Accounting Function In Garment Organization Essay Example

The organisation is dealing with garment manufacturing. It is a medium sized company having 250 skilled labours force including professionals and employees. Its objective is to make quality garment products using the latest state-of-the –art technology for the benefit of customers. When describing the key resources of the organisation, its major assets are its skilled work force. They employ expert tailors, designers and sales personnel and “ skill diversity and strong work ethic of the area labor force” create strong basis for quality products. (BNET 1994: Labor Force one of Kern County’s major assets).

The entire superintendence, control and supervision of the company is held by the Executive Director who has been appointed by the Board of Directors to oversee the day-to-day activities of the Company. In this company, the role of accounting is important as it helps in the better control over the financial resources of the organisation. It is also needed for report preparation and preparation of financial statements for the benefit of the shareholders, directors, employees and others who may be interested in the financial affairs of the company.

As a part of financial accounts, the Company prepares Annual Statement of Accounts, at the end of each financial year, which depicts the financial performance during the year.” The reports are intended both for the firm itself and for outside parties.” ( Investopedia : Acounting).

Management accounts including the cash and flow reports are prepared for understanding of cash positions of the organisation. It is prepared for the internal use of the organisation. and “involves strategic planning skills necessary to drive business performance in the changing global economy.“

Cited Works

BNET 1994: Labor Force one of Kern County’s major assets. Web.

Investopedia : Acounting. Web.

IMA: Institute of Management Accounting : 1997-2008. Web.

Corporate Social Responsibilities Of A Company In India

Introduction

This report contains the major corporate social responsibility and environmental issues that the company will encounter when it relocates to India, a developing country. With the changing times, there is a lot of pressure that mounts on companies from the stakeholders i.e. the employees, customers, governments, the communities, and the locals of the areas in which they operate. The expectations of the stakeholders for the companies to make beneficial contributions to their societies, make positive changes, are part of corporate citizenship.

In this regard, this report was requested by the company’s Chief Executive Officer. This report contains the corporate social responsibility issues of human rights, environmental concerns, employment of locals. On top of highlighting these issues, the report has also given recommendations on how they can be addressed and also the potential benefits that the company stands to gain by handling these issues accordingly.

Essay Body

Corporate social responsibility is also considered as corporate citizenship or corporate responsibility and principally involves the responsibility of business and corporate organizations and institutions to consider the social, economic progress of the communities in which they are instituted and run by taking care of the impact of the activities and operations on their clients, suppliers, employees, shareholders, and other stakeholders and very importantly the environmental impacts. This is voluntary responsibility that ensures that the business complies with the rules, regulations, and principles of business of the said country (Garry Crystal, 2008).

India being a third-world country, experiences several challenges including slow economic growth, unemployment, pollution, poverty, corruption, and many legislative hurdles in the registration of businesses. Corporate paternalism plays a very important role in shaping the community, prospects of progress in India besides the pressure mounted by civil society, the government, and the consumers, the local communities have been at the forefront of being off due watchfulness since they are most affected in this line (Atul sood,Bimal Arora,2006).

The employees should be involved through motivation and company support of various programmers including saving schemes, retirement savings, and reasonable access to information, legitimacy, and recognition since the employees are the ambassadors of the company, representatives of the community, for job enrichment and personal satisfaction. The company should open itself up to global stakeholder initiatives, this will involve the locals hence the feeling of ownership of the company in a way and any adverse effects might as well affect them. Among its key strategies is total responsibility management which still provides a big challenge to many business co-operations. The company should not play the ball too fragmented, from the defensive position towards stakeholders to an affirmative, integrated approach in solving issues arising internally and externally. The company should measure the social impact, value chain production/supply, and competitive context investments for self-regulation and meaningful growth.

The Company should also declare its asset and financial capitalization in the country and fully follow the code of conducting business in the country since any intent to hide revenue sources, failure to remit taxes, and other illegal underworld malpractices will not be condoned due to the changing political regimes and investment interests. An exemplary case is of an American Bank which pleads guilty in court and paid $16 million to clear criminal charges against it for unlawful transactions with Augusto Pinochet, the Chilean dictator involving his assets.

