Company Assignment Example | Topics and Well Written Essays - 500 words

Company - Assignment Example The company operates in countries that average 37 and employs 28,400 workers directly as of mid-2013. 65% of these are in Europe, 26% is based in Asia, while 95 is based in the Americas (Düblin 8). Most employees in Europe work in Germany, France, and Switzerland. Richemont reported revenues of â‚ ¬10.150 billion in 2013, which was up from â‚ ¬8.868 billion the previous year (Düblin 10). Some strengths of the company include its high position of 6th in the Swiss Market Index, being the 2nd largest luxury goods company, and its large employee base, while it also encompasses several world-renown luxury brands like Piaget and Cartier among others. Its biggest weakness is that it has limited presence in emerging economies. Richemont’s HR brand is one of the most respected in the world, especially with regards to its highly trained staff, highly competitive remuneration packages, and its family culture. The main responsibilities of their group HR function are to develop processes, establish policies, and offer strategic direction to constituent brands’ HR functions with regards to best practices in HR management (Düblin 22). The main clients for the group HR are its brand HR teams. The HR’s plans, strategies, and direction were influenced by the 2009 financial crisis, especially with regards to restrictions on recruitment. This led them to focus on effectiveness and quality, while also shifting their focus from an approach solely based on skills to one also based on personality with regards to ambition, attitude, willingness to learn, and ability to learn (Düblin 23). This was to ensure that employees could fit into the Richemont family culture. Fitting employees into this culture also requires that Richemont find a balance between locals and expats for its overseas offices. This also ensures that their HR function embraces diversity in their work culture. This fit into

History II Essay Example | Topics and Well Written Essays - 500 words

History II - Essay Example Japanese targeted Pearl Harbor and attacked Pearl Harbor. Pearl Harbor is located on the west of Honolulu on the island of Oahu, Hawaii. It is under the command of United States Pacific Fleet. Japanese army attacked the Pearl Harbor on the 7th of December 1941. The impact of this attack was massive and began World War II. In the past the Pearl Harbor contained a shallow entrance and it was impossible for the large ships to enter the harbor (Hakim 93). The United States pacific fleet was previously located at the San Diego. Then President Franklin D. Roosevelt relocated it and sent it to the Hawaii (Hakim 149). The American invasion in the Hawaii made changes to the harbor and the rules related to it. The main motive of making of Pearl Harbor as narrated by United State is to protect the sailor and other men which are related to whaling industry (Hakim 152). It was decided to make pearl harbor a duty free harbor to increase the trade in the vicinity. By the start of the 1900 to 1908 t he American Navy expanded and improved the services (Hakim 153). On the day of 7th December 1941 Japanese imposed a surprise military attack on the United States Navy at the Pearl Harbor. According to Japanese the imposed military action is to avoid United States Navy to interfere in the Japanese invasion to the other parts of the world (Hoyt 104). The Japanese air strike nearly crushed many of the United States naval ships.

Development of the Caspian Oil and Gas Sector

Development of the Caspian Oil and Gas Sector Caspian Oil Gas Role of FDI in Economic Development of Azerbaijan, Kazakhstan and Turkmenistan Abstract This paper underlines the foreign direct investment strategy formulation process in the three energy-rich countries of the Caspian Region: Azerbaijan, Kazakhstan and Turkmenistan. The study comparatively analysis the investment climate in three selected countries and more specifically it examines the foreign direct investment in oil and gas industry and its role in economic development of each country. The research examines the investment climate in Azerbaijan, Kazakhstan and Turkmenistan and factors influencing the foreign investor’s decision-making in oil and gas sector. The first part of this paper overviews the Caspian region and its oil and gas reserves. More specifically this part summarises the role of foreign direct investment in oil and gas industry and how it promotes economic development of Caspian basin countries, namely Azerbaijan, Kazakhstan and Turkmenistan. The second part presents the theoretical framework of foreign direct investment. This part also reviews the previous empirical findings on types, determinants and motives of foreign direct investment. The part 3 comparatively analysis foreign direct investment performance in selected countries and factors which may influence the ability of a country to attract foreign investment. This part also overviews the investment climates in Azerbaijan, Kazakhstan and Turkmenistan. Part 4 concludes. Key Words: FDI, Caspian Sea region, Oil and Gas, Azerbaijan, Kazakhstan, Turkmenistan. 