Pv Trade War Between the Us and China

Introduction International trade and competitive advantages in the costs of production in China have brought numerous opportunities for China’s exports but also generated challenges due to protectionism from its foreign competitors. Consequently, there have been numerous trade cases against China, including anti-dumping, anti-subsidy, in many economic sectors. The very current trade case involving China is the US accusing Chinese manufacturers of dumping photovoltaic (PV) panels in the US market and the Chinese government unfairly subsidizing its own solar industry.In fact, the US’s trade balances in polysilicon products between both the US and China, and the US and the world significantly deficit while China’s polysilicon cells and modules production has increased dramatically (The Kearney Alliance 2012). This essay claims that, the surge in PV exports does not necessarily mean that the Chinese government has subsidized its PV manufacturers illegally, and Chines e solar manufacturers’ low prices do not necessarily imply they are selling their PV products below the cost of production.Importantly, imposing such significant imports tariff is highly likely to undermine not only the bilateral trade between two countries but also long-term benefits of both countries. First, this essay provides an overview of the US-China PV trade case; then explains why China solar industry has been growing dramatically; and finally it analyses what the consequences might be if the US imposes a countervailing and antidumping tariff on China’s PV. BackgroundOn October 2011, seven US-based PV manufacturers headed by SolarWorld Industries America reported China on a double-anti case to US Department of Commerce (DOC) and US International Trade Organization (ITO). The seven manufacturers, which later formed Coalition for American Solar Manufacturing (CASM), accused China for dumping their PV module products to US market and giving a huge amount of expor t subsidy to this industry which in turn causing severe injuries to US PV manufacturers.Several investigations have been carried out by both DOC and ITC for this issue, as the coalition accused China government providing cash grants, heavily discounted resources, huge loans and credits, tax exemption, incentives and rebate and export grant insurance to the industry. In its final determination held on 10 October 2012, DOC proposed 18. 32 per cent to 249. 96 per cent of anti-dumping and 14. 78 per cent to 15. 97 per cent of countervailing duty.Further actions, including issuing or not issuing anti-dumping and countervailing duty orders, will be made after ITC final determination (US DOC 2012). Photovoltaic industry is a new emerging industry as a response to the threat of energy shortage and environmentally-unfriendly fossil fuel-based energy. Governments issued supportive policies, including giving significant account of subsidy considering higher production cost of this new energy i ndustry compared to that of conventional one.In case of China, the country issued a PV market policy in 2007 that included deployment, investment and research and development supports under the scheme of middle and long term program of renewable energy development set by National Development and Reform Commission (NDRC) targeting the energy of 300MWp by 2010 and 1. 8 GWp by 2020 of PV cells installed (Grau et al. 2011). This policy and its comparative advantage on labors result in excessive growth of China PV industries, making China’s world market share skyrocketing from 1 per cent in 2001, 5 per cent in 2005 to 50 per cent in 2010.In 2012, four of the top five PV producers are Chinese overtaking US manufacturers which occupy 27 per cent in 2006, decreased to 5 per cent in 2010 of the total world share (The Kearney Alliance 2012). Why has China’s PV grown so big so fast? There are a number of reasons why the PV industry in China has experienced tremendous growth withi n a short span of time. For instance, China produced about 1 per cent of the world’s solar cells in 2001, and by 2010 it produced nearly almost half (The Kearney Alliance 2012).The same rate of growth was achieved by Japan and Germany during their PV industry expansion; however the key difference is it took them twice as long (The Kearney Alliance 2012). First, such fast paced growth would not be possible without assistance from the government. The Chinese government has been providing many different kinds of assistance to the manufacturers to promote the growth of the PV industry in China. The government’s policy to boost the industry came in the form of loans, tax credits and grants.Additionally, some of the resources required for manufacturing of PV cells were subsidized or discounted to encourage manufacturers to produce more. In 2011, the Chinese government initiated a ‘Five-Year Plan’ to induce further growth of the PV industry well into the year 201 5. Second, it is estimated that help from the government allowed some Chinese manufacturers of PV cells to have somewhere between 18-30 per cent cost advantage over their US counterparts (The Kearney Alliance 2012).The government alone is not responsible for the cost advantage enjoyed by the Chinese manufacturers; scale and vertical integration, and labour costs constitute significant part of the cost advantage. The scale and vertical integration of some of the top tier Chinese manufacturers means that they gain cost advantages due economy of scale; larger factories can produce at a lower cost, and additionally they tend to own or control majority of the companies in the supply chain as well as distributions outlets thus allowing them to maximize profit from supply, production and distributions.Moreover, labour costs are relative cheap compared to the US, especially for unskilled labour, where China has approximately 80 per cent labour cost advantage over the US counterparts (The Ke arney Alliance 2012). Third, besides the assistance and cost advantages, some, if not all, Chinese manufacturers tend to offer trade credit, where solar power customers can purchase the panels without having to pay upfront and are given 60 days payment window to complete the deal.This provides tremendous financial benefit to the customers, as they will have some time for installation of the panels without paying upfront for the panels thus the cost of downtime during the installation is not born by the customers. Finally, growth of China’s PV industry is also due to the extreme projected growth of domestic demand. In 2010, Chinese domestic demand for solar power was only 3 per cent of the world’s demand, and by the end 2014 this is expected to increase to 26 per cent (EPIA 2011). Is Chinese government providing illegal subsidies? Are Chinese manufacturers dumping their products on the U.S. market? The US government accuses the Chinese government of providing the export subsidies, which according to WTO rules is illegal. However, the Chinese government claims that the subsidies, grants, loans and discounts given to the manufacturers are intended to promote the solar power industry and make it cost competitive with conventional power sources. It is worth noting that it’s not just Chinese government that provides subsidies, the US also provides substantial subsidies to its solar power industry albeit to a slightly lesser extent and lower amount in dollar terms.For instance, the US government does not provide land grants or discounts, and the total stimulus loan/loan guarantee is only US$1. 3 billion compared to US$30 billion from the Chinese government (Goodrich et al. 2011). The US Department of Commerce accuses Chinese manufacturers of dumping PV cells on the US market. According to the WTO (WTO, 2012), dumping occurs when a company exports a good to foreign market at a price less than the price it normally charges in its domestic market. T he US considers Chinese economy as non-market economy, thus the Chinese domestic price of PV cells cannot be determined directly from the Chinese market.Therefore, third or surrogate country needs to be chosen in order to determine the fair value of Chinese PV cells. The U. S Department of Commerce has chosen Thailand from a list of 6 countries as the surrogate country. This is unlikely to reflect an appropriate normal price for the Chinese PV since the costs of PV production in China is normally lower than those in Thailand. Possible consequences Both sides are currently still waiting for ITC's final determination. If an affirmative determination is made in late November that imports of PV cells from China, no matter being assembled into modules or not, leads to US omestic industry being or is threatened to be materially injured, Commerce will issue the Anti-Dumping and Countervailing duties order. Back when the preliminary determinations was announced earlier this year, in which t he DOC assessed countervailing duties ranging at a lower rate, most Chinese manufacturers breached a sight of relief and continue their business in U. S. as before. However, DOC's final determination assessed significant higher countervailing duties at 14. 78 per cent -15. 24 per cent, comparing to its 2. 9 per cent-4. 3 per cent in the preliminary (US DOC 2012), undoubtedly it will have a severe impact on China's manufacturers and global solar industry. As the subject of DOC and ITC's investigation is PV cells that are manufactured in China, Chinese firms could shift manufacture or directly purchase PV cells from other countries to avoid tariffs on modules made of Chinese cells. An ideal location is Taiwan, which is already a robust solar cell manufacturing market. Although it is 8 per cent higher than using its domestic produced cells, cells made in Taiwan still have a 10-22 per cent cost advantage than the ones in the US (Wesoff 2012).Not to mention its relative closeness to Chin a. However, using PV cells from other countries other than the US and assembles into PV modules is not a proper long-term strategy. The US could also initiate another investigation into Chinese PV modules assembled, using other countries' cells. Thus, this is only a transitional strategy for Chinese manufacturers before China's domestic demand for PV products picks up to ameliorate industry's excessive supply situation. On the other hand, the imposition of high countervailing and anti-dumping duties might also affect the U.S. solar industry. In 2011, manufacturing only contributed 24000, or 24 per cent of the total employment in the solar industry (The Solar Foundation 2011). Punitive tariffs against Chinese cells will lead to a price jump on PV cells and modules in the US market, it causes the cost of solar projects in the US to increase and the implementation and demand for solar products to decline, which ultimately transits into lower employment in other sectors in the PV indust ry. The Coalition for Affordable Solar Energy commissioned a study showing that a 50 er cent tariff will indeed boost employment in the cell and module manufacturing sector. However, this tariff jump would also result in a huge decrease in employment from slowing-down discretionary spending by solar buyers and an overall demand decrease in other sectors in the whole PV industry. The net impact on total employment would be 15 per cent -40 per cent decline in the US PV industry compared to its 2010 numbers (Berkman et al. 2012). This means the resurrection of the US cells and module manufacturers is at the cost of the rest and the vast majority of the US PV industry.Another potential outcome is that Chinese manufacturers could retaliate against imposed tariffs. The US currently still has a huge positive net export of polysilicon and PV manufacturing equipment to China. In 2011, China attributed to around 30 per cent of the US total net exports of polysilicon and 60 per cent of PV capi tal equipment (GTM 2012). To protest against imposed tariffs and duties, Chinese manufactures could ramp up their own production of polysilicon or turn to other countries to fill the gap, effectively cutting out the US firms in the solar supply chain.Conclusion In sum, Governments in most industrial countries including the US and China have been promoting clean energy technology in recent years. Among the world’s solar producers, China’s booming renewable energy industry, especially solar industry has dominated world solar markets and challenges American leadership. President Obama affirmed the US’s concern about clean energy technology: ‘†¦to make sure that we win the competition. I don’t want the new breakthrough technologies and the new manufacturing taking place in China and India’ (Morris et al. 012, p1). Meanwhile the subsidy to energy, including solar industry, has been successful in China (rapidly increase its market share of wor ld polysilicon production), the US policy subsidy on clean energy has not brought any expected result, even failure (i. e. bankruptcy of Solyndra–the California solar firm) (Robert et al. 2010). Trying to protect the domestic solar industry by preventing other country’s polysilicon exports is highly unlikely to be a wise and fair policy.In particular, countervailing and anti-dumping duties would result in a significant decline in exports of polysilicon and PV manufacturing equipment to China as well as a fall in employment. Indeed, China could have several ways rather than bring the case to the WTO in responding to the trade barriers imposed by the US, but what the US needs to consider its long term benefit. The competitive price of Chinese solar as a cheap source of clean energy which potentially enhances the US economic growth, creates jobs for Americans and tackles with climate change.ReferenceBerkman, M, Cameron, L ; Chang, J 2012, ‘The employment impacts of proposed tariffs on Chinese manufactured photovoltaic cells and modules’, The Brattle Group, Washington, D. C. viewed 16 September 2012, . EPIA see European Photovoltaic Industry Association. European Photovoltaic Industry Association 2011, ‘Global market outlook for Photovoltaics until 2015’, viewed 12 Oct 2012, http://www. epia. org/index. php? eID=tx_nawsecuredl;u=0;file=fileadmin/EPIA_docs/publications/epia/EPIA-Global-Market-Outlook-for-Photovoltaics-until-2015. pdf;t=1351601058;hash=65fb67c830a17dc3384646f83c30e104Goodrich, A, James, T ; Woodhouse, M 2011, Solar PV manufacturing cost analysis: US competitiveness in a global industry, Stanford University, viewed 25 Oct 2012, ;lt; http://www. nrel. gov/docs/fy12osti/53938. pdf;gt;. Grau, T, Huo M ; Neuhoff, K 2011, ‘Survey of photovoltaic industries and policies in Germany and China’, Climate Policy Initiative, Berlin. GTM 2012, ‘U. S. Solar Energy Trade Assessment 2011: Trade Flows and Dom estic Content for Solar Energy-Related Goods and Services in the United States’, Greentech Media, Washington, D.C. Morris, AC, Nivola, PS ; Schultze, CL 2012, ‘Clean energy: revisiting the challenges of industrial policy’, The Brookings Institution, Washington, DC. Roberts, MJ, Lassiter, JB ; Nanda, R 2010, ‘US Department of Energy & Recovery Act Funding: bridging the â€Å"Valley of Death† ‘, Harvard Business School. The Solar Foundation 2011, ‘Nation Solar Jobs Census 2011’, viewed 12 October 2012, . The Kearney Alliance, 2012, ‘China solar industry and the US anti-dumping/anti-subsidy case’, China Global Trade.USDOC 2012, ‘Fact sheet: Commerce finds dumping and subsidization of crystalline silicon photovoltaic cells, whether or not assembled into modules from the People's Republic of China’, Department of Commerce, The United States of America, viewed 15 October 2012, . Wesoff, E 2012, ‘Breaking n ews: Commerce Dept. Chinese solar panel dumping verdict is now in’, Greentech Media, viewed 17 October 2012, . WTO see World Trade Organisation World Trade Organisation 2012, ‘Anti-dumping, subsidies, safeguards: contingencies, etc’, The World Trade Organisation, viewed 10 October 2012, http://www. wto. org/english/thewto_e/whatis_e/tif_e/agrm8_e. htm

Progressive Reformers

10/08/12 Progressive Reformers The Progressive movement has had a tremendous impact on society and preserving the doctrine of a democratic nation. The Progressive Era, which initiated between the years 1890 through 1920, was instituted because progressives who wanted to rid politics of corruption and inefficiency. Progressives wanted to curtail the power of the business trusts, and protect the general welfare of the public. The Progressive name derived from forward-thinking or â€Å"progressive† goals that its supporters sought to advance.John Dewey, who is known as the father of Progressive education, has been most influential in Educational Progressivism. His vision for schools tied to a larger vision, leading towards a good society. His focus on education was on teaching the â€Å"whole child†. This learning extended beyond the subject matter and the attention was on the needs and interest of the child. I like to look at this as a form of nature vs. nurturing. Progre ssivism and Pragmatism are similar in its aims.They both contained the same educational aims, needs and interest, in educating the whole child. Pragmatic philosophers, such as Rousseau, looked at the correlation of education and politics. Progressivism, as I interpret it, was more of a movement. This movement formulated interest groups, like unions, which seek interest around the progressive philosophy. These interest groups protected the needs of the people. Organizations such as American Federation of Teachers began in 1916, during the time of the Progressive Era.Interest groups like American Federation of Labor, founded in 1881, focused on skilled workers (such as painters and electricians) and Congress of Industrial Organizations (early 1930s) advocating the organization of workers in the basic mass-production industries (such as steel, auto, and rubber). A lot of the people, on the frontline, in this progressive movement were women, farmers, and African American. This movement made a profound impact on education. In a publication of Progressive Education, George Counts wrote an article which focuses attention upon the child.He states that â€Å"progressive education has recognized the fundamental importance of the interest of the learner; it has defended the thesis that activity lies at the root of all true education; it has conceived learning in terms of life situations and growth of character; it has championed the rights of the child as a free personality†. Child-centered educational practices are shared by progressive educators. The pedagogical method is object teaching. The teacher begins with an object related to the child's world in order to initiate the child into the world of the educator. The focus is on thinking and doing.Problem-solving skills are required to overcome obstacles between a given and desired set of circumstances. Education is not simply a means to a future life, but instead it represents a life to the fullest. Progressive educators view existing schools as being formal, not focusing on real life situations, and strict. They prefer variety in classroom preparations and informal interaction between the teacher and their student. Progressives prefer schools teach useful subjects (including occupations) and emphasize â€Å"learning by doing† rather than instruction purely from textbooks. This brought about schools such as trade and vocational schools.The student was placed at the center of thinking, â€Å"teach the child not the subject. † John Dewey’s model of learning is to: become aware of the problem, define the problem, propose hypotheses to solve, evaluate the consequences of the hypotheses from one's past experience, and test the most likely solution. Progressive like Dewey felt that children, if taught to understand the relationship between thinking and doing, they would be fully equipped for active participation in a democratic society. The educational program depended on cl ose student – teacher interactions that required altering of traditional subject matter.

