Ryanair low cost airline

Ryanair low cost airline Introduction This case study highlights some aspects of Ryanair low cost airline operation. The company was the largest airline carrier by passengers and market capitalisation in the year 2009. The company based its operational model on the low cost strategy in order to increase its market shares and reduce costs. This model proved suitable during the economic crisis of 2008. The company also has a huge potential for growth as the EU low fare airline markets expand.Advertising We will write a custom case study sample on Ryanair low cost airline specifically for you for only $16.05 $11/page Learn More Ryanair has also introduced ancillary services to increase its revenues. However, some these strategies are not popular with customers. In addition, the company also suffers from negative publicity due to its treatment of customers and persons with disabilities. Still, Ryanair also has challenges related to legal issues, fierce competition, EU ban, regulatory me asures and costs, and fuel costs among others. The company needs a new strategy for its future operation. This should focus on reducing its risks and improving its market share. Current mission/objectives and strategy Low fare Ryanair operates on a low cost strategy. Customers and competitors know Ryanair for low prices. The company underwent restructuring in the 1990s and changed policies that eliminated free services. Ryanair has been operating as no frills passenger airline. The company has relatively low fare in relation to its competitors. However, Ryanair also has some of the most controversial charges in the airline industry. For instance, Ryanair has additional charges for passengers using wheelchairs, infant fees, baggage charges, check-in fees, and onboard toilet fees among others. Such fees related to wheelchairs, and how the company treats persons with disabilities have attracted controversies and negative publicity among stakeholders. In all, the low price strategy has positioned the airline as the cheapest in the European markets, and it constantly changes its strategy to match the European market (HOggins 618). The company also has some serious challenges from both inside and outside. These include poor customer services, legal challenges, fierce competition, regulation requirements, and poor relations with unionists among others. Low maintenance cost The low cost model has also resulted into low maintenance cost strategy. For instance, the company reduced its operating costs by 4 percent. The company maintains its costs as low as possible due to its fleet and staff. This approach also covers environmental area as the company strives to invest in environmental friendly fleets. These fleets are also fuel-efficient. The companys low maintenance cost also includes staff training. Ryanair also reduced flight frequencies in loss making routes in the UK and Ireland.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Ancillary services Ancillary services are also core parts of Ryanair strategy. This strategy aims at increasing the airline’s revenues. The company has in-flight beverages, food, online and onboard gambling, mobile phones, ‘fat tax’ for overweight customers, and sale of merchandise for extra revenues. In addition, Ryanair also has accommodation, car rental and travel insurance services. According to Ryanair financial statements of accounts, revenues from ancillary services have been growing steadily for the past three years, i.e., from  £3.6 million in 2007 to  £5.9 million in 2009. However, not all these ancillary services, such as gaming and entertainment console were successful as they met resistance from passengers. Expansion strategy Ryanair also has an aggressive expansion strategy. For instance, the company expects to operate 300 fleets by the year 2012. Meanwhile, Ryanair has inves ted in new and environmental friendly flights. The company reduced operation in loss making routes of the UK and Ireland, but replaced them with profitable routes in Germany, France, and Spain. The company took advantage of diminishing carriers and planned to open 146 new routes in 2010. At the same time, Ryanair also focused on increasing its market shares. This was also evident in the failed takeover attempt of Aer Lingus. Productive Employees Productive workforce strategy is also a strategy in Ryanair, and this starts from the CEO. The company nearly doubled its staff during the last three years of operation. Ryanair claimed that it paid its crew better than any other airline company. For instance, in 2009, the company Annual Report claimed that it paid an average of  £45,333 higher than other companies. In addition, pilots and other cabin crews negotiated new pay deals with the company. These negotiations aimed at maintaining a healthy workforce and complying with the EU regul ations. Web site advertisement Ryanair marketing strategy aims at positioning it as a low cost airline company. Ryanair has exploited Internet marketing opportunities and in turn eliminated travel agents. The Web site has been the primary tool that the company uses to advertise its low cost services. Consequently, Ryanair promotes its Web site on newspapers, radio, and television. This effort has ensured that 99 percent of the booking takes place via the Internet.Advertising We will write a custom case study sample on Ryanair low cost airline specifically for you for only $16.05 $11/page Learn More Ryanair is sensitive to costs. Consequently, it relies nearly on free and controversial publicity. These include topical advertising, press conference and publicity stunts. In addition, the company also relies on distributions of promotional and advertisement materials, cooperative advertisement with other travel organisations and tourist boards. Internal and ext ernal environment Economic factors Michael O’Leary commented that â€Å"an economic recession is good for Ryanair, as it can survive it better than airlines with higher pricing models† (HOggins). The globe recession of 2008 was the major economic factor that Ryanair faced. Economists like McConnell, Brue, and Barbiero claim that shifts in the economic patterns influence organisations operation (McConnell, Brue and Barbiero 34). The prevailing economic conditions influenced how passengers, sellers, and other stakeholders in European markets behaved. Airline companies diminished because their business models could not withstand recession challenges. However, as we have seen above, the recession created opportunities for low cost airlines like Ryanair. Ryanair was able to exploit the vacuum that other companies created. As a result, the company did not experience thorough effects of recession due to its business strategy of low cost. Instead, the company increased its ope ration to become among the best airlines in the region. From this observation, we can conclude that Ryanair business model was recession proof. However, tough economic conditions also had its effects on Ryanair. For instance, the company share prices dropped, revenue plummeted and it cancelled expansion decisions due to costs. The UK and Ireland routes became unproductive and forced the company to cut its operation in those routes. Ryanair was also able to exploit the favourable fuel prices in order to offer low fare fleets that no other company could achieve. In 2009 to 2010, the company managed to hedge 90 percent of its fuel costs and saved  £460 million. Political factors These are mainly regulations, taxes, and other related political factors. In this case, Ryanair must abide by EU regulations on airline operation. For a long time, Ryanair CEO has engaged in high-profile wars with the EU and British Airport Authority (BAA). For instance, the CEO accused the EU commission of b ias towards low fare airlines.