TQM, Six Sigma And Product Liability In Perishable Food Industry Sample Assignment

Introduction

The food industry is a multifaceted, worldwide collective industry composed of different enterprises which together supply food products that are used by the global population. Only the individuals who thrive on the food they grow (subsistence farmers) cannot be considered within the scope of today’s food industry. From the initial stage to the final stage, the food industry includes the following; regulation, education, financial services, research and development, agriculture, food processing, marketing, wholesale and food distribution, retailing and consumers. Food industries are grouped into two; perishable and non-perishable food industries. Perishable food is food that can spoil, perish or decay easily while non-perishable food is commodities that do not perish or decay rapidly. This paper will examine how economic, safety, legal and social responsibility, and how quality control systems can be utilized to achieve the company goals.

Perishable food industry

Therefore, perishable foods need special handling and refrigeration. All frozen and fresh food products can spoil easily and are subject to quick declension or deterioration when inappropriately stored. They need appropriate temperatures, air circulation, controlled humidity and special handling by ensuring the storage area is clean and sanitary. Thus, failure to sustain any of the above conditions will lead to quick spoilage and ultimate loss. In perishable food industries, most spoilage in frozen and fresh food products is as a result of fungi and bacteria, and they spread easily from the spoiled to the fresh food products.

The perishable food industry has been facing a lot of pressure regarding food safety improvement, quality management and application of effective risk management. Individual parties within the perishable food supply chain should create proper strategic and functional modifications, increase commodity quality and raise functional effectiveness and profits (Wang & Brien, 2009, par. 1). The pressure within the industry is due to quality failures which have been witnessed in different perishable food industries.

Safety responsibility

Food-tracing systems are significant for food safety and quality control. The systems assist perishable food industries to differentiate the source and degree of quality or safety-control predicaments. The more accurate the systems, the quicker a generator can recognize and correct food quality or safety predicaments. Thus, the industries have a motivation to devote in the systems since they assist in reducing the distribution and production of poor quality and unsafe commodities, which as a result reduces the probability for recalls, bad publicity and liability. In addition, the systems could assist in tracing commodity distribution and aim recall actions, hence limiting the level of destruction and liability (Rasco & Bledsoe, 2005, p. 355).

Managing perishable products pose an essential challenge within the supply chain surrounding. Green vegetables, dairy products, fruits, food stuffs and other perishable products are products of daily human consumption. The above items have a limited operational lifetime, and they go through several hands during their motion from initial stage to final stage. Food processing encompasses some of the food chain issues. Food processing refers to the techniques utilized to change raw materials in food or products that can be consumed by human being. Perishable food processing takes hygienic, slaughtered or harvested elements and utilizes them to generate vendable food commodities. There are several dissimilar methods of producing perishable food. These methods include; one off production, batch production, mass production and just-in-time production (Rasco & Bledsoe, 2005, p. 357).

When the advantages of accurate traceability for food or product quality and safety control are bigger, the larger the possibility and quality failures or cost of safety are detected. Where the possibility and cost of quality failure are great, manufacturers have large monetary bonuses in order to minimize the amount of the measure recalls mass and to follow a more accurate traceability approach. The possibilities of failures vary among perishable food industries due to concept that some products are more perishable and vulnerable to contamination or pollution than others. In addition, the cost of quality or safety breaches differs because the worth of foods and the worth of the reputation of the industries vary. For high-worth commodities, remember costs in every product are greater than for low-worth items. For industries with important reputes, the recall costs or quality breaches are greater than for industries with fewer reputations (Rasco & Bledsoe, 2005, p. 357).

If the perishable food industries could eradicate safety predicaments by use of simple measures or inexpensive examination, the marginal advantages of traceability approach for supervising safety could be small. For instance, a company can utilize a chemical on incoming product which can eliminate the risk of microorganism contamination completely. As a result, there could be less value in a system of traceability to recognize the generators of the items containing high amount of micro-organism contamination. Similarly, if quality and safety predicaments are unlikely to come up in a particular area of the supply or production chain, there is less worth in developing traceability approach for that area or stretch. Traceability system could also assist industries to determine the degree of their loss or liability in food safety failure cases and possible change liability into others within the supply chain. If an industry could produce documents to show that the identified safety failure or malfunction did not happen in its firm, then it might be in a position to protect itself from negative effects or liability (Rasco & Bledsoe, 2005, p. 358).

In spite of the significant role traceability systems play its just one component of the entire quality/safety of the perishable food industry control systems and are planned to strengthen and accomplish the other components of the quality system. Traceability systems themselves do not generate high-quality or safer commodities or measure the liability. They offer appropriate information on whether control points within the supply or production chain are functioning appropriately or not. The precision, depth and breadth of the system for quality and safety inevitably mirror the critical control points within the entire system of safety/quality. In addition, they differ consistently across firms and with time based on quality and safety inventions and technologies (Rasco & Bledsoe, 2005, p. 358).

Economic responsibility

Economic responsibilities of a firm or industry indicate the capitalization of the values of the industry. Economically, firms are supposed to capitalize the earnings of their shareholders. This is achieved through the generation of goods and services which are on high demand in the market niche. In order for a company to achieve its goals, all the economic responsibilities must be implemented effectively. A company has economic initiatives to its customers, investors and employees. The four basic economic responsibilities include; profitability, transparency, non-discrimination and sustainability (Spice Mentor, 2008, par. 1).

A company or an organization makes profit when it trades commodities or services which are more significant than the raw materials and labour force it utilized to create them. Simply, any company makes profit through adding value to a product. Therefore, adding value and making profit fulfils the goals of all the direct stakeholders of a company. In addition, the company generates commodities or services which are important to clients. Moreover, the company utilizes profits to acknowledge investors and pay its workers (Spice Mentor, 2008, par. 2).

Secondly, a company is able to achieve its goal if it serves with transparency; where it offers as much data as realistic or practical concerning its operations. Similarly, an organization permits direct stakeholders to clearly view its financial positions, practices and strategies. Therefore, transparency benefits the direct stakeholders of a company. In addition, transparency caters for the interests of investors by providing them with data which they require to assess the probable rewards and risks of investing within the organization. Moreover, transparency allows workers and clients to view the manner in which a company is run. The company could create informed decisions regarding how it uses its finances, where they use the money and where they work (Spice Mentor, 2008, par. 3).

Thirdly, a company can achieve its goals by being non-discriminatory. In an economic viewpoint, non-discrimination does not mean the deficiency of unfairness against cultural, racial or gender groups. It refers to a company implement the same monetary method to all its clients, workers and suppliers. Thus, direct stakeholders gain from the aspect of non-discrimination since the organization make decisions concerning the merit of finances instead of the preferences and deficiencies of decision makers (Spice Mentor, 2008, par. 4).

