Supply Chain Management Essay Example | Topics and Well Written Essays - 2000 words

Gracefully Chain Management - Essay Example According to the establishment understanding, the Corporation possesses most properties where McDonald's is found. The UK plan of action is extraordinary, in that less than 30% of eateries are diversified, with the dominant part under the responsibility for organization. McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois. Almost one out of eight specialists in the US has worked with McDonald's at one point in their lives. [1] Eric Schlosser's. McDonald's is additionally the biggest private administrator of play areas in the nation, aside from being the single greatest buyer of pork, hamburger, potatoes, and apples. The meats that the organization sends fluctuate with the way of life of the nation. McDonald's is remarkable in a few different ways to its rivals as respects the manner in which it maintains its business. It has not generally been going great however, for the most well known inexpensive food joint on the planet. McDonald's has been focused by analysis for claims of control of section level laborers, , natural harm created by modern preparing of its items, selling a long way from solid food, delivering bundling waste, exploitative and questionable promoting and participating in the enduring of domesticated animals. McDonald's' inclination towards advancing unhealthy nourishments like French fries has not helped either. Likewise, a few McDonald's eateries are affirmed to have utilized substitute meats, similar to wildebeest and pony. While these charges are not kidding, some contend that it is just taking care of being celebrated. McDonald's Food flexibly chain McDonald's puts sanitation at the highest point of their plan. This isn't unexpected for an organization that does billions of deals income yearly. This sort of morals advances great business too. At the core of the McDonald's activity is a quality confirmation and provider sanitation programs and is viewed as top corporate need. Providers and franchisees need to follow fastidious quality and wellbeing rules on the off chance that they need to continue their relationship with McDonald's. It is a prominent business whose achievement is established on acceptable client experience. In this manner, setting clear sanitation and quality desires is the most ideal approach to make the business work. [2] Sarah Fister Gale Sanitation is a ceaseless procedure for McDonald's, from crude materials, through the offices and circulation focuses, and right to the cafés. It's a top need at McDonald's. It's a central standard of our business and our legacy, and will never be undermined. - Lamont Rumbers, chief of value frameworks for McDonald's USA. [2] For sandwich buns alone McDonald's has tie-ups with in excess of 20 bread shops all

Essay on Several Different Papers part 3Essay Writing Service

Article on Several Different Papers part 3Essay Writing Service Article on Several Different Papers section 3 Article on Several Different Papers part 3Essay on Several Different Papers part 2Week 7 Decision settling on processThe dynamic procedure is significant for the effective business advancement however frequently this procedure goes up against generous difficulties, particularly when relatives come into business together and neglect to choose their obligations and decide the quintessence of the dynamic procedure. In such manner, alluding to the instance of the retail apparel store, run alongside a relative, it is conceivable to prescribe to decide precisely how choices are made inside the organization and who precisely takes what decisions.First of all, the dynamic procedure should be aggregate that implies that both relatives take choices. In any case, their power ought not cover that implies that they should take choices on various issues. For example, one relative is liable for providers and conveyance of items to the attire store, while another is liable for deals, HR and advertis ing of the organization (Masterson Picton, 2004). In such a manner, they ought to disperse various territories of their duty between one another. Along these lines, both relatives will take part in the dynamic procedure and will have a significant influence in this procedure. Simultaneously, such dynamic model will be successful on the grounds that relatives will convey their capacities and will concentrate on their particular fields (Breneman Taylor, 2006). Therefore, they won't burn through their time and endeavors on different fields that will boost their effectives in those zones, which they are mindful for.On the other hand, such dynamic model will diminish the danger of contentions. As every relative is liable for his/her fields just, at that point they don't meet and they don't have the appearance and cause for the contention. They simply focus on their own work and decisions.Nevertheless, the proposed model doesn't imply that there will be no contentions by any stretch of th e imagination. In actuality, clashes despite everything are probably going to happen on the grounds that they include a characteristic piece of any business. In such a circumstance, the avoidance of contentions is especially significant on the grounds that contentions can fall apart the authoritative execution. The contention avoidance and goals ought to include conferences between the two relatives. What is implied here is the way that they should discover accord to take the correct choice that meets the vision of every relative. They ought to figure out how to bargain to settle on viable and quick choices. For example, if relatives face a contention over financing of the new limited time crusade or singing an agreement with another provider, they ought to weigh the two choices and select the one that coordinates the present needs of the organization, its crucial, and promoting technique. Along these lines, if the organization needs supplies, the new provider ought to be marked, wh ile if the organization has low deal rates, the organization ought to rather put into the advancement of its items and brand.Thus, the contention avoidance is significant, while the goals of contentions ought to include the nearby cooperation and correspondence between both relatives running the store. In such manner, the appropriation of duties and capacities and, thusly, dynamic procedures will diminish the danger of contentions and help the organization to grow effectively.

The structure of the play Blood Brothers

Toward the beginning of the play , w see the finish of the play , a blaze back, in spite of the fact that now we don't have the foggiest idea about its the end , all we see is 2 men dead on the floor and a puzzling and unpleasant music can be heard , leaving the crowd thinking about what is happening. At that point we realize of what is happening as the storyteller discusses a section that we here a couple of times in the play â€Å"As like each other as two new pins, of one belly conceived on the similar day, how one was kept and one parted with? A did you never hear how the Johnston's kicked the bucket, never realizing that they shared one name till the day they kicked the bucket, when a mother cried, my own dear children lie slain† this section mentions to the crowd what's going on and parts with the plot, however it doesn't demolish it for the crowd as there is still data they don't know for instance, how could they bite the dust? For what reason did they not realize they were siblings? What's more, parts more inquiries, making them be more enjoyed the play. Inconvenience The inconvenience in the play is when Mrs. Johnstone is compelled to surrender one of her children to Mrs. Lyons to abstain from losing them both to social administrations or going into so much obligation that she just couldn't take care of them. In the event that this piece of the play didn't occur, there truly would be no play as it would mean Eddie and Mickey wouldn't need to meet and they could never become kindred spirits, Eddie wouldn't go to college since he wouldn't of had the option to bear the cost of it and Eddie wouldn't of had the great job and had the option to give Linda cash later on in the play and give Mickey a vocation. Rising activity Other little entanglements in the play that are included to make it additionally fascinating and add more activity are imperative to the play too. The adoration triangle between Mickey, Eddie and Linda, without this piece of the play Linda wouldn't have undermined Mickey making Mickey get envious and search out Eddie to execute him toward the finish of the play. However, another confusion which was imperative and the explanation that Linda cheated was Sammie shooting the man and Mickey going to jail for it , if this didn't occur Mickey wouldn't of got discouraged needed to take his Tablets , he wouldn't of gradually pushed Linda away, and as I said , Linda wouldn't have cheated. Peak The peak of the play is clearly the end arrangement which begins with Mrs Lyons who now in the play has become a suspicious wreck appearing/disclosing to Mickey that Edward and Linda are together, This is an impetus for the consummation everything in the play after this point accelerates (the music, the discourse the development) Mickey is offended by what he presently thinks about his significant other and Ex closest companion so he runs home finds the weapon that Sammie used to shoot the man prior in the play and goes looking for Eddie , during this he the female characters understand shouldn't something be said about's to occur and feelings hit there tops â€Å"he's †¦. Mickey†¦. Mickey has a gun† (Mrs. J) (p97) the strain and speed builds increasingly more as we draw nearer to the end. Yelling and shouting expands the pressure, Mickey helps the crowd to remember what has occurred all through the play â€Å"FREINDS! I could execute you. We were Friends right? Kin dred spirits, right? Remember?