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The company noted that the EU Commission prevented its agents from booking low cost airlines. This is a case of regional regulations affecting activities of Ryanair. At the same time, the Commission’s fixed charges also discriminate low cost airlines (Ryanair 2012). According Ryanair, this is discrimination against low fare airlines. At the same time, BAA has also imposed charges that affect the company’s revenues. For instance, the UK government planned to raise passenger charges from  £10 to  £11. Social factors The CEO can control the company’s image and its relationship with customers. This is because such factors affect consumers’ emotions, attitudes, opinions and interests about Ryanair services. Some of these social factors have generated negative publicity for the company. These may include relations with disabled and overweight passengers. At the same time, passengers who prefer service-oriented flights may not find high quality services in R yanair. Brassington and Pettitt note that social factors are priority concern to marketers (Brassington and Pettitt 24; Solomon 39). Technological factors Ryanair is technologically evolving company. The company conducts its 99 percent of bookings through its Web site. Ryanair noticed convenience that online services provided to its customers and the company. Therefore, the company advertises its Web site in different media. Technological developments have transformed the way airlines conduct their management processes (Kotler, Wong, Saunders and Armstrong, 2005). Legal factors The company has some of the most expensive lawsuits in the industry. Consequently, its operation costs have increased. The company has faced charges from regulators, competitors, passengers, and it is also in poor relations with trade unionists, politicians, and people with disabilities. Environmental factors Environmental factors also influence activities of Ryanair. The company embarked on using modern airc rafts and maximised usages in order to reduce emissions. At the same time, Ryanair also claimed that its decision to eliminate free food, beverages, and newspapers had reduced waste products from the company fleets. Ryanair SWOT Analysis Strength Low fare strategy Environmental friendly fleets Ancillary revenues generation Web site booking Few flights cancellations Weaknesses Poor customer services Overreliance on CEO Negligence on security issues Opportunities Growing EU markets Provisions of ancillary services Expansion of marketing strategies Investing in environmental friendly flights Using hedge to save on fuel costs Threats Expensive lawsuits Competition from other low fare flights and large flight companies, alternative modes like train EU ban on low fare flights Different states regulations and charges Unproductive routes like Ireland Customer resistance to some revenue generation strategies Negative publicities Map and determine the organizational stakeh olders’ expectations power and influence Shareholders High Power hareholders of Ryanair have significant power and control over the future of the company strategies (Roloff 233). Shareholders expect returns from their investments. However, since the year 1996, the company had never declared or paid dividends on shares. The company believes in retaining earnings for future expansions, acquisition of new fleets, and expansion of current services (Svendsen 85). However, shareholders of the company expect their dividends after 2012. We can also see how shareholders influenced Ryanair’s strategic decision to takeover Aer Lingus. Employees The company’s management team and employees have been responsible for its current position. Ryanair believes that it pays its employees relatively well above the average of other airline companies. For instance, the company report of 2009 claimed that the staff cost was  £45,333 above other European airlines. Employees can also n egotiate for favourable pay with the company, but their power is low. However, Ryanair also expects its employees to deliver positive results. Lenders Lenders have high interest in the company because of business advantages. However, their power to control the company’s decisions is low. Government /Regulators These groups influence all the company’s policy, charges, and decisions among others through their regulatory and tax measures. The company cannot consider decisions that go against governments’ wishes. Thus, their interest and power in the company remain high. Customers In a world of fierce competition, Walker and Marr believe that customers are key stakeholders for success (Walker and Marr 13). The company is favourable among low fare airlines in European markets. Customers expect fair treat and quality services for charges they pay. Though Ryanair is a low fare airline, the company has formulated some of the most controversial methods of charging custom ers extra fees. Some of these methods are not popular among its passengers. Ryanair charges persons with disabilities who use wheelchairs onboard. This move has generated debate on how the company handles its disabled customers. At the same time, the company also targets overweight passengers with its ‘fat tax’ charges. However, the ‘fat tax’ led to wastage of time and the management eliminated it. Some of these ancillary services for extra revenues have generated negative publicity for the company. In fact, critics of the airline believe that passengers use it because it is a low fare airline available in most routes. Competitors and Suppliers Competitors and suppliers are also important elements of Ryanair. We can look at fierce competitions among airline companies of Europe. These companies have based their battles on prices. Ryanair uses different media to compare its prices with its competitors. In turn, competitors have accused it of misleading passen gers. Competition among these organisations is responsible for the growth of the airline industry in Europe particularly the growth of Ryanair. The relationship