Finally, sustainability as an economic responsibility could assist a company achieves its goals if implemented appropriately. Companies make sure that sustainability of their operations by advancing or developing the procedures of the business and establishing long-lasting, secure associations with clients and suppliers. In addition, the investors, clients and workers of a company are referred to as direct stakeholders since they possess an interest in the future of the organization. Therefore, direct stakeholder gain from the business sustainability because when a company has a safe prospect, investors persist to earn dividends, and employees persist to receive pay checks while client continues to purchase the commodities and services of the company (Spice Mentor, 2008, par. 3).

Therefore, if a company lowers its food quality and safety, it will not be in a position to make more profits as compared to higher quality. In addition, when food quality is compromised, customers, investors are likely to withdraw; thus, the food company fails to sustain its production and distribution.

Social responsibility

Social responsibility in the business sector refers to the ethical theory which a firm has a role to the community at large. Social responsibilities mark the beliefs and values of the community regarding a certain company. Thus, companies should observe ethical measures when operating in order to achieve its goals. For instance, it’s not ethical for a perishable food company to sell stale food to its customers. In addition, since perishable foods are daily products which customers depend on, the companies should regulate their prices rather than exploiting their customers. As a result, the industries will be in a position to create more profit and attract more customers (Zain, 2008, par. 4-5).

Similarly, in order for a company to fulfil its goals, proper overtime remuneration should be given for long or unofficial hours. Thus, ethical or social roles are invalidates within the legal scheme and permit industries or companies to function with humanitarian measures and values in mind (Zain, 2008, par. 6).

Social responsibilities requires companies to view beyond documents and figures and instead to perceive at individuals and the surrounding. By adopting beliefs and values of particular moral measures as one of the success of the company, is very significant since it will help the company attract customers within its locality because of respecting their values and beliefs. Therefore, the social responsibility can form a constructive rapport between the company and individuals who are privy to its functions. These parties include; workers, investors, suppliers, surrounding community and clientele (Zain, 2008, par. 8).Therefore, if the quality of food in a perishable food industry is affected, customers within its locality will withdraw from purchasing food from the company. As a result, economic wise,

Quality control system

Controllable factors which impact on finished goods either negatively or positively are called quality control system. Quality is the characteristic which make a product what it is and the level of superiority or excellence in that product. The utilization of sound and good raw substance is of great significance in the accomplishment of the needed end commodity of consistent quality. Recognition of the main critical control areas or points is important because the procedure control associates to main processing outcomes of the raw substance (Strugnell, 1992, p. 17). Conventional quality control method is fully incapable of eradicating quality predicaments. Hence a prophylactic plan grounded on exhaustive evaluation of persisting status which makes sure that quality assurance programme goals are achieved is advocated for the perishable food companies. The ‘Total Quality Management (TQM) and Hazard Analysis Critical Control Point (HACCP)’ encompasses these needs as authorized under the ‘International Standard Organization (ISO) 9000 series’ (Amankwa, 1999, par. 1).

Total quality management

This refers to a management philosophy which seeks to incorporate all organizational roles to center on fulfilling the requirements of the clients and goals of the organization. TQM authorizes the entire company starting from the workers to the managers, with the initiatives of making sure quality is achieved in their relevant services and commodities, and proper management of the procedures via the suitable procedure advancement channels. Thus, TQM aims at recognizing the root source of every problem and to preclude it from getting into the final commodity. Utilizing an elementary iterative procedure, TQM strengthens quality assurance to achieve alterations in services and commodities by way of advanced efficiency of their functional procedures. This philosophy is mostly a people-dependent procedure. Thus, in order to obtain the entire benefit of TQM, individuals in any company ought to be synergized. Therefore, companies are supposed to sustain an organization-wide plan which delegates roles or functions to every worker for the excellence of their task and the task of their group (Padhi, 2010, par. 2).

In order for an organization to implement TQM successfully, it should focus on the following elements; ethics, integrity, trust, training, teamwork, leadership, recognition and communication. These eight components of TQM can be categorized into four based on their functions; foundation (ethics, trust and integrity), building bricks (training, leadership and teamwork), binding mortar (communication) and roof (recognition).

TQM is constructed on a basis of trust, ethics and integrity. It promotes honesty, justice and openness and permits engagement by everyone. Foundation is the main key to open the crucial potential or capacity of TQM. Ethics refers to the field pertained with bad and good circumstance. It is a two-directed discipline represented by personal and organizational ethics. Ethics of the company develop an enterprise code of ethics which highlights the instructions which all workers are to follow when conducting their work. Personal ethics involves individual wrongs or rights. Secondly, integrity in TQM refers to justice, honesty, values, morals and obedience to sincerity and facts. The feature is what clients anticipate and deserve to get. Individuals perceive the opposite of unity as fraudulence or duplicity. TQM cannot perform in an environment of duplicity. Trust in a business is a by-product of ethical conduct and integrity. Without trust, the TQM’s structure cannot be formed or constructed. Trust promotes full contribution of all people within an organization. It permits authorization which motivates pride possession and commitment. In addition, it permits decision making at proper position in a company, promotes personal risk-taking for uninterrupted development and assists to make sure that measurements centres on development of procedure and are not utilized to challenge individuals. Therefore, trust is significant in order to achieve clients’ satisfaction and it builds the cooperative surrounding or atmosphere which is important for TQM. Therefore, the social responsibility of perishable food industry is to ensure that their customers trust the company so that when they purchase the food products they believe they are safe.

Training of employees is important in order to improve quality and productivity. Managers are responsible for applying TQM within their units and train workers the TQM’s philosophies. The training that employees should have include; problem solving skills, interpersonal skills, technical and business economics skills, decision making, capability to work in a team and job management performance evaluation and development. For a company to be effective, teamwork is a major component of TQM. With the utilization of groups, the enterprise will obtain better and immediate resolutions to predicaments. Moreover, teams offer more lasting developments in operations and procedures. In teamwork, individual feel more comfy while raising predicaments which might occur and can obtain assistance from other employees to get a solution and implement it. Similarly, in every company, leadership is a crucial element of TQM. In order for TQM to be effective in an organization, managers should be devoted in guiding their employees. A manager should comprehend TQM, trust in it and indicate their devotion and belief via their day-to-day practices of TQM. Thus, employees within the food industry should be trained innovative and modern methods of processing the products. In addition, they should be in a position to solve any problem which might occur during processing in order to maintain the required quality.