† then it at long last hits the pinnacle when Mrs Johnstone lets them know there siblings and the two of them are shot, Mickey by the cop then Edward by Mickey. Arrangement The arrangement, albeit pitiful is the two twins passing on, if not for them not realizing they were twins the play could never have been, yet nothing could be serene and directly until the issue made toward the beginning which was them, was removed. The mysteries and falsehoods needed to confess all for the play to be finished and that implied Mrs Johnstone needed to gain from her slip-ups, she must be rebuffed for her errors and the notion which pays such a key part in this play needed to work out as expected. At long last we end the Play how it began with the baffling Narrator rehashing the section said toward the beginning â€Å"Did you ever here the tale of the johnstone twins , As like each other as two new pins, of one belly conceived on the equivalent day, how one was kept and one parted with? A did you never hear how the Johnston's passed on, never realizing that they shared one name till the day they kicked the bucket, when a mother cried, my own dear children lie slain†. The storyteller The storyteller in the play plays a significant character in the play, as most storytellers he recount to the story, yet this storyteller is somewhat more strange and confused than most. He is an apparition like figure; He appears to consistently be there, however is never observed by the characters, he is genuinely similar to a phantom , in certain pieces of the play he contacts the characters they go round to see what it's identity was nevertheless they appear to see nothing despite the fact that the crowd see him there. I have said that the storyteller plays a phantom like figure different understandings of him would be an underhanded soul or the fiend, I wouldn't Say he was ever similar to a watchman heavenly attendant however on the grounds that every one of his references are to terrible things in the play, he is never truly around when upbeat and funny pieces of the play E.G when there kids are playing firearms yet is ever present when strain and outrage is engaged with the scene , additionally his tune â€Å"The villains got your number† proposes he might be the fallen angel or a detestable soul regarding the demon. The storyteller likewise constantly alludes back to strange notion helping the crowd to remember a key factor in the play. His lines are never gruff and directly to the point it is possible that, they as a rule are in questions to make the crowd think. Topics The topics in Blood siblings are continually alluded to and returned to all through the play, for the most part reminded to the crowd by the storyteller yet in addition very evident in the play. The first is destiny this is for the most part appeared through the glimmer back, we see what the consummation resembles and we are additionally told by the storyteller so all through the play we realize it will wind up like the beginning. The second and proberly most significant subject is odd notion â€Å"new shoes on the table, take them off† this topic is a fundamental factor of dread in the play , Mrs johnstone is perpetually frightened to let Mickey and Eddie play and be companions as she is terrified on the off chance that they discover they are siblings the two of them will bite the dust , like Mrs. Lyons said. The last subject is love, love pays a key part and connections with strange notion Mrs Johnstone cherishes both her children and doesn't need them to kick the bucket , But because of the affection triangle between Linda , Eddie and Mickey she needs to disclose to them indicating how dangerous love truly is. The adoration for various class' is additionally appeared in the play, we see Mrs Lyons and high society resident being extremely over defensive of Eddie in light of the fact that she cherishes him so much she doesn't need him getting injured in contrast with Mrs johnstone who would prefer to give her affection by letting Mickey live it up and have a fabulous time. Moving Moving is alluded to a ton in the play particularly in a great deal of the tunes, were Mrs. Johnstone alludes to a darling taking her moving or not taking her moving. Again moving is thought about in the two social classes in the play Mrs Lyons instructs Edward to move in a customary manner E.g. a Waltz, were as Mickey Dances to a disco music and Rocky music thinking about the character as Edward moves a progressively develop and taught move and Mickey moves an increasingly lively Un instructed move which doesn't have a lot of structure. Dreams and desire Each Character in the play has there own fantasies and desire again these are Very extraordinary over the two social classes. To begin however Mrs Lyons has the fantasy about having a kid, so when Mrs. Johnstone goes to her with twins that she doesn't figure she can take care of Mrs Lyons seizes the chance. In Mrs. Johnstone case she fantasies about getting another spouse, moving house, Getting cash, she likewise gets all the things she wants†¦ yet these things appear to all reason issues later on in the play , for instance Mrs Lyons gets her Child however closes transforming into a neurotic wreck since she feels the weight of the mystery of receiving Mrs J's infant illicitly is consistently upon her. In Mrs Johnston's case moving house and getting a renewed person is truly destroyed as they move to were The Lyons family have gotten away to and Mickey and Eddie grow up together, if this wouldn't of happened they proberly would of overlooked each other forestalling both there passings. Both Mickey and Eddies dreams and desire likewise cause demolition there dreams to resemble the different appears to cause envy which in the end makes Mickey shoot Eddie, Eddie's fantasies of college isolates the 3 companions leaving Mickey to battle for himself and settle on an inappropriate decisions. So to summarize each one dreams and desire appear to work out in the play however they all appear to reverse discharge on the characters. Toy firearms Toy firearms is an issue canvassed in the play which causes numerous issues, when the characters are kids they play with toy weapons as said in the tune they can get up after a check to ten , they cannot pass on when they play with toy weapons they don't comprehend the threats of weapons , this absence of comprehension is completed into there adulthood and it brings about Mickey being placed in jail when Sammie pulls the trigger and shoots somebody , yet at the same time Mickey doesn't gain proficiency with his exercise, in the last scene when Mickey holds the weapon to Eddie I don't think he intends to shoot him , I think he is utilizing it to panic Edward and because of his naivety when he shoots Eddie he kills him , he kills his own sibling and closest companion. He has never grown up, he is as yet a child inside, yet the weapon he holds has.

Ghostwriting A Lesser Known Career Path that Pays Big

Secretly composing A Lesser Known Career Path that Pays Big Graduating with a science certificate, I did not understand I would wind up being an independent essayist. I decided to be one, as it most appropriate my life during the downturn time frame in 2009. In the same way as other different essayists who stall out with low paying substance factories like Elance (presently Upwork), I began my vocation gaining peanuts. That changed when I researched for a blog entry in 2013 about how much professional writers acquire. That exploration instructed me that I was profoundly undercharging at $1 per page. The first eBook I ever secretly composed for a customer was more than 50 pages in length and paid just $50. Also, that included Elance’s and PayPal’s expenses, as well! Today, in 2018, I charge as much as $1-$2 per word. I charge more for innovative work or fiction than for genuine. On the off chance that the work requires broad research, the rate runs higher. This implies secretly composing a 10k words novella would effortlessly win me $10,000. Presently, envision what a full-length novel of 60,000 to 100,000 pays. Secretly composing is a worthwhile specialty that numerous scholars don’t think a lot about. Why Ghostwrite? In all actuality: I have attempted independently publishing. This expects time to market and sell your books. Secretly composing is much simpler, less distressing, includes less showcasing, and pays well. At the point when I began my vocation as an independent essayist, I was attempting to raise a family while as yet being a ‘good’ housewife. I required, now in my life, to telecommute. Secretly composing appeared to accommodate my way of life consummately. How I Land Ghostwriting Gigs Secretly