Belonging Essay

An individual’s interaction with others and the world around them can enrich their feelings of belonging and acceptance, however feelings of insecurity can lead to isolation and rejection limiting the experience of belonging. The concept of belonging is feeling connected to another individual, group, place or object that evokes positive emotions within oneself. In contrast, not belonging leads to feelings of alienation due to a lack of understanding, separation or when forced to embrace unfamiliarity. Through the 1992 film ‘Strictly Ballroom’ directed by Baz Luhrmann, the children’s biography ‘ by Beverley McGregor and the punk rock song ‘Perfect’ by Simple Plan, composers illustrate both concepts of belonging and alienation . Through a range of cinematic and literary techniques these composers show how an individual’s interaction with others and the world around them can enrich and limit their experiences of belonging. Baz Luhrmann through the film ‘Strictly Ballroom’ utilizes costuming to suggest isolation as well as ‘belonging’ and how it can either enrich or limit an individual’s experience. This is highlighted in the first scenes when viewers are introduced, through the mocumentary, to the flamboyancy of characters from the world of ballroom dancing such as Liz in her trademark gaudy canary colored outfits, and Shirley Hasting in her pink ball gowns that are matched to her ornate fuchsia eye shadow and lipstick. In contrast the character of Fran is dressed in a shapeless, oversized t-shirt and a close up of her face shows her naturally troubled skin free from makeup, wearing a large pair of thick-framed glasses. This immediately segregates her from the rest of the competitors and supporters of Ballroom dancing, signifying to the audience that a lack of interaction with others can severely impact on ones sense of belonging. The split screen later in the film where Fran, in normal day clothes dances with Scott and on the other side of the curtain Tina Sparkle dances in her lurid sequined costume, further shows Fran’s alienation from the dancing world. However, the song she and Scott are dancing to is Doris Day’s â€Å"Perhaps†, suggesting that their partnership could possibly work. The shock on Shirley’s face and the use of the children as a Greek chorus ‘Fran.. who’d have thought’ also suggest an acceptance of Fran. This is soon dispelled as Fran trips and a low angle shot of Liz and Shirley as they attend to her and tell her to ‘go home’ reminds the audience who belongs. Shirley and Liz’s perception of ‘belonging’ is enriched through their interaction with each other and their compatibility with the world of ballroom dancing. When Scott is shown by Ricco how to dance the Passo Doble, a close up of his feet in dusty work shoes on bare timber of the floor contrasts with a previous close up of Scott’s feet in shiny shoes on a highly polished floor. However, it is on this rough-hewn timber that Scott finally learns to dance ‘from the heart’ and his experience of belonging is enriched. You introduce costuming here so keep to that – your next paragraph is camera shots so do not confuse the two here. You could talk of costuming and characterization here but do not discuss camera techniques when that is part of your second discussion of the core text. Similarly aspects of belonging and not belonging and how these feelings can enrich or limit an individuals experience are explored in Beverly McGregor children’s biography ‘Pink Balloons’. The protagonist Sky constantly suffers from alienation and rejection from her peers and their parents due to her recent diagnosis of HIV/AIDS. This can be seen through symbolism to express ‘Skye’s’ feelings of isolation, when she says to her carer ‘Do you like my picture, the octopus has nine legs instead of eight, he is crying because he is different to the others†. This shows her feelings of inadequacy due to her inability to interact with the world around her and the limitations she faces in order to become accepted. This can be further expressed through the somber tone of the protagonist Skye as she relays her grief stating to her mother â€Å"Mummy, its bad enough having AIDS without everyone staying away from you because they are scared they can get it too†. Thus Skye’s apparent isolation as can be seen through the discrimination she endures throughout the text, which significantly decreases her chances of interacting with others to enrich her own personal experience of ‘belonging’. Continue here†¦ In contrast, Skye’s experiences of ‘belonging’ are enhanced following her election to vice captain in her class as can be seen through the literary technique of a rhetorical question when Skye states â€Å"they could have picked anybody, but who did they choose? †. This highlights Skye’s ability to feel a part of the world around her as a result of her eventual acceptance in her class, despite the constant stigma attached to her and her contraction of the HIV/AIDS virus. Baz Luhrmann further exhibits belonging and not belonging and its effect on enriching or limiting an individuals experience in ‘Strictly Ballroom’ through the implementation of camera techniques. This can be seen in the split screen where Fran and Scott are caught dancing together behind the crimson colored show curtains. Fran in an ordinary day dress is juxtaposed with Tina Sparkle in her lurid costume and sequins on the other side of the curtains. Scott and Fran dance to the Doris Day song ‘Perhaps’ suggesting they could possibly be dance partners. After Fran falls to the ground and is dragged stage left by Shirley Hastings and Liz to the powder room a low angle point of view shot signifies the alienation of Fran. Fran is seated on a stool and stares up at Mrs. Hastings and Liz showing the obvious superiority Shirleyand Liz feel over Fran. and further highlighted when ‘Liz’ states â€Å"you’re a beginner Fran, what the hell did you think you were doing? † Fran is then left isolated staring up at the huddled group of women representing her separation from the world of ballroom dancing. When Shirley Hastings states, â€Å"I think it will be better if you just went home and forgot about all this nonsense† Fran’s rejection through this scene conveys her inability to enrich her experience of belonging in the world of ballroom dancing. Continue here†¦. In comparison the final dance scene highlights the enrichment of a sense of belonging. This is conveyed through a long shot of the ballroom, which captures the acceptance of Fran and Scotts ‘crowd-pleasing’ steps, when everybody begins to clap with Doug to enable them to continue their dance. Crosscutting between ‘The Pan Pacific Championships’ and Fran’s back yard is also utilized to express the relationship between Fran and Scott and their newfound connection with dancing. Scott no longer dances to win but for the love of the sport and to express the simplicity related to his relationship with Fran. This technique symbolizes that it does not matter where Fran and Scott dance as long as they are dancing together. The implementation of Diagetic sound the ‘Rumba De Burros’ in the concluding scene expresses the concept of belonging and allows the viewers to develop an understanding of the enrichment of ‘Fran nd Scott’ when they are accepted in the world of ballroom dancing just the way they are. Additionally the song ‘Perfect’ by the punk rock band ‘Simple Plan’ displays how isolation can limit an individual’s chance to belong. ‘Perfect’ encapsulates feelings of worthlessness and insecurity as it explores the concept of rejection from the composer’s own father quote needed. The use of repetition as can be seen through the words â€Å"I am sorry, I can’t be perfect†, and highlights how feeling inadequate can segregate an individual from their world. Repetition is effective as it reinforces the deviation of the composer and provides the audience with a clear understanding of the separation between the writer and his father. The reminiscent nature of the lyrics can be seen through the rhetorical question ‘Did you know, you used to be my hero? ’, this engages the listener and alerts them to the change in the relationship while expressing the passionate tone of the song and the eventual acceptance of the turbulent relationship by the protagonist. Colloquial language, â€Å"Hey Dad† appeals to a young audience and invites them to have an insight into the father and son’s personal life to allow them to understand the hurt that is felt by the son in their dysfunctional relationship. Likewise the song writer constantly uses rhetorical questions to address his father and express his feelings of inadequacy such as â€Å"Did I grow up, according to your plan?. Thus it can be understood that due to the rejection experienced by the lyricist at the hands of his father it limits his opportunity to experience a sense of belonging. You need to discuss the music when you talk about a song otherwise you must only talk about it as the lyrics†¦ In conclusion various composers have utilized literary, visual and sound techniques to convey aspects of belonging, and how this can limit or enrich ones reaction to the world around them. Through the analysation of ‘Strictly Ballroom’, ‘Pink Balloons’ and ‘Perfect’ we can enhance our understanding of belonging and different obstacles that prevent an individual from feeling accepted.