between Aer Lingus is also crucial as it affected profits of Ryanair. Aer Lingus is a fierce competitor of Ryanair. However, Ryanair has 25.2 percent stake in the company. The deteriorating fortunes of Aer Lingus meant losses to Ryanair shareholders in the year 2009. As a result, Ryanair CEO admitted investment in the company was a mistake. In this case, the company could have sold its shares before accruing further losses (Lock 67). Another relationship of significance is the interaction between Ryanair and its suppliers. Ryanair attempted to expand its fleets in 2009, and the company invited Boeing and Airbus. The invitation of Airbus was a strategy that the company wanted to apply in order to get a massive discount from Boeing. Airbus declined because the process would be expensive and time-consuming. On the other hand, t alks with Boeing collapsed. These cases show how Ryanair management use different strategies in order to keep costs as low as possible. Formulation of new strategic direction for the organization This was the largest airline carrier by passengers and market capitalisation in the year 2009. In fact, the airline and its management have won several awards. In addition, its low cost strategy proved recession proof in 2008. However, the company must address some concerns for future growth by balancing its strategic direction with revenue generation, legal issues, market dynamics, and industry relations among others (Kaplan and Norton 56). Home Business Ryanair should emphasise weekend travel and last-minute travel and provide the best packages for such travellers. The company can rely on such strategies for improving its customer base. However, home business strategy for Ryanair can lead to poor services as customers may increase beyond the company’s capacity. This strategy may al so affect perceptions of customers about the quality of services Ryanair offers. As a result, some customers may use alternative means like rail transport. Holiday packages Ryanair should introduce free seat campaigns for a given period of time, especially during winter seasons. The company should use this approach as sales strategy particularly in unpopular routes so as to increase the number of customers. The company should offer few seats in popular routes. The company should also inform its customers about tax charges with free seat campaigns. Such holiday packages should save customers on costs and improve experiences of their holiday. This shall enable Ryanair popularise itself among travellers and attract many travellers. Promotional strategies can only improve the number of customers who need free seats or discounted services. Thus, Ryanair must restrict such offers to a specific number of customers for its fleets. Frequent traveller loyalty programme Ryanair should introduc e loyalty programmes for its frequent travellers. The company can reward its frequent customers through free flights or reduced charges. Every travel should earn redeemable credits. The best method to capture such data is through the use of smart card. The company must also give specific periods for expiry of such credits. Loyalty schemes should not target blackout dates. Thus, customers can redeem their free flights at any time. However, loyalty programmes can severely affect the profit of the company (Pocket Mentor 12). Referral discounts The industry is still competitive (Bache and Freeman 3). Thus, Ryanair should work with local travel and accommodation companies so as to promote its flight. In turn, customers who also book through the Internet can also get discounted rates in hotels rooms and car hire among others. However, the company must apply policies such as nonrefundable and advance payment in order to discourage cancellations after booking (Madison 233). Referral discoun ts also shall affect the company’s profit margins. Baggage and Saving Ryanair should encourage its customers who have baggage to check while booking in order to avoid extra charges while boarding. Customers can check the option and determine the number of baggage they can carry in different flights. This means that customers can purchase the baggage depending on their travel requirements. This option should also give customers opportunities to save flight costs instead of incurring extra charges when boarding. Web Booking and Check-in Ryanair should continue exploiting Web booking, and it should also introduce Web check-in before with or without luggage before a given deadline for check-in expires. This should also allow customers to choose their ideal seats depending on availability. This is a method of improving customer service for Ryanair that has poor customer service. Conclusion Ryanair has used low cost strategy to increase its market share and reduce costs of operatio n. This model protected the company from recession of 2008 and increased its competitive advantages. As a result, its customers have cost advantages. However, Ryanair also has some charges that customers oppose. Ryanair has huge potential for growth as EU market is growing, and it has not fully utilised the low cost model. The company must also address challenges that threat its operation, increase costs, and reduce profit margins. Bache, Alan and Mike Freeman. Is Our Vision Any Good? Journal of Business Strategy, March-April (1999): 1-3. Print. Brassington, Frances and Stephen Pettitt. Essentials of Marketing. Essex: Pearson Education Limited, 2005. Print. HOggins, Eleanor. Ryanair: the low fares airline future destination? Dublin: University College Dublin, 2010. Print. Kaplan, Robert and David Norton. The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston: Harvard Business Review Press, 2000. Print. Kotler, Philip, Ver onica Wong, Saunders John and Armstrong Gary. Principles of Marketing. 4th ed. Essex: Pearson Education Limited, 2005. Print. Lock, Dennis. Project Management. Hampshire: Gower Publishing Limited, 2007. Print. Madison, Dan. Process Mapping, Process Improvement, and Process Management. Chico, CA: Paton Professional , 2011. Print. McConnell, Campbell, Brue Stanley and Barbiero Thomas. Microeconomics: Canadian Edition. 9th ed. Toronto: McGraw-Hill/Ryerson, 2002. Print. Pocket Mentor. Improving Business Processes. Boston: Harvard Business Review Press, 2010. Print. Roloff, Julia. Learning from Multi-Stakeholder Networks: Issue-Focussed Stakeholder Management. Journal of Business Ethics 82.1 (2008): 233-250. Print. Ryanair. Ryanair condemns EU Commission bias against low fare airlines. 2012. Web. Solomon, Michael. Consumer Behavior. New Jersey: Prentice Hall Europe, 2006. Print. Svendsen, Ann. The Stakeholder Strategy: Profiting from Collaborative Business Relationships. San Francisco: B errett-Koehler Publishers, 1998. Print. Walker, Steven and Jeffrey Marr. Stakeholder Power: A Winning Plan For Building Stakeholder Commitment And Driving Corporate Growth. New York: Basic Books, 2001. Print.

