-Year%20Plan%20(2016-2020)%20Redefining%20China’s%20development%20paradigm%20under%20the%20New%20Normal.pdf

International Monetary Fund, IMF. (2016). Report for Selected Countries and Subjects. Retrieved from www.imf.org/external/pubs/ft/weo/2013/01/weodata/weorept.aspx?sy=1980&ey=2018&sort=country&ds=.&br=1&pr1.x=40&pr1.y=0&c=924&s=NGDP_RPCH%2CPPPPC&grp=0&a=

Jalil, A., & Feridun, M. (2011). Long-run relationship between income inequality and financial development in China. Journal of the Asia Pacific Economy, 16 (2). pp. 202-214

Johnson et al. (2014). Exploring Strategy: text and cases, 10th edn. London: Pearson.

Lynch R (2012). Strategic Management, 6th Ed. London: Prentice Hall

Manikandan, K. S., & Ramachandran, J. (2015). Beyond institutional voids: Business groups, incomplete markets, and organizational form. Strategic Management Journal, 36(4), 598-617. doi:10.1002/smj.2226 Retrieved from eds.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=88d6a802-f8b6-4c73-bae4-1116ab61ef00%40sessionmgr107&vid=1&hid=103

Masani, Z. (2015, February 6). Tata: India’s Global Giant. [Audio podcast]. Retrieved from www.bbc.co.uk/programmes/b0512j9b

Ramachandran, J., Manikandan, K. S., & Pant, A. (2013). Why Conglomerates Thrive (Outside the U.S.). Harvard Business Review, 91(12), 110-119. Retrieved from eds.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=5262165e-4c89-48a6-9114-63d931dbabb8%40sessionmgr104&vid=1&hid=103

Rapoza, K. (2015). The Best Countries for Your Investment. Retrieved from www.forbes.com/sites/kenrapoza/2015/03/06/the-best-countries-for-your-investment/#52070d661e12

TATA Website. http://tata.com/

Valick, A. & Benavides, T. J. (2011). Practical Human Resources for Public Managers: A Case Study Approach. Boca Raton, FL: CRC Press.

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Mayo Clinic’s Utilization Management Program

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An Overview of Mayo Clinic’s Facility Utilization Management Program

Mayo clinic is a sophisticated health care organization, which runs a variety of health care facilities, medical schools, and health science schools in the United States (Kashyap et al, 2016). This organization has developed an elaborate healthcare facility management program, which is aimed at enhancing the functionality of its facilities and personnel by integrating the most qualified health specialists and staff with a well-designed and equipped environment. Mayo clinic provides health care services to millions of patients from within the country and outside at a reduced cost (Miller et al., 2014).

The health care provider has facilities that are located in some of the following areas; Rochester, Jacksonville, Minnesota, Phoenix, Arizona, Scottsdale and Florida. In fact, its clinical campuses in Rochester are regarded as the world’s most integrated clinical facilities (Kashyap et al, 2016). In Mayo clinic, facility utilization and management program is based on empirical and evidence based strategies, which are aimed at providing the clinicians and other health care service providers with a conducive work environment, and the clients with high quality services, depending on urgency, and in the most appropriate and efficient manner (Kashyap et al, 2016).

Facility utilization management is also regarded as a venture that assists the management to reduce the overall costs of running the facility. It is therefore implemented in a prospective, concurrent, and retrospective approach (Kashyap et al, 2016). The health care provider has also developed the ‘at-risk care delivery program’, which is meant to increase the effectiveness of health care provision to its clients, as well as an enabling environment for the physicians and other staff members.

For instance, the at-risk care delivery program is designed to provide clients with; a well-planned discharge schedule for inpatients; provision of services with minimum variation for all clients; and a continuum of high quality care services to both inpatients and outpatients in the clinic, and all these being designed to result in minimization of any unnecessary care that could be provided to patients, and as such, an overall reduction of costs incurred in service delivery to patients is achieved (Kashyap et al, 2016).

Critique of the Facility’s Utilization Program In Light Of the Standard Utilization Management Programs

Facility Utilization Management (FUM) in this organization is evident in the systems and procedures that it has adopted as an effort to achieve health care savings. In particular, FUM is achieved through effective management of patients’ care as well as minimizing unnecessary care that is given to the patients (Kashyap et al, 2016). Physicians and other medical staff in Mayo clinic have been sensitized to the need to adhere to FUM guidelines as health service providers, as an effort to increase the accountability of medical service provision to patients who are regarded as payers in the system.

As such, they are required to provide health care services in accordance with the patient’s needs and the medical necessity that arises from the need, which in this case should be provided to the patient in the most efficient and appropriate manner at all times (Massimino et al., 2015). To achieve this, Mayo clinic has adopted the necessary technology to oversee efficient and economical service provision to patients including hospital admission programs, length of stay management, and precertification programs (Julianna et al., 2013).

All these programs are designed to provide patients with services in the most economical manner, where costs are aligned with the type of service provided. These programs have been adopted in all areas within Mayo clinic’s health facilities including medical, substance abuse, laboratory, and surgical sectors.

FUM within Mayo clinic is performed retrospectively and concurrently as deemed necessary. The specific objectives include maintaining the average number of patients who receive services, but at a reduced cost; establishing a DRG-guided inpatient health care facility; and to effect free for service outpatient services as a containment strategy to cut down on costs (Kashyap et al, 2016).