Anglo American Dissatation

Introduction Anglo American Plc is a mining conglomerate and is one of the largest companies within the mining industry. It originally started in 1917 as a gold mining company going by the name of Anglo American Corp; the name was created when the initial starting capital of ? 1million was raised from U. K. and U. S. sources (Forbes 2006). In 1999, following a major strategic review, Anglo American merged with Luxembourg headquartered Minorco to form Anglo American Plc, with its primary stock exchange listing and head office in London and secondary listings in Johannesburg, Switzerland, Botswana and Namibia (Anglo American 2012d).Anglo American â€Å"operates in Africa, Europe, South and North America, Australia and Asia† and is a global leader in the mining of both platinum and diamonds (Anglo American 2012c). They employ approximately 100,000 people (Anglo American 2012c) across the world, both in the mines and in local offices, with the majority of employees being based in South Africa, 79,000 (Anglo American 2011). Anglo American employs 10,000 people in South America, which is the second largest proportion of employees in the company, and employs 11,000 people in other countries across the globe (Anglo American 2011).South Africa produces the highest amount of revenue by origin, $17,855million in 2011, which accounted for 49% of the group’s total revenue for that year (Anglo American 2011). When comparing all the countries’ revenue for the year, South Africa has a very dominant position, as all the other countries have less significant revenues of $5,058million or lower (Anglo American 2011). This suggests that South Africa is the main country for production. They have a highly diversified mining portfolio, comprising of many metals and minerals.In 2011, Anglo American increased their shareholding to 85% in the world’s leading diamond company, De Beers (Anglo American 2012a), which accounted for 6% of the share of Anglo American ’s operating profit in 2011 (Anglo American 2012c). The company employs 16,000 people in the diamond division, in North America and Africa, which is the second largest percentage of employees across the group (Anglo American 2011). Another subsidiary of Anglo American is Anglo American Platinum Ltd. AAP), of which they own 80% and employ 55,000 people, which is the largest proportion of employees across the company, 55% (Anglo American 2011). AAP is the main producer of platinum in the world, accounting for 40% of the global supply (Anglo American 2012c). Iron ore is the most predominant area of Anglo Americans operating activities with the largest share of the group’s profit in 2011 of 41%, $4520Million (Anglo American 2011). This is significant in comparison with the second highest area of operating profit, copper, which attributed to $2461Million, 22%, of the operating profit.Anglo American also produce metallurgical and thermal coal, nickel and other materials, whi ch, although contribute to the company’s profits, are less significant in comparison to the more major operations of diamond, copper, iron ore and platinum. Anglo Americans main corporate aim is to, â€Å"be the leading global mining company becoming the industry’s largest employer, partner and investment of choice† (Anglo American 2012f). They believe a â€Å"sound strategy, sustainable development and good corporate governance are essential to achieve this goal†. (Anglo American 2012f) MethodologyAt the first meeting, the group decided that the company study was to be worked on two days a week and a table was drawn up in order to manage the time efficiently to ensure the deadline was met. The table comprised of a ‘plan’ and ‘achieved’ column for each date during the weeks leading up to the deadline of 14th December, see Appendix A. After the first meeting, the group went away to do some individual brief research on the given co mpany in order to get background knowledge of Anglo American and so the in depth research for each section could be carried out at the next meeting.In order to make the most of the time given, the group was divided so that each of the main sections were researched thoroughly in order to give a more detailed report. The group followed the recommendations, allowing a third of the time to carry out research, a third on writing up the report and a third on editing and producing the final piece. After the research had been carried out on all sections, different members of the group began writing up different sections of the report using the information previously obtained.The group then looked over each other’s sections in order to make sure all relevant information was included, to check for grammar and spelling mistakes and to make sure enough references had been used. This was important to ensure all members had a good understanding of each section. Anglo American’s webs ite and annual reports were the main source of information for the company study. The issues surrounding Anglo American during the past year allowed for many relevant news articles to be widely available for use within the financial management section.After the report had been completed, the group booked weekly sessions in the Techno booths with print outs of the completed report, to ensure all members of the group were familiar with all sections. The presentation was then brainstormed and the main points put on a PowerPoint, which then allowed for the presentation to be practiced over a couple of weeks prior to the deadline. Many rehearsals of the presentation were carried out to ensure it filled the time allocation required and it flowed well.Problems occurred with the methodology closer to the deadline, as members of the group had less spare time to work on the company study, due to other assignments being due in around the same time. Financial Accounting Corporate Governance As a global organisation it is crucial that Anglo American complies with the highest standards of corporate governance, to ensure any agency problems within the company are minimised and the company is well run. Anglo American aims to â€Å"direct and control its company in a transparent and accountable way. † (Anglo American 2012f).From the 2010 board effectiveness review, an action plan was created to improve the relationship between the board and management, which could have helped reduce the conflicts of interests and agency problem. The action plan was to Increase contact between directors and management between board meetings and â€Å"Introduce more ‘free flowing' informal discussions outside board meetings – the pre-board meeting dinners will be more ‘structured' whilst retaining an informal style† (Anglo American 2011). In 2011, this action plan was reviewed and changes within Anglo American were made. The flow of management information to the Board was enhanced and the frequency of dissemination of this was improved. † â€Å"Structured board dinners also took place during the year where matters such as strategy were discussed† (Anglo American 2011). This shows good corporate governance by Anglo American as areas of the business which need work are being identified by the company and being acted upon accordingly to improve the effectiveness and control. The Anglo American board is chaired by Sir John Parker and consists of two executive and eight non-executive directors. 0% of this board it made up by women, this suggests that the Anglo American board could be more diverse. In the current business economy, â€Å"Regulators, politicians and shareholders are each stepping up pressure on companies for greater board  diversity  as part of a drive for better governance† (Robertson 2012). The Lord Davies Women on Boards report set a target of 25% minimum of board members to be female by 2015. Anglo Ameri can stated in their annual report their â€Å"intention to increase the representation of women on the Board from 20% to about 30% by 2013† (Anglo American 2011), which is two years below the national expectation.This is an example of good corporate governance by Anglo American as it is adhering to policies and targets which are not compulsory and also has disclosed in its annual statement, its future intentions to increase diversity in the boardroom. Anglo American also has a nomination committee which â€Å"aim is to build on the existing diversity of the board by identifying and nominating suitably qualified candidates† (Anglo American 2011). This is viewed as being good corporate governance by the company as Anglo American is making sure before directors are appointed that they are right for the job and the best candidate is chosen.To do this, they are considering both men and women for the job roles which is widening the talent pool. The Government passed the UK B ribery Act 2010, under this act the â€Å"defence  for a company against this liability is to prove that it had ‘adequate procedures’ in place to prevent bribery† (Wilkinson 2010). To comply with this act, Anglo American have implemented the necessary procedures to ensure that its business integrity policy operates effectively, so the risk of bribery is minimised as far as possible (Anglo American 2011).During the year, Anglo American developed enhanced guidelines on the acceptance and provisions for gifts and entertainment and provided specific guidance on the procedures to be followed where risks were considered higher. This is a good example of corporate governance as this would reflect positively for shareholders and potential investors, as new laws are being adhered to. In accordance with the UK Corporate Governance Code, Anglo American continue to propose the re-election of all its directors on an annual basis (Anglo American 2011), which ensures good cor porate governance, as directors will always be of the highest quality possible.Within Anglo American â€Å"The Audit Committee plays a pivotal role in ensuring high standards of corporate governance and provides assurance to the Board on its reports to shareholders† (Anglo American 2011). In Anglo American, the audit committee comprises of four independent non-executive directors. The audit committee is also charged with reviewing the results of the key risk management process, â€Å"being involved in the risk management procedures of the company† (Anglo American 2011).However, to improve the governance in this area Anglo American could disclose the main risks to the company and the strategy it has in place to deal with these risks. The Audit committee is also responsible for the whistleblowing programme which the group has had in place for a number of years. It â€Å"is designed to enable employees, customers, suppliers, managers or other stakeholders, on a confident ial basis, to raise concerns in cases where conduct is deemed to be contrary to our values† (Anglo American 2011).This shows good corporate governance as there is a programme which has been set up by the group where stakeholders, can report failures and discrepancies within the company, to independent non-executive directors. However, Anglo American could disclose the procedures which are to be followed when issues are reported. Within Anglo American, the board delegates certain responsibilities to a number of committees; these include the Remuneration committee, Nomination committee and Audit committee.In coherence with the UK combined code of corporate governance there â€Å"should be a formal and transparent procedure for developing policy on executive remuneration and fixing individuals director’s remuneration packages, no director should be involved in deciding their own remuneration† (FRC 2012). Anglo American’s remuneration committee seeks advice fr om external advisers Pricewaterhouse Coopers LLP, Linklaters LLP, Mercer Limited and Deloitte LLP, to help determine the director’s remuneration packages.Anglo American describes its policy as being â€Å"formulated to attract and retain high-calibre executives and to motivate them to develop and implement the Company’s business strategy in order to optimise long-term shareholder value creation† (Anglo American 2011). The remuneration mix is an important part of good corporate governance as it ensures that the company has an appropriate blend of basic and performance related pay as the remuneration committee will see as suitable.This will ensure that the directors will strive to achieve the main goal of increasing shareholder wealth. At the present time, director’s remuneration is calculated on the industry median for the mining sector and is adjusted by the director’s performance and experience. Anglo American could improve their corporate governa nce by setting director’s remuneration packages at the industry averages only. Within Anglo American, each executive director’s total remuneration consists of basic salary, annual bonus, long-term incentives and benefits.This ensures that an appropriate balance is maintained between fixed and performance-related remuneration (Anglo American 2011). However, the sheer value of some of the bonus packages is likely to affect shareholders wealth and the willingness for potential investors to invest. An article from the Telegraph explains that the chief executive of Anglo American was handed a 38 per cent increase in pay last year, with a total package worth ? 2. 17m, however the cash element of her annual performance bonus was increased by 134 per cent to ? 962,000.Never the less, at this time shares in Anglo American fell by 14 per cent over the course of 2011 (White 2012). This could be viewed as bad corporate governance by the company as despite the share price falling t he chief executives pay has been dramatically increased. To help the directors ensure they have a meaningful stake in the performance of the company, in 2004 the remuneration committee devised a Bonus Share Plan (BSP), â€Å"which requires executive directors to invest a significant proportion of their remuneration in shares† (Anglo American 2011).This demonstrates good corporate governance, as it aligns the directors’ interests with that of the shareholders, reducing the agency problem. The bonus share plan also weakens independence of the directors within the company, as it is giving them greater interest within the company on a personal level. Training is offered to new directors in order to develop a comprehensive view of Anglo American’s company, continuous training is also available to directors throughout their employment.However, the governance could be improved by disclosing in the annual report the nature and the schedule of the training, so the stakeh olders know what is being covered in the induction training. Within the annual report for Anglo American there is a statement of director’s responsibilities, which sets out what is expected of the directors. The board should present a balanced, true and fair view of the company’s position and prospects. Under company law the directors should not approve the accounts unless they are satisfied that they give a true and fair view of the affairs of Anglo American.This shows good corporate governance from the company as in the annual report it breaks down the directors responsibilities, however this could be improved by giving details to the users of the annual reports about what responsibilities each director has. A breakdown of the separation of roles between the chairman and director could also be disclosed in the annual report, which will ensure that one person is not given too much power which could prove to be very risky for Anglo American.The skills and knowledge of all the board members are summarised in the annual report, to give the shareholders and stakeholders an idea of their previous experience and the wealth of knowledge they bring to Anglo American, which shows good corporate governance by the company. Overall Anglo American shows good corporate governance with compliance to the UK combined code of corporate governance. The company has disclosed majority of information but could improve by disclosing the strategies in place, especially for the risk management prospective and its whistleblowing and training schemes.Stating the responsibilities of the chairman and chief executives would also ensure that corporate governance is being applied at a continuous high level. Stakeholders UK corporate law requires companies to be principally accountable to their shareholders. However, Anglo American believe that their shareholders' best interests are served when the company makes sure all appropriate stakeholders are kept happy, not just the sha reholders (Anglo American 2011).It is in all stakeholders’ best interests that the company not only survives, but flourishes long term, Anglo American therefore seek to be the partner of choice for its stakeholders by operating in a way that is acceptable to them all (The Times 2012a). Anglo American needs their stakeholders to support them in order to meet the organisations objectives’, for example treating staff well and respecting local communities, will make it easier to recruit new people necessary for growth.In the long term, this will create more value for shareholders. Employees are possibly the most important stakeholder for Anglo American, employing approximately 100,000 people around the world (Anglo American 2012c), however working within the mining industry has been voted one of the top ten most dangerous jobs (Korch 2012). To help protect this stakeholder group, Anglo American has adopted strict health and safety regulations which are outlined in the safe ty way, ensure that employee’s working conditions are as safe as they can possibly be. The safety way is a comprehensive framework of roles and responsibilities supported by a set of safety principles and mandatory safety standards† (Anglo American 2012b). The strategy outlines Anglo American's risk-based approach to safety based on ten key factors that support effective safety management; leadership, risk management, culture, competence, assurance, monitoring, planning, standards, communications and learning (Anglo American 2012b). Employees in management positions are also seen as stakeholders within Anglo American, as they are esponsible for making key business decisions within the company and without the relevant information they will not be able to make reliable decisions. Unions are a very important