Taking Another Look at Strunk and White

Taking Another Look at Strunk and White Taking Another Look at Strunk and White Taking Another Look at Strunk and White By Maeve Maddox April 16 was the 50th anniversary of the publication of The Elements of Style by Strunk and White, a slim grammar reference that is recommended to students and writers everywhere. I wrote a post on it not too long ago, saying that it deserves its long popularity as a concise guide to correct usage. This little book has sold more than 10 million copies since 1959. Its publisher, Longman, has commemorated the anniversary by producing a black leather-bound, gold-embossed edtion containing paens to the work written by prominent literary and journalistic figures from Dorothy Parker to Dan Rather . Dennis K. Baron, professor of English and linguistics at the University of Illinois at Urbana-Champaign, goes so far as to equate teeny Elements with Fowlers massive and erudite Modern Usage: This [Elements of Style], together withH.W. Fowlers Dictionary of Modern English Usage, are the two style books that are generally held up as the authorities Unlike many writers, I was not introduced to Elements as an undergraduate. It was not until many years later that I found itliterallyin the drawer of a desk assigned to me in a college English department. Since I already relied on Walshs Plain English Handbook to solve knotty usage problems, I didnt have much occasion to consult Strunk and White. However, all my colleagues had a copy and recommended it to their students. I never doubted that it was an impeccable reference. Until now. A caustic review of The Elements of Style in the April 17, 2009 issue of The Chronicle of Higher Education, 50 Years of Stupid Grammar Advice, has sent me back to Strunk and White for a closer look. According to Professor Geoffrey K. Pullum, head of linguistics and English language at the University of Edinburgh and co-author of The Cambridge Grammar of the English Language (Cambridge University Press, 2002), The Elements of Style does not deserve the enormous esteem in which it is held by American college graduates. Its advice ranges from limp platitudes to inconsistent nonsense. Its enormous influence has not improved American students grasp of English grammar; it has significantly degraded it. Harsh words, but at least two of the items in Pullums criticism struck a chord with me: the entry on passive verbs, and the admonition against using adverbs. Ive often pondered the fact that many writers, not just students, but practicing adult writers, and even (gasp) English teachers, often identify verbs as passive that arent. The explanation may well lie in the fact that White gives four examples of the passive, three of which are incorrect. One of Whites incorrect examples of the passive, There were a great number of dead leaves lying on the ground brought 187,000 Google hits. Heres what I found by following one of the links. Its from a teachers guidelines for writing lab reports: Use the active voice (tense) [sic], not passive voice, when writing, it is much more direct and vigorous. For example, â€Å"Dead leaves covered the ground.† (Active voice) versus â€Å"There were a great number of dead leaves lying on the ground.† (Passive voice). I highly recommend the ‘little book’ entitled The elements of style by William Strunk, Jr. and E.B. White, it costs about $7. Whites admonition against adverbs may explain the almost religious aversion to using adverbs felt by so many writers and teachers of writers. Heres a headline I saw over a writing post: Fight back against beastly adverbs Personally, I like adverbsnot Tom Swifties, of coursebut adverbs have their place. Pullums iconoclastic condemnation of The Elements of Style will perhaps anger the guides numerous worshippers, but it raises some valid criticisms. Im going back to Strunk and White with a critical eye this time, and may do a page by page analysis of my own. 50 Years of Stupid Grammar Advice Longmans Special Edition of The Elements of Style In Priaise of The Elements of Style on its 50th Anniversary Maeve on Passive Voice Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Book Reviews category, check our popular posts, or choose a related post below:50 Rhetorical Devices for Rational WritingAnyone vs. EveryoneHow to Write a Proposal

Porter's Management Theory Essay Example | Topics and Well Written Essays - 2000 words

Porter's Management Theory - Essay Example The book, which has been published in nineteen languages and re-printed approaching sixty times, changed the way business leaders' minds worked. Further, it remains a guide of choice for strategic managers on a global scale. Apart from being rich in lessons about why and how industries, regions, and nations succeed or fail, this book is of great value as the first serious attempt to develop a really original grand theory of national economic development processes since the early years of Postwar development economics, and one of the most original ways of thinking about development policy in years. This brings us to a discussion on the technicalities of the model proposed by Porter. Porter's Five Forces model provides suggested points under each main heading. When taken into consideration individually, each of these gives rise to the development of a broad and sophisticated analysis of competitive position. This may further be used during the creation of a strategy, plans, or even where making investment decisions about a business or organization is concerned. These five competitive forces determine industry profitability and attractiveness apart from being responsible for shaping the prices that firms can charge, the costs they have to bear, and the required investments to engage in industry level competition. We are concerned with the fact that Porter's essentially ahistorical approach cannot provide a full account of either a nation's competitive advantage and corporate strategies or the growth and development of industrial clusters. For this, let us first understand competitive advantage. Competitive advantage is the response of afirm to the pressing need to organize and perform discrete activities. While these needs may not be perpetually spelt out, it is the responsibility of the planners and executers of policies to foresee such situations when catering for growth and development of the firm n various levels. So does this mean that we are dealing with changes and issues only on an individual level and not a national level The basic explanation for this comes from the fact that any change on an individual level is effected by changes on a national level. Yet, Porter's theory cannot accommodate strategies and competitiveness at such levels due to various constraints. The first of these emerges from the fact that people run businesses and economies - and everyone has his or her own unique style. These cannot be covered at length when talking which factors and resources will be utilized in which combination. Thus Porter's theory does not provide an accurate account of the diversity and dynamism in the corporate and commercial environment that businesses and firms thrive in. Secondly, there are various activities to take into consideration. The activities performed when competing in a particular industry can be grouped into categories, as these activities can be divided broadly into primary activities and support activities. It has been noted that primary activities are those involved in the ongoing production, marketing, delivery, and servicing of the product.

