Corporate Social Responsibility Initiatives in India Essay Example for Free

Corporate Social Responsibility Initiatives in India Essay 1. Company Background †¢ Coke – A sweet carbonated drink containing caramel and other flavoring components †¢ Invented in 1886 by Dr. J.S. Pemberton †¢ Contained extracts of Coca leaves and Kola nuts †¢ Business sold in 1888 to business men †¢ Candler acquired competitors and promoted Coca-Cola → Rapid sales increase since 1895 †¢ In 1894 J.A. Biedenharn invented selling the prepared drink in bottles 2. Company Background (continued)†¢ In 1919 a group of investors bought Coca Cola for around $25 million†¢ Robert Woodruff turned the company into what it is now:†¢ One of the worlds most recognized brands and a MNE with huge profits†¢ 1993, Coca Cola entered India through a strategic alliance with Parle Exports †¢ By now, it offers a portfolio of world class quality beverages, extending through over 400 brands 3. SWOT Analysis Strenghts†¢ Strong brand-name†¢ Global distribution system†¢ High-profile global presence†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market share 4. SWOT Analysis Strenghts Weaknesses†¢ Strong brand-name †¢ Carbonates market is in decline†¢ Global distribution system †¢ Existing distribution system is less efficient for non-carbonates†¢ High-profile global presence †¢ Health care issues†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market share 5. SWOT Analysis Strenghts Weaknesses †¢ Strong brand-name †¢ Carbonates market is in decline†¢ Global distribution system †¢ Existing distribution system is less efficient for non-carbonates†¢ High-profile global presence †¢ Health care issues†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market shareOpportunities†¢ Expansion†¢ Use distribution strengths†¢ Large domestic market (India)†¢ Increasing average income in India 6. SWOT Analysis Strenghts Weaknesses†¢ Strong brand-name †¢ Carbonates market is in decline†¢ Global distribution system †¢ Existing distribution system is less efficient for non-carbonates†¢ High-profile global presence †¢ Health care issues†¢ Low cost of operation†¢ Broad-based bottling strategy†¢ High market share ThreatsOpportunities †¢ Competition from health drinks†¢ Expansion †¢ Competition from Pepsi†¢ Use distribution strengths †¢ Boycott in the Middle-East†¢ Large domestic market (India) †¢ Government regulations on Increasing average income in India production (license)†¢ 7. Coca-Cola India CSR Initiatives Focus on Environment Responsibility 8. WaterMethods†¢ Watershed Protection Community Watershed Partnership (CWP) (2005)†¢ Rainwater Harvesting Projects Kaladera plant in Rajasthan (2006) †¢ Educating Jal Tarang (a part of World Water Day) (2007) â€Å"Think Green, Go Green† Campaign (2007) Film (2007) 9. Water (continued)Achievements1. Reduced water consumption by 35% between 1999 to 20061. Reached zero water balance (2009)1. Returned all water in manufacturing processes (2010)2. Improved the livelihoods of Bottom of the Pyramid populations (BOP) (poor farmers) 10. WaterGoal: Reduce the emission of GHGs (especially HFCs and CO2) Methods 1. eKOfreshment Cooler Program (2000) 1. Converted old equipment to HFC-free fridges (2006) 2. Installed over 8500 units of HFC-free equipment (2007) 3. esKO Project (2007) 4. Enhanced energy efficiency 5. Developed Energy Management System (EMS) (2006) 11. Energy New Coke: Isdell wants to reduce Coca-Colas carbon footprint. E. Neville Isdell, CEO 12. Energy (continued)Achievements 1. GHGs emission reduces by 75% (2006) 2. Reduced energy consumption by 640 million kilowatt-hours, which equals to 3 million metric tons 3. Increased the energy efficiency of equipment by 40 to 50% 13. FuelCoca-Cola had local operations for production, bottling, and delivery in each country of operation. Take Taiwan for example: SWIRE Coca-Cola Taiwan LTD. and its factories are in No.46, Singbang RD., Taoyuan County. 14. Packaging + Recycling †¢ Focus on 3R (Reduction, Recovery, Reuse) †¢ PET Recycling Project in Mumbai (2005) †¢ â€Å"Abhiyan – The Movement†, a film on PET recycling Methods †¢ e3 Program †¢ Redesigned trademarked bottles †¢ Invested millions of dollars on collecting and recovering packaging materials used for beverages 15. Packaging + Recycling (continued)Achievements 1. Raised the income of about 100 PET crusaders by 50% 1. Recycled nearly 80% of the PET waste (2006) 2. Redesigning of bottles saved 89000 metric tons of glass (2006) 3. Most of the packaging material was 100% recyclable 16. Depletion of Water Table Coca-Cola India depleted groundwater tables and overexploited the groundwater reserves, leaving the local communities with no access to drinking water and water for farming which was their primary source of income! 17. Depletion of Water Table (continued)Data collected by the government agency the Ground WaterBoard showed that groundwater level had dropped in the firsts even years of the company‟s operation. †¢ A sharp drop in groundwater levels in Mehdiganj near the city of Varanasi. †¢ Groundwater levels in Kala Dera have continued spiraling downwards. 18. Depletion of Water Table (continued) One report, in the daily newspaper Mathrubhumi, described local women having to travel five kilometers to obtain drinkable water, during which time soft drinks would come out of the Coca-Cola plant by the truckload. 19. Depletion of Water Table (continued) â€Å"Coca-Cola sucks India dry.† 20. Supplied Sludge to Farmersas Fertilizer Coca-Cola had seized land from farmers and discharged hazardous material and sludge in the areas surrounding its plants in India. In a goodwill gesture, Coca-Cola was distributing the solid waste from its bottling plants to farmers in the area as fertilizer!! 21. Supplied Sludge to Farmersas Fertilizer (continued) The Central Pollution Control Board of India found in 2003 that sludge from Coca-Cola‟s Uttar Pradesh factory in Mehdiganj was contaminated with high levels of cadmium (up to 86mg/kg), lead (up to 538mg/kg), and chromium (up to 134mg/kg), effectively making the solid waste toxic. 