In its prospective review programs, Mayo clinic evaluates patients’ perceived medical or care need before admission, and assesses its appropriateness in terms of the proposed service requirement against any available medical information about the patient’s condition. This is followed by conducting an extensive consultation to determine the necessity for the required services or procedure (Julianna et al., 2013). If positive outcomes are obtained, then the patient is admitted for services or provided with outpatient services, if negative, alternative treatment options are discussed with the patient (Kashyap et al, 2016).

The prospective review program may be seen as a cost effective measure since it prevents the patient from being given unnecessary treatment services, and the health facility from incurring costs from the services provided, medicine and consultancy fees for physicians. The likely disadvantage in the program is that prospective reviews are bound to take lots of time if they are to be effective and meaningful (Massimino et al., 2015). In addition, the type of review may not be effective in cases where patients require emergency services, and this is because unnecessary costs would still be incurred during the diagnosis.

In its retrospective review programs, Mayo clinic conducts a detailed analysis of the duration of stay among other metrics in all its institutions and health facilities, including an analysis of the length of stay at the physician(s) level. Retrospective review is aimed at identifying any gaps in care provision, and whether there exist anomalous utilization patterns in the system (Kashyap et al, 2016). The information provided is used to make updates on clinical guidelines and registries according to care outcomes, after which necessary adjustments are made.

The retrospective review may be seen as an important venture because it helps management to optimize the health service outcomes, and at the same time achieve a reduction in the overall costs of operating the clinics. In addition, gaps in the utilization of medical staff and facilities may also be identified through the review, which would allow the appropriate adjustments to be effected. If effectively done, this would be reflected as reduced operation costs.

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In its concurrent review programs, Mayo clinic emphasizes that its physicians and the medical staff screen patient’s conditions or health service requirements before admission, which is a means of determining the medical necessity of the patient’s need requirements (Kashyap et al, 2016). Information from the screening procedure is also used to determine the appropriateness of the patients’ perceived requirement. As an effective care management program, the screening procedure helps determine the appropriate duration required in giving the patient the required service care, and this information is used to schedule the period of stay from admission to when the patient is discharged.

The concurrent review program may be seen as an effective venture in as far as cost reduction in care provision is concerned. This is so because; information obtained from the screening procedure may be used by physicians to prescribe the correct treatment. Specifically, it allows the nurses and medical staff to provide health care services in an efficient manner while focusing on the anticipated outcomes (Kashyap et al, 2016). In this case, wastage of time and medication is minimized; the clinic is also able to anticipate the appropriate bed days for scheduling.

On the other hand, the clinic is able to cut down on costs incurred through bed stays and admission services, which is because the applicability of the provision of home support services may be evaluated during the screening procedures. In addition, the patients are also able to receive high quality services and the needed attention, since the nurses and physicians would need to monitor the patient’s progress in an effort to adhere to the schedule and discharge plans.

References

Kashyap, R., Farmer, J. C., O’Horo, J. C., & Farmer, C. (Eds.). (2016). Mayo Clinic Critical Care Case Review. Oxford University Press.http://books.google.com/books?hl=en&lr=&id=XxQ9DAAAQBAJ&oi=fnd&pg=PP1&d q=mayo+clinic++&ots=PwF_auNEbd&sig=Bj5vKP_jdmz1YhiYaEc4U9IBTBI

Massimino, P. M., Joseph, M. L., & Kopelman, R. E. (2015). Hospital Performance and Customer-, Employee-and Enterprise-Directed Practices: Is the Mayo Clinic Reputation Deserved?. Journal of Management Cases, 28.

Merten, Julianna A., et al. “Utilization of collaborative practice agreements between physicians and pharmacists as a mechanism to increase capacity to care for hematopoietic stem cell transplant recipients.” Biology of Blood and Marrow Transplantation 19.4 (2013): 509-518.

Miller, R. C., de los Santos, L. E. F., Schild, S. E., & Foote, R. L. (2014). Organizational Culture and Proton Therapy Facility Design at the Mayo Clinic. International Journal of Particle Therapy, 1(3), 671-681.

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Promoting Awareness on Heart Disease

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Promoting Awareness on Heart Disease through Evidence-Based Practice

In investigating the impact of promotion awareness on preventing heart disease in women, the following PICOT question will be used to guide the research:

In women with cardiovascular diseases (P), does health promotions using evidence-based strategies to achieve optimal health of the heart (I), as compared to women receiving standard cardiovascular care (C) show better improvement in the cardiovascular disease (O) within six months? (T).

Using terms in the PICOT statement was not effective in finding useful studies. Most of the studies found by using such terms addressed broader concepts or did not relate all the ideas that the PICOT question needed to address. Some of them talked about one aspect of cardiovascular diseases alone without giving any hint about women, outcomes or interventions made towards controlling the condition.

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MESH terms such as cardiovascular, women, health promotion and others limited the number of studies that were listed on the databases compared to when those terms were not used. Therefore, this is an implication that the utilization of the MESH terms delimited the search as it filtered out some of the search results that did not have most components of the PICOT question.

Most of the research findings were not relevant to the study. To improve the relevance of the of the materials obtained, I applied limiters such as age, studies, EBP, women, years so as to only have articles that had a direct link to the various components of the Picot statement. The use of limiters was helpful because most of the items obtained in this case gave relevant information about aspects of the study. Reviewing this articles provided adequate information on the association between evidence-based practice in health promotion and improvement of cardiovascular diseases in women.