Pharmacy Law & Ethics Coursework Essay Example | Topics and Well Written Essays - 2000 words

Pharmacy Law & Ethics Coursework - Essay Example The consequence of this to the pharmacy profession in Great Britain is significant considering that its governing body is a dual function entity – both performing regulatory role and professional leadership function. The present set up of the Royal Pharmaceutical Society of Great Britain (RPSGB hereafter) therefore, runs counter to the Government’s present thrust which is to make health professional regulatory bodies totally independent to be credible to the public. In line with this, the RSPGB is set to demerge its two functions through the creation of a separate regulatory body to be called General Pharmaceutical Council (GPhC hereafter) and a separate new professional body, both to take place in 2010 (About the Society 2009). The need to establish a separate regulatory body for the pharmacy profession demerged from the present RPSGB structure was underpinned by Lord Carter of Coles, who headed the Working Party on Professional Regulation and Leadership in Pharmacy in early 2007. In the foreword of the Party’s Report at the conclusion of its review, he said that the justification of a new and separate regulatory body for the profession was keeping in step with the shift in the functional direction of pharmacists from its original â€Å"‘product-focused service’ to a truly clinical profession, directly caring for patients and the public† (MPI 2007 p 4). Subsequently, the Health and Care Act 2008 paved the way for the creation of the GPhC (s 5,  § (2) (1A), Schedule 8). At present, consultations are being undertaken for draft Pharmacy Order 2009, a secondary legislation which will lay down the details of the establishment of the GPhC (DH 2009). In addition, an independent group, called the Pharmacy Regulation and Leadership Oversight Group (PRLOG) chaired by Ken Jarrold CBE, was created to render advice to Ministers in the setting up of the

An Inspector Calls by J.B. Priestly - The purpose of the inspectors Visit :: English Literature

Help the audience understand The purpose of the inspectors Visit. Show how a production of â€Å"An Inspector Calls† could Help the audience understand The purpose of the inspectors Visit. The play â€Å"An Inspector Calls† written by J.B Priestley is set in 1912. There are a few things that support this, that are heard in the first part of the play. â€Å"The titanic-she sails next week† â€Å"All these capital versus Labour† â€Å"These silly little war scores† All of these events happened just before 1912 and so we know that the play is set just before 1912. The Birlings are an upper class family with a high social position which can be seen by the fact that Mrs Birling doesn’t have to work and they have servants and maids to do house work for them. There high social position can also be seen because Mr Birling being a magistrate and is still on the bench. At this time the Birlings are in a great, and very happy mood. They are all looking forward to the wedding of their daughter and Gerald. They are all drinking port and are celebrating a special occasion with a large meal that has been set out for them by the maids. This is also another indication that the Birlings are a well off family. The inspector’s arrival changes the atmosphere a lot and turns the room into a hostile place. Mr Birling is very surprised to see an inspector and thinks that it is something to do with Mr Birling being a magistrate. The inspector interrupts Mr Birling taking to Gerald and Eric. Mr Birling is telling the two men how to look after themselves, and that’s the most important thing. Mr Birling gets this point across when he says â€Å"A man has to make his own way-has to look after himself† â€Å"That a man has to mind his own business and look after himself and his own† From these quotes that Mr Birlings says you can see that he only thinks about him and preaches that. The inspector arrives at this time and this is very significant, because this is what the inspector has come to prove wrong. The lighting is described as â€Å"pink and intimate† until the inspector arrives and then I think that the lighting should be â€Å"brighter and harder†. The lighting is as pink and intimate before the inspector comes as it gives the impression of the family relaxing and having fun. When the inspector comes it shows that the family are more on edge. The brighter light is there to show all corners and all secrets of the family. The inspector should stand at the head of the table to symbolise his

Accounting Information Systems Research Paper Essay

Abstract The Sarbanes-Oxley Act of 2002 (SOX) was enacted into law in 2002 in the wake of corporation financial reporting scandals involving large publicly held companies. SOX instituted new strict financial regulations with the intent of improving accounting practices and protecting investors from corporate misconduct. SOX requires corporate executives to vouch for the accuracy of financial statements, and to institute and monitor effective internal controls over financial reporting. The cost of implementing an effective internal control structure are onerous, and SOX inflicts opportunity costs upon an enterprise as executives have become more risk adverse due to fears of incrimination. The Public Company Accounting Oversight Board (PCAOB) was created by SOX to oversee the accounting process and dictate independence requirements for auditors and auditing committees. The PCAOB proposed regulations must be approved by the SEC before they are enacted. Since the passage of SOX, the IT department has become critical in designing and implementing the internal controls in company accounting information systems. The Information Technology Governance Institute (ITGI) created a framework called Control Objectives for Information and Related Technology (COBIT) to provide guidance for companies to implement and monitor IT governance. Accounting Information Systems Research Paper The Sarbanes-Oxley Act of 2002 changed the landscape of corporate financial reporting and auditing. In the wake of corporate reporting scandals, Congress decided the accounting profession was unable to self-regulate, and The Sarbanes-Oxley Act of 2002 was signed into law. The law addresses corporate greed and dishonesty by requiring companies to implement extensive internal control procedures to deter fraud and hold corporate executives accountable. The Public Company Accounting Oversight Board is the enforcement arm of the legislation, and is under the authority of the SEC to oversee accounting and auditing processes. Public companies are required  integrate internal controls in their accounting information systems to ensure data validity and security. The Sarbanes-Oxley Act of 2002 In the aftermath of several corporate financial reporting scandals involving large publicly held companies such as Enron, WorldCom, and Tyco, the United States Congress passed the Sarbanes-Oxley Act of 2002 and enacted it into law on July 30, 2002. The Sarbanes-Oxley Act (SOX) takes its name from its two primary congressional sponsors, Representative Michael Oxley (R-OH) and Senator Paul Sarbanes (D-MD) (Hoffman, 