22. Supplied Sludge to Farmers as Fertilizer (continued)Cadmium is a Lead iscarcinogen particularly and can dangerous to children and the accumulate in results of the kidneys, exposure can be with repeated fatal. Even at low exposure levels it can possibly cause mentalcausing retardation and kidney failure. severe anaemia. 23. Supplied Sludge to Farmers as Fertilizer (continued)When confronted by BBC reporters†¦ â€Å"Its good for the farmers because most of them are poor.† Coca-Colas Vice-President 24. Supplied Sludge to Farmers as Fertilizer (continued)When confronted by BBC reporters†¦ â€Å"Its good for the farmers because most of them are poor.† The Coca-Cola company was ordered to stop the practice by the government Coca-Colas Vice-President authorities immediately. 25. Supplied Sludge to Farmers as Fertilizer (continued) The bottling facilities at Kala Dera also reported that the groundwater contained pesticides. 26. Liquid waste from the Coca-Cola bottling plant at Balia 27. Banner at Coca-Cola Museum Major Protest Demands Coca-Cola Shut Down Plant March 31, 2008. 28. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org 29. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org Overexploitation of the groundwater reserves Study by National Geophysical Research Institute disapproved these allegations Decreased rainfall by 60% was the cause 30. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org Overexploitation of the groundwater reserves Study by National Geophysical Research Institute disapproved these allegations Decreased rainfall by 60% was the cause Release of untreated water by the factory Wastewater management technology is among the most advanced in the world 31. Coca-Cola India’s Response Coca-Cola India’s response to the allegations www.cokefacts.org Overexploitation of the groundwater reserves Study by National Geophysical Research Institute disapproved these allegations Decreased rainfall by 60% was the cause Release of untreated water by the factory Wastewater management technology is among the most advanced in the world Supplied sludge to farmers as fertilizer Sludge is not harmful to the environment 32. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions 33. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen 34. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen Coca Cola’s plan: Attack credibility Refuting the allegations and calling them baseless Aggressively stressing their innocence hoping to resolve the issues 35. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen Coca Cola’s plan: Attack credibility Refuting the allegations and calling them baseless Aggressively stressing their innocence hoping to resolve the issues Problem: NGOs are very powerful! NGOs have higher credibility in the eyes of the general public 36. AnalysisOf Coca-Cola India’s ResponseCoca Cola was attacked by different institutions Coca Cola had to face image problems in the Indian and American market Consumers would lose trust in the company Loss of reputation as a socially responsible corporate citizen Coca Cola’s plan: Attack credibility Refuting the allegations and calling them baseless Aggressively stressing their innocence hoping to resolve the issues Problem: NGOs are very powerful! NGOs have higher credibility in the eyes of the general public Mistake Acting to fast by attacking and underestimating NGOs power 37. How Coca-Cola India should have respondedThinking and analyzing alternatives 38. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs 39. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs Alternative 2: Ignore Ignore the allegations and wait till the buzz goes away 40. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs Alternative 2: Ignore Ignore the allegations and wait till the buzz goes away Alternative 3: PR Campaign A PR campaign that informs the American public about Coca Cola‟s efforts as responsible corporate citizen 41. How Coca-Cola India should have respondedThinking and analyzing alternatives Alternative 1: Collaboration instead of attack Coca Cola should have collaborated with the NGOs Alternative 2: Ignore Ignore the allegations and wait till the buzz goes away Alternative 3: PR Campaign A PR campaign that informs the American public about Coca Cola‟s efforts as responsible corporate citizen 42. The Plan Solution: Collaboration with NGO and PR Campaign Goal Regain trust and loyalty of customerCapabilities needed Coca Cola and NGO have to collaborateActions NGO has to correct their mistakes publicly NGO has to issue an apology to Coca Cola 43. The Plan Solution: Collaboration with NGO and PR Campaign Goal Rebuild and repair Goal the Coca Cola Regain trust brand name and loyalty of customer Capabilities needed A PR team which will planCapabilities needed and lead the campaign Coca Cola and NGO have to collaborate Actions Organize promotional activitiesActions (including charity work) NGO has to correct their mistakes publicly Hand out free drinks, coupons, vouchers at public events NGO has to issue an apology to Broadcast TV advertisements which Coca Cola show the good side of the company 44. The Plan Solution: Collaboration with NGO and PR Campaign Goal Rebuild and repair Goal the Coca Cola Regain trust brand name and loyalty of customer Capabilities needed A PR team which will planCapabilities needed and lead the campaign Coca Cola and NGO have to collaborate Actions Organize promotional activitiesActions (including charity work) NGO has to correct their mistakes publicly Hand out free drinks, coupons, vouchers at public events NGO has to issue an apology to Broadcast TV advertisements which Coca Cola show the good side of the company 45. What is Greenwashing? â€Å"Coca-Cola attempts to manufacture a green image of itself that it clearly is not, as their practice in India shows. We call this „Greenwashing.‟ † Amit Srivastava 46. Examples of Greenwashing †¢ In 2009, European McDonald’s changed the color of their logos from yellow and red to yellow and green to demonstrate its concern for â€Å"being green.