The study used for the study on preventing heart disease in women the following databases: AHRQ, guidelines.gov, joannabriggslibrary.org, EBCO, PubMed, and Ovid to gather evidence. All of them provided valid pieces of evidence. The study provided level I evidence as most of the articles were systematic reviews of randomized control trials.

References

Joanna Briggs Institute. Joanna Briggs Institute reviewers’ manual 2014 edition. Adelaide: JBI; 2014. Retrieved from http://joannabriggs.org/assets/docs/sumari/reviewersmanual-2014.pdf.

US Department of Health and Human Services. (2014). Guide to clinical preventive services. US Preventive Services Task Force. 3rd ed. Washington (DC): US Government Printing Office. Retrieved from https://www.google.com/search?q=http%3A%2F%2Fwww.ahrq.gov%2F&ie=utf-8&oe=utf-8&client=firefox-b.

Vandvik, P. O., Lincoff, A. M., Gore, J. M., Gutterman, D. D., Sonnenberg, F. A., Alonso-Coello, P., … & Spencer, F. A. (2012). Primary and secondary prevention of cardiovascular disease: antithrombotic therapy and prevention of thrombosis: American College of Chest Physicians evidence-based clinical practice guidelines. CHEST Journal, 141(2_suppl), e637S-e668S. Retrieved from https://www.guideline.gov/summaries/summary/35273?.

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Assessing the Financial Health of a Company

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Financial health of a company

1. Depending on your review of the financial statements, suggest a fundamental insight about the financial health of the company. Speculate on the likely reaction to the financial statements from various stakeholder groups (employee, investors, shareholders). Provide support for your rationale

Universal Health Services is a publicly traded company and know for operating acute care hospitals, surgical and behavioral health centers. The firm also operates in ambulatory surgery as well as radiation centers. The company is recognized as the largest hospital management in the United States having more than 240 acute care hospitals and employing more than 74,000 workers (UHS, 2016).

Based in Pennsylvania, the firm is known to register billions in earnings enabling it to be classified as a top performer. This has also allowed the company to create franchises in rapidly-growing markets. However, the efforts are owed to its management which works on the principle of integrity to effectively be competent and compassionate. As such, most of its revenues are gotten from its various departments with acute care hospitals bringing in 73% of income (UHS, 2016).

Nonetheless, it is believed that behavioral health services bring in more than hospitals due to the high occupancy rate. In other words, it could be said that the behavioral centers bring in the highest amount of revenue than hospitals. The fact that the health management is large in size, there are bound to be numerous accounting concepts.

Since the financial statement is helpful in monitoring the financial health of a company, integrity should be applied. Accurate financial information gives the position of the firm in the market. According to the recorded UHS’S financials, the company’s revenue have been increasing.

Nonetheless, the business should make correct entries on the financial statements especially when recognizing income and expenses. Therefore, it could be said that the financial health of the company is stable but may be complicated with the numerous acquisitions. However, the higher returns on investments have been attracting investors.

Current Industry Trends

There is no doubt that firms get into business in a bid to make money rather than meeting the full needs of the market. This is no different from the health care industry where the industry players are focusing on financial aspects instead of providing quality care to their patients (UHS, 2016). More so, what is taught in schools also involve economic aspects as part of its curriculum.

What people fail to apprehend is that quality care attracts more people and eventually increasing the amount of revenues. At the same time, having more patients and clients raises the spending of resources raising the overall costs (Kaplan & Witkowski, 2014). Besides, hospitals are turning to technology, and this also increases the overall costs and stakeholders are not left behind (Jena & Philipson, 2013).

In fact, they are behind every planning, developing, and implementation of hospital projects. Therefore, the trend that hospitals are now following is not new but something that is rapidly gaining acclamation in the industry. Additionally, the future health direction the industry players are taking is gaining momentum (Gengler, 2011). All in all, what is more, important is that lack of quality care in hospitals affects the firm’s financial performance.

Sadly developing sound business practices does not stick with the industry players. Gambling with people’s health in a bid to reduce hospital costs is undesirable and a recipe for disaster. It is, therefore, essential for hospitals and health care providers to practice good business ethics that entails focusing on providing quality care to patients.

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3. As the CFO, suggest one (1) basic strategy that you might use in order to improve the financial performance of the organization. Recommend an approach to implementing the proposed plan. Provide support for your recommendation.

For the above reasons, it is my responsibility as the CFO to ensure that individual and organizational goals are aligned. In turn, this translates to increased revenues since both employees and the employers would be satisfied. Better still, there would be increased customer loyalty and brand image. It is crucial to note that stimulating individual motives will lead to greater motivation and will to work efficiently.

This, therefore, means that core values have to be instilled as a culture that appreciates everyone’s efforts is cultivated (Baker & Baker, 2013). This is so because formal business policies will integrate both individual and organizational goals towards one direction. Still, group objectives should be recognized as essential for success and continuity of business growth. In turn, the organization’s missions and vision will be met entirely as the strategies would be linked to the goals.

In essence, if personal objectives would be fulfilled, group goals would be easy to attain. For instance, if UHS decides to align its overall goal of increasing revenue with individual needs of providing quality care, there would be smooth operations. As such, the strategy is found to be useful in all types of organizations. While little is being done on performance, the critical focus is lost. In our case, the focus should be on creating a balance between providing good quality health care and make more revenues at the same time.