2005, p. 3). SOX instituted new strict financial regulations with the intent of improving accounting practices and protecting investors from corporate misconduct. The law is intended to protect stakeholders from corporate greed, fraud, and misleading financial reporting. SOX legislation tackles several important concerns including corporate responsibility, internal controls, auditor independence, financial disclosures, criminal and fraud liability, conflicts of interest, and corporate tax returns (Moffett and Grant, 2011, p. 3). Under the law, independent auditors and corporate officers of publicly traded companies must affirm both the accuracy of the financial statements and their supporting processes and data (Hoffman, 2005, p. 3). The law requires corporate officers to vouch for the effectiveness of the company’s internal controls and to be honest and transparent in financial reporting. SOX is organized under eleven titles, with the majority of the compliance principles written under sections 302, 401, 404, and 409 (A Guide to the Sarbanes-Oxley Act, 2006). Section 302 requires company officers to certify the truthfulness and completeness of quarterly and annual reports. Additionally, the signing officers are responsible for establishing and maintaining the internal controls, and must have evaluated the effectiveness of the controls within 90 days prior to certifying the financial statements (Hoffman, 2005, p. 4). Section 401 of SOX requires corporations to issue financial statements that are compl ete and accurate and include all material off-balance sheet obligations or liabilities (A Guide to the Sarbanes-Oxley Act, 2006). This regulation was instituted to prevent public corporations from hiding liabilities from investors, and thus artificially inflating stock prices. Section 404 requires public companies to establish internal controls and report annually on their effectiveness over financial  reporting. The CFO and CEO are held personally responsible for the internal controls via the requirement to sign a statement certifying the adequacy of the internal control system (Moffett and Grant, 2011, p. 3). Additionally, the company’s independent auditor must issue an attestation regarding management’s assessment of the internal structure as part of the company’s annual report (Bloch, 2003, p. 68). Material changes to a company’s financial condition or operations must be disclosed to the public in a timely manner under the provisions of Section 409. Rapid disclosure applies to all types of company information – i.e. product recalls, personnel changes, or loss of a major customer (Hoffman, 2005, p. 4). Internal Controls Effective internal controls protect a company’s assets, maintain compliance, improve operations, prevent fraud, and promote accuracy in financial reporting. In 1992 the Committee of Sponsoring Organizations of the Treadway Commission (COSO) designed an internal control framework of five components: the control environment, risk assessment, control activities, information and communication, and monitoring (Moffett et al, 2011, p. 3). Companies use this framework to implement internal control systems tailored to their own needs. No internal control system is infallible, however, effective controls provide reasonable assurance company assets are protected and financial reporting is accurate. Section 404 compliance. Section 404 mandates that Securities and Exchange Commission (SEC) registered companies implement and maintain adequate internal control procedures for financial reporting, and also appropriately assess and report on the internal controls’ effectiveness (Conway, 2003, p. 19). Company executives and audit committees are expected to take an active role in defining and evaluating the internal control structure and procedures. The COSO internal control framework is widely accepted as the best criteria for evaluation of a company’s internal control structure. Documentation of internal control procedures is essential to the evaluation process. Documentation provides evidence that controls have been identified and can be monitored. All relevant financial statement assertions and each of the five COSO internal control components should be documented. When documentation is lacking or nonexistent, independent auditors will report either a significant deficiency or material weakness in internal control (Conway, 2003, p. 19). Furthermore, documentation provides evidence that management applies wisdom to protecting company assets and instills integrity in financial reporting in a way that is pleasing to the Lord, as affirmed in Proverbs 24:3, â€Å"By wisdom a house is built, and through understanding it is established† (New International Version). Internal controls should be evaluated to determine whether they are operating effectively and to substantiate management’s assertion on the adequacy of the controls. Internal control testing and results should be documented, with deficiencies noted and remediation plans identified (Conway, 2003, p. 19). Upon completion of the evaluation process, management prepares its assertion on the effectiveness of internal control over the financial reporting process. As part of the independent audit, the external auditor will test and evaluate the internal control system, and subsequently attest to management’s assertion regarding internal controls. Section 404 impact on small business. One of the biggest concerns to small firms is the onerous cost of implementing Section 404 on internal controls. Companies have seen audit fees increase by as much as 30% due to tougher accounting and auditing standards required by SOX (Solomon & Bryan-Low, 2004). In addition to external auditing expenses, the cost of hiring employees to create, implement and monitor Section 404 compliant internal controls can be burdensome to small businesses. In addition to the financial burden created by SOX compliance, SOX imposes significant opportunity cost on corporations by making executives more risk-adverse by instilling in managers a fear of incrimination (Vakkur, McAfee, & Kipperman, 2010, p. 19). SOX inflicts extremely punitive measures on corporate executives to include penalties, incrimination, private litigation, and potential labor market penalties (Ahmed, McAnally, Rasmussen & Weaver, 2010, p. 354). When managers’ time is consumed with regulatory compliance, they are not focused on new-product development or growing the business, resulting in lower profits and reduced marketplace competitiveness. The PCAOB The Public Company Accounting Oversight Board (PCAOB) was created by the Sarbanes-Oxley Act to oversee the accounting process and dictate independence requirements for auditors and auditing committees (Kim, 2003, p. 236). In order to curb the system of accountants’ self-regulation, only two of the five members of the PCAOB may be current or former certified public accountants. The PCAOB conducts annual quality inspections of accounting firms that audit more than one hundred companies and triennial inspections of all other accounting firms (Kim, 2003, p. 241). The PCAOB has the authority to conduct special inspections of accounting firms at any time, and can impose sanctions on an accountant or accounting