1 Introduction The Overview of the Caspian Sea Region It is wide recognized that foreign direct investment (FDI) can play an important role in the development process of many countries and it is much required. Economies in transition, such as those in Central Asia and the Caucasus, are no exception as they realize the important role of FDI in strengthening their transition process. While some of them have sizable deposits of oil, gas and minerals which are major attractions to foreign investors, others, being less endowed, have more difficulty to attract FDI to their fledgling industrial and service sectors. But in even those countries which are well endowed with natural resources, there is a thrust to diversify their economies away from over-dependence on those resources and to develop viable value-added manufacturing industries and services. FDI can play a major catalytic role in this process. Just a decade years ago the areas on each side of the Caspian Sea – Central Asia to its east side and the Transcaucasia to its west were largely unknown. These regions were provinces of the Soviet Empire important to the outside world neither politically nor economically. Now its is well known that the Caspian Sea is largest land-locked body of water on Earth, bordered by Azerbaijan, Russia, Kazakhstan, Turkmenistan and Iran – the Caspian basin countries (see Map 1). Amongst the five countries only Iran is a member of the Organization of Petroleum Exporting Countries. Kazakhstan, Azerbaijan and Turkmenistan became independent after collapse of Soviet Union in 1991. Once a centre of global commerce, the Caspian Sea region has languished in obscurity ever since the rise of the sailing ship rendered the Silk Road obsolete a half millennium ago (Olcott, 1998). After discovery of oil and gas resources in the Caspian offshore and shore areas, this region became very important oil and gas sector in global context. Moreover, owing to energy security and geopolitical reasons, the Caspian region became very attractive for the West. Azerbaijan became one of the world’s first oil sectors after crude oil production started in Baku in the middle of 19th century. The oil production in Central Asia started in the beginning of the 20th century. Azerbaijan recorded about 70% of Soviet oil production by end of 1940. The former Soviet Union controlled almost all natural resources in Soviet Republics. At the time of their independence, Soviet republics were quasi-states (Olcott, 1998). Each republic has its own president and prime minister, local and national legislatures. The political and economic liberalisation of the Soviet Union in the mid-1980s attracted foreign investors and oil and gas companies interested in exploration and production prospects. The collapse of the Soviet Union gave further opportunities for the liberalisation of investment regulations. By the late 1990s the Caspian region was comparatively politically stable region, and a number of countries significantly improved investment regimes to their oil and gas sectors. Historically, energy industry in Azerbaijan, Russia, Kazakhstan, Turkmenistan and Uzbekistan is very important sector for the economy growth of these countries. However, poor management of natural resources and poor investment climate in these countries lead to disparities emergent between the countries in socio-economic terms. Nowadays, it is well recognized that foreign investment plays a vital role in the development of the oil and gas sector for such countries as Azerbaijan, Kazakhstan and Turkmenistan and significantly stimulates social and economic development of each of these countries. 1.2 Research Questions The presence of potentially vast oil and gas reserves is a part of the foreign investment attraction into the Caspian Sea region. On the other hand, it is important to note that while the quantity of proven reserves undoubtedly plays a significant role in estimating a region’s production and export potential, the other decisive factors for attraction foreign direct investment into this region are undeveloped market, cheap labour and cheap inputs and weak competition. This paper focuses on foreign direct investment strategy formulation process in the three energy-rich countries of the Caspian Region: Azerbaijan, Kazakhstan and Turkmenistan; and on what foreign direct investment strategy in each country are based. The study comparatively analysis the investment climate in three selected countries and more specifically it examines the foreign direct investment in oil and gas industry and performance by each country. The significant number of researches in regard to foreign direct investment mostly explains the investment strategy in the developed countries, when limited study has done on investment in less-developed countries or emerging countries. The selected countries Azerbaijan, Kazakhstan and Turkmenistan are transition countries and to a certain extent new participants in the competition to attract foreign investment. These countries can offer many potential advantages to foreign investor, especially in oil and gas sector of business. The research examines the investment climate in Azerbaijan, Kazakhstan and Turkmenistan and factors influencing the foreign investor’s decision-making in oil and gas sector. There is no much research which explores the determinants of investment in Azerbaijan, Kazakhstan and Turkmenistan, the stereotypes and perceptions that foreign investors have about these countries and what could be done to increase the foreign direct investment flow into these countries. This paper surveys these parts by investigating the multinational oil companies operating in Azerbaijan, Kazakhstan and Turkmenistan. The data from different energy agencies were gathered for comparative analysis of oil and gas data as well as foreign direct investment in different countries. This would not only let one to have a picture of various state strategies related to foreign investment, but could also provide the valuable outlook of the most advantageous approach for transition countries in doing business with foreign investors. 