Consequently, TQM requires that communication to exist among all the stakeholders of an organization (customers, investors, employees and suppliers). In addition, recognition is vital for the success of any business. Workers strive to obtain individual or team recognition. Identifying and recognizing participators is the most significant work of managers. When individuals are recognized, there is enormous alteration in quality, self-esteem and productivity of the workers. Therefore, the above mentioned elements are significant in ensuring the effectiveness of TQM implementation in a company and managers play a major responsibility in establishing these components in a company (Padhi, 2010, par. 8).

Perishable food industry is an enormous world-wide business and within this industry, quality is mostly an incorporated measure of appearance, purity, colour, texture, workmanship and flavour. However, quality is becoming a significant matter because of the multiple factors such as food borne illness which are as a result of poor handling of food or poor storage. For instance, between the years 1993 to 1997, approximately 2,751 outbreak cases concerning food borne illness were reported in the United States. The main causal factors were confirmed to be chemical agents, bacteria, parasites and viruses. Therefore, this is a clear indication that quality within the food industry has been compromised and as a result several cases have been reported. However, if the industries implement the quality systems properly, they will improve quality and achieve their goals.

Proper handling of perishable food

Quality is a vital factor within the perishable food industry and must be maintained from initial to final stage. When perishable goods or commodities are transported from the producer or farmer to the consumer, it is anticipated that they need to resist the changes of delivery across reasonable distances. Decomposition of perishable commodities occurs normally unless some gambit is implemented in order to delay or preclude this procedure. To improve quality, perishable products can be frozen, placed in ambient, chilled or stored under controlled atmosphere. In addition, products should not be stock-piled but ought to be generated on demand. Therefore, for quality to be achieved frequent inspection should be made in order to sort and eradicate any decayed products or part of the commodity. This will minimize losses which are encountered by the industry and instead improve its profit. Secondly, shipments should be separated and marked in order to make apparent their relative ages. Thus, the oldest products will be sued first in order to minimize spoilage and increase sales (Lupien, 1993, pp. 108-110).

Perishable products should be frozen at temperatures which are lower than -12ْ0 C, a level where important decomposition cannot occur. When food temperature increases within the carriage above -12 degree Celsius, the rate of decomposition is greater. When the temperatures are about -10 degree Celsius, decomposition can occur with ultimate noticeable consequences.

Similarly, during transportation, perishable food is chilled. The ventilation of vegetables and fruits produce heat, utilize oxygen and forms water vapor and carbon dioxide, and ethylene gas might be generated which quickens ripening. Therefore, chilling decelerates these procedures. The purpose of chilling perishable foods is to minimize the temperature of the food and sustain it at an appropriate level where it cannot cause damage to the food.

Carriage where the atmosphere is regulated is utilized with respiring fruits like bananas, where the gas composition and temperature in contact with the commodity should be controlled appropriately in order to regulate ripening from occurring in uncontrollable manner.

Quality of perishable products

Therefore, if perishable foods are handled appropriately within the entire food chain, quality will be maintained. Appropriate quality is judged through texture, anticipated appearance, freshness and smell. Because these characteristics alter with time, the preservation of excellent quality relies on decelerating this natural advancement appropriately. The range of alterations differs among commodities. Therefore, within the perishable food industry, TQM is required throughout the stages including transportation chain and constructive quality control system should be implemented.

Effective application of TQM system needs efficient training of the important personnel within the perishable food and carrier organizations and of quality measures enforcement personnel. Moreover, to make sure that foods are obtained from the producer while safe and sound and move to the carrier while in the same situation, there is need for surveyors to conduct independent evaluation. This evaluation will confirm the quantity, the situation and packaging integrity, availability of observable defects, temperature situations at the time of loading the product and temperatures of the carriage itself (Spriegel, 1993, p. 175).

Six Sigma

Six Sigma refers to an enterprise management strategy which seeks to advance the quality of procedure results by recognizing and eliminating the causes of problems or defects, and reducing variability in business and manufacturing processes. It utilizes a group of quality management techniques such as statistical techniques and builds a particular infrastructure of individual within a company who are proficient in these techniques. Every project of Six Sigma that is conducted within a company adopts a specific series of measures and has quantified objectives. These targets or objectives could be financial or whatever is significant to the client of that procedure. The initial step in computing sigma or in comprehending its importance is to understand what the clients anticipate. In Six Sigma’s language, client needs and anticipations are referred to as critical to quality (CTQs).

For instance, an industry which is dealing with pizza, a perishable commodity, should know that the major need of the customers is timely delivery. Other needs include; temperature of the product, tastiness and accuracy of delivering the order among others. Sigma system is used to observe how well or poorly a procedure functions and to offer everyone a general method to show that measure. When a company breaches important needs of the customers, it is producing or giving room for cost, defects and complaints.

Six Sigma has six themes which are as follows; genuine center on the clients, fact-and-data driven management, procedures are found where the actions are found, proactive management and boundary-less collaboration. In Six Sigma, client focus is the major priority. Six Sigma developments or advancements are described by their effect on client satisfaction and worth. In order for an organization to move to innovative and more power level, Six Sigma adopts the idea of ‘management by fact’. Six Sigma subject starts by explaining what standards are important to measuring the performance of an organization and then collect and evaluate key variables. Then predicaments can be defined, evaluated and resolved more efficiently and permanently. Whether a company is centered in creating commodities and services, evaluating performance or advancing effectiveness and client satisfaction, Six Sigma puts the procedure as the significant vehicle of achievement. In addition, proactive management refers to creating habits from exactly what they are, explaining inspirational objectives and reexamining them regularly, setting clear priorities, centering on predicament prevention instead of threatening or firefighting, and querying why they reason of carrying out things rather than defending them blindly (Pande & Holpp, 2000, p. 7).

Similarly, Six Sigma centers on the client and develops procedures which promote higher quality services and commodities, and aggressive boundary within the market niche. Moreover, its projects might create a working surrounding which is more conducive and safer for productivity. Perishable food industry is a discipline where quality control is critical. Bearing in mind the large number of individuals consuming the food commodities, any defect can lead to critical and dangerous effects. Therefore, every food industry should implement Sic Sigma in the whole food supply chain. The following are examples of projects of Six Sigma within the food industry; minimization in distribution costs, preventing or minimizing wastage especially in perishable products, promoting consistency of food commodities transportation and productivity enhancement. Moreover, advancing delivery vehicle usage, minimization in maintenance costs, improving quality packaging, minimization in plant and machine maintenance cost and advancing obedience to schedules at collect and transportation points (Tennant, 2001, p.6).