The company should also ensure that it makes its transactions transparent and avoid off-the-book transactions failure of which stands as a liability and may be charged both in that country or another country through which such transactions have been wired. The company should also ensure that it does not get involved in the rampant corruption of third-world countries like India. This will still be detected however carefully it has been done. Such cases remain as liability risks for the company and should be kept at bay by all means including water-tight fiscal payment and asset acquisition systems, employees should be advised against the same since the image of the company is almost everything when it comes to business competitiveness and performance. The company should be very careful when engaging security personnel to act on its behalf and any cases of high handedness can create a history of abusive conduct or legal suits in case such uncalled for security brutality involves abduction, beatings, rape, and even killing

The company should also consider the following factors as being critical for its success in India: The Company’s management and leadership should demonstrate a belief in stated values, principles, purpose, strategy and practice, whole company consensus, and constant reinforcement of the same to avoid controversy and complacent practices. The company should also create effective and continuous communication procedures and an oversight decision-making board, it should engage the stakeholders effectively and be ethical in its operations and performance reporting.

The company should integrate human rights into business practices to improve stakeholders’ relations, company’s reputation, reduce business risk, engaging corporate power and business climate. Human rights protection policies should be reinforced and the company stands a good chance of business development partner rating in the market.

India is a religious country that practices several doctrines which the company needs to respect including equal measure respect for all the stakeholders including

India’s communities, values like community service, and philanthropy in its activities and events. This stems from the traditional heritage of their influence and paternalism among its traders. The government of India has also put in place a raft of legislation on corporate social responsibility which is socialistic in governing the labor laws and the society. These legislations include equitable distribution of the acquired resources, checks on the importation, control on foreign exchange, protection of the small entrepreneurs, industrial license, and quota system for raw materials and scales of production. These rules and regulations have been the basis of drafting subsequent business legislation in India since its Independence in 1947. These legislations ensure social behavioral control in business and the public, reduction in corruption and government bureaucracy.

The different trade unions in India equally advocate for the rights of the people beyond salary at the workplace leading to improved service delivery and better living standards. A lot of pressure on corporate social responsibility has been put on the export-led sectors and the supply chain businesses. The company’s view of its stakeholders is very important since respect deserves respect but any carelessness in handling the company and issues involving the stakeholders may be very risky. The Company should ensure that the stakeholders are effectively and reasonably involved in its activities. These stakeholders include: Investors, Customers, trade Unions, Suppliers and Contractors, local community, local government, National Government, International agencies, Media, Religious groups, Academics, and the ethical rule regulators

The company should consider the key prerequisites for successful partnerships including shared common purpose, mutual respect for every partner, shared investment, and accountability, evident inclusively besides shared partner commitment.

Even though there is increased clamor for corporate social responsibility globally, the legislations on the same are not institutionalized in India. This means responsibility is principally internally driven within the business agenda with very little government emphasis. Employee care is an ethical undertaking of the businesses to their discretion. The principal challenge for the government, India’s citizens, and the business community are to develop and nurture vibrant civil institutions responsible for developing the corporate community and their markets which will ensure that the companies increase their corporate social responsibility for the success and development of all the stakeholders.. (Atul Sood, Bimal Arora, 2006).

The business should avail ready information for quick decision making and avoid any form of ambiguity that might lead to public discord and dissatisfaction. This will also lead to the right business decisions being taken both by the material, labor supply, and market availability (“E” Choupal, 2000).

The business is likely to experience infrastructural inadequacies since most of India is rural. This incubuses power supply, telecom connectivity, and bandwidth besides a largely uneducated population.. (“E” Choupal, 2000).