1.3 The Legal Status of Caspian Sea A large share of oil and gas reserves in Central Asia and Caucasus are thought to lie under he Caspian Sea. The question of the ownership of those resources, including the right to license and tax their development, is being argued by the Caspian littoral countries. The legal debate over the Caspian Sea can be tracked back to the 1921 Treaty to Moscow, reaffirmed in 1935, which declared that the inland Caspian Sea belonged to Russia (Kemp, 2000). Later Russia sent a note to the United Nations dated from 5th October 1994, where Russian Ministry of Foreign Affairs stated that the Caspian Sea should not be subject to the provisions of international maritime law (International Energy Agency, 1998). The importance of the application of international law is that a â€Å"sea† under the 1982 Law of the Sea Convention would be subject to separation into national zones for the development of its mineral resources. Russia stated that until all five of the Caspian littoral states (Azerbaijan, Russia, Kazakhstan, Turkmenistan, and Iran) came to a common decision on some other arrangement, the legal status of the Caspian Sea was subject only to the provisions of the more general (Treaty of Friendship between Iran and the USSR of 26 February 1921 and Treaty between Iran and the USSR on Trade and Maritime Navigation of 26 March 1940). Nevertheless, the ongoing legal uncertainty does not seem considerably decreased foreign investment in the Caspian Sea region. Advantageous geological prospects, with potential of a major oil and gas resource base, show significant motivations for companies to invest in this important producing region, preferably from the beginning of its development. 1.4 Current Production and Proven Reserves in Caspian Region Caspian oil presents a lot of opportunities for world oil markets and for the region itself (Energy Charter Secretariat, 2008): The appearance of new production sources would expand world oil supplies. Major quantities of Caspian oil would ease the pressure on the Persian Gulf production capacity and provide an additional hedge against oil supply disruptions Profits from oil exports could stimulate economic growth and improve the standard of living in the Caspian energy-rich counties. The availability of Caspian energy supplies in world markets will likewise improve the prospects for economic growth and political stability in the Caspian basin countries. Nowadays the Caspian Sea region is important, but not major supplier of crude oil to world markets, based upon estimates by British Petroleum (BP) and the Energy Information Administration (EIA). In 2005 the Caspian region produced 2.1 million barrels per day, or 2 per cent of total world production (see Table 1). Kazakhstan’s production rapidly increased since the late 1990s, accounted for 67 per cent and Azerbaijan for 22 per cent of regional crude oil production in 2005. The Caspian Sea region’s comparative contribution to world natural gas supplies is larger than that for oil. Gas production of 3.0 trillion cubic feet per year in 2005 was 3 percent of world production (Energy Information Administration, 2006). Turkmenistan is the largest producer; with production of 2.0 trillion cubic feet per year, it accounts for almost two-thirds of the region’s gas production. (see Figure 1). Unlike oil, the region’s proven reserves of natural gas are a higher proportion of the world total than is its natural gas production. The estimate of proven reserves of natural gas in the Caspian Sea region for the end of 2006 published by Energy Information Administration is 232 trillion cubic feet per year, which represents 4 per cent of the world total (see Table 2). Table 1Oil Production in the Caspian Sea Region 1. Proven reserves are defined by the EIA 2. Possible reserves 3. Other estimates (EIA/IEO 2006) 3.45 million barrels per day, (World Oil, 10 March 2004) 3 million ^Only Caspian area oil and gas production Source: Energy Information Administration (EIA): Caspian Sea Region: Survey of Key Oil and Gas Statistics and Forecasts, July 2006. Table 2Gas Production in the Caspian Sea Region ^Only Caspian area gas production Source: Energy Information Administration (EIA): Caspian Sea Region: Survey of Key Oil and Gas Statistics and Forecasts, July 2006. Figure 1 Gas Production in Caspian Sea region (1992-2004) Source: Energy Information Administration (EIA): Caspian Sea Region: Survey of Key Oil and Gas Statistics and Forecasts, July 2006. 1.5 Role of Oil and Gas in the Economic Development of Caspian Region The development of oil and gas resources in the Caspian region is mostly important for the development of economies in the Central Asian and Transcaucasia. In 1995 the energy sector’s share of gross domestic product (GDP) was an estimated 14.6 percent in Azerbaijan, 10.1 percent in Kazakhstan, 10.2 percent in Turkmenistan (International Energy Agency, 1998). Foreign investment attracted to the oil and gas sector in Caspian region could offer significant profits for the region’s governments and stimulate investment in other economic sectors. The attract foreign investment the host Governments should take discreet measures to ensure the development of an sufficient legal and administrative infrastructure, including institution building and personnel training, to handle the inflow of oil related revenues and to help ensure the countries’ efficient and equitable development. International Monetary Fund (2003) expressed concerns that unless regional governments introduce further administrative reforms, they risk being overwhelmed by new oil wealth. Particularly, corruption is a peril. Economic development motivated by foreign investment in the oil and gas industry helps to guarantee the financial independence of the Central Asian and Transcaucasian states. The transition to the market economy and the economic dislocations originated by collapse of Soviet Union left Azerbaijan, Kazakhstan and Turkmenistan without adequate funds to develop oil and gas resources. Governments of these countries are looking