† 47. Examples of Greenwashing †¢ In 2009, European McDonald’s changed the color of their logos from yellow and red to yellow and green to demonstrate its concern for â€Å"being green.† †¢ Comcast, a cable service company, has the slogan of Paper LESS is MORE but it uses large amounts of paper for direct marketing. 48. Examples of Greenwashing †¢ In 2009, European McDonald’s changed the color of their logos from yellow and red to yellow and green to demonstrate its concern for â€Å"being green.† †¢ Comcast, a cable service company, has the slogan of Paper LESS is MORE but it uses large amounts of paper for direct marketing. †¢ The Poland Spring’s bottles is touted as A little natural does a lot of good, although 80% of its beverage containers go to the landfill. 49. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ 50. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We have implemented many environmental protective initiatives since 2000! 51. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We have implemented many environmental Those are not enough protective initiatives even to make up for the since 2000! pollution you‟ve made in India! 52. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We voluntarily initiated The Energy and Resource Institute (TERI) to conduct a survey on ourselves! And the survey shows we‟re doing well! 53. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ We voluntarily initiated The Energy and Resource Institute (TERI) to conduct a survey on ourselves! And the survey shows we‟re doing well! The reliability of the survey is questionable! 54. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve invested US$20million for our water conservation project! 55. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ That‟s just 1 percent of Weve invested Coca Cola‟s annual US$20million for our water advertising budget! conservation project! 56. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve built a lot of rain harvesting sites since 2006 to recharge ground water! 57. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve built a lot of rain harvesting sites since That‟s nothing special. Rain 2006 to recharge harvesting has already ground water! been a common practice in India. 58. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve won many awards for our CSR(Corporation Social Responsibility) initiatives! 59. Is Coca Cola Greenwashing?Coca Cola is not Greenwashing Coca Cola is Green washing because†¦ because†¦ Weve won many awards for our CSR(Corporation Conferment of awards may Social Responsibility) not be objective. It can be initiatives! manipulated! 60. Is Coca Cola Greenwashing?2000 2007†¢ Coca-Cola India launched an eKOfreshment cooler that used Coca-Cola India launched a rooftop rainwater harvesting technologies to helped it curb its emission of GHGs initiative at Varanasi, expecting to recharge more than (greenhouse gases) 4,900 cubic meters of groundwater.2005 Coca-Cola India launched oa rainwater harvesting project†¢ Coca-Cola India initiated a PET recycling project in Mumbai. at Greater Kailash, in New Delhi, which aimed to recharge around 4 million liters of water every year.2006 Coca-Cola India establishment 10 rainwater harvesting †¢ In 2006, the company completed a rainwater recharge projects in different schools of Jamshedpur city. initiative at its Kaladera plant in Rajasthan. As part of the Coca Cola announced a three-year, US$ 20 million project, the company built around 110 recharge shafts that partnership with the World Wildlife Fund63 (WWF) on collected rainwater. water conservation†¢ Coca-Cola India called, ‘Abhiyan — The Movement’. The film Coca-Cola India organized a program, â€Å"Think Green, Go focused on the need for and significance of recycling PET Green† that focused on environment education. bottles. 2008 †¢ By the end of 2006, Coca-Cola India had established PET The Hindustan Coca-Cola Beverages Pvt. Ltd (Coca-Cola recycling projects at over 100 locations in India and built a India), was awarded the Golden Peacock award4 for capacity to collect and recycle nearly 80 percent of the waste Corporate Social Responsibility (CSR) for the several generated from the PET. community initiatives it had taken and its efforts toward†¢ Coca-Cola started an initiative called e3 to redesign its conservation of water. trademarked bottle, saving 89,000 metric tons of glass in 2006 at a global level. Most of the packaging material used by Coca- Cola India becomes 100 percent recyclable.†¢ Coco Cola developed an Energy Management System (EMS) that curbed energy consumption by 35 percent. †¢ Coca Cola launched an initiative called Project esKO, which aimed to reduce Coca-Cola’s carbon footprint at a global level by improving its driving and manufacturing operation to curb its carbon dioxide emissions by 10,000 metric tons every year. 61. ConclusionSo, is Coca Cola seriously doing something to fulfill its social responsibility? 62. ConclusionSo, is Coca Cola seriously doing something to fulfill its social responsibility? Yes, but not enough! 63. Summary †¢ Focus on Environmental Responsibilities †¢ Several initiatives concerning water, energy, fuel, and packaging and recycling †¢ Although, they attracted criticism †¢ Coca Cola responded to the critics Conclusion: Coca Cola is doing something to fulfill its social responsibility, but not enough! 64. Summary (continued)Obstructionist Defensive Accommodative Proactive approach approach approach approachLow social responsibility Social responsibility High social responsibility 65. Summary (continued)Obstructionist Defensive Accommodative Proactive approach approach approach approachLow social responsibility Social responsibility High social responsibility 66. Summary (continued)Obstructionist Defensive Accommodative Proactive approach approach approach approachLow social responsibility Social responsibility High social responsibility 67. Thank you for listening! Questions?