The agricultural sector is one of the major economic pillars of India. The business therefore will as well play a significant role in the development of the sector which may include investing in farm mechanization as part of its social responsibilities in achieving sustainable development through agriculture and local energy production schemes from the plant remains as bio-fuels which is a major challenge for this Least Developed Country. The business should develop a sustainable pollution control strategy to avoid any kind of adverse government legislative actions like closing the business down. This is exemplified by the closure of the Coca-Cola Kerala Plant in 2005 by the Government, an action which was advocated for by the Pollution Control Board in Kerala, India. Other serious cases include the case of toxic fertilizers given to farmers by the same company (Business Respect, 2005).

The business should also operate within the set rules as stipulated in the document, “Green Paper Promoting a European framework for Corporate Social Responsibility” (Mineral Resources Forum, 2003).

Corporate social responsibility is necessary since it ensures the protection of human rights through regulated labor laws and corporate development of employees for profit maximization. It is also a business promotional tool by which a company’s credibility and responsiveness are measured and identified. The company should take careful steps towards the displacement of the local communities and that they are involved in every stage of the company’s development within the local; community without any discrimination of any kind. The company will be avoiding any legal suits against violation of human rights if it decides to use forceful eviction of the local communities, which is a crime under international law. Liability cases may be equally faced if construction of infrastructure and exploitation of the resources in on the land. Legal battles involving forceful evictions have been faced in several third-world countries few other notable cases in the first world.

Conclusion

India is a very good country in terms of the availability of resources, opening its economy to foreign investment and cheap labor. The latter has been a very thorny issue with several companies facing internal staff rebellion, go-slows, strikes, and even lawsuits in many countries. The most notable cases that have seen the light of the day involve forced labor. Temptations by companies to use sacking as blackmail to forced labor may be very costly both financially and to the reputation of the company. An American company farming rice in Siaya District, Kenya, was sued by the workers for forced labor, a case which created a lot of tension between the local community and the company with the locals demanding immediate termination of operation of the company. The case was later settled out of court and the company agreed to be more cautious about labor laws and to get involved in the community development.

Corporate responsibility also ensures that the business neither remorselessly pollutes the environment nor depletes the resources. This concept also helps governments identify with partners with the countries of origin of these businesses. The company should manage the impact of its activities in the following ways: Practicing ethical business principles to avoid disobedience to the law of the country, Cooperate with the various government departments responsible for labor and employment and human rights advocates, market its product responsibly through staff codes and behavior, management and philanthropic activities within the local community, develop business operations and undertakings as per the stipulated legislation on the same, initiate and sustain a responsible social, economic and environmental policies agreeable to the country (Chris Marylyn, 1993).

Works Cited

  1. Atul Sood, Bimal Arora. 2006. Class PowerPoint Notes.
  2. Chris Marsden.1993. Class PowerPoint Notes.
  3. Garry Crystal,2008. Class PowerPoint Notes
  4. “e” Choupal,2000. Class PowerPoint Notes.
  5. Mallenbaker.net.2005. Corporate Social Responsibility. India: Coca Cola ordered to close Kerala plant.
  6. Paul Allen.2005. Class PowerPoint Notes.
  7. Time Foundation. 2008. Corporate Social Responsibility.

General Motors Company’s General Management

Introduction

At the time of writing this research essay on 12/12/2008, a proposal of $14 billion bail-out packages for the automobile industry in the U.S.A failed to get its approval from Senate. This has raised fears of imminent auto industry collapse and job losses in the U.S.A. The bail-out plan failed due to the failure of employee unions of the auto industry in the U.S.A, which declined to accord its approval for immediate wage cuts to bring their wages in tune with their Japanese colleagues.

U.S.A Senate discarded attempts on the night of 11/11/2008 to the government’s approach to bail-out sinking American automobile industry as Republicans failed to extend their support the bill recommended by congressional democrats and the White House.

While rejecting, Senate has claimed that the greatest flaw in the bail-out package is that it guarantees taxpayer money today for restructuring process that may or may not happen tomorrow.