for private investment (mainly from foreign companies) that would play significant role in the development of oil and gas industry. Besides financial capital, a foreign investor brings a modern technology to local industry, including environmentally sound production techniques and modern management approaches. The Caspian Sea region countries are competing with each other for foreign investment. Oil and gas companies have a wide choice of where to make investment. The foreign investor considers the opportunities that offer the best financial returns. However, the investment climate is vital for company’s decision on where to invest. As a result, Kazakhstan and Azerbaijan took considerable steps in creating attractive investment climates. Kazakhstan concentrated on building a body of law applicable to all projects, while Azerbaijan focused primarily on modified production sharing agreements (International Monetary Fund, 2003). By the beginning of 1998, cumulative foreign direct investment in the oil and gas sectors of Central Asia and Transcaucasia had reached an estimated 3 billion of American dollars, nearly one third of which was placed in 1997. Future investment commitments in the region from contracts already signed total over 40 billion of America dollars (International Energy Agency, 1998). So far most foreign investment has been in Kazakhstan and Azerbaijan. Gas-endowed Turkmenistan started to attract foreign investment later than the others due to Government dictatorship and poor investment climate. Caspian oil development has gained a great deal of political and commercial momentum since the first foreign companies came there at the end of 1980s (Ruseckas, 2000). Since then the most important external factor influencing Caspian oil development is the price of oil. Principally if oil prices remain at present high level it is possible the more optimistic projects will be started. The Caspian Sea region could possibly produce approximately 4 million barrels per day by 2010. In any case, the Caspian Sea states require a stable legal regime to develop, produce, transport and market its natural resources. 1.5.1 Summary data on Azerbaijan Owing to extensive oil reserves, Azerbaijan is a major oil producer since the middle of the last century. Between 1990 and 1995 Azerbaijan’s gross domestic product dropped 58 percent (International Energy Agency, 1998). Oil production fell by only 25 percent mainly because of continuing oil product exports to neighbouring countries and an increasing use of heavy fuel oil in domestic power stations to alternative for imported gas. Due to the tightening of monetary and budgetary policies, the fiscal deficit dropped from 11.4 percent of gross domestic product in 1995 to less than 2 percent in 1996. In 2006 Azerbaijans real gross domestic product grew by 31 percent when the oil production in this region significantly increased. Azerbaijans anticipate for sustained economic growth is in its managing of large oil and natural gas resources in the Caspian Sea region, through effective management of the resulting revenue stream, and non-oil sector diversification (Energy Information Administration, 2006). During the beginning of transition most Azerbaijan onshore oil fields were in decline and required momentous new investment to develop large-scale offshore projects and to reconstruct existing fields. Since independence Azerbaijan signed several agreements with foreign oil companies. While maintaining full state ownership over energy companies, Azerbaijan was quick to invite foreign investors to assume a direct role in the development of its hydrocarbon reserves (Thompson, 2004). In 1992 most of the Azerbaijan oil sector assets were merged in two state oil companies – Azerineft and Azneftkimiya. The new merger was called the State Oil Company of the Azerbaijan Republic or SOCAR. While Government organizations handle production and exploration agreements with foreign companies, SOCAR is body to all international companies developing new oil and gas projects in Azerbaijan. After the first commercial oil flows through the Baku-Tbilisi-Ceyhan pipeline during summer 2006 and the increasing oil production from the Azeri-Chirag-Guneshli project, oil revenues are expected to contribute to a doubling of Azerbaijan’s gross domestic product by 2008 (Thompson, 2004). Energy Information Administration (2007) reports that though the oil sector represented around 10 percent of Azerbaijan’s gross domestic product in 2005, it is already projected to double to almost 20 percent of gross domestic product in 2007 (see Table 3). To manage the revenues, former President of Azerbaijan Heydar Aliyev formed a State Oil Fund in 1999, which is designed to use money obtained from oil-related foreign investment for poverty reduction, education and raising rural living standards. As of the end of 2006, the State Oil Fund reported assets of almost 2 billion US dollars, but the fund’s assets are expected to increase to 36 billion US dollars by 2010 (Energy Information Administration, 2006). Table 3Azerbaijan: Economy and Energy (in millions US dollars) 2003 2004 2005 2006 2007 2010 Oil Production (thousand barrels per day) 320 319 441 648 860 1,300 Oil Exports (thousand barrels per day) 215 204 314 521 721 N/A Foreign Direct Investment 3,285 3,556 1,680 -219 -4,750 476 FDI in Oil Sector 3,246 3,461 1,459 -573 -5,198 366 Oil Sector Revenue 886 946 1,337 2,921 5,272 19,417 As share of total rev (%) 42% 38% 39% 51% 59% N/A As share of total GDP (%) N/A N/A 9.8% 15% 19.7% 43.3% Oil Fund Assets 816 972 1,394 1,936 3,093 36,387 Source: Energy Information Administration: Short Term Energy Outlook, 2007; International Monetary Fund (IMF), Article IV Consultation, Staff Report, No 07/191, June 2007 1.5.2 Summary Data