For many years, manufacturing organizations have maintained the disputing views and competing precedencies of supply-quality and supply-chain management. For instance, within the grocery company, the need to make sure that products get to the store a soon as possible is relevant since attention is needed to ensure quality in maintained during the manufacturing procedure. Basically, the quality of manufacturing should be associated directly to supply-chain effectiveness in order that perishable products can get into the stores quickly and while they are still fresh. It has been hard for supply-quality and supply-chain management to arrive at a practical solution or comprehension because of poor communication between the individuals who are responsible for quality processes and senior management. In order for the perishable food industry to resolve these challenges they need to form quality culture which gets assistance at the lead and pervades the supply chain (Stamatis, 2004, p.1).

Similarly, in the perishable food industry, making sure that raw substance and final commodities achieve the needs and standards of the regulatory agencies could be enormously hard. In addition, industries face the challenge of the way to hold back the spiraling costs related to enormous low inventory turnover and supply chains. With larger supply chains rising from world-wide outsourcing, industries encounter or experience difficult in ensuring quality of the commodities which they get from the suppliers. Therefore, the challenge to the industries is to create a strategy where the supply-chain people will aim at the performance standards and goals in order the industry can obtain raw substances, ingredients or elements which achieve the requirements or their customers. It is significant to center on managing suppliers’ procedures, in order the commodities can be manufactured appropriately (Kopecky, 2008, p.1).

Therefore, in order for the perishable food industry to overcome the above challenges, they should implement Six sigma which is used to improve efficiency and effectiveness by removing defects from food processes.

Product Liability

Product liability refers to the field where suppliers, producers, retailers, distributors and manufacturers are accountable for any injuries that result from the products they deal with. The common claims related to product liability include; breach or warranty, negligence, liability, strict and several client protection claims. Most of the product liability claims are evaluated at the level of state though they differ in different states. Every form of product liability issue needs dissimilar components in order to be confirmed to present an effective claim. There are three types of product liability; marketing liability, manufacturing defect and design defect. Defects associated with manufacturing occur during processing period and involve poor workmanship and poor quality materials. Perishable food industries are continuously named within lawsuits saying because of long lasting health predicaments arising from poor diet selections formed by the plaintiff. These cases are inculcated with queries of general sense and individual initiatives. To some individuals, food consumption cases indicate the quarrelsomeness while others say that such cases illustrate a long-overdue development in societal regulation. Early product liability cases regarding perishable food companies, basically involved cases concerning; contamination of food, presence of foreign materials in food and exploding of beverage bottles or cans proceedings. Currently, lawsuits against food industry have increased and involve issues on negligence on fulfilling the requirements of the customers. Though cases associated with food consumption seem to be rising, recent examples include cases against several fast-food chains where unhealthy food is generated and as a result injuries such as obesity and any other health associated illnesses arise (White & Robert, 1996, p 51).

The potential alteration of legal measures has made some individuals to propose alterations to be made in legislation in order to stop the increased proceedings and what is perceived as an apparently minimized or declined responsibility personal initiative and of common sense. Therefore, the treat of cases within the perishable food industry has made legislature both at state and federal level to be established as a method of controlling and stopping what is perceived as frolicsome cases or lawsuits (Vargo, 2005, par. 12). For example, Topps Meat Company faced several challenges in the year 2007 because of quality failure. Approximately 21.7 million Ibs of fresh and frozen beef commodities generated between the year 2006 and 2007 by the organization were recalled in the year 2007 because they were contaminated with a bacteria referred to as E. Coli (Escherichia coli) O157:H7. During that time, this recall was the 2nd largest in the United State documentation, after the largest of 25 million Ibs of beef produced by Hudson Foods Company in the year 1997. After examination, the food sample eventually tested positive for E. coli contamination (Reiser, 2007, par. 1).

One of the goals of the Topps Meat Company is to produce and render quality meat to its customers. Therefore, legal responsibility assisted it in improving its quality because after the incidence of 2007 meat recall, the ‘Canadian Food Inspection Agency’ (CFIA) and U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) had to take the necessary measures in order to trace to root cause of the problem. The CFIA offered FSIS with DNA fingerprints that it had gotten from Ranchers Beef Limited, a Canadian firm. The firm offered trim to the company. When the firm stopped its production by August 2007, some of the meat items stayed in the firm’s store and CFIA took and examined it as a portion of the mutual examination of the 2007 recall of Topps and as a portion of CFIA’s personal examination to the 45 diseases in Canada due to E. Coli O157:H7 (Reiser, 2007, par. 3-4).

This investigation carried out by the food safety organizations in Canada assisted the company to evaluate the likely source of the contaminated commodity that resulted into the 2007 meat recall. From the investigation, it was clear that the DNA fingerprints patterns were similar to those of the sick people who tested positive with E. coli. As a result, the FSIS removed the ranchers Beef, ltd from its list and declared that no commodity from that firm should be valid or eligible to be transported into U.S. since that recall of Topps Meat Company. Thus, from the legal responsibility, FSIS declared innovative, in progress and forthcoming measures in order to protect people from E. Coli O157:H7 risk. These measures include; advanced testing such as examining trim that have been imported at the border. In addition, FSIS has assisted the company in achieving its goals by informing the countries about the programs and new policies regarding exported meat to United States. Moreover, the FSIS is working in collaboration with the Topps Company in order to help it in implementing to new measures so as to protect the individuals from the risks of E. Coli O157:H7 (Reiser, 2007, par. 5-8).

Currently, legal incentives to generate quality and safe food are weak, although somewhat stronger in epidemic circumstances and in the market niche where waterborne and foodborne diseases could be more readily identified to individual companies. The food chain mostly handles product liability on specific foundation and lawsuits associated with food are dealt with in similar way as a vehicle accident case. Although there could be no negligence in quality failure of perishable commodities supplied to the consumers, public policy requires that the initiative be dealt with wherever it is in order to successfully minimize the hazards and risk to health and life underlying in faulty items which get their way into the market. It is clear that food industries can expect some hazards within the food chain and they can protect against the defects from reoccurring since the consumers or customers cannot. The individual who suffer from faulty products or products of poor quality are not prepared to meet its effects. In addition, the injury cost and time wastage or health problems might be an overcoming bad luck to the injured individual. Therefore, it the interest of the public to discourage the trading of commodities which are of poor quality due to defects and as a result they are threat to the customers/consumers or public (White & Robert, 1996, pp. 52-53).