stakeholder for Anglo American as they try to make the employees' time whilst working for Anglo American as safe and as beneficial as possible. Previously, Anglo Ameri can have clashed with unions and issues have been raised, as seen in The Telegraph (2011), resulting in negative media interest and damaging the reputation of the company (White 2011). This, in turn, has a negative impact on all stakeholders within the company.In 2010, Anglo American received an â€Å"Employer incentive award for good performance† due to their â€Å"sound labour relations with trade unions, as well as the implementation and enforcement of sound occupational health and safety practices and initiatives† at the South African trade unions solidarity awards for 2010 (Anglo American 2012k). Examples of some of the trade unions that are recognised within Anglo American are The National Union of Metalworkers of South Africa, The National Union of Mineworkers, The United Association of South Africa and The Togetherness Amalgamated Workers Union of South Africa.Activist groups can be classed as stakeholders, as mining involves using the world’s natural re sources and in some cases can lead to long term damage to the environment. Such groups are passionate about protecting the environment and if they feel that Anglo American are not protecting the environment enough, they put pressure on the company. On 28 Sep 2012, War on Want released an article discussing the miner’s strikes in South Africa and the poor working conditions of the employees (War on Want 2012).This could create negative publicity and disrupt operations, therefore affecting shareholder wealth. In response to these activist groups, Anglo American has recently developed a Socio-Economic Assessment Toolbox (SEAT) as a means of further improving the impact of its activities, e. g. setting up training programmes for local communities (The Times 2012b). The contractors that work on the various sites across the globe are also seen as stakeholders within Anglo American, as they carry out the majority of the work on civil engineering projects, such as digging new mines.C ontractors are important stakeholders in Anglo American as they have a lot of responsibilities when undertaking projects and if these are not carried out properly, then problems can arise. If quality standards were compromised, due to disillusioned contractors, then this could have health and safety consequences in the future. Contractor management is also an important consideration when using contractors as external stakeholders, for example local communities may accuse Anglo American of poor social performance associated with these contractors.This is the reason that the social impact of contractors on the local area is managed professionally. Customers are a vital stakeholder within Anglo American, but due to the nature of the industry, the majority of Anglo American's customers are countries, â€Å"China is a key customer of Anglo American's products† (Anglo American 2012m). Anglo American has many different key performance indicators (KPI), divided into investing in worl d class assets in the most attractive commodities, operating safely, sustainably and responsibly, employing the best people and organising efficiently and effectively (Anglo American 2011).One of the main operating KPIs is the work related fatal injury frequency rate (FIFR). FIFR is calculated as â€Å"the number of fatal injuries to employees or contractors per 200,000 hours worked† (Anglo American 2011). This information is most relevant to the employees of Anglo American, and the unions representing them, as they are the ones who are directly affected by the injuries of co-workers. The FIFR for 2011 shows a small increase in fatalities from 15 to 17, however, in 2009 there were over 50 fatalities which shows that Anglo American is implementing the correct strategies in order to minimise these fatalities.Despite the downward trend, Anglo American targets 0 fatalities, showing that Anglo American show a keen interest in their employees' welfare. Another operating KPI is the lost time injury frequency rate (LTIFR), which is the amount of lost time from injuries (LTIs) per 200,000 hours worked (Anglo American 2011). An LTI is an injury which leaves the employee unable to perform their regular duties for a the period after the injury was incurred (Anglo American 2011).If Anglo-American have a higher FIFR or LTIFR than the industry average, it may put off possible employees from applying for a position, which could result in the company not being able to employ the most knowledgeable people, which can have a negative impact on shareholder wealth. Another operating KPI is greenhouse gas emissions which is measured in CO2 equivalent emissions (Anglo American 2011). Environmental activist groups, such as Greenpeace, are likely to be interested in this key performance indicator as greenhouse gases are very harmful to the atmosphere and have been linked with global warming.The annual report from 2011 shows a reduction in Greenhouse gas emissions than in 2010, s ignifying that Anglo American are moving in the right direction in terms of reducing their carbon footprint. Total water use is another operating KPI and includes water used for primary activities, which affect the people who live in the area surrounding the mine. Some of the regions that Anglo American work in, have sparse water supplies and therefore any water used by the company may result in less water for the local communities.Reducing this KPI is important to Anglo American, as if this is not managed it may put off potential employees within these communities from applying for a position within the firm, and may give Anglo American a bad reputation. The final key operating KPI is Enterprise Development, which is is defined as the number of companies supported and number of jobs sustained by companies supported by Anglo American enterprise development initiatives (Anglo American 2011). The stakeholder that is most closely linked to this key performance indicator would be the lo cal community in which Anglo American operates.Results from this KPI show that Anglo American is currently supporting 38,681 businesses which is much higher than their target of 3,500 businesses (Anglo American 2011). A key KPI relating to employing the best people is voluntary labour turnover, which is the number of permanent employee resignations as a percentage of total permanent employees (Anglo American 2011). In 2011, the percentage of employees who resigned was 3% which shows a decrease of 2. 3% from the previous year (Anglo American 2011).This shows the company is striving to improve employee morale and employee working conditions. This KPI is important for the employees of the company, as it indicates the number of people who may have been unhappy within their work. An important employment KPI in recent times is gender diversity, which represents the percentage of women and female managers employed by Anglo American (Anglo American 2011). In 2011, the group managed to incre ase the percentage of female employees from 14% to 15% and the total number of female managers from 14% to 21%.This KPI can be linked to both the employees and unions of the company, as both want to make sure Anglo American has equal opportunities for both genders in order to create a harmonious working environment. The first â€Å"organising efficiently and effectively† KPI is asset optimisation, which is defined as the sustainable operating profit benefit from optimised performance of the asset base of the core businesses (Anglo American 2011). An asset optimisation strategy is comprised of asset management and asset monitoring and a well organised strategy can reduce avoidable maintenance and interruption times.Managers of Anglo American will be interested in an effective asset optimisation strategy, as it will allow them to make effective decisions with regards to the best method of maintaining and using the company’s assets. The other organising KPI is the supply chain, which is the â€Å"operating pro? t and capital spend bene? ts to Anglo American resulting from centralised procurement from core businesses† (Anglo American 2011). An effective method of managing the supply chain is by local procurement, as it saves transport costs by supplying across the world.Therefore, managers of Anglo American will be interested in this KPI as it allows the company to build relationships with key contractors/ suppliers that can produce mutually beneficial outcomes. The results for the most recent financial year show an improvement to the supply chain of $472 million from the previous year. In the annual report Anglo American also have a section of investment KPI’s, these include return on capital employed and underlying earnings per share. The results from the annual report show an increase in both KPI’s from 2010 to 2011, 24. 8% to 26. 5% and $4. 13 to $5. 06 respectively.Investment KPI’s are only relevant to shareholders. I t enables shareholders to check how well Anglo American generates profit from the capital invested and provides them with a comparison to the previous year. Despite the fact that Anglo American has a fairly extensive list of key performance indicators, there are other factors that have not been accounted for that would benefit the company’s stakeholders. Antofagasta Plc. , another company within the mining sector, uses operational KPIs that state the volumes of the most important metals that has been mined during year and compared with previous years (Antofagasta 2011).Anglo American could create this form of KPI to ensure they increase the level of production for the most important materials each year, which would be useful to the majority of stakeholders as they would be able to see how much the company has expanded its' production over the year. Contractors would be able to use this information to estimate how the level of production will increase over the following year t o put aside enough resources in order to carry out any projects that Anglo American may have in the future. London Mining Plc. ave a KPI for number of employees trained, which gives the number of people who have undergone professional training within the year (London Mining 2011). Anglo American could use this as one of their KPIs to show whether the management have executed the relevant training schemes for employees. Customers would be the most likely stakeholder to benefit from this KPI, as if there is a high number of people that have been professionally trained, it implies that their staff are trained to the highest standard and will have the correct knowledge needed in order to carry out best practice.Employees would find this information useful to determine whether they might be entitled to be given professional training by the number of employees put on schemes within the year. hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh Financial Management Figure 1 shows Anglo American Plc. ’s share price performance over the period 1 January to 30 September 2012 and the FTSE All Share performance. After analysing, it can be seen that both share price, and average share price of the FTSE All Share, have considerably similar movements over the given period with Anglo American’s share price being more erratic. [pic]On 6 January, Anglo American shareholders approved the change of holding from 45% to 85% of De Beers at the company’s general meeting. During the meeting the chairman voiced his expectations for an increase in shareholder value due to the expertise and leadership of De Beers (Anglo American 2012a). This shareholder approval was expected to result in an increase in demand for shares, which is represented by the increase in share price between 9 January and 23 January. This movement in share price seems to be autonomous from the FTSE All Share which would aid our analysis of this particular period as the event is internal to Anglo American. On 26 January Anglo American released their production report for the 4th quarter in 2011. Initially, the share price dropped from ? 27. 37 on 26 January to ? 26. 35 on 30 January which could have been due to the decrease in diamond and platinum production. This area of production is what the company is best known for, so a decrease in production of these would initially deter investors and create doubt for shareholders. Between 30 January and 3 February the share price shot up by ? 2. 5 which signified that the shareholders had looked into the report further to see that the production of all other materials had increased, including nickel production increasing by 125% from the previous year (Anglo American 2012). From figure 1, it can be seen that this increase is reflected in the movement of the FTSE 100 which could suggest that there may be external factors also affecting Anglo American at this time. On 23 March, Anglo American sold a â‚ ¬750m 10 year euro bond which could hav e been due to funds being needed more within the company (Euroweek 2012).Investing in the euro bond may have been to help create or strengthen values of the company, especially within Europe at this particular time of the European Sovereign Debt Crisis. As shown on figure 1 between 23 March and 29 March the share price fell dramatically. This could be due to shares being sold by shareholders that primarily invested in Anglo American, as they supported the Eurozone. On 1 June, Anglo American re-entered the euro bond market which â€Å"several bankers speculated that they returned out of prudence† Euroweek 2012). The share price shot back up, which could have been caused from the amount of demand for the deal, this suggested investors were pleased to see Anglo American again. Anglo American was in talks with Peru on 29 June in relation to a potential local sustainable development to accompany a mining project in the region, and had proposed a $118 million investment (Guerra 201 2). $36. 9 million of the investment was budgeted to install a pumping system in to two of the country’s rivers (Guerra 2012).The fact they are supporting and helping Peru is a sign of good corporate social responsibility for shareholders and potential investors which resulted in a ? 0. 66 increase over 4 days. Between 10 August and 30 August, there is a noticeable decrease in the share price which would seem to be an internal factor as the FTSE All Share does not seem to follow suit during this period. An outside article was realised on the 10 August stating that Anglo American were dismissing claims that a shareholder spring was expected to occur which was broadcasted in the Telegraph (2012).The article in the Telegraph (2012) stated that shareholders had contacted Sir John Parker, Chairman of Anglo American expressing their dissatisfaction with the CEO, Cynthia Carroll. Sir John parker sided with the CEO which fuelled the shareholders to take their complaint to one of the company’s directors. This highlighted to the shareholders the lack of support they were receiving, which therefore could be the internal factor forcing the share price down.When comparing Anglo American with other companies within the mining industry, the movements in the FTSE share price are mirrored more closely by Antofagasta than Anglo American, which may suggest that their beta is closer to 1. [pic] Throughout the period analysed, the share price movements for Anglo American is quite volatile in comparison to the FTSE All Share. Between 2 April and 7 June, the movement in share prices between both Anglo American and The FTSE is extremely similar with Anglo American’s movement being more responsive.This could signify that external factors affecting the whole market have affected Anglo American the same way but at a more severe rate, this is shown by their beta of 2. 08, see Appendix C. With the FTSE having a perfect market beta of 1 the beta value of Anglo American is in perfect correlation with the movement of share prices, see Appendix B, as in the majority of places the movement is the same but double as volatile. With the beta value being considerably higher than 1, shareholders or investors are likely to be risk seeking rather than risk averse.The further away from 0 the beta value is, the lower the shareholder value, but the potential for a high return is there. As seen in the London Business School Risk Measurement Services publication the commercial betas for the 3 quarters up to September 2012 are of a similar value, see Appendix C, with the average being 1. 55. This is significantly lower than our calculated beta of 2. 08. However the â€Å"Risk Measurement Service uses estimates based on an analysis of variable factors, and is therefore no way guaranteed† (London Business School 2012), whereas the beta of 2. 8 was calculated based on weekly data taken from Thomson Analytics. Although the beta of 2. 