The Role of the Gods in Homers The Iliad Essay -- Iliad essays

The Role of the Gods in Homer's The Iliad "We everlasting gods....Ah what chilling blows we suffer-thanks to our own conflicting wills-whenever we show these mortal men some kindness." This exert clearly states what kind of authority Homer has bestowed on his Gods. John Porter said," their constant interference in the lives of the mortals, which seems to cast them in the role of malicious puppeteers, while reducing Homer's heroes to mere pawns in a selfish and often rather petty divine game of one-upmanship." I found it to be quite disturbing imagining these characters fighting in such a mercilous war, giving every ounce of strength they had, and in an instance, all of their efforts could be derailed by a God or Goddess. You almost have to wonder if these 'heroes' really have any control whatsoever, or if they are there for the pure amusement of others. Porter also mentions the morality of the Gods'. He points out that the gods display many of the same values that we criticize the heroes of having. " They are as jealous of their honors (time) as are Agamemnon and Achilles i...

Evaluate Postmodernist Explanations of the Role and Functions of Religion in Contemporary Society Essay

Evaluate postmodernist explanations of the role and functions of religion in contemporary society. Postmodernist religion can be defined as any type of religion that is influenced, interpreted or shaped by postmodernism and postmodern philosophies. Postmodern religion is not an attempt to banish religion from society; rather, it is a philosophical approach to religion that considers orthodox assumptions that may reflect power differences in society rather than universal truths. A postmodern interpretation of religion emphasises the key point that religious truth is highly individualistic, subjective and resides within the individual. Science technology and efficiency would overcome many social problems. The collapse of the ‘grand-narrative’ is part of post-modernism as it is a belief system that claims universal authority, religion; science and philosophies are examples of these. They have a superior status over other belief systems and also claimed they could explain the causes of society’s problems and could therefore provide solutions. According to Jean-Francois Lyotard, the grand-narratives powerful attraction has been lost during the 20th century. So, science hasn’t delivered solutions, wars have devastated nations, and the world is still full of evils that the grand-narratives can’t explain or resolve. Examples of this are world wars; nuclear warfare; AIDS and global poverty. The common perspective of post-modernist religion is ‘there is a god who can’t do anything, there is a god who won’t do anything, or there isn’t a god. ’ Zygmunt Bauman said post-modernity is the irretrievable loss of trust in the project of modernity and its ability to manage, enhance and fulfil human potential. Symbols, signs and meanings are also another theory to post-modernism. Mass media like television and the internet have exposed us all to different cultures and ideas from across the globe, also known as globalisation. The ‘meanings’ of things have now become more individualised, we consume the products, symbols and signs of a globalised economy, but we provide our own meanings to these. Jean Baudrillard said â€Å"we are what we consume†¦ and our identities are formed and changed through acts of consumption. † Signs and symbols have become detached from their original meanings; original purposes and meanings have become lost. Religious signs and symbols are losing their meaning, these signs and symbols have been adopted by mass consumer culture, usually used for decorative and playful purposes such as jewellery. Joseph Natoli said â€Å"post-modernity has questioned the authority and legitimizing of both faith and reason, opting for the view that both offer stories of reality†¦ both do so on the shifting sands of a post-modernist outlook. † Signs and symbols have become insecure from the things they were linked to originally. Individuals no longer identify with a single religion and so they blend different beliefs with practices to create an identity for themselves. This can be known as being utilitarian, so there is no substance to our identity and actions, we are no longer just shaped by the moulding force of socialisation. Zygmunt Bauman said the consumption of goods and services becomes more important in our lives as a way of constructing and changing identity. This consumption is addictive and advertising drags us in. â€Å"I don’t know what’s right and what’s real anymore, and I don’t know how I’m meant to feel anymore, and when do you think it will all become clear? † from ‘The Fear’ by Lily Allen (2009). Many different religions now exist and people tend to mix the styles and genres with one another. Baudrillard said it is hard to find guidance in our lives as sources of authority and moral leadership are often undermined, they seem almost irrelevant. In the past we believed anything that religious leaders told us, simply because they were a religious leader, but this is no longer the case as we are now sceptical. We live in a world of images, and so it is hard to distinguish between image and reality as we live in a world where media simulations are more ‘real’ than the reality that we live in. Anthony Giddens said we live in a new form of modernity where we have lost faith in the ‘project of modernity’. We are now able to try out many different cultures in a globalised world. Life is now more uncertain