Rick Wagner, CEO of GM, tried to convince the Senate banking committee that the industry’s quandary was not because of failures of management of auto industries in the U.S.A in general but due to the intensity of the global financial crisis. Wagner also warned if Senate fails to approve the auto bail-out packages, there will not only be loss of millions of jobs, but also America’s GDP could be lost by 4%

The chairman of the Senate Committee, Mr. Christopher Dodd, was of the view that industry was looking for treating the wounds that chiefly appear to be self-inflicted.

The Senate committee was of the view that major auto industries like GM, Ford, Chrysler’s manufacturing was fell short of their targeted units. Its labor costs were skyrocketing as compared to its foreign competitors.

However, Wagner of GM has denied this accusation and put the blame on the international financial predicament, which has rigorously limited availability of credit and lessened industry sales to the ever gloomiest per-capita intensity since the Second World War. (Erbe 2008).

Auto industries allege that if no bail-out package is extended to it, as in the case of the insurance and banking industry, there will be a loss of three million jobs within the first year of the predicament, which will have a tale-telling effect on the U.S economy.

Due to this turmoil, the share price of GM fell to just $3 in November 2008 from $76 in early 2008. In the last four years, GM has had an accumulated loss of $ 75 billion. (BBC 2008).

Company background

General Motors is a U.S based multinational company engaged in the manufacturing and selling of trucks, cars, and spare parts. Ford had delivered 9.4 million trucks and cars worldwide in the year 2007 alone. Some of its famous brands are Cadillac, Chevrolet, and GMC. Further, Ford also holds equity ownership holdings through multiregional subsidiaries like GM Daewoo, Shanghai GM, CAMI Automotive Inc, and SGMW. These subsidiary-holding companies engaged in designing and marketing the brand vehicles like Cadillac, Daewoo, Suzuki, and Chevrolet. Other than manufacturing activities, GM is also engaged in aftersales services through its dealer outlets like small repairs, maintenance, vehicle parts, collision repairs, and offering extended service warranties.

It is to be observed that the automotive business is a seasonal one and the manufacturing pattern differs from a month-to-month basis. Due to constant vehicle model changeovers and new market entrants, changeover happens throughout the year. Usually, in the auto industry, annual plant shutdown and product changeover will be taken over in the third quarter of a financial year, and hence in the third quarter, operations results will be much lower as compared to the other three quarters of the year. Further, the market for a car is associated with consumer spending patterns and general economic scenarios, which will have a great bearing on sales. Moreover, consumer spending and preferences will also be influenced by the fluctuations in the price of fuel.

GM has a strong brand image and markets its famous brands through its well-knitted dealer network around the globe. For instance, there were about 6777 GM vehicle dealers in the U.S.A, about 730 in Canada, and 331 in Mexico. Further, it has more than 14,053 distribution centers around the globe for marketing its products.

One of the major overheads in the auto industry is the research and development costs as it has to research on improving production, design enhancement constantly, improve vehicle emissions checks, enhanced fuel economy, and improved safety of inmates in their vehicles. For instance, in 2007 alone, GM has spent about $ 8 billion on research and development expenses alone.

GM is constantly engaged in developing advanced alternative propulsion technology to enhance its internal combustion engines, advanced diesel engines, and hydrogen fuel cell technology.

GM’s insurance and finance business operations are carried through GMAC LLC.

GMAC’s major profits and revenues were emanated from initiating, securitizing, and servicing residential mortgages, which include subprime loans. The year 2007 was a catastrophe year for the real estate market in the U.S.A as real estate value declined drastically with declined housing constructions, falling residential sales, and increasing rate of foreclosures and defaults. Due to the subprime crisis, GMAC’s profit was adversely affected. Due to this, Residential Capital LLC (ResCap), a subsidiary of GMAC in 2007, incurred a total pecuniary loss of $ 2.4 billion alone as equated to its net revenue of $ 2.3 billion in the year 2006. (Form 10-k 2007). Due to the subprime mortgage crisis, ResCap’s mortgage loans were significantly written down, which were held for sale portfolios. Any prolonging of these situations may continue to drastically affect GM’s results, its operations, and financial conditions.