08 is the less favourable one, it is the more accurate out of the 2 so will give a better indication of shareholder value and the risk an investor may take. Both betas are aggressive in relation to the market beta however the commercial calculation is less so. Unless a serious investor were to calculate the beta themselves, using actual data for the company, they would be likely to base an investment decision on estimated inaccurate beta values.A shareholder’s decision to invest can be influenced by another confounding variable, the company’s investment rating. There are 3 main investment ratings that stakeholders use and rely upon these are Moody’s, Standard & Poor’s (S&P) and Fitch. Anglo American are rated on Moody’s with a long term investment rating of Baa1 and the equivalent long term rating on S&P of BBB+ which is noted to be a lower medium grade of investment. S&P define their BBB+ rating as the company having â€Å"adequate capacity to meet financial commitments, but more subject to adverse economic conditions† (Standard and Poors 2012).Although Anglo American’s ratings could be higher they seem to be in a good stable financial position and therefore an attractive investment for potential shareholders. The short term ratings for Anglo American are of a slightly better position than the long term ratings, with Moody’s being P-2, which implies they â€Å"have a strong ability to repay debt obligations† (Moody’s 2009). This shows the company is fairly liquid giving reassurance to shareholders because if the company was to enter default there would be a higher chance of shareholders getting a return.The S&P credit rating for Anglo American was the same in 2011 as in 2012 with a long term rating of BBB+ and a short term rating of A-2 for both. This gives investors the security of Anglo Americans stable credit rating and in turn ability to pay off debt. Although investment ratings can be used to help determine whe ther to invest or not they should not be relied upon, as companies with the same rating do not have absolutely equal credit quality. It does not take into consideration external factors such as a change in money rates and it ignores the length of maturity. Dividends |2011 |2010 | | |($) |($) | |Interim dividend |28 |25 | |Recommended |46 |40 | |final dividend | | | |Total dividends |74 |65 | Anglo American has a clear dividend policy in which a base dividend will either be increased or maintained from year to year (Anglo American 2011).An interim dividend of 28 US cents per ordinary share was paid on 15 September 2011, and for the 2011 financial year â€Å"The Board proposes a final dividend of 46 cents per share, giving a total dividend for the year of 74 cents, a 14% increase† (Anglo American 2011) see figure 3. During the year the Group paid dividends of $818 million to company shareholders, which is a huge increase on the $302 million paid out in 2010, and $1,404 million in dividends to non-controlling interests.Based on shares eligible for dividends at 31 December 2011, this will result in an estimated distribution of $557 million of shareholders’ funds, of which $350 million will be distributed by the parent Company. The interim dividend for 2012 has increased by 14% to 32 cents per share, which continues their policy of a base dividend being slightly adjusted after discussion to ensure the maintenance of their investment grade rating (Anglo American 2012n). Dividends are proposed to be paid out in cash and not scrip issues therefore the $557 million will be shown on the balance sheet, therefore affecting cash flows.Anglo American have a fairly attractive dividend yield of 3. 32% in 2011, when compared with other mining companies within the FTSE 100, see Appendix D. From the four companies analysed the dividend yield has increased from 2010 to 2011, apart from BHP Billiton. This suggests that either companies are issuing a higher divided or the value of shares has dropped. In Anglo Americans case the share price has fallen over the given period, but the annual dividend has also increased. As a percentage of earnings the dividend for 2011 was 14. 51%, which had increased from 11. 97% in 2010.Considering the high capital investments that Anglo American commit themselves to, this is fairly good proportion of earnings attributable to shareholders. The optimum dividend policy would offer shareholders a constant, steady dividend paid at regular intervals now rather than later; this is exactly what Anglo American has to offer. However due to the Group’s aggressive investment plans for future growth, which includes three major projects; Barro Alto, Los Bronces and Kolomela, the constant regular dividend policy is likely to cease or at least come under discussion at board meetings.Shareholders have questioned the decision to invest money into these projects, CEO Cynthia Carroll has announced that the 3 projects and anot her one expected to commence in 2013 will contribute $6bn to dividend pay-outs. Although the expected change in dividend policy has undoubtedly caused controversy with shareholders, the company has proven that investment into new projects is necessary to maintain a high profit and continue to pay a regular dividend in the future (Vuuren 2011).Over the past few years Anglo American have had a strong, fairly positive balance of debt and equity, which has allowed them to have the flexibility to attain more finance when necessary. Net debt at 30 June 2012, including related hedges, was $3,124 million which was an increase of $1,750 million from the net debt at 31 December 2011. Net debt at 31 December 2011 comprised $12,873 million of debt, partially offset by $11,732 million of cash and cash equivalents (Anglo American 2011).However a dramatic net debt decrease of $6,010 million occurred from 31 December 2010 to 31 December 2011 which reflects strong operating cash flows and proceeds o n the disposal of 24. 5% of Anglo-American Sur (Anglo American 2011). Anglo American is funded mainly by equity as shown by the debt and equity ratios in Appendix D. At 30 June 2012 for every $1 of capital invested by the shareholders $0. 655 is funded through debt, which is a slight improvement on the debt equity ratio of 0. 677 at 31 December 2011.The ratios indicate that the group should easily be able to generate enough cash to satisfy its debt obligations as the group has enough room to manoeuvre its current levels of finance. It is important that a company’s debt-equity ratio is not too high as this can lead to increased interest payments and an enlarged risk of damaging their credit rating. This is perhaps the reason that the group made efforts to decrease the debt-equity ratio from 31 December 2010 from which it was 0. 755. Anglo American has a sound equilibrium between debt and equity as seen by the gearing calculations in Appendix D.Over the past two years, the figu re has increased gradually from 45. 71% at 30 June 2010 to 50. 30% at 30 June 2012, which could be due to an increase in long term liabilities. The market value of equity has also increased but at a slightly lower rate, causing the gearing ratio to increase steadily. However, the value of equity is based on the market value of the shares at 30 September 2012 for each of the three years to ensure a more accurate comparison, so when considering each year in turn, it would not show the true value of gearing.Figure 3 shows the comparison of the percentage of gearing compared with the percentage of gearing using the market value of equity. Both show a similar pattern with gearing gradually increasing over the two years, but a steeper incline for the gearing based on the share price at that year. This could be a result of the share price dramatically decreasing from 25. 26 at 30 September 2010 to 18. 17 at 30 September 2012, in turn giving a lower value of equity when using the market sha re price.Calculating the gearing using the share price at that time, rather than the market value today, shows the gearing in a way that the company would have wished to portray. Overall, it can be seen that the share price movements of Anglo American Plc. generally follow the market trend, signalling that external factors are the main influence on any change in share price. The erratic behaviour of Anglo American’s share price makes an investment in this company quite risky. For example a variation in the market share price due to a change in regulation is likely to have more of an effect on Anglo American as their beta value is 2. 8. To lower the risk they could strengthen themselves against external factors by introducing or improving their internal control systems, minimising their exposure to the external environment and in turn lowering their beta. The beta of Anglo American demonstrated by how the share price movement is generally the same as the market but exaggerated , which shows that it is an aggressive beta. When comparing with other companies in the mining sector Anglo Americans beta value is higher than most but not an anomaly, see Appendix C.All the companies within the mining sector in the FTSE 100 have a beta value higher than 1, making them all aggressive, risky investments, with Anglo American being one of the more risky options. Anglo American may seem quite risky when using the beta, however when considering this alongside the company’s gearing it could be considered as an attractive less-risky investment. Anglo American’s gearing is fairly average, but it could be improved by minimising the amount of debt that contributes to the company’s finance, also decreasing the debt equity ratio.Although the company may be seen as becoming increasingly highly geared, they are constantly investing in new projects to increase shareholder wealth in the long term, which makes the level of gearing more acceptable. Anglo America n’s investment rating is fairly high on Moody’s credit rating table, which shows there are signs for improvement but also space for fault. The rating is based on many confounding variables, with Corporate Governance having a major influence on the overall rating. Although Anglo American has demonstrated fairly good corporate governance, there is still room for improvement in many areas.Another variable that could affect the rating is the dividend policy on offer to shareholders. Anglo American offer a very attractive policy with a base amount and regular payments, which is the optimum option for shareholders, as they know what to expect and when to expect it. After taking into account all aspects of the financial performance of the company, an investment in Anglo American would be recommended for a risk seeking investor expecting regular dividend payments. Anglo American is a worthy investment, as they have a number of new projects ined up for the future and have prove n to have had huge success with previous projects, leading to satisfied shareholders. However, the value of Anglo American has declined over the period analysed, with the share price falling from 22. 29 to 18. 17, but this is forecast to increase over the near future due to all the projects recently invested in. If the global economy was to enter a double dip recession, Anglo American is not likely to be affected much by this, due to the strong commodity values and derivatives. Strategic ManagementAnglo American is currently one of the world’s top mining companies and has held this position for a number of years. Their main goal is to be the â€Å"leading global mining company, becoming the investment, partner and employer of choice† (Anglo American 2012f). A way in which Anglo American wish to become the global leading mining company is to outperform competition, by their structure of organising efficiently and effectively (Anglo American 2012l). They aim to achieve t his from being more focused and performance orientated, and believes their Asset Optimisation (AO) programme will help to do this (The Times 2012).Anglo American wanted to enhance the health and performance of their operations, so designed an Asset Optimisation programme in order to achieve a holistic approach to this. It has allowed a more open working culture giving employees the encouragement to not only work together but contribute their own ideas to improve the business. A major contributor from the AO programme, that has added value across the group, is the development of the programme, in which it has been introduced into the day-to-day business of Anglo American.This programme has added value and strength to Anglo American as to date they have saved well over their target of $1 billion from their core operations and hope the strategy continues to present positive outcomes in the future (The Times 2012). To improve efficiency, each individual area of production is focused on lowering its costs, such as lowering excessive waste or managing the usage of natural resources. Water is vital to Anglo American in order to carry out their operations and also for the communities around them, especially as some areas are the most ater-stressed regions in the world. To reduce water usage, a 10 year strategy is in place which involves making projects water resilient, investing in new technology and building water infrastructure. By 2030, Anglo American hope to have reached the strategic objective of zero net water consumption. Not only does this strategy improve the efficiency of production, it also engages with stakeholders, which in turn benefits the community (Anglo American 2012l) and will reduce the agency problem between directors and the local population.Investment is a strong part of Anglo American’s strategy, and they feel that the investments they have made into large scale assets, with long life cycles, have given them a clear advantage through the low costs attached to them. The commodities that Anglo American specialises in are those that they believe hold the best returns over a long period of time, and even during the fluctuations that occur over an economic cycle.Anglo American also offers derivatives of their commodities which is a good strategic decision for them to take, in the sense that they are guaranteed a certain level of return for those derivatives. However if the demand and in turn the price dramatically rises for those commodities Anglo American could receive lower than the market value at that time. Therefore the option to offer derivatives not only allows for the opportunity of stability for an agreed amount of income, but also the threat to lose out on an increase of market value of that commodity. Operating safely, sustainably and responsibly is embedded in everything† (Anglo American 2012l) that Anglo American does. Employee safety is a huge part of any decision made by the company and they are per sistent on reaching their goal of zero harm. The 5 years prior to Cynthia Carol becoming Anglo Americans CEO there was a total of nearly 200 fatalities, whereas the 5 years following her position as CEO the number of fatalities dropped to 77.This could be down to the change in strategy and how the importance and safety of employees was considered invaluable to Cynthia; this was demonstrated by her drastic decision in 2007 to close the Rustenburg mine instantly due to the risky nature of it (Carroll 2012). The health and wellbeing of employees was taken a step further when HIV/AIDS and general healthcare services were not only provided to employees but also their dependents, spouses and other stakeholders.This has been recognised as world class and has received a number of rewards for it, ‘The Business Excellence Award for Best Workplace Program’ being one of many (Engineering & Mining Journal 2009). Minimising the effect that their operations have on the environment is something that Anglo American also considers in detail. Over the years Anglo American have received a number of awards that prove their commitment to the environment, in 2011 they received the three out of four awards at the ‘Three Nedbank Capital Green Mining Awards’.They were recognised for their rural research project at Sishen mine where management decisions were aligned with the long term sustainability objectives of the Taolo Gaetsewe District and the surrounding region (Nedbank 2011). Anglo American hope that this project will make a positive difference to community development, and in turn bring them closer together, building respectful associations within the society they work in (Anglo American 2012l).They believe that this strategy along with strong governance and solid risk management will create trust amongst the company and its stakeholders and fundamentally enable the delivery of long term returns to shareholders (Anglo American 2012l). Employing the best people is vital to the success of the company and also to achieving their main goal of becoming the leading global mining company. How effectively Anglo American operates depends on the people they employee which in turn contributes to the reputation they have with investors, partners and potential employees (Anglo American 2012l).To attract the best employees to the company, Anglo American; create a safe work place for all, have a clear strategy for success, offer stimulating work, are organised for effectiveness and efficiency and support employees in their career development (Anglo American 2012l). Not only does this strengthen the company, as employees have the help to progress and be motivated to progress and become the best employees, but it also offers opportunities for Anglo American to be the employer of choice.Although Anglo American has quite strong strategies in place, they should be aware of the external factors which are constantly changing that could affect these str ategies or future strategies. Due to the many countries that Anglo American operates in, they need to constantly monitor each country to ensure they are aware of anything that could affect them, for example, a change in government may have a drastic effect on the way they operate in that country. This could be managed by strong internal controls and contingency plans to react to any change as quickly as possible.The minimum wage rate for each country is something that also needs to be monitored and adhered to as they differ dramatically between the countries Anglo American operate in. The minimum wage for Australia in 2011 was ? 10. 13 compared to Kenya which was ? 0. 61, which is a dramatic difference so is hard to monitor, but it is essential to ensure all the different countries regulations are adhered to (Wage indicator 2012). Governments have also started to impose super profit taxes, where mining royalties increased in Australia, Chile and South Africa.Companies are charged su per profit taxes on revenue but now new legislation has been introduced where mining companies are charged on profits as well as revenue. To offset this, there are also discovery bonuses that Anglo American can be rewarded for, for finding natural resources within a country (Deloitte 2010). Anglo American should carefully consider the environment and the areas affected by their actions. There is a constant concern from the public, as appreciation of the environment grows along with the awareness of the harmful effects that mining can have on their surroundings (Australian Bureau of Statistics 2006).Activities at ground level constantly have an impact on the surrounding area, as bore holes, access tracks and sometimes even helipads are required. If the areas affected are left un-rehabilitated, this can have a long term effect on the environment (Australian Bureau of Statistics 2006). Anglo American has a strategy in place that is recognised internationally, and assists any mine-closu re planning. It focuses on the provision for finance necessary and rehabilitation â€Å"for long term sustainability through addressing complex socio-economic, physical and bio-physical challenges† (Anglo American 2012e).Stakeholder relations are constantly upheld throughout any project that Anglo American carries out; this ensures they have constant feedback from the community, government bodies and any other stakeholders affected by their actions. Mining is always going to affect the environment and the local communities surrounding each project, but Anglo American has strong strategies in place to deal and cope with these affects to the best of their ability. It is important for Anglo American to value the importance of society.Employees, their communities, and the population of host countries are all part of the society that Anglo American should embrace. â€Å"Every year Anglo American spend a percentage of their pre-tax profit on social investment projects and spend ti me working with communities† (Anglo American 2012j). In 2011, Anglo American increased their Corporate Social Investment by 15. 