Conclusion

In conclusion, food industry is an enormous world-wide business and within this industry, quality is mostly an incorporated measure of appearance, purity, colour, texture, workmanship and flavour. In addition, while the perishable food industry persists to grow and develop, ensuring that the food supplied to the customers is of good quality is a critical factor that will assist the industry in achieving its goals. To achieve or fulfill the quality aspect, the industry need to monitor all stages of food chain through proper transportation of raw materials, removal of toxic materials, proper storage, easing marketing, heightening food consistency and easing distribution tasks. In addition, economic, safety, legal, social responsibility and quality control system when implemented appropriately can assist in achieving the goals of an organization. Moreover, effective implementation of quality control systems such as Six Sigma and TQM can reduce recalls and instead improve company’s productivity as a well as attract more customers.

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Terrorism. Hezbollah: Ideology And Financing

The problems of combating terrorist crimes in the framework of the modern world are becoming increasingly important in view of the apparent increase in cruelty and more frequent cases of this group of crimes. Like any manifestation of terrorism, its financing is public in nature and aims to create a climate of fear and social tension in society. The problems of financing terrorism directly or indirectly affect all countries. In the fight against this negative phenomenon, cooperation of all forces and a joint search for the most effective mechanisms for solving the problem are necessary, which is possible only if there is an understanding of the sources and mechanism of financing a specific terrorist organization, as well as its ideology. In this context, it seems appropriate to consider Hezbollah ‑ a militant Shiite organization and a political party operating in Lebanon, the territory of which in recent decades has been turned into an arena of unceasing clan and ethno-confessional clashes, which in fact reflect a more global conflict between Arabs and Israel.

Hezbollah

Brief History and Ideology

More than a quarter century after the formation of Hezbollah, one could state that it went through several successive stages in its development: from the Islamist protest movement to a full-fledged political party. It should be noted than Hezbollah was formed in 1982 in Baalbek by part of the Lebanese Shiites for the armed struggle against the Israeli occupation of southern Lebanon (Worrall et al., 2015). Since the early 1990s, Hezbollah began to adapt to the Lebanese political system, trying to gain influence by participating in political processes. In the domestic political arena, it (with the generous financial support of Iran) has turned into a kind of system operating in parallel with the Lebanese executive authorities, into a civic organization that is gaining political strength not only among the Shiite population (Worrall et al., 2015). That is, Hezbollah has become a kind of Middle Eastern semblance of the Irish Republican Army, which has both a military wing and legal political representation.

It is obvious that the “party of Allah” arose in the Middle East political arena with the goal of destroying Israel, since the existence of a Jewish state did not fit into the project of establishing Islamic justice. The multi-confessional nature of Lebanon has had a significant impact on Hezbollah’s entry into the political life of the state (Farida, 2019). As before, the priority of its activity is anti-Zionism, to which anti-Americanism was added. The political situation that existed in Lebanon at that time required the party leadership to determine the main lines of activity in order to make its existence legitimate in Lebanese society (Farida, 2019). Therefore, protection against an external threat, primarily from Israel, was put to the forefront. The Hezbollah organization is an important player both in the domestic politics of Lebanon and in the international arena. The organization is recognized as terrorist in the EU, Canada, the USA, Israel and Egypt, the Gulf countries, as well as partially in Australia and the UK.

The pillar of Hezbollah’s ideology is the exclusively Shiite political-legal-religious doctrine of Khomeinism, which includes values, views, and norms aimed at establishing an Islamic rule of law and determined by an Islamic lawyer (Wali al-Fakih). The party’s mission is not only to worship God (Ibad), but also to establish a special Islamic regime that will become an expression of a just divine society (mujtama al-adl al-allahi), where God has all power over people (hakim Allah) (Levitt, 2015). God is considered the source of sovereignty and power, He directs Muslims through the prophet and his followers (imams) (Levitt, 2015). This inextricable link between divine governance and the need to create an Islamic rule of law in accordance with Hezbollah’s ideology turns Islam into a comprehensive system of social existence.

Sources and Mechanism of Financing

Hezbollah enjoys financial and military support from Iran and Syria. Hezbollah’s general secretary himself claims that funding has only come from Iran since the party was created in 1982 (DeVore & Stahli, 2014). Iran sought to turn it into a “regional power” in order to further use it to achieve its goals in the region. However, there is an opinion that there are other sources of financing for this organization, namely, the most complex financial network that exists in parallel with the official financial system (Farida, 2019). Many countries, led by the United States of America, have attempted to discover and subsequently eradicate these sources, but significant success has not been achieved.

With tangible financial support from Iran, the “party of Allah” appeared able to organize such a structure, which many call the “state in the state,” that is, the organization is self-sufficient and able to independently provide itself with everything necessary (Darshan-Leitner & Katz, 2017). This structure is based on certain ideological principles, and although it exists within the state, it has no real influence on its existence and activity. In its structure, the party has its military strength (Islamic Resistance), a construction company (the Organization of Construction Jihad, which is engaged in electrification, construction and provides drinking water).

In addition, the organization is the creator of numerous foundations that address the problems of disabled, wounded, and families of murdered shahids (Darshan-Leitner & Katz, 2017). Moreover, the party is engaged in education; in addition to religious specialized educational institutions, the party maintains schools, technical schools, and higher educational institutions. Moreover, the education expenditures of the “party of Allah” are many times higher than government spending on education (DeVore & Stahli, 2014). At the same time, such a cultural ‘incline’ and social steps should in no way diminish the guilt of Hezbollah members for numerous terrorist acts that claimed the lives of a huge number of innocent people.

Moreover, it would be a mistake to assert that the interests of the party are limited only to Lebanon and the struggle against Israel. Hezbollah is increasingly starting to touch on regional and international issues. At the same time, the message of the party leader Hassan Nasrallah to the leaders of European and Arab states represents the evidence that the party is trying to bring its ideas to the international level as part of the confrontation with America.

Terrorist groups, such as Hezbollah, rely on special networks to finance and facilitate their activities and organize attacks on a global scale. Hezbollah receives almost one billion dollars a year from direct financial support from Iran, international business and investment, a network of donors, corruption and money laundering (Blanford, 2017). The group uses these funds to support its destructive activities around the world.

The activities of Hezbollah includes the deployment of its militants in Syria in support of the Assad dictatorship; alleged surveillance and intelligence operations in US territory; and building military capabilities to such an extent that Hezbollah claims to have high-precision missiles at its disposal (Blanford, 2017). These terrorist operations are sponsored through international network of financial backers of Hezbollah and its activities ‑ financial instruments and infrastructure that form Hezbollah’s lifeblood. Hezbollah’s annual revenue is about $1 billion, including Iranian assistance, international business operations and investments, donor funds and money laundering proceeds (Darshan-Leitner & Katz, 2017). At the end of 2008, American and Colombian investigators discovered and liquidated an international gang based in Colombia engaged in drug trafficking and money laundering. The statement said that part of the profit, which exceeded hundreds of millions of dollars a year, was used to finance Hezbollah (Daher, 2016). Hezbollah receives a significant amount of weapons, funding, and assistance in military training from Iran.