In as much, as it is a medical institution, it operates as a business and requires funding as other firms do. However, even though there is no harm in wanting more money, it should be made clear that patient health outcomes matter. In supporting this performance program, the health care provider should ensure they include customer and business profitability is achieved through proper alignment of goals and strategies. As a result, there will be reduced costs, increased efficiency, and increased income levels.

References

Baker, J. J., & Baker, R. W. (2013). Health care finance. Jones & Bartlett Publishers. Retrieved from https://books.google.co.ke/books?hl=en&lr=&id=yfuBAAAAQBAJ&oi=fnd&pg=PR1&dq=Baker,+J.+J.,+%26+Baker,+R.+W.+(2013).+Health+care+finance.+Jones+%26+Bartlett+Publishers.&ots=Jeyce1VgVc&sig=ZHe-D_48p6mJ4JmRSbBGEDEAyNg&redir_esc=y#v=onepage&q&f=false

Gengler, A. (2011). The future of your health care. Retrieved from http://money.cnn.com

Jena, A. B., & Philipson, T. J. (2013). Endogenous cost-effectiveness analysis and health care technology adoption. Journal of health economics, 32(1), 172-180. Retrieved from http://www.sciencedirect.com/science/article/pii/S0167629612001555

Kaplan, R. S., & Witkowski, M. L. (2014). Better accounting transforms health care delivery. Accounting Horizons, 28(2), 365-383. Retrieved from http://www.aaajournals.org/doi/abs/10.2308/acch-50658

UHS, (2016). 2014 Annual Report- Universal Health Services. UHS. Retrieved from http://www.uhsinc.com/media/288196/2014-annual-report.pdf

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Personal and professional development Portfolio

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Personal and professional development

Professional development entails a person developing himself or herself in his or her role to completely understand the job that he/she does and the way in which that person can improve. It is notable that professional development entails enhancing the necessary skills in order to perform one’s role as effectively as possible and as Armstrong (2010) pointed out, it is something that would continue all through a person’s working life.

When thinking about personal development, one thinks about the skills needed to achieve the required results, both in the person’s role and for life in general. Ordinarily, personal development is about improving one’s talents as well as potential, both in the place of work and outside the place of work (Cook &Hunsaker, 2011). This learning portfolio entailed filling out a total of five Activity Reflection sheets for Lecture Topics 1 through 6. Entries 1, 2, 3, 4 and 5 provide a summary of the activity reflection sheets.

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In essence, each entry highlights the things that I learned from the activity and includes relevant examples which prove my learning and how I am intending to use the skills that I developed all through the activity in the future at my place of work. On the whole, this learning portfolio provides evidence of my progress as well as ongoing performance and is therefore of major importance to me.

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Racial Discrimination in the Criminal Justice System

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Racial Discrimination in the Criminal Justice System

Racial discrimination as a deterrent to public safety efforts in America: A study of citizens’ trust on the criminal justice system

In the past decades, the United States has been proactive in addressing the racial discrimination issue. However, the concern over unfairness and discrimination based on race remains a major cause of controversy within the criminal justice system.

Race and culture influences public safety policies immensely because there is need to design policies that address citizen needs without discrimination. Accordingly, public safety policy is developed through a series of write-ups that must be thoroughly scrutinized to determine that policy seeks to protect all citizens equally. In the event that public safety policy appears to negate from equal treatment public uproar is likely to result. This leads to questioning of values that underlie criminal justice policies and procedures; and the possibility that citizens could lose trust in the system due to unrelenting racial disparity (Lawrence, 2011).

This insinuates that until policies are further revised to create serious consequences for criminal justice officers who discriminate based on race and ethnicity, citizens’ trust on the justice system will continue to diminish (Durant, 2016). It is a mandatory obligation for the government to enhance citizens’ safety; while safeguarding equality grounded on racial or cultural background. This will ensure that public safety policies are effectively executed and that they are considered effective.

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It can be established that the U.S. is significantly committed towards ending discrimination in all aspects. Therefore, the criminal justice system is undergoing copious reforms, all which portray discrimination as unconstitutional and place emphasis on the need for professionalism within the system. However, discrimination still perseveres. A considerable number of citizens have been reported as serving jail term based on erroneous conviction (Smith & Hattery, 2011).

Minorities’ overrepresentation is also rampant, leading to continued questioning of the criminal justice system objectivity and whether every American can feel adequately protected by the system (The Sentencing Project, 2016). The police force is particularly as affected, having been criticized continuously in the recent past as being agents of discrimination. This is a serious predicament that the government must address, if its efforts towards enacting inclusive public safety measures are to be successful.

Based on this topic, the writer will demonstrate how racial discrimination has affected overall trust on the criminal justice system and how this is likely to impact public safety outcomes and policies.

References

Durant, J. M. (2015). Equal Protection: Access to Justice and Fairness in the American Criminal Justice System? Depaul Journal for Social Justice, 8(2), 175-198. Retrieved from eds.a.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=29d32b56-8af3-487f-b80b-041bc4748a07%40sessionmgr4006&vid=1&hid=4205

Lawrence, K. O. (2011). Race, Crime, and Punishment: Breaking the connection in America. Washington, D.C: The Aspen Institute.