than before. So to sum up, we live in a society characterised the coexistence of many different subgroups and cultures; the erosion of traditional social classes; the growth of movements such as environmentalism, feminism and ethnic politics; the absence of agreed standards for evaluating what is true/false and right/wrong; the blurring of what is real and not; and experimentation with self-identity. Stewart Clegg said that organisations are different in the post-modern age. For example, in the modern age there is rigid authoritarian control; mass consumption; it is dominated by technology and is demarcated and deskilled. Whereas, in the post-modern age there is flexible and democratic control; niche markets; it is enabled by technology and is undemarcated and multi-skilled jobs. Postmodernists believe that the advent of postmodernity has led to significant changes in religion. In particular, they see it as leading to the decline of traditional church-based religions in which believers follow rules laid down by their religion, and the growth of new age beliefs where people can pick and choose their own belief systems. Marxist religion is all about the ruling class owning the means of production, and through wealth they derive power which allows control over the superstructure of society. Ruling class ideology of religion keeps the ruling class in power by discouraging the working classes from realising they are being exploited and in turn trying to rebel against the ruling class power. Karl Marx famously described religion as the ‘opium of the masses’, by this he meant that religion was seen as being like a drug that helps people deal with pain, much like ‘opium’. Religion promises eternal life in heaven for people who accept religion. As the biblical quote says ‘it is easier for a camel to pass through the eye if a needle, than for s rich man to enter the kingdom of heaven’. It offers hope of supernatural intervention to end suffering, for example, Jehovah’s witnesses believe that judgement day will arrive and those who are not religious will be judged and punished. Marx saw religion as a mechanism of social control. It creates false class consciousness, mistaken beliefs about the true nature of social life, which justify the position of the ruling class. This prevents the working class developing class consciousness, in which they become aware that they are exploited, and unite to overthrow the capitalist system that exploits them. Marx believed the only escape of this exploitation was communism, this way religion would no longer be necessary. Without social classes there would be no need for religion as its sole purpose was to legitimate ruling class power. Religion would therefore disappear. For example, in the Soviet Union under communist leadership from 1917 to 1990 the state consistently opposed the existence of religious beliefs and destroyed many Russian orthodox churches, as well as mosques and synagogues. The Marxist view of religion has been proven in many societies across the world; some examples of these are the Hindu caste system and evangelical Christianity in Latin America. In the Hindu caste system in India, people were divided into 5 castes based upon their supposed degree of religious purity. The Brahmins (priests) were at the top and the untouchables (unskilled labourers) at the bottom. This supports the Marxist view since no movement was permitted between castes, this system ensured the ruling class maintained their power and control and justified the lowly position of those at the bottom in terms of their religious impurity. The new Christian right have encouraged the spread of protestant religious beliefs in predominantly catholic Latin America countries particularly amongst the poor in shantytowns. This supports the Marxist view of religion as protestant religious beliefs provide religious discipline and hope of salvation in afterlife to some of the poorest in Latin American societies, discouraging them from supporting radical catholic liberation theology and encouraging support for US-style capitalist values. However Marxist view can also be criticised, just a few criticisms would be that Marxist only focus on one possible role of religion in society and it ignores the much broader range of effects religion might have. Another criticism would be that attempts to destroy religion in communist countries were not successful. Religion survived in the USSR and Catholicism thrived in communist Poland. Much like Marxists, feminists believe that religion does not serve the interests of society as a whole, and only serves the interests of a particular social group. They see religion as being patriarchal, male-dominated, and serving the interests of men. Karen Armstrong argued that religion has not always been patriarchal and that in early history women were considered central to spirituality and archaeologists have found numerous symbols of the great mother goddess, in comparison there were few portrayals of male gods. With the advent of Judaism, Christianity and Islam, monotheistic religions largely replaced polytheistic religions. In all these cases god was portrayed as a male. Jean Holm argues that in the public sphere of religion when important positions are held, men almost always dominate. However, in the private sphere, women are dominant and do most of the religious work. Holm has identified inequality between men and women in all major world religion. Some examples of these inequalities are shown in Christianity/roman Catholicism; Islam; Hinduism; Chinese folk religions; Orthodox Judaism and Sikhism.