firm if the Board finds unreasonable failure to supervise any person associated with auditing or quality control standards (Kim, 2003, p. 241). The SEC maintains authority over the PCAOB, and must approve PCAOB proposed regulations in order for them to become effective. PCAOB Pronouncements Pronouncements related to accounting information systems. Auditing Standard No. 12, â€Å"Identifying and Assessing Risk of Material Management,† addresses the auditor’s requirement to understand the company’s information system, including related business processes, relevant to financial reporting. This includes understanding transactions that are significant to the financial statements, and the procedures by which these transactions are initiated, authorized, processed, recorded, and reported. The auditor is to obtain understanding of related accounting records, supporting information, and specific accounts that are used to initiate, authorize, process and record transactions. The auditor should understand how the information system captures events and conditions that are important to the financial statements and how information technology affects the company’s flow of transactions. Additionally, the auditor should become knowledgeable about the companyà ¢â‚¬â„¢s period end financial reporting process, including general ledger procedures, application of accounting principles, procedures used to process and record journal entries and adjustments, and procedures for preparing financial statements and related disclosures (Auditing Standard No. 12, 2010). Pronouncements related to internal controls. Auditing Standard No. 5, â€Å"An Audit of Internal Control over Financial Reporting that  is Integrated with an Audit of Financial Statements,† establishes requirements and provides direction for audit engagements of management’s assessment of the effectiveness of internal control over financial reporting that is part of a financial statement audit. Effective internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and related financial statements. The auditor is required to plan and perform the audit to obtain appropriate evidence about whether material weaknesses exist in the internal control over financial reporting. General standards apply in the audit, including technical proficiency as an auditor, independence, due professional care, and professional skepticism. The auditor prepares and signs a report expressing whether the company maintained effective internal control over financial reporting that is dated and issued in conjunction with the report on the audited financial statements (Auditing Standard No. 5, 2007). Auditing pronouncements. SOX authorized the PCAOB to establish auditing and professional practice standard to be employed by registered public accounting firms. Auditor compliance is mandatory. On an interim basis, the PCAOB has adopted the generally accepted auditing standards as described in the American Institute of Certified Public Accountants’ Auditing Standards Board’s Statement on Auditing Standards No. 95, Generally Accepted Auditing Standards, in existence on April 16, 2003 (Auditing, 2003). Ethics and independence pronouncements. In accordance with Rule 3520, the registered accounting firm and auditors must be independent of the firm’s audit client throughout the audit and the engagement period. In accordance with Rule 3500T, the registered accounting firm and auditors shall comply with ethics standards as written in AICPA’s Code of Professional Conduct Rule 102, and interpretations and rulings as in existence on April 16, 2003 (Ethics & Independence, 2003). Quality control pronouncements. In April 2003 the PCAOB adopted as interim quality control standards the AICPA’s Auditing Standards Board’s Statements on Quality Control Standards, as in existence on April 16, 2003. The section requires that certified public accounting firms shall have a system of quality control for its accounting and auditing practice that ensures services are completely delivered and adequately supervised. Firm personnel are to comply with applicable professional standards and the firm’s standards of quality (Quality Control, 2003).  Attestation pronouncements. In April 2003 the PCAOB adopted as interim attestation standards the AICPA’s Auditing Standards Boardâ₠¬â„¢s Statements on Standards for Attestation Engagements, related interpretations, and statements of position as in existence on April 16, 2003. The practitioner shall have adequate training and proficiency in the attest function and the subject matter. The practitioner shall maintain independence in mental attitude, and exercise due professional care in the engagement. Work shall be adequately planned and supervised, and sufficient evidence shall be obtained to support a reasonable basis for the conclusion expressed in the report (Attestation, 2003). Future PCAOB pronouncements. The PCAOB is considering including an Auditor’s Discussion and Analysis (AD&A) with an auditor’s report. The AD&A could include information related to the audit, including audit risks, audit procedures and results. It could also include discussion related to the auditor’s views of management’s judgments and estimates, accounting policies and practices, and difficult issues. (Current Activities, 2013). SOX and PCAOB Impact on Accounting Information Systems The SOX requires that companies evaluate the effectiveness of both the design and operation of internal controls (Holmes & Neubecker, 2006, p. 25). Because of the reliance on accounting information systems for financial transactions and reporting, internal controls must be built into in the accounting system infrastructure in order to provide reasonable assurance that financial reporting is valid, complete, and free of fraud. Damianides (2005) stresses, â€Å"IT will be crucial to achieving this objective and establishing the foundation for a sound internal control environment.† Prior to SOX, there were no definitive requirements on the extent of accounting system information technology controls a company was expected to implement. Prior to SOX, wise managers and companies that placed high importance on integrity had already instituted internal control procedures. The bible speaks to this concept of being good stewards of the property entrusted to us. As noted in Proverbs 27:2 3, â€Å"Be sure you know the condition of your flocks; give special attention to your herds† (New International Version). Once SOX became law, more attention was given to internal controls that should be inherent in accounting information systems. Accounting  transactions from inception to disposition are automated, resulting in a direct relationship between IT effectiveness and operational effectiveness in companies (Holmes et al., 2006, p. 25). The chief information officer plays a critical role in SOX internal control compliance. IT professionals are tasked to provide accurate, visible, and timely information while ensuring the protection and security of information systems (Damianides, 2005, p. 77). IT governance is a process whereby a company’s IT system sustains and supports company goals and objectives (Gelinas, Dull, & Wheeler, 2012, p. 264). The Information Technology Governance