8% to $128. 6 million. The Anglo American Group Foundation is their own venture that operates globally, offering grants to countries where projects are carried out (Anglo American 2012j).Education is a huge social aspect where grant funding is used; assisting the development of maths, science and literacy as well as higher education and ensuring teachers are of a good quality. Health is also considered an important aspect on which to focus grant distribution, and Anglo American have a holistic approach when it comes to HIV/AIDS as not only do they supply internal counselling and testing but have also donated $4 million to external HIV/AIDS projects (Anglo American 2012j).Anglo American has outstanding generosity and strategies in place when it comes to the society and has strong and thorough planning for any operation carried out to improve their rela tions with stakeholders. However â€Å"community projects require creative marketing strategies and comprehensive business plans, and an external project consultant could be useful here† (Engineering and Mining Journal 2012), to eliminate any bias, and to make society relations a major variable for any decisions made.A large proportion of Anglo Americans workforce and mining is carried out in Africa â€Å"with nearly 1 billion people, Africa accounts for over a sixth of the world’s population, but generates only 4% of global electricity† (Salaam 2007). Anglo American need a lot of electricity to carry out day to day activities and with the strain of electricity available throughout Africa it was essential for Anglo American to find an alternative energy source due their large consumption of 102. 9 million gigajoules in 2011 (Anglo American 2011).In order for this level of energy to be available to them Anglo American have constructed five platinum based fuel cel ls which not only provides them with the necessary power for productivity but also â€Å"provided a significant economic and environmental development opportunity for South Africa by facilitating the provision of clean, reliable and cost effective power† (Anglo American 2012g). Anglo American consider technology and carbon reduction to be linked very closely and aim to have technology capable of running cost efficient, carbon neutral mines in 20 years (Anglo American 2012g).Although Anglo American have the aim in place to achieve this, a strategic report on how they aim to achieve it and a breakdown of steps, costs and research would be useful. It would not only be useful to the company and employees carrying out the strategy, but also for stakeholders, especially the African population and government. It may even be possible for the project to be supported, and maybe even assisted by the local Government to push forward the time scale. Being a multi-national company, Anglo A merican has to comply with many laws from each country they mine in.As well as these, some countries have individual legislation, which varies in different areas of the countries, USA & Canada (Garcia 2008). These can include environmental laws, e. g. water pollution, national laws e. g. minimum wages and safety laws. An example being that Anglo American has developed a safety and sustainable development committee in order to comply with South African safety law. This states that a company in South Africa must provide a committee with ambitions to â€Å"initiate, develop, promote, maintain and review measures to ensure health and safety† (Boshoff 2012).By having a safety committee they can try to minimise the lost time fatality rate and try to achieve their overall goal of zero fatalities within any Anglo American workplace. Anglo American has a sound collection of strategies in place to deal with external factors but it is also important for that they have strategies in plac e for internal factors. Figure 5 shows a value chain of Anglo American and allows for the internal factors that Anglo American could be affected by to be recognised. |Infrastructure: A multinational conglomerate with joint projects and subsidiaries.De Beers being the largest subsidiary of | |many. Extremely high capital investment, with lots of projects. Primary listing on LSE, secondary on JSE. | |Human Resources: Diversity among workforce across all levels of employment. Committed to International Labour Organisation. | |Development of talent remains a key priority. | |Technology: Research and develop their own technology. Link development of new technology with the ability for carbon | |reduction. | |Procurement: have a local procurement policy engaging local businesses in supply chain.Expect all suppliers to operate | |safely, sustainably and responsibly. Prefer suppliers who are engaged in China sourcing. | |Inbound Logistics: |Operations: Diamond, |Outbound Logistics: |Marketi ng and Sales: De Beers|Service: To maintain | |partner with Chinese |nickel, copper, iron |40% of worlds platinum|have their own diamond |the sites. Mines need | |suppliers to operate and |ore, thermal coal and |output. Own 85% of De |auction and shops. 70% of |to be maintained by | |maintain complex products|platinum mining. Beers, the global |platinum consum

Foundations of Organizational Structure Essay

TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 1 General Introduction 1. Ice-breaking session. 2. Self-introduction by tutor and students. 3. Briefing on course requirements. 4. Tutorial expectations and participation. 5. Briefing on Group Report & Oral Presentation (requirements and expectations). 6. Team formation for Group Report. (4 members per group) 7. Tutor assigns question and time for oral presentation & group report ** Oral presentation and group report submission will starts from Week 3 to 5** **Important note** Students are required to sit for one (1) online test on Week 3. Please make sure that you are registered under this course and be able to access to CEL to take the test. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 2 Topic 1 : Foundations of Organizational Structure Part A: Multiple Choice Questions 1) The ________ refers to the number of subordinates that a manager directs. A) span of control B) unity of command C) chain of command D) decentralization principle E) leadership web 2) A task that is subdivided into many separate jobs is considered to have ________. A) a high degree of departmentalization B) a low degree of decentralization C) a high degree of work specialization D) a low degree of structure E) a high degree of matrix structuring 3) Aeronautics Inc., a parts supplier, has departments for government aircraft and contracts, large commercial aircraft clients, and small personal aircraft clients. This is an example of ________ departmentalization. A) product B) function C) geography D) customer E) service 4) Stalsberry Company has employees in personnel, sales, and accounting. This division of an organization into groups according to work functions is an example of ________, the second element of structural organization. A) social clustering B) bureaucracy C) specialization D) centralization E) departmentalization 5) The unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom is termed ________. A) chain of command B) authority C) span of control. D) unity of command E) web of authority 6) Which one of the following is consistent with a simple structure? A) high centralization B) high horizontal differentiation C) high employee discretion D) standardization E) bureaucracy 7) Which of the following is a drawback of a narrow span of control? It ________. A) reduces effectiveness B) is more efficient C) encourages overly tight supervision and discourages employee autonomy D) empowers employees E) increases participatory decision-making 8) In an organization that has high centralization, ________. A) the corporate headquarters is located centrally to branch offices B) all top level officials are located within the same geographic area C) action can be taken more quickly to solve problems D) new employees have a great deal of legitimate authority E) top managers make all the decisions and lower level managers merely carry out directions TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 3 Topic 2 : Organizational Culture Part A: Discussion Question 1) Explain the primary methods of maintaining an organization’s culture. Once a culture is in place, there are practices within the organization that act to maintain it by giving employees a set of similar experiences. Three forces play a particularly important part in sustaining a culture: selection practices, the actions of top management, and socialization methods. a) First, the explicit goal of the selection process is to identify and hire individuals who have the knowledge, skills, and abilities to perform the  jobs within the organization successfully. It would be naive to ignore that the final decision as to who is hired will be significantly influenced by the decision maker’s judgment of how well the candidates will fit into the organization. This attempt to ensure a proper match, whether purposely or inadvertently, results in the hiring of people who have values essentially consistent with those of the organization, or at least a good portion of those values. In addition, the selection process provides information to applicants about the organization.   Candidates learn about the organization and, if they perceive a conflict between their values and those of the organization, they can self-select themselves out of the applicant pool. b) In addition to selection, the actions of top management also have a major impact on the organization’s culture. Through what they say and how they behave, senior executives establish norms that filter down through the organization as to whether risk taking is desirable; how much freedom managers should give their employees; what is appropriate dress; what actions will pay off in terms of pay raises, promotions, and other rewards; and the like. c) Finally, no matter how good a job the organization does in recruiting and selection, new employees are not fully indoctrinated in the organization’s culture. Because they are unfamiliar with the organization’s culture, new employees are potentially likely to disturb the beliefs and customs that are in place. The organization will, therefore, want to help new employees adapt to its culture. This adaptation process is called socialization. This is when the organization seeks to mold the outsider into an employee â€Å"in good standing.† Employees who fail to learn the essential or pivotal role behaviors risk being labeled â€Å"nonconformists† or â€Å"rebels,† which often leads to expulsion. But the organization will be socializing every employee, though maybe not as explicitly, throughout his or her entire career in the organization. This further contributes to sustaining the culture. 2) Explain how an institutionalized culture can be a barrier to diversity. Describe how an organization could utilize the three forces at play in sustaining a culture to help create a diverse workforce. By limiting the range of acceptable values and styles, strong cultures put considerable pressure on employees to conform. In some instances, a strong culture that condones prejudice can even undermine formal corporate diversity policies. Strong cultures can also be liabilities when they support institutional bias or become insensitive to people who are different. Hiring new employees who differ from the majority in race, age, gender, disability, or other characteristics creates a paradox: management wants to demonstrate support for the differences these employees bring to the workplace, but newcomers who wish to fit in must accept the organization’s core cultural values. Because diverse behaviors and unique strengths are likely to diminish as people attempt to assimilate, strong cultures can become liabilities when they effectively eliminate these advantages. The explicit goal of the selection process is to identify and hire individuals with the knowledge, skills, and abilities to perform successfully. Taking diversity into consideration at this phase does not have to be antagonistic to the culture. The final decision, because it’s significantly influenced by the decision maker’s judgment of how well the candidates will fit into the organization, identifies people whose values are essentially consistent with at least a good portion of the organization’s. Looking beyond surface level differences at the selection phase will help create a diverse workforce. Through words and behavior, senior executives establish norms that filter through the organization about, for instance, whether risk taking is desirable, how much freedom managers should give employees, what is appropriate dress, and what actions pay off in terms of pay raises, promotions, and other rewards. Management actions should be inclusive and non-prejudicial to create a diverse and functional culture. During the metamorphosis stage of socialization management should use institutional practices to encourage person–organization fit and high levels of commitment. 3) What are the three stages of socialization through which employees become indoctrinated into an organization’s culture? The three stages of socialization are prearrival, encounter, and metamorphosis. a) The prearrival stage recognizes that each individual arrives with a set of values, attitudes, and expectations. These cover both the work to be done and the organization. b) Upon entry into the organization, the new member enters the encounter stage. Here the individual confronts the possible dichotomy between her expectations and reality. c) Finally, the new member must work out any problems discovered during the encounter stage. This may mean going through changes – hence, this is called the metamorphosis stage. 4) Discuss the difference between strong and weak organizational cultures and discuss the effect that a strong culture can have on an acquisition or merger. Strong cultures have a greater impact on employee behavior and are more directly related to reduced turnover. In a strong culture, the organization’s core values are both intensely held and widely shared. The more members who accept the core values and the greater their commitment to those values is, the stronger the culture is. A strong culture will have a great influence on the behavior of its members because the high degree of sharedness and intensity creates an internal climate of high behavioral control. One specific result of a strong culture should be lower employee turnover. A strong culture demonstrates high agreement among members about what the organization stands for. Such unanimity of purpose builds cohesiveness, loyalty, and organizational commitment. These qualities, in turn, lessen employees’ propensity to leave the organization. In recent years, cultural compatibility has become the primary concern. All things being equal, whether the acquisition actually works seems to have more to do with how well the two organizations’ cultures match up. The primary cause of failure is conflicting organizational cultures, when people simply don’t match up. Therefore, when considering an acquisition or merger, management would need to carefully evaluate the cultures of each organization. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 4 Topic 3: Foundations of Group Behavior & Understanding Work Teams Part A: Discussion Question 1) List and briefly describe the stages in the five-stage model of group  development. The five-stage group development model characterizes groups as proceeding through five distinct stages: forming, storming, norming, performing, and adjourning. a) Forming is characterized by a great deal of uncertainty about the group’s purpose, structure, and leadership. Members are testing the waters to determine what types of behavior are acceptable. b) In the storming stage, members accept the existence of the group, but there is resistance to the constraints that the group imposes on individuality. There is conflict over who will control the group. c) The third stage is one in which close relationships develop and the group demonstrates cohesiveness. There is now a strong sense of group identify and camaraderie. This norming stage is complete when the group structure solidifies and the group has assimilated a common set of expectations of what defines correct member behavior. d) The fourth stage is performing. The structure at this point is fully functional and accepted. Group energy has moved from getting to know and understand each other to performing the task at hand. e) In the adjourning stage, the group prepares for its disbandment. High task performance is no longer the group’s top priority. Instead, attention is directed toward wrapping up activities. 2) Design the most effective team to figure out ways to reduce the number of preparation hours for shipping products overseas for your company. Choose the type of team from one of the four principal team types. Describe your team’s context, composition, and process parameters. Answers will vary. A problem-solving team is probably the best type of team for this task. In a problem-solving team members share ideas or suggest how work processes and methods can be improved. The problem-solving team will offer ideas to management. Together they discuss ways of improving quality, efficiency, and the work environment. The team will need information on what products are being shipped and how  long each of them takes, as well as details on the current procedures. Adequate information is essential. A firm goal of reducing the hours spent must be established by a leader. The group should be comprised of workers and management with expertise in the shipping department procedures. The team should have five members, three management and two people from shipping and packaging. The process parameters should be clearly outlined, with goals of exactly how much time needs to be shaved off of packaging processes. 