Impact Of Corporate Governance On Capital Investment Decisions - Free Essay Example

Sample details Pages: 10 Words: 2973 Downloads: 4 Date added: 2017/06/26 Category Statistics Essay Did you like this example? Introduction Overview Through various studies over the years, different scholars and financial analysts have been able to establish a relationship of cash flow on firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ investment spending. It was significantly proven by (Modigliani Miller, 1958) that a firm financial status is irrelevant for real investment decisions in a world of perfect and complete capital markets, after controlling for the cost of capital. In case of managerial discretion, based on (Jensen, 1986) free cash flow theory, firms increase investment (including projects with negative present value) based on the availability of cash flows with incentive of increasing firms value beyond level of optimal investment. Moreover, an agency costs also appreciate the borrower net worth by charging a premium on the external financing. The discussion above explains that the firms investment decisions are dependent on the availability of internal funds, as cost advantage over external fund is evident. Don’t waste time! Our writers will create an original "Impact Of Corporate Governance On Capital Investment Decisions" essay for you Create order While choosing an appropriate capital structure, there are certain trade-offs which affects the decision. These trade-offs include tax advantage through acquiring debt against the bankruptcy cost which advocates the use of equity. Keeping this in view, various different models have been supported to explain this corporate capital structure behavior. Pecking Order Theory, initially mitigated by (Donaldson, 1961) describes the financing practice as prioritizing the means of financing, which is necessary for the management to counter against asymmetric information. Either they should generate the funds internally or acquire funds externally through debt rather than equity. Implications to the pecking order theory involves the positive impact of leveraging on the market price, which means, financing through debt sends a positive signal into the market about the firm future prospects. Furthermore, intermediaries also undermine the role of management as the financial intermediaries such as investment banks function as the insider to the firm. Consequently, keeping an eye on the firms operations and influencing the firm capital financing decision. However, Pecking order theory of (Myers, 1984) argues that the firms operating in imperfect or incomplete capital markets where the cost of external capital exceeds that of internal funds, the financial structure may be appropriate to the investment decisions of companies facing uncertain prospects. Gauging the level of corporate investment in any firm is based on the corporate governance; market position of a firm asset against its book value can be termed as Tobin q ratio. Identified by (Chung Pruitt, 1994), Tobin q as the ratio of a market value of a firm to the replacement cost of its assets. Tobin q can be considered an effective tool for determining financial performance as the data can be collected readily from a balance sheet. When calculating Tobin q ratio, the replacement cost can be determined approximately by the book value of firm plant and equipment. Approximate q can be replaced with the actual Tobin q to make the calculations unproblematic and data can be readily available without any discrepancies. Problem Statement To study the impact of corporate governance on the capital investment decision through cash flow and Tobin q interaction in relation with Capital Investment HypothesEs H0: Firms with investment spending that is influenced by cash flow will be associated with high Q values. In fact, the equilibrium level of Q for these firms will be larger than one. (FCF Theory) HA: Firms indicating a liquidity constraint by not paying dividends will have the most significant cash flow/investment relationship, and will be associated with high Q values in the market. (PO Theory) Outline of the study The report contains the contemplation of research data that will study the phenomenon of cash flows and investment discussed earlier in this paragraph. The study categorizes firms according to characteristics (such as dividend payout, size) which will help measure the level of constraints faced by firms. The study will help readers to understand the complexities of Pecking order theory and Free Cash Flows concept with regard to asymmetric information available and corporate governance which influences decision of the firms. To measure the effect that cash flow-financed capital spending and Q has on firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ investment, Ordinary Least Square Regression model will be used to estimate the function. To compute the influence on the Investment, instruments used are: (1) Cash Flow, (2) Approximate q, and (3) an interaction of both variables are created. Through studying the parameter estimates of interaction variable, positive influence on investment will support the Pecking Order hypothesis and negative influence will govern the Free Cash Flow hypothesis. The equation hypothesized in the next part is linear. Definitions Pecking Order Theory: (Myers, 1984): A firm is said to follow a pecking order if it prefers internal to external financing and debt to equity if external financing is used. Free Cash Flow Theory According to (Jensen, 1986) free cash flow theory, high cash flow and low debt create agency costs associated with conflicts between manager and share holder over the payout of this free cash, which is the cash left after the firm has invested in all available positive net present value projects. Capital Structure A careful and systematic analysis of how claims against a corporations assets can or should be determined, assessed, and accounted for. (Riahi-Belkaoui, 1999) Capital Investment Decision Capital Investment decisions are those decisions that involve current outlay in return for a stream of benefit in future years. (Drury, 2006) Tobin q Tobins q is a measure of investors expectations concerning a firms future profit potential. It is defined as the ratio of the market value of a firm to the replacement cost of its assets. (Strecker, 2009) Literature Review (Vogt, 1994) explained the capital spending behavior of companies with respect to change in dividend cash paid, cash flows, sales, and market value of assets. The regression equation models the variables to proportion of fixed assets, and distributes the firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ data in segments of Dividend Payout Groups and Asset Groups. Primarily, Dividend Cash has a strong negative impact on capital spending; it explains that in order to finance additional fixed investment firm needs to sock cash by reducing their dividend. Cash flow, Sales, and Q Ratio having a positive coefficient demonstrates that with an increase in future cash flows, the firm will improve its capital