Smith, E., & Hattery, A. (2011). Race, Wrongful Conviction & Exoneration. Journal of African American Studies, 15(1), 74-94. doi:10.1007/s12111-010-9130-5

The Sentencing Project. (2016). Racial Disparity in the Criminal Justice System. Retrieved from www.sentencingproject.org/wp-content/uploads/2016/01/Reducing-Racial-Disparity-in-the-Criminal-Justice-System-A-Manual-for-Practitioners-and-Policymakers.pdf

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National Security Intelligence: Homeland Security

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National Security Intelligence: Homeland Security

Discussion Replies

Reply to peer 1

It is true as the author says that the organization of the security intelligence systems in the USA has not made the security situation perfect. However, the writer is also quick to acknowledge that the streamlining of the flow of information is a good step that the government took to better the collection and administration of intelligence. For instance, the creation of the Director of Intelligence as the author points out has improved sharing of information among the agencies and therefore better use and access to information (Bullock, Haddow & Coppola, 2016).

Reply to peer 2

The sentiments of the second peer are also correct. The reason is that the establishment of the fusion centers, the giving of grants as well as the Nationwide Suspicious Activity Reporting Initiative are important recommendations that ease not only the collection of information from grass root levels but also preparedness of the security agencies and states. For example, the fusion centers enable the interaction among the different federal agencies with regards to technical support and access to security clearance, therefore increasing corporation among the agencies (Bullock, Haddow, & Coppola, 2016). The unifying of the agencies that have resulted from the recommendations has undoubtedly improved effectiveness within the intelligence community.

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Reply to peer 3

The Director of National Intelligence is indeed an addition to the system that is meant to unify the intelligence community. It is also agreeable that in the initial times, it was hard for anyone accepts the directorial role as it bears responsibilities that most people feared. However, the author echoes the improved efficiency ad flow of information using the example involving how the CIA plays the lead role in the collection of data and training, therefore streamlining the dissemination of the intelligence to other agencies (Bullock, Haddow, & Coppola, 2016).

References

Bullock, J. A., Haddow, G. D., & Coppola, D. P. (2016). Introduction to Homeland security: Principles of all-hazards risk management (5th ed.).Waltham, MA: Elsevier.

U.S. Department of Homeland Security. (2012). Implementing 9/11 Commission Recommendations: Progress report 2011

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Gun Violence, Gang association, youth association

Gun Violence

Introduction

A purpose statement is a segment of the introductory portion of a study that summarizes the research’s role and hints on what the research is about and how it achieved the purpose. The purpose statement of the research calls for the introduction of measures to curb gun violence and implement intervention programs where necessary to control gun violence.

The statement includes all the signaling words the research is about, that is, gun violence, gangs and the youth. The statement is clear that the research is qualitative due to the mention of a small sample and qualitative research techniques such as Poisson and logistic regression. The statement is framed in a manner that is consistent with the purpose of the research as it demonstrates intend to achieve a positive hypothesis on the dependent variables. The statement also indicates the following;

Intent

The research intends to expose the influence of gangs and gun violence in various neighborhoods in various parts of the United States on the inception of young boys and girls into gangs. This is so as to encourage invention measures to end gun crime in America, which is currently a major concern.

Participants and Research site

There are a hundred and sixty four participants in the research. However, the purpose statement is not very clear about the sampling techniques used and the ratios between the respondent categories. The statement also mentions the research site to be in middle schools in South East Lost Angeles, California.

Variables used

The use of the sample data in the research as well the regression models provides a pre-emptive analysis of the cases in Los Angeles. The distribution of the sample is ample to provide a proper representation of the entire scope of research. However, the use of a sample of predominantly Hispanic boys and girls is imminently circumstantial. This presents a significant challenge to the research since communities in Black, Native American and Asian-American communities may present different findings.

Theory Identified

The research demonstrates the confirmation of the Social Cognitive theory by Holt and Chapman. The theory can be summarized as follows ‘portions of a person’s knowledge can be acquired by directly observing the actions of other people and learning from them.’ Communal issues such as neighborhood gang presence, gun presence and cases of gang violence often affect the psychological response of children to gang violence (Decker, van Gemert & Pyrooz, 2009). In some cases, the perception of these issues can discourage these children from aggressive practices while in other cases; it can encourage them to join gangs where they feel like it is the only way to survive such neighborhoods.

Other factors such as level of education, nature of neighborhoods and existing legislation are important aspects of this research that need to be included as well (Klein, 2007). It is necessary to also ensure that the sample distributes aspects of distribution such as age groups, family income and cognitive factors in the children. These issues present a clearer picture in researches (Wolverton, 2009).

Data collection techniques

The interviews were used for qualitative data while the questionnaires presented a survey sample for the quantitative data.

Conclusion

The purpose statement of the research by Forster, Grigsby, Unger & Sussman (2015) demonstrates that mixed methods are used in the research. The statement presents an aspect of quantitative analysis in the number of households with cases of violence as well as views from different households; all Hispanic. Research on impact analysis and correlative data needs to be very accurate and particular.

However, there should be quantifiable and qualified data for use in research that seeks to encourage policy changes and the adoption of new measures to change an endemic issue (Grantham, 2009). The research by Forster, Grigsby, Unger & Sussman (2015) does present relevant information on gang violence. However, this data is not sufficient to encourage policy change.