on Kazakhstan As it was the case in most other former Soviet Union countries, Kazakhstan’s first attempts at economic reform were effectively taken in response to Russias one-sided price reforms in 1992. After Kazak oil production had suddenly declined for two years in the end of 1993, inflation had out of control. The efforts to create an economic union with Russia and other former Soviet Union countries didn’t meet expectations of the Kazakh Government. Looking at the dynamic Asian economies as a model, the Kazakh Government turned to market style policies. However, the government increased hard budget constraints and restrictive monetary policies due to attempts to solve non-payment problem through state financing. The remained net debts after netting out inter-industry arrears were financed from Government budget and the central bank. In 1993 International Monetary Fund (IMF) granted Kazakhstan a one-year standby package. To maintain IMF collaboration and to stop the decline in gross domestic product, the Kazakh government implemented a second stabilisation program in 1995. But this time hard budget constraints and monetary policy were strengthened by excluding of government financing of net positions in inter-enterprise debts and retreating government guarantees for loans granted by foreign and domestic banks. In the middle of 1996, the International Monetary Fund approved an Extended Fund Facility (EFF) of 446 million US dollars for three years (IMF, 2003). According to International Monetary Fund (2003) the decision was made in light of a wide-ranging three-year reform programme submitted by the government, as well as the positive longer term prospects for production and exports of energy and non-ferrous metals. In 1996, Kazakhstan experienced its first positive economic growth since 1989. 1.5.3 Summary Data on Turkmenistan Preceding the collapse of the Soviet Union approximately 8 percent Turkmenistan’s gross domestic product was generated by gas exports to the rest of the USSR mostly to Belarus, Ukraine and the Caucasus. Another 5 percent of gross domestic product was earned from cotton exports. Gas and cotton exports continue to be used to cover the import of considerable amounts of grain and capital equipment from other former Soviet Republics. While estimates for the fall of gross domestic product between 1990 and 1995 vary depending on how adjustments to official gross domestic product are made, International Monetary Fund and European Bank of Reconstruction and Development agree on about -35 percent (IMF, 2003). This is much less than the 58 percent drop in Turkmen gas production. The rest of the economy is basically agricultural. The cotton industry has been less affected by the downfall of the Soviet Union. The government gradually liberalised some prices beginning in 1992. A presidential decree of 1995 removed price controls on all products except for about 50 items, including energy. The government introduced the manat as the national currency in 1993. In 1995 it unified the previously separate official and commercial exchange rates, which subsequently became determined by inter-bank auctions for foreign exchange. Between 1992 and 1995 the government compensated for the shortfall in revenue from taxes on gas production and exports by cutting expenditures and replacing subsidies to the economy with additional allocations of credit at largely negative interest rates. Controlled prices were adjusted repeatedly but declined in real terms for natural gas and for oil products through 1994. The share of gas related revenues in the central budget declined from 60 percent in 1992 to under 20 percent in 1995, which lowered the share of total budgetary revenue in GDP from 40 percent to 10 percent during this period. Due to drastic expenditure cuts in government wages and investment, including maintenance, the central budget deficit remained fairly stable over this period. It also helped that new excise taxes were introduced in 1995 on petrol (55 percent) and diesel (60 percent). This resulted in some recovery of government capital spending. The easy money policy was changed slowly in 1995 and 1996. During this time foreign exchange surrender requirements of state-owned enterprises to the Foreign Exchange Reserve Fund (FERF) were increased to 50 percent for gas and oil exports, and the money allocated directly to the central budget. Prior to that, this fund had been used to award credits to the economy, contributing to monetary expansion. In 1995 and 1996, bank credit allocation was reduced, real interest rates rose (due to credit auctions with deregulated interest rates), and reserve requirements for banks were increased. However, the pursuit of these policies was not smooth, in part due to the limited political autonomy of the Central Bank. Nevertheless, inflation decelerated by 50 percent towards the end of 1995 and is estimated to have been 445 percent in 1996, and 21 percent in 1997. Despite plummeting gas exports in recent years, Turkmenistan’s current account was slightly positive in 1994 and 1995, as long as arrears owed to the country are not taken into account. If such arrears are counted the 1995 balance swings from an estimated surplus of 54 million US Dollars to a deficit of 289 million US Dollars. The situation has probably continued to deteriorate due to weak gas exports. 