composing simply fell into my lap, however consistently it is a little jump from independent composition. I was composing websites and articles when one of my recurrent customers inquired as to whether I’d be keen on secretly composing digital books. I at last composed an enormous number of them for a similar customer. He was thoughtful enough to get the message out to his companions which landed more work. As the proprietor of a composing business now, I secure the vast majority of my work through my Facebook page. It’s not that my customers are excessively languid or awkward to compose their own work. They are simply excessively occupied with vocations or family to make the work they wish to showcase, which is the standard in today’s world. Systems administration causes me as well. At the point when I meet another person and present myself as a professional writer, individuals are quick to share splendid thoughts or stories for their books and have me write them down for them. Such a significant number of individuals have a story, however not the aptitude nor time to carry them to realization. Is Ghostwriting for You? In the event that you are joined to your composition, most likely clandestine writing isn’t a solid match for you. In any case, on the off chance that you appreciate toying with others’ thoughts and trim them into your own words, it may very well be your specialty. Shows improvement over Traditional writing?â It sure does, yet you don’t get rich short-term. There are some independent professional writers asserting six figures per year. They do gain that sum, yet they didn’t immediately. Expand upon your portfolio and notoriety first. At first, secretly composing will take care of your tabs; your clandestine writing cash. I making the most of my first occasion toward the south of France and afterward in the States in 2015 and 2016 separately. In 2017, my family went to Spain and Pakistan. For 2018, I’ve arranged a unique astonishment as we will praise our tenth wedding commemoration in December. All gratitude to secretly composing, I am getting a charge out of an actual existence that numerous simply dream of. Brief

Balancing Life, School, and More Life

Balancing Life, School, and… More Life Ahhhh. Wednesday. Veterans Day. A day FREE of classes. A one-day weekend! Wooohooo!!! Yesterday, I decided that today would be perfect for a movie/drama/DDR marathon! So I found my friends Tuesday and asked, Have any plans for tomorrow? Their responses were like this: Tomorrows my chance to STUDY! I have some major catching up to do! AHHHHH evil physics test on Thursday! I am locking myself in my room and never coming out! Somehow I found about three people that said they could do SOMETHING today. So I made a nice schedule: I would wake up at 9:30ish, watch the fourth episode of My Girl (one of the best asian dramas out there, w00t!) with my big Jessica (a girl from my sorority) at 10, get to the Terrascope room at 12 and stay there until 2 or 3 to work on our final plan for lowering carbon levels in the atmosphere with carbon sequestration and by lowering countries CO2 emissions levels, go to the physics review session from 3-5 for my own physics test on Thursday, and then find my friends to watch the Prestige and DDR. And then call it a night. So what REALLY happened: I ended up watching 2.5 episodes of My Girl with my friends until 1ish, then stayed up until 3:30 AM studying for physics. Luckily I texted my friend and told her I might not be able to watch the drama at 10. So I woke up at 10 AM, turned off the alarm, woke up at 12:30, went to the bathroom and saw my left eye glaring at me in all its bloodshot glory. I am pretty sure that I dont have pink eye because Ive had a red eye a million times before for allergies or from overuse (ahem maybe staying up till 3:30 like EVERY NIGHT), but theres always a first time, so Im heading over to medical after I finish this post. And maybe after I study a bit more for physics. Because I didnt feel comfortable going into the Terrascope room or to the physics review session there would be 30-80 people there that could get infected or scared at least So now its 3:30 and Im trying to get down and finish this annoying mass transfer problem and then go on to the rest of physics. No DDR or movies I suppose But I found something SOOO much cooler that I can do while I work in my room! XD Its called OWL CITY!!! I have Fireflies and Saltwater Room on repeat right now XD So, if youd read my last post, you may be asking: Whats your life been like since that nearly-failed 18.022 test? We had ANOTHER test, but this time I scored right on average (70)! And last time I checked (two days ago by email), I was passing the class with a B-! And since freshman year is pass/no record, I was in paradise. Some of my friends are still struggling though and didnt crack that test =( Hopefully well all make it through! In other school news, Ive been getting more involved in Terrascope. Were supposed to work like 6 hours outside of class a week so since the deadline for our project is coming up soon, from now on Im spending an extra 6+ hours a week on Terrascope =P I also have to plan what Im doing during IAP and the summer. I would LOOOVE to do something with Outward Bound or another group, hiking/mountaineering somewhere but everything Ive found is too expensive so far so Im going to look for a class/UROP/internship for IAP and an internship/program for the summer. Some people already have applied to internships and programs Im one of those students who doesnt work efficiently and thereforehasnt X____X Also, Ive been trying to balance my life more outside of classes. For starters, I joined a sorority (*gasp!*) and we just had initiation yesterday (*DOUBLE GASP!*). We also had relevations this is where we get paired to our big as in big sister (sophomore or junior from the sorority) whom we bond with for the 2-3 years we have together at MIT, and beyond! So yeah, my big Jessica and I have been watching Asian dramas! =) Yay bonding XD Ive been trying to spend more time with friends, not just in the sorority (I really should go to more of their events). I went to Salem for Halloween with friends from MIT and one high school friend that goes to Brandeis. There were so many costumes! And we went to an Italian place which had wonderful pumpkin ice cream. Unfortunately I dont have pictures from there, but I did get one of this evil flower my friend found in some hidden lair Look! Witness the evil! (My friend almost flew to the other side of that train while holding that flower. I am serious.) I also have a good friend in McCormick whom I work with on 18.022 when we dont get distracted by watching movies, playing with Photobooth, or doing weird things to hair (like mine) I was working on an 18.022 pset while she (aka The Master of Design) did THIS to my hair Master of Design: CAPTAIN JACK SPARROW! And this is us deciding to play with Photobooth on a Sunday morning You said TEST? In terms of clubs outside of school I joined LTI the Leadership Training Institutes Expansion team. Im going to try to help with the logistics of LTI-Brazil and LTI-China however I can with my limited experience (and time X_X), but Im also trying to see if we can bring this awesome program (to train high school students to lead their own community service projects!) to Puerto Rico! Gotta work on my spanish skillz X_____X In addition, Ive been trying to get more involved in environmental stuff outside of Terrascope. For instance, Im helping Biodiesel @ MIT with their Biodiesel @ Brazil project (were writing the proposal now gotta work on this!). Ive also joined the Organizing Team for MITs Sustainability Summit, taking place the Friday of Earth Day week (I believe) in April 2010. Almost everyone organizing this event is from Sloan (MITs graduate school of management) except for me, another college freshman, and a Ph.D. candidate. Its pretty awesome. We had a social last night and they took us out to dinner XD They also had some great ideas about good green careers. Ill elaborate on an upcoming post about going green! One last thing on that environmental note: I defied time by biking all the way to Northeastern University for the Boston Vegetarian Festival two Sundays ago. Sooo much food, sooo much info it was amazing. Beyonnnd amazing. I only wish I had more pictures I had like a brownie, samples of raw food bars, cous cous, hummus, asian food, etc., etc. Im also trying to get back into Sport Tae Kwon Do, but I wanted to take a look at the variety of martial arts MIT has to offer as well. I really need to get back into shape, thats one of my goals, havent been exercising much at all treadmills work wonders, it would be a dream to run/swim/do weight training/one of these at least four days a week XDD Ohhhh, and on THAT note I should try to stay healthy. Got to start cooking healthy foods (theres oatmeal and stuff to make lentil burgers sitting in my room). And I need to force myself to sleep at 12-1. At least 80% of the time if possible. And I need to go to medical and get this eye checked out. And then study for physics. And then do chem. So theres one chapter of my quest to find a balance at MIT. So maybe life will be balanced in the next chapter! In two? Or in 20 chapters! Or 100! Or IS there a balance? Well see!