References

Decker, S. H., van Gemert, F., & Pyrooz, D. C. (2009). Gangs, migration, and crime: The changing landscape in europe and the USA. Journal of International Migration and Integration, 10(4), 393-408.

Forster, M., Grigsby, T. J., Unger, J. B., & Sussman, S. (2015). Associations between gun violence exposure, gang associations, and youth aggression: Implications for prevention and intervention programs. Journal of Criminology, doi:http://dx.doi.org/10.11

Grantham, R. V. (2009). Wheelchair warrior: Gangs, disability, and basketball. Contemporary Sociology, 38(2), 154-155.

Klein, M. W. (2007). Gangs in the global city: Alternatives to traditional criminology. Contemporary Sociology, 36(5), 480-481.

McGloin, J. M. (2007). Studying youth gangs. Contemporary Sociology, 36(2), 171-172.

Wolverton, Marvin L,PhD., M.A.I. (2009). Research design, hypothesis testing, and sampling. The Appraisal Journal, 77(4), 370-382.

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Accounting Standards

Abstract

Globalization has closely linked different markets. With the rise in globalization and market integration, there is a quest to establish a set of global accounting standards. Though progress has been made in establishing a common set of accounting standards, the process still faces challenges that have made it impossible to establish common accounting standards. This paper addresses there benefits of having converging the accounting standards and goes ahead to look at the challenges that make it difficult to converge the accounting standards.

Accounting

Introduction

The rise in globalization has led to the quest to achieve common international accounting standards. Financial users around the world are working towards establishing a common set of worldwide accounting standards though it is yet to be accomplished. This is unfortunate given the many benefits of adopting common accounting standards all over the world. Establishing the same accounting standards would mean that each organization prepares financial statement using the same rules.

This would make it easier for users of financial statements to compare the financial position of different companies. The use of a similar set of global standards would improve the quality of financial reporting. Companies around the world would follow the same high-quality standards and they would have to adhere to these rules hence the quality of financial reporting would improve around the globe. Using a similar set of global standards would enhance efficiency and reduce the cost of capital.

The allocation of funds of companies around the globe would reduce the cost of and enhance efficiency. However, even in light of these benefits of having global accounting standards, the world is yet to achieve common accounting rule. For the last two decades, financial experts have been working towards achieving similar accounting standards without success. Progress has been made but there are still notable differences in financial reporting between countries. Part of the reason the common global accounting standards have not been achieved is due to sovereignty of nations.

Countries feel that having one set of accounting standards would undermine the sovereignty of a nation. This termed as westernization by various nations who feel that the western countries have a tendency to impose rules on other countries. The second challenge is lack international regulatory body that would be used to implement the international accounting standards. Despite the challenges, the world needs to look for a workable solution and converge the accounting standards to enjoy the benefits of a common set of global accounting standards.

Reason the world Need International Accounting Standards

Financial reporting standards around the globe are different, and this creates inconsistency in financial reporting. Today, the world economy has become integrated. Globalization is on the rise, and every market is connected to the other market. Globalization closely links markets together, and effects felt in one market are felt in other markets in different countries (Albrecht, Stice, Stice, & Swain, 2014).

Furthermore, countries are coming together to create economic blocs as each country is realizing the need to integrate and form a single market without barriers. As the world is converging and becoming one market each day, financial expert are also looking for a way to remove the inconsistency in financial reporting. The inconsistencies are a major setback to the users of financial reports. Investors rely on financial statements to make investments decisions. Globalization has encouraged investors to invest in global companies.

However, inconsistency in financial reporting makes it difficult to get the right information. A company located in different countries follows different accounting standards to prepare its financial reports hence it becomes difficult to make sense out of different financial reports provided. There is a need to achieve consistency and ensure that investors are provided with the right information when making decisions around the globe.

International convergence is a concept that was established in the 1950s after the Post World War. It was round this time that countries started creating strong economic blocs that eliminated tariffs and reduced the requirements to move across nations. The integration and diversity of the world increased the cross-border capital flows increasing the need to converge the accounting standards.

Previously, the world had been working towards harmonization of accounting standards but with the integration, it was clear that convergence was appoint of urgency (Horton, Serafeim, & Serafeim, 2013). Different countries sought to come up with the same reliable accounting standards that would be used to represent information of organizations operating in major capital markets.

This led to the formation of the International Accounting Standards Committee which is the modern day International Accounting Standards Board. IASB has made progress in the quest for a unified global accounting standard. This board came up with international financial reporting standards (IFRS). The IFRS is used in more than 100 countries most of them are European Union member states.

Benefits of Having Common Accounting Standards

Comparability

Comparability is one of the greatest advantages of using financial statements. Financial statements are used to indicate the performance of an organization. A person wishing to evaluate the performance of an organization should critically look at the financial records. Financial statements provide a summary of financial position making it possible for investors to understand the position of a company.

However, when companies use different accounting standards, it becomes difficult to understand the financial reports (Atrill & McLaney, 2012). A company in China and a company in the United States will use different accounting standards making it difficult for financial reports users to compare the performance of companies. Using global accounting standards would make comparability a reality.

Items located in financial reports would be similar, and an individual comparing the performance of different companies would compare the essential parts of the reports (Christensen, Lee, Walker, & Zeng, 2015). Users of financial reports can be able to compare important aspects of a business such as liquidity, credit worthiness, profitability, and solvency.