2 Theoretical Frameworks 2.1 Overview of Foreign Direct Investment Theories There is variety of empirical studies on theoretical models explaining foreign direct investment (FDI) and its determinants. The various approaches from different disciplines such as economics, international business, organisation and management explain numerous characteristics of this phenomenon. The following dissimilar methods, explaining foreign direct investment as the location decision of multinational enterprises are mostly acknowledged in empirical literature on FDI: Ownership advantages as determinants of foreign direct investment (including monopolistic advantage and internalisation theory) based on imperfect competition models and the view that multinational enterprises (MNEs) are firms with market power (Hymer, 1960; Buckley and Casson, 1979; Kindleberger, 1969; Caves, 1971 for ownership advantages) Determinants according to the Neoclassical Trade Theory and the Heckscher-Ohlin model, where capital moves across countries due to differences in capital returns (for example Markusen et al, 1995,pp. 98-128; Aliber, 1970); Determinants of foreign direct investment in Dunning’s ownership-location-internalization (OLI) framework, which brought together traditional trade economics, ownership advantages and internalisation theory (Dunning, 1977; 1979); Determinants of foreign direct investment according to the horizontal FDI model or Proximity- Concentration Hypothesis (Krugman, 1983; Markusen, 1984; Ethier, 1986; Horstmann and Markusen, 1992; Brainard, 1993); Determinants of foreign direct investment according to the vertical FDI model, Factor-Proportions Hypothesis or the theory Development of the Caspian Oil and Gas Sector Development of the Caspian Oil and Gas Sector Caspian Oil Gas Role of FDI in Economic Development of Azerbaijan, Kazakhstan and Turkmenistan Abstract This paper underlines the foreign direct investment strategy formulation process in the three energy-rich countries of the Caspian Region: Azerbaijan, Kazakhstan and Turkmenistan. The study comparatively analysis the investment climate in three selected countries and more specifically it examines the foreign direct investment in oil and gas industry and its role in economic development of each country. The research examines the investment climate in Azerbaijan, Kazakhstan and Turkmenistan and factors influencing the foreign investor’s decision-making in oil and gas sector. The first part of this paper overviews the Caspian region and its oil and gas reserves. More specifically this part summarises the role of foreign direct investment in oil and gas industry and how it promotes economic development of Caspian basin countries, namely Azerbaijan, Kazakhstan and Turkmenistan. The second part presents the theoretical framework of foreign direct investment. This part also reviews the previous empirical findings on types, determinants and motives of foreign direct investment. The part 3 comparatively analysis foreign direct investment performance in selected countries and factors which may influence the ability of a country to attract foreign investment. This part also overviews the investment climates in Azerbaijan, Kazakhstan and Turkmenistan. Part 4 concludes. Key Words: FDI, Caspian Sea region, Oil and Gas, Azerbaijan, Kazakhstan, Turkmenistan. 1 Introduction The Overview of the Caspian Sea Region It is wide recognized that foreign direct investment (FDI) can play an important role in the development process of many countries and it is much required. Economies in transition, such as those in Central Asia and the Caucasus, are no exception as they realize the important role of FDI in strengthening their transition process. While some of them have sizable deposits of oil, gas and minerals which are major attractions to foreign investors, others, being less endowed, have more difficulty to attract FDI to their fledgling industrial and service sectors. But in even those countries which are well endowed with natural resources, there is a thrust to diversify their economies away from over-dependence on those resources and to develop viable value-added manufacturing industries and services. FDI can play a major catalytic role in this process. Just a decade years ago the areas on each side of the Caspian Sea – Central Asia to its east side and the Transcaucasia to its west were largely unknown. These regions were provinces of the Soviet Empire important to the outside world neither politically nor economically. Now its is well known that the Caspian Sea is largest land-locked body of water on Earth, bordered by Azerbaijan, Russia, Kazakhstan, Turkmenistan and Iran – the Caspian basin countries (see Map 1). Amongst the five countries only Iran is a member of the Organization of Petroleum Exporting Countries. Kazakhstan, Azerbaijan and Turkmenistan became independent after collapse of Soviet Union in 1991. Once a centre of global commerce, the Caspian Sea region has languished in obscurity ever since the rise of the sailing ship rendered the Silk Road obsolete a half millennium ago (Olcott, 1998). After discovery of oil and gas resources in the Caspian offshore and shore areas, this region became very important oil and gas sector in global context. Moreover, owing to energy security and geopolitical reasons, the Caspian region became very attractive for the West. Azerbaijan became one of the world’s first oil sectors after crude oil production started in Baku in the middle of 19th century. The oil production in Central Asia started in the beginning of the 20th century. Azerbaijan recorded about 70% of Soviet oil production by end of 1940. The former Soviet Union controlled almost all natural resources in Soviet Republics. At the time of their independence, Soviet republics were quasi-states (Olcott, 1998). Each republic has its own president and prime minister, local and national legislatures. The political and economic liberalisation of the Soviet Union in the mid-1980s attracted foreign investors and oil and gas companies interested in exploration and production prospects. The collapse of the Soviet Union gave further opportunities for the liberalisation of investment regulations. By the late 1990s the Caspian region was comparatively politically stable region, and a number of countries significantly improved investment regimes to their oil and gas sectors. Historically, energy industry in Azerbaijan, Russia, Kazakhstan, Turkmenistan and Uzbekistan is very important sector for the economy growth of these countries. However, poor management of natural resources and poor investment climate in these countries lead to disparities emergent between the countries in socio-economic terms. Nowadays, it is well recognized that foreign investment plays a vital role in the development of the oil and gas sector for such countries as Azerbaijan, Kazakhstan and Turkmenistan and significantly stimulates social and economic development of each of these countries. 