Shadow Economy of Hezbollah

The Hezbollah party has managed to build its own economy that goes beyond the framework of the Lebanese state and its institutions so that information on financial flows is not reflected in the statistics of the official banking system of Lebanon. Since its inception, the party has relied solely on Tehran’s financial assistance. Lebanese sources report that in the 1980s, Hezbollah received $100 million annually, and over time, it increased to 600 million (Daher, 2016). Such support covered the party’s material and military expenses, and from these funds, social assistance was provided to the families of the deceased party members and unemployment benefits. Activists of Hezbollah in Africa invest and launder huge sums of money. They recruit local activists, and collect intelligence data. The choice fell on Africa not accidentally ‑ all this is done in order to provide financial support to Hezbollah, namely the huge number of Shiite and Lebanese expats living in Africa.

It is known that the word “economy” includes the production, distribution, exchange, and consumption of goods and services in accordance with certain rules and regulations. The Lebanese government recognizes the role of Hezbollah, which is both a military and a political organization. It is assumed that all transactions conducted by this party are subordinate to the state, whether they come from abroad or from any other sources (Daher, 2016). Given the fact that Hezbollah receives huge amounts of money from Iran, financial transfers should be carried out through banking operations. However, this does not happen during the last period of time.

This raises a problem for all those who are trying to find third-party sources of party funding. Financial transactions are limited to cash, because Hezbollah refrains from receiving financial transfers, deposits or checks, which, in turn, makes the mechanism for monitoring financial transactions very difficult. Due to the lack of any official data, except for information leaks, expected calculations of financial costs or American intelligence reports, the available information is equated with guesswork and virtual assumptions. In addition, after receiving the money, the party seeks to immediately spend or transfer money due to the sanctions imposed by the United States on Hezbollah and related institutions and individuals (Darshan-Leitner & Katz, 2017). It is also worth noting some of the people who actively finance Hezbollah.

In particular, Adham Tabaja is a member of Hezbollah, who maintains direct contacts with senior Hezbollah organizers, including the operational component of the Islamic Jihad terrorist group. Tabaja also owns real estate in Lebanon for the benefit of the group. He is the controlling owner of the Lebanese construction company Al-Inmaa Group for Tourism Works. Tabaja, the Al-Inmaa Group for Tourism Works, as well as its subsidiaries, were qualified as especially dangerous international terrorists in June 2015 (Darshan-Leitner & Katz, 2017). The Kingdom of Saudi Arabia has also qualified Tabaja and his companies as terrorist under the Crimes and the Financing of Terrorism Act.

Another active supporter of Hezbollah, Mohammad Ibrahim Bazzi, is one of Hezbollah’s chief financiers, who has provided the organization with millions of dollars from his business activities. He owns or controls companies such as Global Trading Group NV, Euro African Group LTD, Africa Middle East Investment Holding SAL, Premier Investment Group SAL Offshore and Car Escort Services S.A.L. Off Shore. Bazzi and his subsidiaries were qualified as particularly dangerous international terrorists in May 2018 (Darshan-Leitner & Katz, 2017). In 2019, the United States offered rewards of up to $10 million for information that would help eliminate Hezbollah’s funding schemes.

One important feature that makes it difficult to track Hezbollah’s (as well as other Islamist terrorist organizations’ funding channels) is worth noting. The most important source of funding for all Islamic groups is the regular (zakat) and voluntary (sadaka) donations of believers to charity ‑ they are considered mandatory for all faithful Muslims. Although zakat is made regularly by private and legal entities, it is traditionally not legally regulated by the authorities and is not subject to tax, audit, or any other verification by the state.

At the collection stage (in mosques, Islamic banks, etc.), these funds are absolutely legal. They are managed by various Islamic foundations and charitable organizations ‑ the International Organization of Islamic Aid in Saudi Arabia or the World Muslim League, which has over 100 branches in more than 30 countries. The institutions of the Islamic banking system play a large role (Farida, 2019). In accordance with the norms of Islam, regular donations in the form of zakat are officially intended for charity: helping the poor (lil-fuqara), those in need, including travelers (lil-masakiin), and, finally, charitable deeds (fi-sabil-alla), for example, on propaganda of Islam, printing and distribution of the Koran and construction of mosques. According to experts, in fact, part of these funds can be redistributed to the needs of jihad and its leading radical Islamist groups (Farida, 2019). Thus, even those from radical Islamic organizations that carry out terrorist activities and are outlawed are often funded from originally legal sources. “Power-up” in this case is carried out according to the principle of not laundering dirty money, but pollution of the “clean.”

In the most simplified form, funds of “Islamic donations” from private individuals, companies, and financial institutions through bank transfers are transferred to the accounts of the leading charitable organizations, while remaining legal at this stage. Then they are transferred (also often legally) to the local branches of the respective funds (Daher, 2016). There they are split up and in various ways go to the disposal of radical groups ‑ at this stage, the money is criminalized.

Official banking channels are by no means the only instrument for transferring financial transactions. In Islamic countries, for example, the traditional informal money transfer system known as hawala is widespread (Daher, 2016). It is based on trust, secured, as a rule, by the extremely long (sometimes, several generations) experience of personal or family-clan business communication between financial intermediaries in different countries. Under such a system, it is normal practice to verbally (by telephone) notify one side of a representative in another country or another city about the need to simply transfer (without a receipt or other documentation) cash directly to a named person (Darshan-Leitner & Katz, 2017). Naturally, such operations are not officially registered in any way; the fact of their carrying out is almost impossible to confirm legally, and it is extremely difficult to trace them.

Today, the range of sources, channels and entities involved in the financing of terrorism has expanded. Modern technologies, including social networks and new payment systems, have provided a wide platform for maneuvering terrorist organizations and Hezbollah in particular. Moreover, attracting professionals to manage the financial assets of terrorists is a separate problem both in terms of increasing the profitability of terrorist resources and in terms of conducting terrorist operations through financial institutions. In this context, the fight against money laundering with its traditionally high requirements for the legality of the income of any “suspicious” individuals or organizations does not fully take into account the specifics of financing Islamic groups. In this sense, its effectiveness is deliberately limited. That is why a set of measures is needed that focus precisely on the prevention of criminalization of funds obtained legally, both in Muslim countries and in Islamic communities of non-Muslim, primarily Western countries.

References

Blanford, N. (2017). Hezbollah’s evolution: From Lebanese militia to regional player. Middle East Institute Policy Paper, 4. Web.