Comparability is not limited to different companies. There are companies operating in different countries. For instance, General Motors, and Mac Donald are operating in different parts of the world. The multinationals have many subsidiaries around the world that use different accounting standards. The companies must adhere to the local accounting standards of each country that they operate in (Drury, 2013).

This makes it difficult for organizations to compare the financial reports of same organization but located in different countries. With international accounting standards, the organizations can be able to measure the performance of each entity regardless of its geographical location. Additionally, the companies would be able to consolidate the financial reports easily and understand how each of entity contributed to the overall performance of the organization.

Improve Quality of Financial Reports

At the top of agenda of the ISAB is to improve the quality of financial standards. The IFRS was established to enhance the quality of financial reports across the world. A global set of accounting standards would be high quality standards (Crosson & Needles, 2013). As much as countries are willing to converge to same accounting standards, they are not willing to compromise the quality of financial reports.

Quality financial reports would provide the user of financial reports with the right information. Investors can make the right investment decision when provided with the right information. If companies across the world would follow high-quality accounting standards, then the financial information provided would be clear, useful and relevant to the users of financial reports.

The cases of the financial crisis of 2008 make it critical to have reliable and quality accounting standards. The financial crisis which affected the world’s strongest economies was caused by lack of adequate regulation where companies provided misleading financial information. A single set of global standards would improve the quality of accounting standards. Companies would not find a loophole to mislead users of financial reports since the global standards are clear and target to ensure that financial report represent the true position of a company.

Companies that have embraced the IFRS have improved the quality of financial reporting. A report released by the IASB indicated that the IFRS has improved the quality of financial reports (Crosson & Needles, 2013). The report further indicated that capital market participants and investors who use information prepared using the IFRS standards get the right information and can be able to evaluate the financial position of different companies use the international standards.

Simplification

Implementing unified financial reporting standards would not only enhance comparability, but it would simplify financial reporting. This is especially true for organizations that have subsidiaries around the world. The companies prepare different financial reports that adhere to local standards but at the end of the day the organizations have to consolidate the financial reports (Becker, Schäffer, & Thaten, 2015). It is difficult to consolidate financial reports prepared using different rules. This is because the items are not represented and accounted for the same way.

The items represent in one financial report in one country may differ from the items of another country making it difficult for multinationals to consolidate the financial reports. Additionally, without converged financial accounting standards, the countries are forced to prepare financial reports using different currencies such as yens, pounds, and dollars depending on the locality they operate (Brochet, Jagolinzer, & Riedl, 2013). It becomes difficult to consolidate the financial reports because they have to consider the foreign exchange rates.

Financial reports simplify the process of mergers and acquisition. Companies are looking to make strategic mergers and acquisition to increase their market share. Mergers and acquisition are becoming prevalent today as companies globalize (Bradshaw, 2010). Companies are establishing mergers to launch products successfully in new markets. Using global accounting standards would enable companies to make the right mergers and acquisition. The companies can be able to look at financial reports comprehensively and compare the results with ease enabling them to make sound decisions.

Reduction in Cost of Capital

Shifting from locally accepted principles to international reporting standards will reduce the cost of capital. Research conducted on the EU nations showed that using a the same accounting standards has boosted the net income by 25%. Companies recorded a rise in earnings before taxes and depreciation. A second study that focused on 30 European organizations showed that the application of the same accounting standards increased profits by $30 billion (Albu & Alexander, 2014).

Implementing similar accounting standards across the world indicates that companies allocate capital more efficiently, and the markets would be more efficient. International accounting standards would also converge the regulation of financial reports hence companies would strive to be efficient. To be ahead of competitors and to attract investors companies would enhance efficiency hence global market would be more efficient.

Challenges

Differences in Accounting Practices in Different Countries

Publicly held countries use the generally accepted accounting principles. Different countries have accepted various accounting principles which are recognized by the different nationals. Research indicates that over 132 countries have so far embraced the IFRS, but there is still a difficult in implementation (Wang, 2014). Countries are not implementing the IFRS standards in the same manner because they have national accounting standards. For instance, the U.S. has U.S. Generally Accepted Accounting Principles (GAAP) and the U.K. use the U.K. GAAP.

Since 2005 Japan started converting to the IFRS from the Japanese Generally Accepted Accounting Principles. However, there are still notable differences between the ways countries treat financial reports. For instance, the United States and United Kingdom accounting standards are stock market oriented because the foreign companies based in these countries rely on the stock exchange as a source of finance.

On the other hand, the accounting standards of Japan are bank oriented because companies rely on bank loans and not willing to participate in stock markets. Japan and the U.K. are guided by different accounting laws. For instance, the United Kingdom is guided by the common legal system while Japan is guided by the code and civil legal system. The differences in accounting practices make it difficult to find one single accounting standards. Countries are not willing to abandon their way of doing things to adopt a new single set of accounting.

For instance, the United States was hard hit by the financial crisis. The country established the Sarbanes Oxley law which increase regulation and specifically focuses on financial reporting. This means that companies in the United States must follow the U.S. GAAP and meet the legal requirements in financial reporting as stipulated by various laws concerning financial reporting (Arnold, 2013). It is difficult for companies to adopt a common set of accounting standards because there are local accounting standards that are unique to each country and laws that must be met.