1.2 Research Questions The presence of potentially vast oil and gas reserves is a part of the foreign investment attraction into the Caspian Sea region. On the other hand, it is important to note that while the quantity of proven reserves undoubtedly plays a significant role in estimating a region’s production and export potential, the other decisive factors for attraction foreign direct investment into this region are undeveloped market, cheap labour and cheap inputs and weak competition. This paper focuses on foreign direct investment strategy formulation process in the three energy-rich countries of the Caspian Region: Azerbaijan, Kazakhstan and Turkmenistan; and on what foreign direct investment strategy in each country are based. The study comparatively analysis the investment climate in three selected countries and more specifically it examines the foreign direct investment in oil and gas industry and performance by each country. The significant number of researches in regard to foreign direct investment mostly explains the investment strategy in the developed countries, when limited study has done on investment in less-developed countries or emerging countries. The selected countries Azerbaijan, Kazakhstan and Turkmenistan are transition countries and to a certain extent new participants in the competition to attract foreign investment. These countries can offer many potential advantages to foreign investor, especially in oil and gas sector of business. The research examines the investment climate in Azerbaijan, Kazakhstan and Turkmenistan and factors influencing the foreign investor’s decision-making in oil and gas sector. There is no much research which explores the determinants of investment in Azerbaijan, Kazakhstan and Turkmenistan, the stereotypes and perceptions that foreign investors have about these countries and what could be done to increase the foreign direct investment flow into these countries. This paper surveys these parts by investigating the multinational oil companies operating in Azerbaijan, Kazakhstan and Turkmenistan. The data from different energy agencies were gathered for comparative analysis of oil and gas data as well as foreign direct investment in different countries. This would not only let one to have a picture of various state strategies related to foreign investment, but could also provide the valuable outlook of the most advantageous approach for transition countries in doing business with foreign investors. 1.3 The Legal Status of Caspian Sea A large share of oil and gas reserves in Central Asia and Caucasus are thought to lie under he Caspian Sea. The question of the ownership of those resources, including the right to license and tax their development, is being argued by the Caspian littoral countries. The legal debate over the Caspian Sea can be tracked back to the 1921 Treaty to Moscow, reaffirmed in 1935, which declared that the inland Caspian Sea belonged to Russia (Kemp, 2000). Later Russia sent a note to the United Nations dated from 5th October 1994, where Russian Ministry of Foreign Affairs stated that the Caspian Sea should not be subject to the provisions of international maritime law (International Energy Agency, 1998). The importance of the application of international law is that a â€Å"sea† under the 1982 Law of the Sea Convention would be subject to separation into national zones for the development of its mineral resources. Russia stated that until all five of the Caspian littoral states (Azerbaijan, Russia, Kazakhstan, Turkmenistan, and Iran) came to a common decision on some other arrangement, the legal status of the Caspian Sea was subject only to the provisions of the more general (Treaty of Friendship between Iran and the USSR of 26 February 1921 and Treaty between Iran and the USSR on Trade and Maritime Navigation of 26 March 1940). Nevertheless, the ongoing legal uncertainty does not seem considerably decreased foreign investment in the Caspian Sea region. Advantageous geological prospects, with potential of a major oil and gas resource base, show significant motivations for companies to invest in this important producing region, preferably from the beginning of its development. 