3) Explain the difference between groupthink and group shift. Give an example to support your answer. Groupthink is related to norms. It describes situations in which group pressures for conformity deter the group from critically appraising unusual, minority, or unpopular views. Groupthink is a disease that attacks many groups and can dramatically hinder their performance. Group shift indicates that in discussing a given set of alternatives and arriving at a solution, group members tend to exaggerate the initial positions that they hold. In some situations, caution dominates, and there is a conservative shift. More often, however, the evidence indicates that groups tend toward a risky shift. Students answers may vary. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 5 Topic 4: Motivation Concepts Part A: Discussion Questions 1) Compare and contrast a manager that implements Theory Y and one that adheres to the expectancy theory. How would each choose to motivate their employees? Theory Y managers assume that employees can view work as being as natural as rest or play, and therefore the average person can learn to accept, even seek, responsibility. Theory Y assumes that higher-order needs dominate individuals. Theory Y managers would contend that ideas such as participative decision making, responsible and challenging jobs, and good group relations are approaches that would maximize an employee’s job  motivation. A Theory Y manager believes that the employee is inherently motivated as long as the conditions respect his intellect and character. A Theory Y manager would work hard to include the employee in decision making concerning his job, to satisfy work environment preferences, and to make sure the work is stimulating. Expectancy theory proposes that employees will be motivated to exert a high level of effort when they believe it will lead to a good performance appraisal; that a good appraisal will lead to organizational rewards such as bonuses, salary increases, or promotions; and that the rewards will satisfy the employees’ personal goals. An expectancy theory manager would focus much more on the reward expectations of the employee, versus the psychologic expectations. It would be important for the manager to understand the personal goals that the employee strives to achieve so that he can be appropriately rewarded and praised. 2) Describe Maslow’s hierarchy of needs including the types of needs and how they become dominant. Maslow’s hierarchy of needs hypothesized that within every human being there exists a hierarchy of five needs. a) The physiological needs include hunger, thirst, shelter, sex, and other bodily needs. b) Safety includes security and protection from physical and emotional harm. c) Social includes affection, belongingness, acceptance, and friendship. d) Esteem includes internal esteem factors such as self-respect, autonomy, and achievement; and external esteem factors such as status, recognition, and attention. e) Self-actualization is the drive to become what one is capable of becoming; includes growth, achieving one’s potential, and self-fulfillment. As each of these needs becomes substantially satisfied, the next need becomes dominant. So if you want to motivate someone, according to Maslow, you need to understand what level of the hierarchy that person is currently on and focus on satisfying those needs at or above that level 3) According to Two-Factor Theory, how might a manager motivate employees? According to Herzberg, the factors leading to job satisfaction are separate and distinct from those that lead to job dissatisfaction. Therefore, managers who seek to eliminate factors that can create job dissatisfaction may bring about peace but not necessarily result in motivation. Conditions surrounding the job such as quality of supervision, pay, company policies, physical working conditions, relations with others, and job security were characterized by Herzberg as hygiene factors. When they are adequate, people will not be dissatisfied; neither will they be satisfied. If we want to motivate people on their jobs, Herzberg suggested emphasizing factors associated with the work itself or to outcomes directly derived from it, such as promotional opportunities, opportunities for personal growth, recognition, responsibility, and achievement. These are the characteristics that people find intrinsically rewarding. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 6 Topic 5: Motivation: From Concepts to Applications Part A: Discussion Questions 1) List and describe THREE (3) different variable-pay programs. Be sure to include piece-rate plans, profit-sharing plans, and gainsharing. a) Piece-rate plans. In piece-rate pay plans, workers are paid a fixed sum for each unit of production completed. When an employee gets no base salary and is paid only for what he or she produces, this is a pure piece-rate plan. b) Merit-based pay. Merit-based pay plans also pay for individual performance. However, unlike piece-rate plans, which pay based on objective output, merit-based pay plans are based on performance appraisal ratings. c) Profit-sharing. Profit-sharing plans are organization-wide programs that distribute compensation based on some established formula designed around a company’s profitably. d) Bonuses. Bonuses can be paid exclusively to executives or to all employees. Many companies now routinely reward production employees with bonuses in the thousands of dollars when company profits improve. e) Skill-Based Pay. Skill-based pay (also called competency-based or knowledge-based pay) sets pay levels on the basis of how many skills employees have or how many jobs they can do. f) ESOPs. Employee stock ownership plans (ESOPs) are company-established benefit plans in which employees acquire stock, often at below-market prices, as part of their benefits. g) Gainsharing. Gainsharing is a formula-based group incentive plan. Improvements in group productivity determine the total amount of money that is to be allocated. By focusing on productivity gains rather than profits, gainsharing rewards specific behaviors that are less influenced by external factors. Employees in a gainsharing plan can receive incentive awards even when the organization isn’t profitable. 2) Compare and contrast the benefits of intrinsic rewards such as recognition and extrinsic rewards such as pay as forms of motivation. Organizations are increasingly recognizing that both intrinsic and extrinsic rewards are important. Rewards are intrinsic in the form of employee recognition programs and extrinsic in the form of compensation systems. Intrinsic rewards range from a spontaneous and private thank-you to widely publicized formal programs in which specific types of behavior are encouraged and the procedures for attaining recognition are clearly identified. Pay, an extrinsic reward, is not the primary factor driving job satisfaction, however, it does motivate people, and companies often underestimate its importance in keeping top talent. No matter how much recognition a top performer gets, he will be tempted to leave if the pay scale is much lower than the market and another offer arrives. Recent survey data indicate most employees don’t see a strong connection between pay and performance. Variable pay structures, such as bonuses are often the best production motivators. When pay is tied to performance, the employee’s earnings also recognize contribution rather  than being a form of entitlement. Over time, low performers’ pay stagnates, while high performers enjoy pay increases commensurate with their contributions. An obvious advantage of intrinsic rewards like recognition programs is that they are inexpensive since praise is free. However, they are highly susceptible to political manipulation by management. When applied to jobs for which performance factors are relatively objective, such as sales, recognition programs are likely to be perceived by employees as fair. However, in most jobs, the criteria for good performance aren’t self evident, which allows managers to manipulate the system and recognize their favorites. Abuse can undermine the value of recognition programs and demoralize employees. Research suggests financial incentives may be more motivating in the short term, but in the long run intrinsic incentives will retain good employees if the extrinsic incentives are competitive. 3) What is employee involvement and why is it important. Give two examples. Employee involvement is defined as a participative process that uses the entire capacity of employees and is designed to encourage increased commitment to the organization’s success. The underlying logic is that by involving workers in those decisions that affect them and by increasing their autonomy and control over their work lives, employees will become more motivated, more committed to the organization, more productive, and more satisfied with their jobs. Examples of employee involvement include a) Participative management. Participative management programs use joint decision making. Subordinates actually share a significant degree of decision-making power with their immediate superiors. b) Representative participation. Representative participation refers to worker representation by a small group of employees who actually participate on the board. The goal is to redistribute power within an organization, putting labor on a more equal footing with the interests of management and stockholders. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 7 Topic 6: What do Managers Do & Leadership Part A: Multiple Choice Questions 1) Which of the following is most likely to be a belief held by a successful manager? A) Technical knowledge is all that is needed for success. B) It is not essential to have sound interpersonal skills. C) Technical skills are necessary, but insufficient alone for success. D) Effectiveness is not impacted by human behavior. E) Technical skills do not influence efficiency. 2) Which of a manager’s primary functions requires the manager to define an organization’s goals, establish an overall strategy for achieving these goals and develop a comprehensive hierarchy of plans to integrate and coordinate activities? A) controlling B) planning C) staffing D) coordinating E) leading 3) As a manager, one of Joe’s duties is to present awards to outstanding employees within his department. Which Mintzberg managerial role is Joe acting in when he does this? A) leadership role B) liaison role C) monitor role D) figurehead role E) spokesperson role 4) Jill is valued by her colleagues for her ability to perform effective break-even analysis on upcoming ventures. In this case, her colleagues value her for competencies that fall within which essential management skills categories? A) technical B) communication C) human D) conceptual E) education 5) Leadership is best defined as ________. A) the ability to influence a group in goal achievement B) keeping order and consistency in the midst of change C) implementing the vision and strategy provided by management D) coordinating and staffing the organization and handling day-to-day problems E) not a relevant variable in modern organizations 6) The two dimensions of leadership behavior identified in the University of Michigan studies are ________. A) coercion and motivation B) emotional and rational C) employee-oriented and production-oriented D) initiating structure and consideration E) initiation and completion Part B: Discussion Questions 1) Describe the three essential management skills that differentiate effective managers from ineffective ones. Provide a workplace example of how these skills could be used when dealing with the challenge of a workplace recession. The three essential management skills identified by researchers are technical, human, and conceptual. Technical skills are defined by the ability to apply specialized knowledge or expertise. Human skills are defined by the ability to work with, understand, and motivate other people. Finally, conceptual skills are defined by the ability to analyze and diagnose complex situations. In a time of recession human skills are essential to motivate fearful employees and to create a positive work environment. They would also be necessary in the event of workplace staff reduction. Technical skills could be applied in the area of expertise to raise production and, combined with conceptual skills, can be used to look for small market niches and ways to analyze the industry to continue to make a profit until times are better. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 8 Topic 7: Leadership Part A: Multiple Choice Questions 1) Hersey and Blanchard developed which of the following? A) situational leadership theory B) cognitive resource theory C) managerial grid model D) path-goal theory E) cognitive orientation model 2) Hersey and Blanchard’s leadership theory differs from other leadership theories primarily because it ________. A) explores the role of the expectations of the leader for the follower B) focuses on the followers C) holds that leadership style should be dependent on the situation D) is normative E) deals strictly and exclusively with contingencies 3) What is the main principle of path-goal theory? A) Successful leadership is achieved by selecting the right leadership style. B) Stress is a form of situational unfavorableness and a leader’s reaction to it depends on his or her intelligence and experience. C) Effective group performance depends on the proper match between the leader’s style and the degree to which the situation gives control to the leader. D) Leaders establish a special relationship with a small group of their followers because of time pressures. E) The leader is responsible for providing followers with the information, support, or other resources necessary for them to do their jobs. 4) Which of the following is not a key characteristic of a charismatic leader? A) sensitivity to follower needs B) unconventional behavior C) vision and articulation D) task orientation E) willingness to take risks 5) Researchers are conducting a study of a company called Acme Corp, which they believe to be led by a transformational leader. Which of the following, if true, would most support the conclusion that Acme’s leader is a transformational leader? A) Acme’s top managers often conflict over defining the organization’s goals. B) Acme’s goals tend to be very ambitious and to hold personal value for employees. C) Creativity is discouraged among Acme employees. D) Acme managers are cautious and rarely take risks. E) Acme’s compensation plans are designed to reward short-term results. 6) Leaders who clarify role and task requirements to accomplish established goals exhibit a _________ style of leadership. A) transformational B) transactional C) charismatic D) self-initiating E) situational 7) Richard is a transactional leader who has just assigned a series of tasks to a project team. Which of the following is most likely to be true about the team’s performance under Richard’s guidance? A) They will set new standards of productivity for the department, exceeding Richard’s expectations. B) They will meet the goals set for them but are unlikely to go beyond those goals. C) They will tend to be unclear about the roles assigned to each team member. D) They will be highly motivated by what they view as Richard’s heroic or extraordinary qualities. E) They will tend to put their individual self-interest above the interests of the company. Part B: Discussion Questions 1)Compare and contrast Hersey and Blanchard’s situational leadership theory with House’s path-goal theory. Hersey and Blanchard’s situation leadership theory is a contingency theory  that focuses on the followers. Successful leadership is achieved by selecting the right leadership style, which Hersey and Blanchard argue is contingent on the level of the followers’ readiness. The emphasis on the followers in leadership effectiveness reflects the reality that it is the followers who accept or reject the leaders. The term readiness refers to the extent to which people have the ability and willingness to accomplish a specific task. SLT says if a follower is unable and unwilling to do a task, the leader needs to give clear and specific directions; if followers are unable and willing, the leader needs to display high task orientation to compensate for the followers’ lack of ability and high relationship orientation to get the follower to â€Å"buy into† the leader’s desires; if followers are able and unwilling, the leader needs to use a supportive and partic ipative style; and if the employee is both able and willing, the leader doesn’t need to do much. Path-goal theory was developed by Robert House. The essence of the theory is that it’s the leader’s job to assist followers in attaining their goals and to provide the necessary direction and/or support to ensure that their goals are compatible with the overall objectives of the group or organization. The term path-goal is derived from the belief that effective leaders clarify the path to help their followers get from where they are to the  achievement of their work goals and make the journey along the path easier by reducing roadblocks. House identified four leadership behaviors. The directive leader lets followers know what is expected of them, schedules work to be done, and gives specific guidance as to how to accomplish tasks. The supportive leader is friendly and shows concern for the needs of followers. The participative leader consults with followers and uses their suggestions before making a decision. The achievement-oriented leader sets challenging goals and expects followers to perform at their highest level. House assumes that leaders are flexible and that the same leader can display any or all of these behaviors depending on the situation. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 9 Topic 8: Communication Part A: Multiple Choice Questions 1) Communication serves all of the following functions within a group or organization except ________. A) motivation B) planning C) emotional expression D) control E) conveying information 2) Alejandro is annoyed that the new recruit, Ben, is working faster than anyone else in the group, making the rest of the group look bad. In the company cafeteria Alejandro teases Ben and calls him the ‘super recruit’ and imitates his style of working so rapidly. Alejandro wants to intimidate Ben so that he will work slower. Which function of communication is Alejandro using by making fun of Ben? A) motivation B) control C) expression D) information E) formal 3) Helena and Laura were talking on the phone. Laura’s two year old son fell and started crying and Laura could no longer hear what Helena said. This is an example of ________. A) transmitting B) decoding C) noise D) understanding E) analysis 4) The communication used by managers to provide job instructions is ________ communication. A) downward B) lateral C) formal D) directional E) diagonal Part B: Discussion Questions 1)Describe the communication process. Include the communication process model and explain the eight parts of this model. Before communication can take place, a purpose, expressed as a message to be conveyed, is needed. It passes between a sender and a receiver. The message is encoded (converted to a symbolic form) and passed by way of some medium (channel) to the receiver, who retranslates (decodes) the message initiated by the sender. The result is a transfer of meaning from one person to another. The key parts of the communication process are 1) the sender 2) encoding 3) the message 4) the channel 5) decoding 6) the receiver 7) noise 8) feedback The source initiates a message by encoding a thought. The message is the actual physical product from the source encoding. The channel is the medium through which the message travels. The receiver is the object to whom the message is directed. The symbols must be translated into a form that can be understood by the receiver. This is the decoding. Noise represents communication barriers that distort the clarity of the message. The final link is a feedback loop. 2) Explain how the grapevine functions and why it exists in organizational communication. Describe the general direction of communication and the form of communication most commonly used in the grapevine. What can a manager do to limit the negative effects of the grapevine? The informal communication system is the grapevine. While it is informal it is still an important source of information. A survey found that 75 percent of employees hear about matters first through rumors on the grapevine. The grapevine has three main characteristics. First, it is not controlled by management. Second, most employees perceive it as more believable and reliable than formal communiquà ©s issued by top management. Finally, it is largely used to serve the interests of the people within it. Rumors emerge as a response to situations that are important to us, when there is ambiguity, and under conditions that arouse anxiety. The fact that work situations frequently contain these three elements explains why rumors flourish in organizations. The secrecy and competition that typically prevail in large organizations, encourage and sustain rumors on the grapevine. A rumor will persist either until the wants and expectations creating the uncertainty are fulfilled or the anxiety has been reduced. The grapevine generally follows lateral communication in which persons from the same hierarchical levels begin to relay messages. Very rarely does management participate in the grapevine. In fact, one study reported that management only relayed messages to the grapevine ten percent of the time. Generally oral communication is used to relay grapevine information, although written e-mail can be used as well, but is considered less safe for accountability reasons. Managers can not entirely eliminate rumors. What they should do is minimize the negative consequences of rumors by limiting their range and impact. The best way to reduce the negative consequences of rumors is to: 1) Provide information; 2) Explain actions and decisions that may appear inconsistent, unfair, or secretive; 3) Refrain from shooting the messenger; and 4) Maintain open communication channels. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 10 Topic 9: Conflict Management Part A: Multiple Choice Questions 1) The traditional view of conflict is the belief that conflict is ________. A) harmful B) natural C) necessary D) situationally-dependent E) neutral 2) Which of the following is not a cause of conflict, according to the traditionalist view? A) general poor communication between people B) lack of openness in the organization C) trust between people in the organization D) management failure to be responsive to employee needs E) management failure to be responsive to employee aspirations 3) The ________ view of conflict argues that conflict is necessary for a group to perform effectively. A) human relations B) interactionist C) traditional D) functional E) reactive 4) ________ conflicts are almost always dysfunctional. A) Task B) Job C) Relationship D) Process E) Functional 5) The first stage of the conflict process is termed ________. A) cognition and personalization B) behavioral manifestation C) potential opposition or incompatibility D) intention E) habituation 6) High job specialization can lead to ________ conflict. A) communication B) structural C) personal-variable D) job-related E) team 7) In which stage are conflict issues defined? A) potential opposition B) cognition and personalization C) intuitions D) behavior E) reaction and transference 8) The conflict-handling intention of collaborating is ________. A) assertive and uncooperative B) assertive and cooperative C) unassertive and uncooperative D) unassertive and cooperative E) affective and reflective 9) Angelina feels that her cubicle neighbor talks too loudly on the phone, but in other ways she is a great neighbor. Angelina gets annoyed every time her neighbor’s phone rings, but she has decided it’s simply not worth the trouble to talk to her neighbor. Angelina’s conflict intention is called ________. A) competing B) avoiding C) accommodating D) compromising E) collaborating 10) Which of the following is not a conflict-resolution technique? A) creating superordinate goals B) appointing a devil’s advocate C) avoiding the conflict D) exercising authoritative command E) generating additional resources 11) Stage II of the conflict process deals with conflict being ________. A) perceived and felt B) apparent and experienced C) expressed and perceived D) overt and covert E) internalized 12) Irma does not like a few of the standard operating procedures adapted for the new project. However, she discussed the items with the team and told them that she realized she was in the minority and that she would adapt the new procedures to maintain smooth operations within the team. This type of intention is called ________. A) sacrificing B) accommodating C) collaborating D) compromising E) competing TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 11 Topic 10: Power and Politics Part A: Multiple Choice Questions 1) Power can be defined as ________. A) the ability to influence the behavior of others B) the actualization of the dependency of others C) congruence between the goals of the leader and those being led D) downward influence on one’s followers E) upward influence on one’s leaders 2) One reacts to ________ power out of fear of the negative ramifications that might result if one fails to comply. A) legitimate B) coercive C) punitive D) referent E) abusive 3) The power that the College Dean has been granted by the University over the faculty is termed ________ power. A) academic B) positional C) legitimate D) organizational E) balanced 4) Power tactics can be defined as ________. A) the only legitimate sources of power B) techniques for translating power bases into specific action C) strategies for gathering and maintain support D) organizational structural characteristics E) approaches for winning arguments 5) Vivian has not been handling one portion of her duties in a satisfactory manner. As a result, her manager threatens to withhold her promotion. Which power tactic is being used? A) exchange B) ingratiation C) pressure D) personal appeals E) inspirational appeals Part B: Discussion Questions 1) Contrast leadership and power. Power does not require goal compatibility, merely dependence. Leadership, on the other hand, requires some congruence between the goals of the leader and those being led. A second difference relates to the direction of influence. Leadership focuses on the downward influence on one’s followers. It minimizes the importance of lateral and upward influence patterns. Power does not. Still another difference deals with research emphasis. Leadership research, for the most part, emphasizes style. It seeks answers to such questions as: How supportive should a leader be? How much decision making should be shared with followers? The research on power encompasses a broader area and focus on tactics for gaining compliance. Power can be used by groups as well as by individuals to control other individuals or groups. 2) List and discuss the bases of personal power. Personal power comes from an individual’s unique characteristics. Two bases of personal power are expertise, the respect and admiration of others. a) Expert power is influence wielded as a result of expertise, special skill, or knowledge. Expertise has become one of the most powerful sources of influence as the world has become more technologically oriented. b) Referent power is based on identification with a person who has desirable resources or personal traits. If I like, respect, and admire you, you can exercise power over me because I want to please you. 3) Distinguish between legitimate political behavior and illegitimate political behavior. Legitimate political behavior refers to normal everyday politics – complaining to your supervisor, bypassing the chain of command, forming coalitions, obstructing organizational policies or decisions through inaction or excessive adherence to rules, and developing contacts outside the organization through one’s professional activities. On the other hand, there are also illegitimate political behaviors that violate the implied rules of the game. Those who pursue such extreme activities are often described as individuals who â€Å"play hardball.† Illegitimate activities include sabotage, whistleblowing, and symbolic protests such as wearing unorthodox dress or protest buttons, and groups of employees simultaneously calling in sick. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 12 Topic 11: Human Resource Policies and Practices (Human Resource Planning& Forecasting, Recruitment) Part A: Discussion Questions 1) Define human resource planning. Describe the TWO (2) components in human resource planning. Human resource planning is the systematic process of matching the internal and external supply of people with job openings anticipated in the organization over a specific period of time. Human resource planning has 2 components: requirements and availability. A requirements forecast involves determining the number, skill, and location of employees the organization will need at future dates in order to meet its goals. The determination of whether the firm will be able to secure employees with the necessary skills, and from what sources, is called an availability forecast. 2) Describe human resource databases and how databases can assist in matching internal employees to positions. A human resource database contains employee information that permits management to make HR decisions. Information that might appear in such databases, includes, but is not limited to, the following: work history and experience, specific skills and knowledge, licenses or certifications held, organizational training completed, educational background, previous performance appraisal evaluations, assessment of strengths and weaknesses, development needs, promotion potential at present, and with further development, current job performance, field of specialization, job preferences, geographic preferences, career goals and aspirations, anticipated retirement date, and personal history, including psychological assessments. Databases are being used by organizations to enable human resources to match people with positions. 3) List TWO (2) methods are available to firms when either a shortage or surplus of workers is forecasted? Firms faced with a shortage of workers may use: 1) 2) 3) 4) innovative recruiting, compensation incentives, and training programs to fill positions. Lowering of employment standards Firms faced with a surplus of workers may use: 1) 2) 3) 4) 5) layoffs,  restricted hours,  hiring freezes may be necessary, and  encourage early retirement and  the use of vacation time. TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 13 Topic 12: Human Resource Policies and Practices (Selection) Part A: Multiple Choice Questions 1) Which of the following is the most common method of initial selection? A) written tests B) background check C) performance test D) application form E) work-sample test 2) More than ________ percent of employers conduct some type of background check on potential employees during some point in the hiring process, usually either in the initial phase or the contingent phase. A) 25 B) 50 C) 65 D) 80 E) 95 3) The best way for an employer to find out if a potential employee can do a job is by ________. A) using the interview process B) using a written test C) having them spend a day in the office D) administering an IQ test E) using a performance simulation test 4) Work sample tests are widely used in hiring ________. A) unskilled labor B) skilled workers C) professional workers D) managers E) knowledge workers 5) The results of which of the following tend to have a disproportionate amount of influence on employee selection decisions? A) interviews B) written tests C) performance simulation tests D) work sampling methods E) personality tests 6) The behavioral structured interview is built on the assumption that ________. A) past behavior is the best predictor of future behavior B) technical knowledge and skills are the best predictor of job performance C) personality is the best predictor of job performance D) personality and mood are highly correlated E) technical knowledge and mood are highly correlated Part B: TRUE /FALSE Questions 1) As a selection device, written tests have decreased in usage during the past 20 years. (TRUE /FALSE) 2) A test that measures factors such as dependability, carefulness, responsibility, and honesty is referred to as a performance factor test. (TRUE /FALSE) 3) Work samples yield validities almost consistently superior to written aptitude tests. (TRUE /FALSE) 4) In assessment centers, job candidates are evaluated as they go through several days of exercises that simulate real problems they would confront on the job. (TRUE /FALSE) TUNKU ABDUL RAHMAN COLLEGE ABDM2083 ORGANIZATION & HUMAN RESOURCE TUTORIAL 14 Topic 13 & 14: Human Resource Policies and Practices (Performance Evaluation) Part A: Multiple Choice Questions 1) Performance evaluations today are generally based on which three types of behavior? A) task performance, productivity, tenure B) productivity, efficiency, absenteeism C) task performance, citizenship, counterproductivity D) citizenship, counterproductivity, personality E) leadership, training, efficiency 2) Performance evaluations are used as a mechanism for all of the following except ________. A) monitoring the success of marketing strategies B) determining promotions C) pinpointing employees skills D) identifying training and development needs E) providing feedback to employees 3) Which of the following is not a weakness of the 360-degree evaluation system? A) artificially inflated feedback from peers B) insufficient training for performance evaluators C) discrepancies between evaluating groups D) provides a wide performance perspective E) difficulties in reconciling differing evaluations 4) Performance evaluations are used to ________. A) improve group cohesiveness B) define departmental structure C) help management make HR decisions D) identify how jobs are completed E) decrease conformity within organizations 5) Which of the following is the least predictive set of criteria used to evaluate employees? A) traits B) task outcomes C) behaviors D) personality E) mood Part B: Discussion Questions 1) What are the three most popular sets of criteria for evaluating employee performance? The three most popular sets of criteria for evaluating employee performance are individual task outcomes, behaviors, and traits. a) If ends count, rather than means, then management should evaluate an employee’s task outcomes. In many cases, it’s difficult to identify specific outcomes that can be directly attributable to an employee’s actions. b) It’s not unusual for management to evaluate the employee’s behavior. c) The weakest set of criteria, yet one that is widely used by organizations is individual traits. They are weaker because they are farthest removed from the actual performance of the job itself. 2) Who should perform employee evaluations? With many of today’s organizations using self-managed teams, telecommuting, and other organizing devices that distance bosses from their employees, an employee’s immediate superior may not be the most reliable judge of that employee’s performance. Thus, in more and more cases, peers and even subordinates are being asked to participate in the performance evaluation process. Also, increasingly, employees are participating in their own performance evaluation. In most situations, in fact, it is highly advisable to use multiple sources of ratings. Any individual performance rating may say as much about the rater as about the person being evaluated. By averaging across raters, we can obtain a more reliable, unbiased, and accurate performance evaluation.