Institute (ITGI) created a framework called Control Objectives for Information and Related Technology (COBIT) to provide guidance for companies to implement and monitor IT governance. The five key elements of the COBIT framework are: strategic alignment, service delivery, resource management, risk management, and performance measurement (Kepczyk, 2012, p. 5). Strategic alignment is the integration of the IT infrastructure into an enterprise’s strategic plans. Service delivery refers to the IT systems ability to securely provide information system access on any company-approved device from any location, on-site or remote. Resource management is the proactive monitoring and control of IT hardware and software costs, proactively applying cost-benefit analysis. Risk management encompasses the identification of threats and vulnerabilities to IT infrastructure, with proactive actions taken to mitigate potential impacts. Lastly, performance management is process of determining the acceptable levels of network performance and monitoring adherence through such tools as balanced scorecards and benchmarks (Kepczyk, 2012, p. 5). Businesses that apply biblical wisdom to learning and understanding legal requirements and how to implement them will be successful in overcoming the tactical challenges of complying with the law. We are reminding in Proverbs 1:5, â€Å"let the wise listen and add to their learning, and let the discerning get guidance.† Conclusion The Sarbanes-Oxley Act of 2002 is the most significant legislation concerning market regulation since the Exchange Acts of 1933 and 1934 (Holmes et al., 2006, p. 27). Public corporations are most impacted by the stringent internal control requirements. The PCAOB oversees accounting processes and auditing requirements. Companies that are successful in establishing and maintaining effective internal controls automate them within their accounting information systems. As the automation in business processes is continually growing, managers are challenged to ensure transactions are valid, security is strong, and reports are accurate and valid. References A Guide to the Sarbanes-Oxley Act. (2006). Addison-Hewitt Associates. Retrieved April 30, 2014, from http://soxlaw.com Ahmed, A., McAnally, M., Rasmussen, S. & Weaver, C. (2010). How costly is the sarbanes oxley act? Evidence on the effects of the act on corporate profitability. Journal of Corporate Finance, 16, 352-369. Attestation. (2003). Retrieved April 30, 2014, from www.pcaobus.org Auditing. (2003). Retrieved April 30, 2014, from www.pcaobus.org Auditing Standard No. 5. (2007). Retrieved April 30, 2014, from www.pcaobus.org Auditing Standard No. 12. (2010). Retrieved April 30, 2014, from www.pcaobus.org Bloch, G. (2003). Sarbanes-oxley’s effects on internal controls for revenue. The CPA Journal, 73(4), 68-70. Retrieved from http://search.proquest.com/docview/212294542?accountid=12085 Conway, R. (2003). Sarbanes-oxley, section 404: Achieving compliance. Orange County Business Journal, 26(15), 19. Retrieved from http://search.proquest.com/docview/211081168?accountid=12085 Current Activities. (2013). Retrieved April 30, 2014, from www.pcaobus.org Damianides, M. (2005). Sarbanes-oxley and IT governance: new guidance on IT control and compliance. Information Systems Management, 22(1), 77-85. Retrieved from http://search.proquest.com/docview/214122540?accountid=12085 Ethics & Independence. (2003). Retrieved April 30, 2014, from www.pcaobus.org Gelinas, U., Dull, R., & Wheeler, P. (2012). Accounting information systems (9 ed.). Mason, OH: Cengage/South-Western. Hofman, S. (2005). Beyond sarbanes-oxley requirements. ISeries News, 1-6. Retrieved from http://search.proquest.com/docview/219592654?accountid=12085 Holmes, M. & Neubecker, D. (2006). The impact of the sarbanes-oxley act of 2002 on the information systems of public companies. Issues in Information Systems, 7(2), 24-28. Retrieved from http://iacis.org/iis/2006/Holmes_Neubecker.pdf Holy Bible, New International Version ®, NIV ®. (1973, 1978, 1984, 2011). Retrieved from http://www.biblica.com Kepczyk, R. (2012). Raising your IT governance awareness. The Practicing CPA (Online), 40(8), 4-5. Retrieved from http://search.proquest.com/docview/1115475024?accountid=12085 Kim, B. (2003). Sarbanes-Oxley Act. Harvard Journal on Legislation, 40, 235-252. Retrieved from http://heinonline.org.ezproxy.liberty.edu:2048/HOL/Page?collection=journals&handle=hein.journals/hjl40&type=Image&id=241 Moffett, R. & Grant, G. (2011). Internal controls and fraud prevention. Internal Auditing, 26(2), 3-12. Retrieved from http://search.proquest.com/docview/863454394?accountid=12085 Quality Control. (2003). Retrieved April 30, 2014, from www.pcaobus.org Roman, H. K. (2012). Raising your IT governance awareness. The Practicing CPA (Online), 40 (8), 4-5. Retrieved from http://search.proquest.com/docview/1115475024?accountid=12085 Solomon, D. & Bryan-Low, C. (2004). Companies complain about cost of corporate-governance rules. Wall Street Journal, February 10. Retrieved from http://search.proquest.com/docview/398856653?accountid=12085 Vakkur, N., McAfee, R. & Kipperman, F. (2010). The unintended effects of the sarbanes-oxley act of 2002. Research in Accounting Regulation, 22(1), 18-28. Retrieved from http://dx.doi.org/10.1016/j.racreg.2010.02.001

512 Project - 949 Words

Assignment Students name and number: Qian Li Table of Content Question 1------------------------------------------------------------------------------3 Question 2------------------------------------------------------------------------------4 Reference List-------------------------------------------------------------------------7 Question 1 What things need to be taken into consideration when allocating work and drawing up work plans? Consider: goals and objectives, competence, operational need, efficiency, cost effectiveness, consultation ALL of the companies operation†¦show more content†¦Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment. Explain why has a code conduct (or a code of ethics or behavior) for the organization. A code is an open disclosure of the way an organization operates. It provides visible guidelines for behavior. A well-written and thoughtful code also serves as an important communication vehicle that reflects the covenant that an organization has made to uphold its most important values, dealing with such matters as its commitment to employees, its standards for doing business and its relationship with the community. Explain why regularly monitor and evaluate the work of employees is necessary. Monitoring and evaluation are important management tools to track your progress and facilitate decision making. Carries of an evaluation can be the community of people with whom your organization works. By closely examining your work, your organization can design programs and activities that are effective and yield powerful results for the community(William, et al 2010). Explain why give effective feedback and reinforcement to employees and acknowledge good work. Reinforcing feedback has a strong positive influence on behavior. Most of us like to hear compliments and feel recognized. 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