How Is The Corporate Governance Affected By Globalization Finance Essay - Free Essay Example

Corporate governance appears to be a particularly important topic nowadays, when ownership rights and control over assets in corporations are separated, and the top management of corporations might not act in the interests of stakeholders. There are numerous corporations all over the world, and their effect on the world economy is quite substantial. Corporations as one of the most complicated structures of a firm appear to be also the most powerful regarding its influence on economic development and political decision-making process. Considering the importance of corporations to the national economies and shareholders concern over level of protection of their investments, it is particularly relevant to be well aware of the governance systems inside corporations, their policy of shareholders treatment and their level of subordination to the state. These paper aims to explore, how entering the international market affects the corporate governance of corporations. Our research question is How is the corporate governance affected by globalization? The research that we conducted will be useful for exploration of globalization effect on the world economies, and it is as well relevant for those, who have interest in topics related to corporate governance and its dependence on exogenous conditions. To answer our research question we will rely on the following institutional economics approaches: agency theory, transaction costs theory, business ethics theory. We opted these four institutional theories, as they are the most relevant to explain the current changes in corporate governance of German companies as they enter Ukrainian market. In our research, we focus on the effect of Ukrainian market conditions on the governance system of foreign corporations that enter the national market, in our case we analyze German corporations. Both of these countries are in the continental Europe, thus Germany adopted the European type of capitalism. However, it is rather hard to determine what kind of capitalism Ukraine adopted after the break- down of the Soviet Union. We will use real examples of corporations operating in these countries to evaluate the changes in the corporate governance brought by the differences of the background, and to show the consequences the globalization in these c ases led to. The paper contains six main chapters. Chapter 2 provides reasoning for the choice of the countries that are analyzed in the paper. Chapter 3 is a review of four institutional economics theories that we use to analyze the corporate governance in Ukraine and Germany in further chapters. In chapters 4 and 5 we describe and explain main changes in corporations and corporate governance in Ukraine and Germany correspondingly. In these chapters we also focus on the particularities of corporations operating in these countries from the perspective of state of economy, level of political stability, state intervention in private sector and social factors. Chapter 6 is a study case of few German corporations (METRO AG, Henkel etc.) operating in Ukrainian economy. This chapter is an empirical proof of the differences in corporate governance, corporate legislations and their effects in two chosen countries with our comments and advises on possible changes, relying on material provided in previous chapters. 2. Germany and Ukraine. Reasoning for the choice of the countries. Germany and Ukraine are for the time period one of the most unique economies in the world. Both based on heavy industry those two countries are one of the wealthiest countries in Europe. The time during the Germanys division and the occupation of Ukraine is a black-spot in economic history, regarding both those countries. However, in late 1980s and early 1990s, after the break of Soviet Union, many countries regained their independence thus allowing them to choose their own economic path. Germany, was separated in year 1961, when the soviets built a wall, which divided Berlin into Eastern and Western parts, thus part of Germany as well, into two economic blocks; one of which was Western or capitalistic, and the other one Eastern or communistic. On the other hand, Ukraine shared rather similar destiny in historical perspective. In 1922 Ukraine became a part of USSR (The Union of Soviet Socialist Republics), thus determining their fate for socialistic regime, under control of Soviet Russia. Both, Ukraine and Eastern Germany, managed to escape the Soviet control in late 1980s (1989 for Germany and 1990- Ukraine), thus allowing them to be independent and choose their own paths and make their own decisions. The term corporate governance is used in two distinct ways. In Anglo-Saxon countries like the US and UK good corporate governance involves firms pursuing the interests of shareholders. In other countries like Japan, Germany and France it involves pursuing the interests of all stakeholders including employees and customers as well as shareholders (Allen, F., Gale, D. (2002). A comparative theory of corporate governance. Social Science Research Network, Http://papers.Ssrn.com/sol3/papers.Cfm). The economic paths that Ukraine and Eastern Germany chose were rather different. The main differences were the corporate governance control. The united Germany adopted the continental European corporate governance model, whereas for Ukraine, a rather young and inexperienced country, they chose to adopt Anglo- Saxon corporate governance. The main differences about those two corporate governance systems were noticed by WladimirAndreff :In Continental Europe corporate governance, there is no domestic external market for executive talent and, thus, when a German (or any other continental European) CEO is appointed there is no negotiation (about salary, stock options, performance bonus, retirement provision and the like). The second difference is in wage negotiations between the enterprise union and managers. Anglo- Saxon firms behave in both cases as properly capitalist; continental Europe firms, by contrast, are more seen like communities. The latter employee- favoring firm opposes the former shareholder-favoring firm(Andreff, W. (2002), Journal of international business studies, Vol. 33, No 1, pp.195- 197, accessed on 23/10/2010). The industries both countries chose were similar. Germany and Ukraine are both famous for their heavy industries, such as machinery industry, and the IT business. However, the main exporting areas of the countries differ greatly. Ukraine still bases most of its economy on Russia. Not only it exports most of its goods there, but also imports the most of countrys energy (gas, oil, electricity) from Russia. Whereas, Germany, is internationally well known for its car industry and home technic. Therefore, the German corporate governance is in relationships with many other different countries, which have different institutional systems, thus making German governance system to adopt in its own way. On the other hand, Ukraine, basing its main relationship with Russia, had to adopt other meanings of doing transactions. Corruption and government incompetence made the cooperation between western countries and Ukraine rather difficult. According to MSI (Management Systems International):Ukraine can be categorized as a closed insider economy ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã‚ Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬ a country strongly influenced by elite cartels (MSI, (February 10, 2006), Corruption Assessment: Ukraine). In conclusion, both countries have their own similarities and differences. Ukraine and Germany share rather similar historic background until the 80-90s of XX century, however, after both countries escaped the influence of USSR, affected by globalization, they took different paths following different choices, as an example governance structure. Neither of their choices were wrong. Out of these reasons this paper will be analyzing the corporate governance particularly in these countries. Institutional economics theories used in the analysis of the corporate governance (Agency, Transaction, Business Ethics). There are many different approaches, which are possible analyzing countries. The theories this paper will be focusing on are: Transaction cost, Agency and business ethics. Those theories were chosen due to several reasons. Firstly, transaction cost theory would be particularly interesting to apply to German corporate governance, as German corporations have transactions with different firms in different countries, as for Ukraine corporations, it mainly deals with Russia and other post Soviet countries, such as: Belorussia, Lithuania, Latvia, Kazakhstan. Secondly, agency theory would show how different agents and principles manage the transactions. In Germanys perspective, they have many branches of their companies around the world, thus making it rather hard to rule. More over, the difference in chosen corporate governance in Ukraine and Germany makes it interesting to analyze how are firms agents treated and rewarded in both these countries Lastly, the business ethics part will mostly concern Ukraine, as the level of corruption in the country is rather high, thus making it rather difficult for international corporations to take part in Ukraines economic development. As for Germany, it will interesting to see how do the branches of corporations situated in different countries, where corruption level is higher/high, avoid the corrupt structures. 3.1. Transaction cost theory The transaction cost is a cost incurred in making an economic exchange/ or participating in a market (Wikipedia.org, accessed on 23/10/2010). There are many different ways to calculate transaction costs. Also, the transaction cost mostly wants firms to cooperate, as lower the transaction costs lead to higher profit, thus making long-term contracts applicable and wanted. As Hanna Kuittinen argues, The inter- ¬Ãƒâ€šÃ‚ rm cooperation is more ef ¬Ãƒâ€šÃ‚ cient than the use of open markets or hierarchies when it minimizes the difference between the  ¬Ãƒâ€šÃ‚ rms transaction and management costs (i.e. the governance costs) at the same time as the value of its dynamic governance bene ¬Ãƒâ€šÃ‚ ts is maximized(Kuittinen, H., Jantunen, A., Kylahenko, K., Sandstrom, J. (13 September 2008) Cooperation governance mode: an extended transaction cost approach , pp. 307). However, making contracts with other party, needs trust, therefore, the reputation and uncertainty part starts to play an important role in reducing the transaction costs. Especially when long term relationships are being on stake, the reputation determines, whether the contract will be made or not. Moreover, even if the contract is made, uncertainty still might determine the relationships between the firm, as Hanna Kuittinen reasons: Uncertainty about future outcomes makes it dif ¬Ãƒâ€šÃ‚ cult to specify contracts ex ante, and behavioural uncertainty complicates the coordination during the transaction and evaluation of the performance ex post (Kuittinen, H., Jantunen, A., Kylahenko, K., Sandstrom, J. (13 September 2008) Cooperation governance mode: an extended transaction cost approach , pp. 310) 3.2. Agency theory Agency theory treats the difficulties that arise under conditions of incomplete and asymmetric information (Wikipedia.org, accessed on 23/10/2010). The most important part is the asymmetric and incomplete information in these days economy. Principle hiring a new agent for its company is never certain about the validity of his documents or experience. So how should principles determine the agency costs? If they would over evaluate the agent it might come out that the new employee does not sufficiently do his job as expected, however if the agent is under paid, he might start shirking and not try do his best. As Claudia Keser and Mark Willinger argue low incentives can affect participants in a contradictory way because of a possible con ¬Ãƒ ¢Ã¢â€š ¬Ã… ¡ict between intrinsic motivation and  ¬Ãƒâ€šÃ‚ nancial reward. Furthermore, it can be concluded from a vast survey of experiments that in some cases incentives improve performance, and in other cases they have no effect, o r even worse, hurt performance. (Keser, C., Willinger, M., (2 October 2006), Theories of behavior in principal-agent relationships with hidden action, pp. 1527). 