The generally accepted accounting standards and the International accounting standards treat items of financial reports differently. For instance, there is a distinction in the way the U.K GAAP and IFRS treat leases. The IFRS requires a company to capitalize leases as long as the lease term is major part of the assets economic life. Conversely, the U.K. GAAP requires a company to capitalize a lease as long as the term of the lease is equivalent to 75% of the asset’s economic life (Horton, Serafeim, & Serafeim, 2013).

Converging the different accounting practices of different countries is a big challenge. Countries already have their accounting principles and the way they treat different items such as the lease in the example above is different. It is a big challenge to harmonize the accounting standards and find a set of standards that will be accepted by different countries (DeMiguel, Nogales, & Uppal, 2014).

Sovereignty

The politics of the pride of a nation and sovereignty has worsened the chance of achieving global accounting standards. Establishing a global set of standards would impose accounting standards on countries. The global set of accounting standards has already come under criticism because it undermines the sovereignty of nations. Financial experts in the United States released a report that revealed that a global set of financial standards would impact on the quality of financial report negatively (Weil, Schipper, & Francis, 2013).

The experts argued that global set of accounting standards replaces comparability with quality. The report indicates that the current accounting standards in the United States focus on the quality of financial reports and adopting other standards would undermine the sovereignty of the nation and at the same time lower the quality of financial reports.

The global accounting set of standards has been criticized as western dominance. The Western countries have often been criticized of imposing rules and regulations on countries. The wave of democratization, for instance, has been cited as a move by West to dominate (Arrow & Lind, 2014). When coming up with the global accounting standards, the West is actively involved and poor countries do not get to contribute adequately. When the accounting standards are imposed on other countries, it strips them the ability to establish different accounting standards that are unique to the situation.

Lack of Regulatory Body

Though more than 130 countries have adopted the IFRS, there are notable differences financial reports. This is because there is no regulatory body that ensures that each country strictly follows the accounting standards. There is no international regulatory body that can mandate countries to adhere to accounting process. According to Scott (2012), to achieve consistency in the preparation of financial report, there must be an international regulatory body. The regulatory body should oversee the implementation of converged accounting standards.

Additionally, it would be in-charge of dealing with companies that fail to comply with the accounting standards. The regulatory body should be endowed with the authority to regulate both public and private entities to ensure that financial reports meet the international standards. Without the regulatory body, it is impossible to achieve consistency and ensure that all companies are using the same set of global standards.

The Costs of having Global Set of Standards

Having a worldwide accepted accounting standards would increase the cost of accounting in various companies. First, establishing a global set of standards would require that accountants worldwide are retrained. The accountants must be trained on how to prepare the financial accountants using the new accounting standards (Brigham & Ehrhardt, 2013).

Companies would have to incur the costs of retraining the accountants in order to adhere to the new set of accounting standards. The second cost is that failure in the accounting system would cause a worldwide failure. Leiwy and Perks (2013) stipulate that a failure in the accounting standards would cause accounting standards at the same time.

Conclusion

Getting a set of global accounting standards has definitely been at the top of agenda of the IASB in the last decade. Amidst the challenges this course changes there are doubts as to whether it is still possible to attain the global accounting standards. The pride of nationalism and politics of sovereignty make it difficult every day to achieve a single set of global accounting standards.

Every country wants to maintain certain aspects of its accounting standards making it difficult to come up with a common set international accounting standard that will be widely accepted. The world lacks an international regulatory body that will be in charge of implementation and ensuring companies comply with the laws. Lastly, the differences in accounting practices across countries make it impossible to establishing similar accounting standards.

However, there are numerous benefits of applying the same accounting standards. They include comparability, enhancing market efficiency, simplification and improving the quality of financial accounts. In light of these benefits, countries should work together to find a solution and establish a common set of international accounting standards.

Reference List

Albrecht, W., Stice, J., Stice, E., & Swain, M. 2014. Accounting: Concepts and Applications. London: Cengage Learning.

Albu, C., & Alexander, D. 2014. When global accounting standards meet the local context—Insights from an emerging economy. Critical Perspectives on Accounting, 25(6), 489-510.

Arnold, G. 2013. Corporate Financial Management (5th ed.). Pearson Education Limited.

Arrow, K. J., & Lind, R. C. 2014. Uncertainty and the evaluation of public investment decisions. Journal of Natural Resources Policy Research, 6(1), 26-44.

Atrill, P., & McLaney, E. 2012. Accounting and Finance for Non-specialists. Wales: Pearson Education.

Becker, S., Schäffer, U., & Thaten, M. 2015. Budgeting in times of economic crisis. Contemporary Accounting Research., 1-12.

Bradshaw, M. 2010. Financial Reporting, Financial Statement Analysis and Valuation: A Strategic Perspective. New Orleans: Cengage Learning.

Brigham, E., & Ehrhardt, M. 2013. Financial management: theory & practice. New York: Cengage Learning.

Brochet, F., Jagolinzer, A., & Riedl, E. 2013. Mandatory IFRS adoption and financial statement comparability. Contemporary Accounting Research, 30(4), 1373-1400.

Christensen, H., Lee, E., Walker, M., & Zeng, C. 2015. Incentives or standards: What determines accounting quality changes around IFRS adoption? European Accounting Review, 24(1), 31-66.

Crosson, S., & Needles, B. 2013. Managerial Accounting. London: Cengage Learning.

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