Daher, J. (2016). Hezbollah: the political economy of Lebanon’s Party of God. Pluto Press.

Darshan-Leitner, N., & Katz, S. M. (2017). Harpoon: Inside the covert war against terrorism’s money masters. Hachette Books.

DeVore, M., & Stahli, A. (2014). Explaining Hezbollah’s effectiveness: Internal and external determinants of the rise of violent non-state actors. Terrorism and Political Violence, 10, 1-27.

Farida, M. (2019). Religion and Hezbollah: Political ideology and legitimacy. Routledge.

Levitt, M. (2015). Hezbollah: The global footprint of Lebanon’s Party of God. Georgetown University Press.

Worrall, J., Mabon, S., & Clubb, G. (2015). Hezbollah: From Islamic resistance to government. Praeger.

International Corporate Governance: Principles

Introduction

Corporate governance has become an international phenomenon. The recent financial scandals and bankruptcies of big multinational companies have really impacted almost every nation. Realising the significant, the nations around the globe are either establishing corporate governance guidelines or codes or refurbishing their guidelines already in force. International governance principle like OECD governance principles were issued as early as in 1999 and have been updated by taking into account with the recent developments and new updated guidelines were issued in 2004. (Mallin, 2006,p1).

Corporate governance concerns with rules, systems and processes by which a company’s activity is conducted. It can be explained as the relationship between a company’s shareholders, its board of directors and its managers. It is a set of relationship of a company to society and all of its stakeholders and will include the sets of regulations, laws, listing guidelines, voluntary private-sector practices that facilitate corporations to invite capital, manage the affairs of the business efficiently, and generate revenues and to cater both general societal expectations and legal obligations.

Some critics argue that it should cover broader areas like the role of institutional investors, the remuneration of directors, the relationship between the auditors and company

Corporate Governance

Corporate governance is the process by which the corporate can implement proficient decision making, appropriate resource allocation, and involve in strategic planning. It concentrates on how objects are laid down and attained, how risk is watched and evaluated and how performance are maximised.

Corporate governance helps corporations to construct value through innovation, provide accountability and to implement proper control system to quantify the risk involved.

Corporate governance has become more relevance to determine the cost of capital in a global capital market. Corporate governance must be evolutionary and receptive to the information requirements of local and international investors.

Most definitions on corporate governance refer mainly the following:

  • The devise by which companies are controlled and directed and
  • The devise by which those who control and direct a company are supervised.

Fundamentals of Corporate Governance:

  • To explain the functions of the management and the board clearly.
  • The Board is vested with a balance of skills and independence.
  • More emphasis on the honesty on decision makers on corporate’s plan and financial performance.
  • To inform periodically the investors the important happenings in corporate financial activity and enhances the integrity of the corporate reporting.
  • To report all material factors in time and with a matured outlook.
  • The shareholder’s rights shall be clearly acknowledged and to be honoured.
  • Business decisions with inherent risk and uncertainty is to be handled with proper internal control.
  • To cope with the modern risks of business, introduction of formal mechanisms to enhance the board’s and managerial effectiveness.
  • Proper rewarding system should be designed to attract skills required to achieve the result anticipated by shareholders.
  • Good governance takes care of the interest of all stakeholders.

The main general salient features of corporate governance codes are:

  1. It is the way of guaranteeing that the implementation of economic power by the corporate sector.
  2. Board of Directors of a corporation has inherent managerial and supervisory function.
  3. It ensures that there is a demarcation between managerial and supervisory roles. It includes the separation of the office of the Chairman and CEO, the installation of independent directors, formation of committees of Board like remuneration, audit, share transfer etc.
  4. Major codes of the corporate governance deals with disclosures to shareholders more particularly director’s remuneration, top executive remuneration, independence of directors and shareholding pattern etc.

Thus corporate governance is aimed at the maximisation of shareholders wealth and to protect their interests. While the corporate governance is helpful to instil confidence on investors and at the same time if there are grave governance deficiencies, the investors may shun the shares of individual companies, a section of markets or even national capital markets.

OECD Principles

Organisation for Economic Co-operation and Development (OECD) has developed corporate governance principles mainly to enhance the institutional, regulatory and legal framework for corporate governance for their nations to offer suggestions and guidance for investors, stock exchanges, companies and other stakeholders, to have a participating role in the establishment of good corporate governance. These principles mainly focus on publically traded companies both for non-financial and financial matters.

This corporate governance is non-binding in nature. About 30 nations have ratified the above principles in 1999. It is to be noted that four main pillars of OECD principles of Corporate Governance are

Accountability

To make sure that the tactical guidance of the company is supervising the management by the Board and the board’s answerability to the shareholders and company.

Responsibility

To accredit the privileges of stakeholders as proven by concerned legislation and to support the active cooperation between stakeholders and companies and stakeholders in establishing jobs, wealth and the sustainability of financially vibrant companies.

  • Equitable Treatment
  • Transparency

On all material issues, to make accurate and timely disclosure.

Fairness

It safeguards shareholder’s rights and make sure that equitable treatment of shareholders.

The above pillars are progressively viewed as universal value for corporate governance. The principles give due weight to the privileges of shareholders and demand for the design of mechanism as the egressing “gold standard” for corporate governance. (Zarsky, 2005, p201).

Section IV of the OECD Corporate Governance Principles distinctly speaks out about transparency and disclosures and educate that disclosures include but not restricted to the following information:

  • The operating and financial results of the company
  • Corporate’s main goals
  • Voting rights of major shareholders
  • Top executives and Board of Directors and their pay and remuneration
  • Material risk factors that can be foreseeable
  • Top issues pertaining to other stakeholders and employees
  • Corporate governance policies and structures.

The stakeholder issues and the ‘materiality of risk factors is normally detailed as information ‘whose mis-statement and omission could shape the economic decisions taken by users of such data However , the demarcation of whether particular information is a matter of significance is left to the nation or market actor to explain.

The above mentioned points relating to governance policies, the disclosure of foreseeable risk are of specific interest for taken into consideration of how corporate governance has the potency to hold companies responsible on global social and environmental issues.

Further, describing of these sections could act as a bare minimum structure for statutory social and environmental disclosures needed of OECD –associated companies.

For instance, if a company is bribing a military government in a developing nation to offer security for its project or pipeline, it will loose its insurance coverage if it is indulged in poisoning a community’s drinking water system with that of mine tailings, this could be ‘material’ data that the company is expected to disclose to its stakeholders and international community.

Both International Monetary Fund and World Bank have employed OECD Corporate Governance as a measuring yard and as a benchmark for measuring the adherence of corporate governance by companies.