Further, credit rating agencies have further downgraded their ratings for ResCap and GMAC, and there is every possibility of further downgrading. This will likely affect GMAC’s both operational and financial outcomes in the years to come.

Any insolvency filing by GM may badly impact GMAC’s future funding resources, and ResCap’s access to capital can be badly affected due to transformation in the market conditions. (Form 10-k 2007).

The objective of writing the paper

Bailing out of General Motors has become necessary as it will have a larger impact on society and jobs in the U.S.A. If GM is allowed to fall, then it will have a greater impact on their employees, suppliers, middle-class society that depends upon GM. If GM files a chapter 11 petition or if it declares a lock-out, it will have a greater significance to communities whose housing and infrastructure may become nearly insignificant. Further, if GM crumples, it will have a telling impact on employment, mainly high-paying factory employment, which will vanish from the American service-related economy, and nobody knows whether it will revert back to American society at all. It is estimated that job losses would be more than three million, which includes both direct and indirect job losses with subcontractors and spare parts suppliers. These lost jobs will be restored to life in developing economies like India or China, where labor and technology are relatively cheaper.

Further, there is stiff competition in the automobile industry globally. Thus, competition from emerging Asian markets like India and China is considered to be very serious since they offer a competitive price and new models. Further, in the automobile industry, vehicle preference by consumers is influenced by factors like quality, price, safety, style, fuel economy, reliability, and functionality. GM is having a global market share of 13.3 percent as of 2007. Further, GM has had the highest market share in the U.S alone for the last 77 years.

Table 1: Comparative analysis of market shares by various automobile manufacturers on the global basis (Form 10-k 2007).

Company

Name

GM Toyota Ford Chrysler Honda Nissan
The year 2007 23.5% 15.9% 15.6% 12.6% 9.4% 6.5%

Table 2: General Motors – Net loss for the last three financial years (Form 10-k 2007)..

2007 2006 2005
Net loss ($38,732) ($1978) ($10,417)
Net margin (23.9%) % (1.2)% (5.5)%

The chore of Mr. Rick Wagoner, CEO of GM in restructuring GM

Chris Dodd, the chairman of the Senate banking committee, was of the opinion the present CEO of GM, Rick Wagoner, should resign as one of the conditions of the bail-out package. However, the GM board of directors, its employees, suppliers, dealers are strongly feeling that Wagoner is the apt person to guide GM at this challenging and incredibly arduous time. They recalled how Rick was able to turn around GM in the 1990s when its losses totaled a whopping $30 billion. Due to Rick’s austerity measures like cost-cutting, modernization, improving the quality, GM was able to earn $4 billion per year in the middle 1990s. However, Rick’s effort was turned to be futile due to pension obligations and health-care benefits offered to retirees, which denied billions of dollars for the new model developments.

The employee retirement benefits alone added $1400 to the cost of every vehicle manufactured at GM, which is totally absent for its competitor’s product from Asian and European markets. Loss-making cars of GM have to be manufactured in large quantities due to high demand. As a result, GM could not concentrate on the manufacture of high profit-yielding sport-utility and pickup trucks.

After Wagoner become CEO of GM, he had initiated many restructuring initiatives like halving employees force to 97,000 and had closed down 12 manufacturing units in America. (The Economist, 2008)

Literature Review

This research article has gathered its information from secondary sources available from peer viewed journal articles which have been listed in the works cited page of this research essay, and most of the statistical data have been culled out from the government publication like form 10-k from the website www.sec.gov. Further, news articles published on the web by BBC, New York Times have been used to throw more light on the subject.

Findings/Analysis

GM is able to introduce new models like the Cadillac CTS, Chevrolet Malibu, and the Buick Enclave. GM’s Opel Insignia was elected as European car of the year in 2008. Further, in 2010, GM is due to introduce its innovative Chevrolet Volt, an electric car with a “range extending’ internal –combustion engine that is likely to make its competitors product like Toyota Prius as an outdated model.