3.3. Business Ethics Business ethics I can either be institutional or personal in scope. Institutional business ethics deals with broad, somewhat impersonal and abstract issues of the ethics of corporations as institutions. An example of this is corporate social responsibility(Pattan, E., J. (1984), The Business of Ethics and the Ethics of Business, pp. 1). As stated by John E. Pattan, personal or institutional, in this paper we will try to concentrate on the institutional point of view. We make ethical judgments every time we feel that our interests or opinions are promoted or attacked, our rights respected or violated, or ourselves catered to or threatened (Pattan, E., J. (1984), The Business of Ethics and the Ethics of Business, pp. 3) The main purpose of business if not a secret, every businessman wants to maximize his profits. But what moral costs does it involve? In some cases it might involve corruption, stealing sometimes even taking lives of others. Therefore, it will be studied, how do institut ions deal with each other and how are ethics implied to their decisions. Corporate governance Ukraine Introduction to the corporate governance in Ukraine. In the given paper we regarded the period of the economic development of Ukraine, starting from 1990 year. That time was remarkable for the fall of the Berlin Wall and the collapse of the central planning and command structures that had been in forces for 70 years. The country started implementation of reform programs aimed at market economy and globalization (Holmstrom, Smith, 2000). The leading enterprises and companies in Ukraine realized the importance of effective corporate governance. The reason is that it is the key factor determining the microeconomic efficiency of the enterprise sector and the quality of investment climate of the country. According to A. Kostyuk the German model is getting spread in the Ukraine from year to year (Board Practices; An International Review2003). The main evidences are small quantity of independent directors on the board, rare meetings of the board, not big number of committees on the board, the management board affects the supervisory board. There are nearly 35 thousand joint stock companies in Ukraine that is comparatively more than in many developed countries. Every year the state commission on securities and stock exchanges states about over 12 thousand of cases of breaking the principles of corporate governance in the country. In this case, it is significantly to regard the role of ownership structure in corporate governance. It is important to know why owners purchase shares and what corporate mechanisms they use. (A Kostyuk 2002). The cause of closing of board practices in Ukraine is the rise in concentration of ownership, which results in rise in corporate control, violation of minority shareholders rights, rise in number of disputes, conflicts of interests and decrease in transparency of the Ukrainian joint stock companies.      Ãƒâ€šÃ‚   Database provides annual financial statements in total for 14356 companies, in particular 2215  corporations in 1998, 8325 corporations in 2000 (out of 11850 registered), 7735 corporations in 2001  (out of 12039 registered) and 10213 corporations in 2002 (out of 12010 registered). For the empirical testing we use the dataset of 10313 observations on manufacturing open joint-  stock companies in total, in particular 4337 firms in 2000, 3385 in 2001 and 2591 in 2002. Thus the  sample covers around 37%, 28% and 21% of all open joint-stock companies in Ukraine in 2000, 2001  and 2002 respectively. The data is collected from publicly available information, in particular, from  annual financial statements of Ukrainian joint-stock companies (Source: PFTS First Trading Stock  System, Istock database:  www.istock.com.ua), (Corporate governance in Ukraine Vitaliy Zeka ). Nowadays corporations in Ukraine are divided into joint stock companies founded pursuant to Law of Ukraine On business association: Open Joint Stock company Close Joint Stock Company Ukrainian Joint Stock Company Ukrainian Private Joint Stock Company   The biggest companies in Ukraine are: Company Profit Sector Naftogaz Ukraine Ukraine 6.126.451(Energy/Commodities), Mariupolskij Metkombinat Ukraine 2.382.034(Industry), Azowstal Ukraine 2.059.265(Industry) , Linos Ukraine 1.923.149(Energy / Commodities), Mittal Steel Kriwoj Rog Ukraine 1.836.833 (Industry), Industrialnyj Sojuz Donbasa Ukraine 1.750.239(Industry), Ukrtatnafta Ukraine 1.460.350(Energy/ Commodities), Zaporozstal Ukraine 1.325.41(Industry). Directors can be nominated by the supervisory and the management boards independently. At least 25 % of Companies with where controlling block of shares (50 percent +1 share) belongs to one owner, have boards with 5-6 members. They represent interests of the controlling shareholder. (A Kostyuk 2002) In accordance with Article 118 of the Commercial Code of Ukraine, basic shareholder rights are established by law. The width of shareholders rights in Ukrainian firms may vary and depends on whether the joint stock company has free circulation of shares (an open type) or its shares are distributed among the founders and cannot be traded on stock exchange( a close type) . Companies controlled by the foreign institutional investors or Ukrainian investment companies have 7 or 9 members on the board (see the Commercial code of Ukraine). Supervisory board members at Ukrainian joint stock companies meet every quarter. Boards at the companies, where the ownership is strongly concentrated, hold meetings less frequently than at those companies, where the corporate ownership is spread. This is because of controllers have a chance to have both the supervisory and the management boards under their control. The procedure of nominating new directors in Ukraine is plain and chaotic. Shareholder may nominate committees by themselves. In order to do this, they must possess enough stake in enterprise. Each shareholder who possesses shares of the enterprise above 2 % of shareholders equity can offer his own candidate on the supervisory board. As we see from the chart, 44% of elected directors were nominated by shareholders. 31 % of elected directors were nominated by the management board. Only 25% of directors were nominated by the supervisory board. (A. Kostyuk 2002). In other words, shareholders wish to be controllers through electing directors and executive who would represent their interests.   Groups of the director nominators and their efficiency in nomination Supervisory boards at Ukrainian joint stock companies are not independent. Some of them possess  large  share of equity of the companies. The researches show that only about 8 % of board directors are independent.  There is evidence that 42 % of Ukrainian joint stock companies have no independent directors on supervisory board. About 31 %of researched companies in Ukraine have not more than 1 independent director .Companies have policy committee, which are under control of foreign institutional investors.  Directors can be nominated by the supervisory and the management boards indecently. The companies with dispersed ownership structure have a practice of nominating directors by governing corporate bodies. All candidates must be shareholders .    Definition of Corporate Governance. The term corporate governance can be interpreted as the system of legal and economic institutions that create formal and informal regulatory system, which determines behavior of enterprise. (Piotr Kozarevswski 2009). Mechanism of concentration of corporate ownership structure in Ukrain during 1998-2001 is illustrated by next figure. (Kostyuk, 2007) The researches of  Saul Estrin, Adam Rosevear, Alex  Krakovsky, Alex Pivovarsky  helped us   greatly   to understanding the  issue of corporate governance mechanisms in Ukraine. All these experts  considered that many corporate governance mechanisms, such as the board  of directors, financial reporting etc, hardly work in Ukraine.  According to Alexander N. Kostyuk (Corporate Governance in a  transition economy 2007) One of the well-known reasons is the absence  of an Act of Joint Stock Companies. The draft of this Act had been  presented in 2001. However, the Act has not been approved by the  Ukrainian parliament, where a strong political lobby protects the  rights of large owners, named oligarchs. Therefore, joint stock companies in Ukraine  have to work with reference to The Act of Enterprises, which does not  explain the nature of many corporate governance mechanisms, s uch as board  committees,  executive directors,  executive  monitoring, etc. As the result, corporate governance in Ukraine allows violation of minority shareholders rights, weak transparency and inadequate  corporate social responsibility. Under such circumstances, one of the  ways out is through developing a set of internal statements to make  all these corporate governance mechanisms work. Evidences of corporate governance in Ukraine. There is evidence on corporate governance, which we observed while studied the statistical data on corporate governance in the country. Our survey reveals that performance at the enterprise level has also not been improving, average output, employment, and productivity in Ukrainian firms have fallen every year since 1990 and profitability has been uniformly low, if not negative. Moreover restructuring has been very modest, although rather more differentiated across enterprises. For example there has been little increased trade with the West on average only 2%of enterprise sales in 1996 went to OECD countries, up from 0.5 % in 1999. Investment has also been low, so capital stock is largely obsolete. (Saul Estrin Adam Rosevesr, 1999) This is another example we may apply for. In the average firm in Ukraine , the number of managers holding shares is around 15 , while the number of employees is 599 and former employees is 302. Holdings by Ukrainian citizens and companies are also highly dispersed at 1065 and 616 shareholders on average respectively. However, the typical number of shareholders, which are banks, foreign individuals and foreign firms, is one and investment fund is two. The basic conditions for fundamental structure change in company corporate governance in Ukraine are still weak and need for radical policy changes and capital market development to make company corporative governance more effective (Saul Estrin Adam Rosevesr, 1999). After we studied the supervisory board practices in Ukraine, we may conclude the following: they are small in size, lack of legal employee participation in the corporate governance, rare meeting of board, small number of committees on board, management board influences, supervisory board, small number of independent directors. Analysis of corporate governance in Ukraine from the approach of agency theory. The Principal- Agent relations exist when one person called the agent acts on behalf of another, called principal. The welfare of the principal is affected by the choice of the agent.  