spending. (Cleary, 1999) has developed a relationship between the firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ investment decision and the firm financial status. Financial status has been studied with respect to the liquidity constraints. The data is classified into groups through a discriminant analysis on basis of dividend payout policy. These groups helped identify which firms are more prone to be financially constrained and the results showed that firms having high credit worthiness are significantly more sensitive to the availability of internal funds than that are less credit worthy. It has been proposed that the various ownership structures make managerial decision based on the interaction between investment and the firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ liquidity constraints. The study conducted by (Dedoussis Papadaki, 2010) mentioned that the management can be held separate from its ownership, even on basis of the nationality of the company. On the other hand, it also explained that the relative shareholding of CEO and the controlling shareholders can also be the basis of separation. Findings support that the Low Q, small, and new firms under the generalized model are facing asymmetric information problems. Indeed these firms are expected a priori to face financing problems that affect the cost of their external financing. On the other hand, low Q, old and low dividend firms are more likely to face managerial discretion problems that result to over-investment. The impact of Tobin Q is mainly used to determine the investment opportunity of the firm. In this article, marginal Tobin Q has been taken to evaluate the firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ investment and Research Development expenditures. Under the asymmetric information (AI) hypothesis firms with attractive investment opportunities may be unable to finance them because of inadequate internal cash flows and because the cost of external funds is too high due to the capital markets ignorance of the firms investment opportunities. The agency or managerial discretion (MD) hypothesis links investment to cash flows by assuming that managers obtain financial and psychological gains from managing a large and growing firm and thus invest beyond the point that maximizes shareholder wealth. (Gugler, Mueller, Yurtoglu, 2004) Taking in viewpoint the impact of capital structure on the capital investment decision, firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ investment demands is the more susceptible towards cost-of-capital or tax-based capital incentive. Whereas, capital structure seems irrelevant as against internal sources of funds can be effectively substituted with sources of funds generated externally. (Fazzari, Hubbard, Peterson, Blinder, Poterba, 1988) explicates that cash flow/investment relationship is more sensitive when taken in reference with firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ dividend behavior. Comparison based on firms having more or less liquidity constraints can be further improved when compared on a division based on the scale of the firms, i.e. young or small firms versus large ones. This way the researchers can address the problem of firms lacking the asymmetric information. Research Methods The chapter explains the model used in the given research study. The study focuses on analyzing the influence of Cash Flows and Tobin q on Corporate Investment. The equation representation consists of the proportion of capital spending to the beginning-of-periods net fixed asset (I/K) as a function of: (1) cash flow divided by beginning-of-period gross fixed asset (CF/K), and (2) beginning-of-period Tobins q (Q). Method of Data Collection Main source of collecting the required data is from secondary sources. It includes the Balance Sheet Analysis of Joint Stock Company listed in Karachi Stock Exchange provided by State Bank of Pakistan consisting of data of our relevant variables. The data was taken in annual terms to conduct this research. Sampling Technique The Convenience sampling or grab or opportunity sampling would be use in this research. Sample population selected because it is readily available and convenient. Sample Size The sample period taken under study covers 8-years period beginning at the start of 2000 and ending at the close of 2008. The data was taken from a sample of 70 (non-banking and non-financial) companies which are listed on Karachi Stock Exchange and included in KSE-100 index. Research Model Statistical technique Ordinary Least Square Regression technique is used to study the impact of variables included in the study. It helps studies the relationship between a dependent variable and several independent variable. It also assumes the relationship to be linear or ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€¦Ã¢â‚¬Å"straight line,ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€š? where the values of predictors lies directly proportional to Criterion variable. SPSS Software is used to develop the regression model and evaluate the influence of predictors on dependent variable. Results Findings and interpretation of results Aggregate Sample: Table : Represents the model summary of regression estimates for the full sample of 69 firms The predictors, i.e. main effects of Cash Flow and Tobin q and an interaction term of both, included in the model helps explain 78.5% of Investment (Table 1) shown mentioned as R Square. Least variation in Adjusted R Square suggests that the variable to observation ratio in the given model is sufficient. Casewise diagnostic was also conducted to eliminate the outliers in the data to improve the results. Table : Studies the F-statistics to test whether the model predicts the dependent variable significantly The F-statistics (Table 2) is significant and it determines the regression model with the given predictors can significantly predict the outcomes at a 0.05 significance level. Table : The parameter estimation for full sample of 69 firms with respect to dependent variable, t-statistics is used to test the null hypothesis ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1 = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2 = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3 = 0 The coefficient values of all predators included in the test are significant at a 0.05 significant level (Table 3), which shows that they have a strong influence on the investment of the firm. The standard coefficient shows that Cash Flows have a much greater impact on Investment than market value on the firm, which is exemplified through Tobin q. Dividend Payout groups: Table : Presents the sample statistics for 69 KSE listed (non-banking and non-financial) companies which are included in the KSE-100 index. The three rows distribute the statistics into High, Medium, and Low payout policies. Average dividend-to-income ratios of greater than 0.35, between 0.35 and 0.10, and less than 0.10 define High, Low, and Medium dividend-payout firms, respectively. While studying the dividend-payout groups (Table 4), the descriptive