Further, World Bank has commenced “the Global Corporate Governance Forum” as a way to propagate deep research, best practices and offer technical help among the private sector companies especially in developing countries. (Zarsky, 2005, 203).

International Corporate Governance

U.K has a unitary board of directors system where both non-executive and executive directors offer their advice on every board meeting. European nations have a dual board system which consists of management board and supervisory board. The supervisory board has employee directors.

Corporate governance plays a dominant role in UK and institutional investors are very particular about its implementation. For example, Dutch/Shell group has exaggerated its tested reserves of oil and gas and later engaged in strategies to restore its standing and rebuild faith in it. Standard Life is the UK’s oldest institutional investors. It is upbeat in corporate governance issues and stresses that its investee companies should adhere corporate governance without failure.

Telecom Italia is an Italian telecom company and it has corporate governance reforms which assist to enhance protection of minority shareholder’s interests.

In Spain, Indra is a leading information and defense technology company. It has introduced noteworthy corporate governance transformations which includes new remunerations schemes and board restructuring processes. Due to introduction of corporation, lndra attained noteworthy increase in growth, profitability and efficiency. Singapore Technologies Engineering is having high levels of disclosure and transparency. (Mallin, 2006, p 2).

Corporate Governance in UK

In 1992, the Cadbury Report was published and UK has become a pioneer in Corporate Governance and the Cadbury Code became an exemplar for the self-control of listed company boards in other nations.

Cadbury Code vehemently recommended for the following:

  • Non-executive directors assumed an expanded role
  • Executive remunerations received a tighter control
  • Financial reporting has to give full and transparent disclosure
  • Institutional investors took active part in the management of the company
  • Auditors and Accountants are regulated independently

The above recommendations were combined together n a new Combined Code which was implemented in July 2003 and was meant to make board more independent and more efficient in controlling the top management team of the companies.. (Mallin, 2006, p 17).

Effective Corporate Governance Structure

The new combined code stresses the following for the implementation of an effective corporate governance structure:

Though, these governances are compulsory for a listed company in UK, there is no bar on the other types of companies to follow the same. I think, those companies functioning on international level should follow these guidelines to have an effective corporate governance structure:

  • There should be chairman and CEO to lead the company. It should be seen that no individual has unlimited authority in managing the affairs of the company.
  • Board should comprise both executive and non-executive independent directors. It should be seen that no small group of individuals or individuals can dictate the board’s decision taking authority.
  • All directors of board should be re-elected once in three years.
  • The annual report of the company should contain a report on company’s remuneration policy and short notes on the each director’s remuneration.
  • The company should have adequate internal control to protect both the company assets and shareholder’s investment.
  • Board should take efforts to consult institutional investors before initiating any major policy changes and on director’s and key employee’s pay packages mainly through extra-ordinary or annual general meeting.
  • Remuneration committee should consider and analyse industry standards while fixing remuneration to top executives. Further, there should not be any discount while executive share options are allotted.

Corporate Governance at Jersey Trust Company

Jersey Trust Company (JCT) is offering advisory services on private wealth, administration of corporations and funds. Their head office is located in Jersey financial district of St.Helier and has operations in many other places.

JCT is offering a high efficient, professional and personal service to its customers. The specialty of JCT is that it is offering corporate governance itself as a package to its corporate clients.

Since JCT is managing private wealth administration of corporation and funds, as corporate governance compliance, JCT has to appoint a Money Laundering Compliance Officer (MLCO) and Money Laundering Reporting Officer (MLRO) to prevent and detection of money laundering and financing of terrorism in their client companies. JCT has to establish and maintain policies and procedures of internal control and communications mainly to forestall and prevent money laundering in their client companies.

JCT is to conduct and document a business risk assessment with reference to company’s structure , its customers , the jurisdictions in which it operate , its services and products , and how it delivers its services and products in their client companies ongoing basis.

Since JCT business is a service provider to many corporations, it should safeguard its international reputation and its Jersey island business by offering quality advice on corporate governance on international standard to its clients.

In case, if JCT observes any serious deviation or failures to adhere with the needs of Money Laundering provisions in its client companies, it has to notify to commission in writing immediately.

JCT should make appropriate customer due diligence policies and procedures. JCT should bring to the notice of Joint Financial Crimes Unit when it comes across any deviation or suspicion about involvement of money laundering or financing terrorism by their client companies. JCT should establish relevant employee screening policies in their client companies. (www.jerseytrust.com).

Having known the significance of the corporate governance for various investment and Funds companies that is being administered by the JTC, it offers the following Company Secretarial services to its clients.

  • Duly convening the board of director’s meeting
  • Convening the meeting of committees
  • Drafting and circulating the board or committee meeting agenda, board meeting notices and minutes of the board and committee meetings.
  • For shareholder’s meeting, preparing and mailing the notices, proxies and proxy statements.
  • To make sure that company’s jurisdictional filings are filed well before its deadline.
  • Adherences with rules and codes of practices of concerned stock exchanges.. (www.jerseytrust.com).

For success of any mutual fund company or any investment company, the composition of its board of directors is a vital process and is essential to its success. The success of any fund depends upon the quality of the Board that steers the fund’s management. JCT nominates non-executive directors to the boards of such funds ( both quoted and unquoted funds) and is extending independent advise , knowledge , a breadth of experience and a deep understanding of corporate governance. JCT is also offering non-executive directors to offer their expertise to the following committees:

  • Remuneration committee
  • Audit committee
  • Management engagement committee
  • Remuneration committee

For instance, in May 2005, Renewable Energy Generation was included in AIM. The above company was established with prime aim of making investors to participate in the development of global renewable energy market through investing only in wind energy products. JCT personnel are acting as its Audit Committee Chairman, member of its Nomination and Remuneration committee. Further, JTC also offers Company secretarial support in addition to filing announcements to the stock market. (www.jerseytrust.com).

In view of the above, l suggest that board of directors of Gildor Ltd should follow the effective Corporate Governance structure of JCT as enumerated above and such abhorrence will help them to establish international guidance on corporate governance in Gildor Ltd. Hence, Gildor Ltd should initiate various measures that are being followed by JCT which will enhance Gildor Ltd ability to meet its responsibilities in this area.”

References

JerseyTrust. (2006). Web.

Mallin Chiris A.(2006). International Corporate Governance: A Case Study Approach. New York: Edward Elgar Publishing.

Zarsky Lyuba. (2005). International Investment for Sustainable Development. New York: Earth Scan.

Zekany, Kay E., Lucas W. Braun, and Zachary T. Warder. Behind Closed Doors at WorldCom: 2001. Issues in Accounting Education 19.1 (2004): 101+.

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