In companies it is the shareholder who acts as the principal and company directors act as the agent.    This interaction works well when the agent is a professional at making the necessary decisions, but contrary doesnt work well when the interests of the principal and agent differ.   There is possibility of opportunistic behavior on the part of the agent that works against the welfare of the principal (Baza Oba, 2004 ). Most of agents actions in the companies are unknown to the principal or expensive to obtain.  Ãƒâ€šÃ‚  As applied to corporate governance in companies in Ukraine the second practice is common. The absence of accounting and audit norms in Ukraine as we mentioned above, leads  to corruption and bureaucracy. All these prevent the Ukrainian companies from bringing simultaneous capital, access to Western , technology, markets and managerial expertise ( Estrin Rosevear, 2003 ). Analysis of corporate governance in Ukraine from the approach of transaction costs theory. In order to be able to transact at all and to transact safely, actors have to incur costs to find out how and where transaction opportunities occur, and about the possibilities the possible risks and uncertainties involved. These expenses are called transaction costs. Market transactions consist of several aspects: 1. Search and information costs (who offers the product? Is the seller the owner? What are the conditions?) 2. Costs to draft, to negotiate and to conclude the contract. 3. Monitoring costs and enforcement costs. These are the costs that are incurred to make sure that the other party commits to an agreement, whether this is of a private nature or a public nature (John Groenewegen, 2010). According to Vladimir Andreff ( 2006), along with contract corporations (enterprises, established on the basis of the contract) there are a large number of corporations formed to address public authorities public corporations typically, in business practices of Ukraine. These corporations are successors of the reorganized ministries, state committees, departments and state enterprises to unite industry, or other principles. (Inna Pidluska, 1998) Analysis of corporate governance in Ukraine from the approach of business ethics theory. Its of common knowledge  that no universal model of  corporate governance exists. However,  there are generally accepted standards of good corporate governance. They may be applied in the frames of legal, economic and political aspects. International  principles of corporate governance appeared as a result of increased public interest in corporate governance, which was generated by the globalization of financial markets and the capitalization of capital flows.   Ukraine is notoriously famous for engaging  in  corruption openly and freely. Ukraines President Leonid Kuchma has identified the main obstacle to business development as bureaucratic abuse of power, bribery and extortion. He also admitted that the government has failed to create conditions for conducting business honestly. (Inna Pidluska, 1998) After the Orange Revolution the government of Ukraine has seen it  fit to sell business off to rich elite. It leads to the rise of the business oligarchs who have taken over the exercising state power into their own hands. So called  shadow economy was flourishing (Egger and Winner (2005). In modern Ukraine giving a bribe is a regular everyday routine. To give a bribe to an inspector who checks the required norms in the company, or win a tender using special privileges, became a norm in Ukraine. Average Ukrainian manager spends two days per week on inspection issues.  (Inna Pidluska, 1998) The facts of double accounting and money laundering is a widely spread practice in a shadow economy of the country. The size of Ukraines informal sector, or shadow economy, reflects the high degree of corruption. It is currently estimated that seven out of ten enterprises work in the shadow economy. These companies have no protection from corruption and are open targets for bribery and other forms of graft. (Inna Pidluska, 1998) Nowadays, Ukraine  is making a concerted effort to improve corporate governance at the national level. This goal can be achieved through the implementation of national Code of corporate governance. Problems of corporate governance in Ukraine must be addressed through introduction of standards of ethics and a code of practice for corporate governance. Business ethics is mainly aimed at promoting good reputation of the company at the market. The  most important principles are  responsibility and  freedom. Employees and partners are individuals. They should be  honest, reliable and trustworthy. All the employees of the company with good will aim at high results, which improve quality of business itself and stuffs life  (World Bank Group, 2009). Nowadays corruption and bureaucracy widespread among the business community and judiciary itself is subject to political interference and corruption (Adam Mycyk Elizabeth Cook, 2007 ). Conclusion to the chapter. An absence of progress in corporate governance in Ukraine can be explained by insufficiently deep character and consistency of institutional reforms realization.  The functioning of the new global economy is based on an effective management mechanism, implementation of the international accounting and audit standards and professional culture formation in corporate governance. In general, the corporate governance practices, which were adopted by Ukrainian companies, fail to reflect the high levels set by  more developed European market economies and the United States. 5. Corporate governance in Germany 5.1 Introduction to the corporate governance system in Germany. History of corporate governance in Germany: In the 19th century, Germanys typical form of business organisation was the Kommanditgesellschaft (limited commercial partnership). A Kommanditgesellschaft always had at least one member with unlimited liability whereas the other investors liability was limited to their contribution. In 1861, the General Commercial Code was enacted which devoted a section to joint stock companies and allowed incorporations with limited liability. Companies could choose between a single board of directors and a two tiered board system, involving shareholders appointing a supervisory board, which in turn elected the management board. This changed in 1884 when a reform was introduced which mandated that companies have a two-tier board that allowed free registration without a system of state concession. Thus a supervisory board was needed to take over the states monitoring role. For members of the supervisory board it was not possible to be a member of the management board but it was possible for a share holder to directly elect member for the management board. In the early 20th century, formal acts of corporate law led to the abandonment of mercantilism and the rise of classical liberalism. Corporations increasingly became public and private entities free from government control. Under the Nazi government of Adolf Hitler then, companies became less democratic in a reform of 1937. From then on, shareholders could not elect managers directly, and managers could only be removed for an important reason, directors were elected for terms of five years and were under the duty to serve the Gemeinwohl or general good which was manifested by the state officials to be of higher priority than maximizing the companys revenues. After the war, new laws and changes all over the world led to more participation for workers within the corporations. Corporate Governance from 1980-2010 in general In the 1980s, many countries privatized large state-owned corporations. Deregulation reducing the regulation of corporate activity has often been accompanied by privatization and is part of the laissez-faire policy. Another major post-war shift caused the development of conglomerates, meaning that large corporations purchased smaller corporations to expand their industrial base. Especially more concentrated and owner-controlled firms had high returns during the 1970s and early 1980s but this turned in the late 1980s and1990s. Increasing international competition could be the cause. In the mid-1990s, Germany adopted a series of legal and regulatory reforms related to corporate governance. In 2002, the German Corporate Governance Code was created. The aim of the German Corporate Governance Code is to make Germanys corporate governance rules transparent for both national and international investors, thus strengthening confidence in the management of German corporations. The Code addresses all major criticisms especially from the international community levelled against German corporate governance, namely * inadequate focus on shareholder interests; * the two-tier system of executive board and supervisory board; * inadequate transparency of German corporate governance; * inadequate independence of German supervisory boards; * limited independence of financial statement auditors. Each of these five points is addressed in the provisions and stipulations of the Code, also taking into consideration the legal framework. Of course the Code cannot cover every detail of every single issue; instead it provides a framework which the individual companies will have to fill in. 5.2 Analysis of corporate governance in Germany from the approach of agency theory Corporate governance is about the way suppliers who finance corporations get a return from the managers on their investment. How can be ensured that managers do a good job and do not free-ride? How do suppliers of finance control the managers? These are principal-agent problems which have the essence that ownership and control or separation of management and finance are separated. Suppliers of finance give money to firms; the managers run the firm by using this supply of money and return some of the profit to the investors. Although this mechanism works out most of the time, the corporate governance problem is not yet solved. In Germany, a top manager even with poor performance is usually only removed after