helps to identify characteristics to confirm whether the data being studied has the authenticity and the behavior pattern which commonly related to the groups assigned. The values of Investment, Cash Flow, and Tobin q associated with the groups are in complete correspondence with the hypothetical occurrence. Firms having a higher (lower) dividend payout have greater (lower) market value, and lower(higher) level of cash flows and investments. Table : Represents the model summary of regression estimates of 69 firms split by High, Medium, and Low dividend-payout policies. The model helps explains 81.9%, 66.7%, and 80% data in High, Medium, and Low dividend-payout firms (Table 5), shown in R Square. Least variation in Adjusted R Square suggests that the number of observations is sufficient with respect to variables in each group separately. Table : Studies the F-statistics to test the null hypothesis of ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1, H = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1, M = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1, L The F-statistics (Table 6) in each dividend payout group is significant and it determines that each regression model with the given predictors can significantly predict the outcomes at a 0.05 significance level. Table : Shows the parameter estimation for each payout groups with respect to dependent variable, t-statistics is used to test the null hypothesis ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²1 = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²2 = ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3 = 0 The coefficient values of predators in High and Low dividend payout groups are all significant at a 0.05 significant level (Table 7), which shows that they have a strong influence on the investment of the firm. Except for Medium dividend payout group, which has insignificant coefficient values of Tobin q, showing no impact on the investment. The standard coefficient shows that Cash Flows have a much greater impact on Investment than market value on the firm, which is exemplified through Tobin q. Hypothesis Assessment Summary Hypothesis Independent Variables B t Sig. Comments Firms with investment spending that is influenced by cash flow will be associated with high Q values. In fact, the equilibrium level of Q for these firms will be larger than one. (FCF Theory) Cash Flow ÃÆ'Æ’Ã ¢Ã¢â€š ¬Ã¢â‚¬  Q H0= ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3 0 ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3,H = .135 5.295 .000 Rejected ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² 3,M = .072 .991 .324 ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² 3,L = .140 5.482 .000 Firms indicating a liquidity constraint by not paying dividends will have the most significant cash flow/investment relationship, and will be associated with high Q values in the market. (PO Theory) Cash Flow ÃÆ'Æ’Ã ¢Ã¢â€š ¬Ã¢â‚¬  Q HA= ÃÆ'Ã… ½Ãƒâ€šÃ‚ ²3 0 ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² 3,H = .135 5.295 .000 Accepted ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² 3,M = .072 .991 .324 ÃÆ'Ã… ½Ãƒâ€šÃ‚ ² 3,L = .140 5.482 .000 Dependent Variable: Investment Table : Summarizes the results and explains that the hypothesis accepted is directly in correspondence with the aggregate hypothesis. As illustrated (Table 8) capital spending of low payout firms is positively and strongly influenced by the interaction term, consistent with the PO hypothesis, the parameter estimate for the high payout firms are also positive but marginally significant. Conclusion, Discussions, Implications And Future Research Conclusion The results illustrated above demonstrates that the positive relationship between the degree of the CF/I relationship and Q found latter in the aggregate data (Table 3) is concentrated in low or no dividend paying firms. This finding is in further support with the PO hypothesis. Discussions The objective was to study and test the causes of universal relationship between Cash Flow and Investment Spending. Hence, two hypotheses were included in the research to study the source of this relationship: the free cash flow hypothesis (FCF) hypothesis, which works on the assumption that managers prefer investing its free cash flow excessively into investment projects that are not profitable, and the pecking order hypothesis (PO) purports that managers are prone to investment comparatively less than the opportunity provided due asymmetric information-induced liquidity constraint. As advocated in favor of Pecking Order Theory by (Fazzari, Hubbard, Peterson, Blinder, Poterba, 1988) and many others, for groups which consists of small firms with low-dividend payout to fund capital spending, exhibits heavy reliance on cash flow and cash changes. The relationship can be more significantly studied when the impact of larger q value is associated with this group. Evaluating the impact of corporate governance on investment-cash flow relation requires a critical judgment as to how do the firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ cash flow and the existing market value influence the investment decision. Financially constraint firms may have a larger impact on liquidity associated matters and managers might take discretion in choosing the right sources to tap. Agency cost may be involved in making such a decision where managers may consider paying dividend as a higher opportunity cost as it reduces the firmsÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒ ¢Ã¢â‚¬Å¾Ã‚ ¢ free cash flow to exploit new profitable investment projects. Implications and Recommendations In the current market situation where external pressures existing can also be taken into proxy. When managers making a capital investment decision they need to take in view other non-financial aspects that also influences the decisions to a certain extent. Furthermore, financial intermediaries having a certain level of involvement and sharing information sensitive to the market can also be a major factor that might be giving a varying result against Investment. Investing in profitable-investment projects can bring in greater resources to the firm in future and it entails a huge decision burden upon the shoulders of the managers. Shareholders expecting to earn a greater return through investing in them can also be undermined when manager decided to have a low payout policy. Funds generated internally is a possibility where there is a healthy cash flow, but it is also preferable if this free cash is invested into marketable security for allocating the resources into a profitable venture for a time being to make it a positive impression. Future Research In future studies there may be more aspects of cash flow-investment relationship which can be studied for assessing the degree impact it has on this relationship, i.e. sales, debt performance, capital structure, firm size, etc. The research study may also be improved if the observation of firms are increased that will in turn reflect a more clear picture about the relationship in the current scenario.