As a restructuring process, GM closed its Janesville, Wisconsin plant, which was established in 1919, and laid down 2,500 workers. However, the state of Wisconsin paid General Motors $0.10 billion in financial grants during the year 2004 to facilitate General Motors to invest in $175-million to modernize the production capacity. In return, General Motors had undertaken to employ 3,331 employees at the production facility through 2009. Now, Wisconsin state is aspiring into by what means it can recollect some of the grants to General Motors. (Manufacturing & Technology News 2008).

Wagoner successfully negotiated with the workers union for transfer of liabilities on health care to a union-run fund and to minimize the pay structure of newly recruited employees.

Workers Union has to change its adamant attitude in not cooperating to reduce pay packages in tune with its Asian counterparts as suggested by Senate to revamp the American automobile industry.

Conclusion

Knowing that pension benefits were the culprit of GM’s financial debacle, Wagoner successfully negotiated with the workers union for transfer of liabilities on health-care to a union-run fund and to minimize the pay structure of newly recruited employees. The failure was not only restricted to GM alone but also to other major auto-players like Chrysler and Ford in the U.S.A. Further, the increase in oil price and credit crunch was also reasons for the failures of auto majors in the U.S.A.

Recommendation/Applications

Bail-out packages of $ 25 billion of loan should be immediately sanctioned to auto industries in the U.S.A including GM, which will assist the auto industries in developing more fuel-efficient vehicles, in making a settlement with employee’s union to agree for wage cut in lieu of lay-off and to minimize the retirement benefits or else U.S government should come forward to draw a retirement package for auto industry employees which would be equally burdened by the U.S government so as to relieve the auto industries to use the funds so saved to improve their manufacturing techniques and to introduce more fuel-efficient cars to make them fit and compete in the global automobile market. The Republicans should not reject the above package but extend their support to save the U.S automobile industry from going to the graveyard.

Having Republicans rejected the bail-out proposal (as of 12th December 2008), the only viable option available to the American government is to employ the Treasury’s greater financial structure stabilization fund to bail out the U.S automobile industry provided if the adequate fund is available. (David M Herszenhorn, 2008).

The U.S government should think of exploring alternate short-term financial assistance schemes to save its sinking automobile industry.

Works Cited

Erbe, Bonnie. “If We Bail out Citicorp, Why Not Bail Out GM, Too? (General Motors Corp.).” U.S. News & World Report (2008): NA. General One File. Gale.

“Face Value Mr. Detroit “ 2008. The Economist 13, 2008.

“General Motors. (Plants Closing in the United States)”. Manufacturing & Technology News. 2008.

Herszenhorn, David M. “Senate Abandons Automaker Bailout Bid” New York Times 2008. Web.

“Form 10-k “General Motors Annual Report –for the year 2007.

“General Motors Cashes in on World Series.” The Washington Times 2006: C05.

“General Motors Falls Pounds 579m into the Red.” The Birmingham Post (England) 2005: 22.

“General Motors Plugs into Hybrid Vehicles.” Daily Herald (Arlington Heights, IL) 2005: 1.

“General Motors Plugs into Volt Concept.” Daily Herald (Arlington Heights, IL) 2007: 1.

Hosking, Patrick. “The Business: General Motors Is Less a Car-Maker These Days Than a Bank, but a Bank with Debts in Excess of $300Bn. Now the Penny Is Finally Dropping on Wall Street.” New Statesman 2005: 30.

Taylor, Michael T. “OSHA, Lockout/tag out and General Motors: The Specificity Requirement of the Federal Lockout/tag out Standard Attorney Michael T. Taylor Analyzes a Recent Occupational Safety and Health Review Commission Decision Involving Lockout/tag out at General Motors Corp. and the Impact of the Decision on Workplaces.” Occupational Hazards 2008: 44+.

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