extreme circumstances as the boards are quite passive. There are large differences in legal protection of investors around the world. In Germany, at least some suppliers of finance have their rights protected and have them enforced by law through the courts, in contrast to many other countries. But still in Germany, managers are in most of the cases not liable. In Germany, over a quarter of all votes in major companies are controlled by large commercial banks. The banks also have smaller but still significant influence as direct shareholders or creditors. As studies estimate, do about 80% of the large German companies have a non-bank shareholder who owns a share of over 25%. Family control through majority ownership or pyramids is the norm in smaller German companies. A pyramid means that the owner controls 51% of the company which controls 51% of its subsidiaries. The function of pyramids is to enable the ultimate owners to control the assets with the least amount of capital. In Germany, large shareholders are associated with a higher turnover of directors. The effectiveness of large creditors and large shareholders depends on the legal rights they have. In Germany, banks have much power because they vote significant blocks of shares, sit on boards of directors, play a dominant role in lending and work in a legal environment favorable to creditors. In Germany, banking governance is very effective. German banks are relative to their lending power and control over equity votes not as active in corporate governance as one could expect. Large investors such as banks often fail to terminate unprofitable projects they have invested in when continuation is preferred to liquidation. A large investor often maximizes private benefits of control rather than wealth because he is rich enough. He will not internalize the costs of these control benefits to the other investors, large investors fail to force managers to maximize profits and pay them out. Germany has a successful corporate governance system relying on a combination of concentrated ownership and legal protection of investors. Compared to the United States, German creditors have stronger rights but shareholder rights are weaker. Germany has a system of governance by both permanent large shareholders, for whom the existing legal rules suffice to exercise their power, and by banks, but it does not have participation of small investors in the market. As Germany has a system of permanent large investors, hostile takeovers are rare. The advantage is that firms with long-term investors go through crises with less economic distress and better access to financing. Takeovers limit the planning for future for the managers and reduce the efficiency of investment. Permanent large shareholders and banks that dominate corporate governance in Germany are able to influence corporate management through informed investors who are better able to help firms. A large investor-oriented governance system discourages small investors from participating in financial markets. Germany has a successful corporate governance system that combines significant legal protection of at least investors with an important role for large investors. This combination is very different from the governance systems in most other countries which provide limited legal protection of investors and are stuck with family- and insider-dominated firms receiving little external financing. 5.3 Analysis of corporate governance in Germany from the approach of transaction costs theory The degree to which a firm can switch or differentiate its governance mechanisms depends on the legal jurisdiction in which it operates. German law accords greater bargaining power to labour unions than other countries do. This tends to create a stronger degree of governance inseparability. Governance inseparability means that a firms choice of governance mode for a transaction is constrained by the governance choices it made for prior transactions. Governance inseparability can also be created by contractual commitments. Most German firms are efficiently engaged in long-term exchange relationships which require long-term contractual commitments. These contractual commitments cause governance inseparability because they are costly and sometimes even impossible to reverse. The flexibility of a firm is restricted for the future through contractual commitments. Changes in bargaining power of other parties -e.g. employees, suppliers or customers to a firms contractual commitments can also lead to governance inseparability. Changes in bargaining power can for example emerge from changes in law and regulations. Parties that gained bargaining power unforeseen, try to use this circumstance to improve their own positions but forcing the firm to adopt locally suboptimal governance mechanisms in the future. The German government does not change its regulations constantly giving security to firms and private actors, but there are still other factors that could affect bargaining power and thus make changes in bargaining power to a constant risk in Germany. As German firms engage in long-term transactions, no firm can entirely avoid making contractual commitments and are thus always aware of the risk of governance inseparability. Governance inseparability constrains most firms over time because of their existing arrangements which limit their scope and flexibility. 5.4 Analysis of corporate governance in Germany from the approach of business ethics theory. Germans in general are pessimistic about the introduction of an ethical code. Businessmen in Germany think that ethical codes are not effective. In their view, ethical codes do not provide aid for executives in refusing unethical requests and do not give a clear definition of acceptable limits of conduct. But over the years, there is a growing acceptance of business ethics among German executives. Managers like former Nestl chairman Helmut Maucher, who are fed up with such moral poppycock have given way to an increasing number of corporate members of the German branch of the European Business Ethics Network, including well-known German companies, such as Daimler Benz, Bayerische Hypo Bank, Siemens, together with German subsidiaries of transnationals like Procter Gamble and IBM. 5.5 Conclusion to the chapter. The German corporate governance system is one of the best in the world. Of course it has some disadvantages and it still can be improved but it already works more efficient than most other corporate governance system and is one of the most advanced ones. Case study. Corporate governance in Ukraine and Germany differs in many ways. Ukrainian corporate governance system is younger and less developed, it has many weaknesses yet, comparing to the OECD standards of corporate governance and German Code of Corporate Governance (GCCG). This gap between the corporate governance systems in the two countries becomes especially obvious when globalization enters the picture. Due to the internationalization of the markets, foreign (German in our case) corporations with their own systems of corporate governance involve in the economy (Ukrainian in our case) with completely new to them conditions. Such changes have a double effect on both foreign corporations and domestic market. To show this, we will focus on how different are German corporations headquarters from their branches in Ukraine. 1). Metro AG was formed in Germany in 1996 through a merger of retail companies Asko Deutsche Kaufhaus AG, Kaufhof Holding AG and Deutsche SB-Kauf AG. The same year the company entered the list of 20 largest publicly listed companies in Germany and since then it started expanding to foreign markets as well. (Official website of METRO Group, https://www.metrogroup.de) METRO AG has established its branch in Ukraine in 2002. One of the main changes the company implemented was decentralization of its structure in order to improve performance of each separated sales division, this way METRO Cash Carry was formed in Ukraine. Further on METRO Cash Carry launched a new strategic performance improvement program MCC 2012 Committed to Excellence in Ukraine. The program is built upon two cornerstones: the re-positioning of METRO Cash Carrys business focus and the optimization of the companys structure with the introduction of a regional organization. METRO CashCarry Ukraine established an In ter-corporation university to provide practical managerial education to potential employees. (Official website of METRO CashCarry Ukraine, https://www.metro.ua) The company had to adjust to a number of particularities with regard to Ukrainian economy, political state and geographical specialties; weather conditions, different consumer preferences and available labour market supply were taken into consideration, and few alterations in the companys strategy, structure and logistics were made. A substantial problem was the process of negotiation in the beginning of business in Ukraine, the reason for that was lack of unity between the state national level authorities and city level authorities and inconsistency of their activity. Another substantial problem was caused by the difference in business ethics, written contracts are of the highest value in Ukraine, whereas METRO relies on the agreements with suppliers that regularly has contract proof, and therefore a number of trials on that account took place in Ukraine. As a matter of fact, METRO CashCarry was performing successfully in Ukrainian market, since they cooperate with mostly domestic suppliers, with national authorities and launch special projects for Ukrainian market, they employ national specialists as company managers, the company also focuses on the exchange of experience between the international branches and attempts to adjust the most to the country they operate in. 2). Henkel corporation has its headquarters in Dusseldorf, Germany. Henkel has business lines: Laundry Home Care, Cosmetics/Toiletries and Adhesive Technologies. The company management is committed to such principles: value creation as the foundation of our managerial approach; sustainability as a criterion for responsible management; transparency underpinned by an active and open information policy. Henkel corporation was established in Ukraine in 1998. The company is centrally managed, a range of products is not presented in Ukraine due to a lower level of demand for these products in Ukraine. The company succeed in Ukrainian market by employing Ukrainian specialists as top managers, although they would dedicate German specialists marketing and financial reporting functions, as the corporation required accounting to be done by its standards. Strong system of detailed planning for 5-years periods and experience of Ukrainian specialists in the domestic economy helped the company to get itself a strong position on the market. (Official website of Henkel corporation, https://www.henkel.ua/SID-AE091F88-63C2EB69/about-henkel-85.htm). Conclusion. The most essential factors in formation of a national model of corporate governance in Ukraine are: The structure of ownership of shares in corporations; Specificity of financial system as a mechanism of transformation of savings into investments; Ratio of sources of corporate investments; Macroeconomic and economic policy in Ukraine; Political system; History of development and modern features of legal system and culture; Traditional Ukrainian ideology; Business relations practice; Traditions and level of government intervention in economy and its role in regulating of legal system. References Allen, F., Gale, D. (2002). A comparative theory of corporate governance. Social Science Research Network, Http://papers.Ssrn.com/sol3/papers.Cfm, Arthur, E. E. (1987). The ethics of corporate governance. Journal of Business Ethics, 6(1), 59-70. Betzer, A., Theissen, E. (2009). Insider trading and corporate governance: The case of germany. European Financial Management, 15(2), 402-429. Drobetz, W., Schillhofer, A., Zimmermann, H. (2004). Corporate governance and expected stock returns: Evidence from germany. European Financial Management, 10(2), 267-293. Estrin, S., Rosevear, A. (2003). Ownership changes and corporate governance in ukraine 1995-1999. Problems and Perspectives of Management, 1, 29-38. Goergen, M., Manjon, M. C., Renneboog, L. (2008). Recent developments in german corporate governance. International Review of Law and Economics, 28(3), 175-193. Gugler, K., Mueller, D. C., Yurtoglu, B. B. (2004). Corporate governance and globalization. Oxford Review of Economic Policy, 20(1), 129. Hart, O. (1995). Corporate governance: Some theory and implications. The Economic Journal, 105(430), 678-689. Haxhi, I., Van Ees, H. (2009). Explaining diversity in the worldwide diffusion of codes of good governance. Journal of International Business Studies, 41(4), 710-726. Jackson, G., Moerke, A. (2005). Continuity and change in corporate governance: Comparing germany and japan. Corporate Governance: An International Review, 13(3), 351-361. Kerr, R., Robinson, S. (2009). The hysteresis effect as creative adaptation of the habitus: Dissent and transition to the Corporatein post-soviet ukraine. Organization, 16(6), 829. Lehmann, E., Weigand, J. (2000). Does the governed corporation perform better? governance structures and corporate performance in germany. European Finance Review, 4(2), 157. Muravyev, A., Talavera, O., Bilyk, O., Grechaniuk, B. (2010). Is corporate governance effective in ukraine? Eastern European Economics, 48(2), 5-24. Rogach, A., Balyuk, T. (2009). Transfer pricing in transition economies: Evidence from ukraine. Transition Studies Review, 16(1), 20-33. Schubert, S., Miller, T. C. (2008). At siemens, bribery was just a line item. New York Times, Sunday Business, , 1. Sidhu, K. (2009). Anti-corruption compliance standards in the aftermath of the siemens scandal. German Law Journal, 10(8), 1343-1354. Wjcik, D. Change in the german model of corporate governance: Evidence from blockholdings 1997-2001. Official website of Henkel corporation, https://www.henkel.ua/SID-AE091F88-63C2EB69/about-henkel-85.htm Official website of METRO CashCarry Ukraine, https://www.metro.ua Official website of METRO Group, https://www.metrogroup.de

The Theory And Practice Of Risk Management Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1141 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Since the 1970s, world business transactions have experienced and contributed to diverse sources of financial uncertainty or risk (see, Dowd, 2005; Holton, 2003; Jorion, 2006; Tardivo, 2002a). Financial risk or risk created through financial transactions can be associated with value reduction. This reduction is due to market factors disequilibrium such as equity prices devaluation, interest or exchange rate fluctuations. Lately, in the competitive business environment, it has been discovered that firms have to face several financial risks namely market, credit, liquidity, operational and legal risks. The uncertainty scenario undoubtedly has had an impact on the volatility level of the financial market, thus influencing the return of an investment. Reflected in various dimensions such as the stock market, exchange rate, interest rate and commodity market, a volatile environment exposes firms to greater financial risk levels. Volatility that creates new dimension of business and systematic risk then forces firms to amend congruently their operational structure to accommodate changes in the environment. These conditions motivate firms to find new and better ways to manage risk, specifically in the case reported by Dowd (1999a) where investors were exposed to multiple problems of market risk. Although risk cannot be totally eliminated, Fong and Vasicek (1997) stress that its effect, particularly on investment losses, can be minimized thoroughly when one understands and manages it according to an effective risk measurement methodology. Ironically, the tremendous evolution in risk management practices coupled with innovation of financial engineering instruments have several distinctive effects, depending on the nature of business (Basle Committee, 1994; Dowd, 2005; Fong Vasicek, 1997; Gastineau, 1993; Holton, 2003; Ibrahim, 1994). As indicated by several observers such as Brooks and Persand (2002) and Rahl and Lee (2000), viewing different kinds of business and investment portfolios based on an effective risk measurement tool is crucial in order to maximize returns and minimize risk. Thus by combining fundamental and analytical techniques to create new risk evaluation approaches, the process will be in a much better form to prevent larger financial losses. JP Morgan (1996) highlighted that the absence of a common point of reference for market risks makes it difficult to compare different approaches towards the measurement of market risks. The growing need for better empirical investigations to evaluate alternative measures of risk, says Brachinger (2002), realistically depends on whether the objective is to forecast choices under uncertainty or to provide superior predictors of introspective judgements about the risks being perceived. Along with the urgent needs of financial institutions to devise suitable mechanisms of risk management, the quantification of risk may avoid inappropriate policy decisions which can affe ct stakeholders. As noted by Nath and Reddy (2003), should the underlying risk not be properly estimated, it will lead firms to a lower profit level and jeopardize the financial stability condition, since less optimum capital is allocated throughout the organization. The theory and practice of risk management have developed extensively since the pioneering study of Markowitz (1952) who presented portfolio risk as the dispersion of standard deviation around the average return or mean. This modern investment theory, as portrayed in the well-known Portfolio Selection: Efficient Diversification of Investment, assists market users to incorporate results of wealth distribution according to an assets class and the best investment position. Following Markowitz (1952), risk of a security was later portrayed by Sharpe (1963, 1964) as its covariance with respect to the general market index or Beta. From there, the measurement and evaluation have since evolved to handle a portfolios market r isk. Although the trade-off between risk and return is well recognized (higher returns can only be obtained at the expense of higher risk), JP Morgan (1996) points out that the risk measurement component of the analysis has not received broad attention. Within the same perspective, JP Morgan (1996) also reports that the exclusive attention on the role of return, however, has led to incomplete performance analysis. They conclude that the return measurement gives no indication of the cost in terms of risk. By the early 1990s, Value-at-Risk (henceforth VaR) had gained immense popularity and had become an integral risk management tool and a standard to monitor and control a firms risk exposures. By definition, VaR summarizes the worst expected loss that an institution could suffer over a target horizon under normal market conditions at a given confidence level (Butler, 1999; Dowd, 2005; Jorion, 1997, 2006). Cassidy and Gizycki (1997) conversely termed VaR as the earnings-at-risk o r a potential loss amount. The main reason underlying its popularity lies in its simplicity of providing a single statistical figure summary of possible potential losses within a given time horizon. Since the introduction of the simplest VaR models, a range of approaches to calculate VaR has expanded from two important perspectives; number and complexity. Without doubt it is likely that VaR will become even more widely adopted over time (considering the views of academia and practical interest), since it is thought that such an approach may signal inefficiency in capital charges. Although Dowd (1998) reports that VaR enables firms to get a better sense of the overall risk and serves as a determinant of capital adequacy, the VaR methodology is not without criticism, one of which is that VaR may underestimate risk over simplified assumptions of normally distributed returns and constant variance. This is the case when ample empirical evidence has shown that rates of return distribut ions of financial time series exhibit fat tails, skewed to the left or peaked around the mode (Bali Gokcan, 2003; Glasserman, Heidelberger, Shahabuddin, 2000b; Zangari, 1996) and that volatility is time-dependent or better known as volatility clustering (Mandelbrot, 1963). Triggered by these circumstances, several related non-normal issues and consequences have been identified. From a regional perspective, an earlier survey by Murphy and Quinn (1993) observed that risk management practices by most Asian companies are underutilized. Both authors reported many companies either do not have any authorized risk management department/unit/staff or they lacked of precautionary actions to face instability in the business environment. Such act will definitely increase a firms risk and should be an encouragement to market users to pay extra attention to financial risk management aspect. In particular, since the 1980s the Malaysian economy has experienced several phases of growth and rece ssion situations. Until June 1997, Malaysia grew prosperously with Gross National Product increasing at an average value of eight percent each year for eight consecutive years. But it was not long after mid 1997 that South East Asian countries were hit by currency crises which were led by misallocation of funds and overinvestment of capital (Dean, 1998, 2000). With extensive capital control, inclusive of pegging the Malaysian Ringgit to the US Dollar, Malaysia witnessed a better environment compared to its neighbouring countries, starting from the year 2000. As a result of a competitive market leading to higher risk exposure, professionals have turned their attention to search for a tool to measure VaR bounds with a specific distribution assumption without simultaneously over or underestimating it. Some of the current issues in VaR measures which motivate this research are explained in the following section. Don’t waste time! Our writers will create an original "The Theory And Practice Of Risk Management Finance Essay" essay for you Create order