1.4 Current Production and Proven Reserves in Caspian Region Caspian oil presents a lot of opportunities for world oil markets and for the region itself (Energy Charter Secretariat, 2008): The appearance of new production sources would expand world oil supplies. Major quantities of Caspian oil would ease the pressure on the Persian Gulf production capacity and provide an additional hedge against oil supply disruptions Profits from oil exports could stimulate economic growth and improve the standard of living in the Caspian energy-rich counties. The availability of Caspian energy supplies in world markets will likewise improve the prospects for economic growth and political stability in the Caspian basin countries. Nowadays the Caspian Sea region is important, but not major supplier of crude oil to world markets, based upon estimates by British Petroleum (BP) and the Energy Information Administration (EIA). In 2005 the Caspian region produced 2.1 million barrels per day, or 2 per cent of total world production (see Table 1). Kazakhstan’s production rapidly increased since the late 1990s, accounted for 67 per cent and Azerbaijan for 22 per cent of regional crude oil production in 2005. The Caspian Sea region’s comparative contribution to world natural gas supplies is larger than that for oil. Gas production of 3.0 trillion cubic feet per year in 2005 was 3 percent of world production (Energy Information Administration, 2006). Turkmenistan is the largest producer; with production of 2.0 trillion cubic feet per year, it accounts for almost two-thirds of the region’s gas production. (see Figure 1). Unlike oil, the region’s proven reserves of natural gas are a higher proportion of the world total than is its natural gas production. The estimate of proven reserves of natural gas in the Caspian Sea region for the end of 2006 published by Energy Information Administration is 232 trillion cubic feet per year, which represents 4 per cent of the world total (see Table 2). Table 1Oil Production in the Caspian Sea Region 1. Proven reserves are defined by the EIA 2. Possible reserves 3. Other estimates (EIA/IEO 2006) 3.45 million barrels per day, (World Oil, 10 March 2004) 3 million ^Only Caspian area oil and gas production Source: Energy Information Administration (EIA): Caspian Sea Region: Survey of Key Oil and Gas Statistics and Forecasts, July 2006. Table 2Gas Production in the Caspian Sea Region ^Only Caspian area gas production Source: Energy Information Administration (EIA): Caspian Sea Region: Survey of Key Oil and Gas Statistics and Forecasts, July 2006. Figure 1 Gas Production in Caspian Sea region (1992-2004) Source: Energy Information Administration (EIA): Caspian Sea Region: Survey of Key Oil and Gas Statistics and Forecasts, July 2006. 1.5 Role of Oil and Gas in the Economic Development of Caspian Region The development of oil and gas resources in the Caspian region is mostly important for the development of economies in the Central Asian and Transcaucasia. In 1995 the energy sector’s share of gross domestic product (GDP) was an estimated 14.6 percent in Azerbaijan, 10.1 percent in Kazakhstan, 10.2 percent in Turkmenistan (International Energy Agency, 1998). Foreign investment attracted to the oil and gas sector in Caspian region could offer significant profits for the region’s governments and stimulate investment in other economic sectors. The attract foreign investment the host Governments should take discreet measures to ensure the development of an sufficient legal and administrative infrastructure, including institution building and personnel training, to handle the inflow of oil related revenues and to help ensure the countries’ efficient and equitable development. International Monetary Fund (2003) expressed concerns that unless regional governments introduce further administrative reforms, they risk being overwhelmed by new oil wealth. Particularly, corruption is a peril. Economic development motivated by foreign investment in the oil and gas industry helps to guarantee the financial independence of the Central Asian and Transcaucasian states. The transition to the market economy and the economic dislocations originated by collapse of Soviet Union left Azerbaijan, Kazakhstan and Turkmenistan without adequate funds to develop oil and gas resources. Governments of these countries are looking for private investment (mainly from foreign companies) that would play significant role in the development of oil and gas industry. Besides financial capital, a foreign investor brings a modern technology to local industry, including environmentally sound production techniques and modern management approaches. The Caspian Sea region countries are competing with each other for foreign investment. Oil and gas companies have a wide choice of where to make investment. The foreign investor considers the opportunities that offer the best financial returns. However, the investment climate is vital for company’s decision on where to invest. As a result, Kazakhstan and Azerbaijan took considerable steps in creating attractive investment climates. Kazakhstan concentrated on building a body of law applicable to all projects, while Azerbaijan focused primarily on modified production sharing agreements (International Monetary Fund, 2003). By the beginning of 1998, cumulative foreign direct investment in the oil and gas sectors of Central Asia and Transcaucasia had reached an estimated 3 billion of American dollars, nearly one third of which was placed in 1997. Future investment commitments in the region from contracts already signed total over 40 billion of America dollars (International Energy Agency, 1998). So far most foreign investment has been in Kazakhstan and Azerbaijan. Gas-endowed Turkmenistan started to attract foreign investment later than the others due to Government dictatorship and poor investment climate. Caspian oil development has gained a great deal of political and commercial momentum since the first foreign companies came there at the end of 1980s (Ruseckas, 2000). Since then the most important external factor influencing Caspian oil development is the price of oil. Principally if oil prices remain at present high level it is possible the more optimistic projects will be started. The Caspian Sea region could possibly produce approximately 4 million barrels per day by 2010. In any case, the Caspian Sea states require a stable legal regime to develop, produce, transport and market its natural resources. 1.5.1 Summary data on Azerbaijan Owing to extensive oil reserves, Azerbaijan is a major oil producer since the middle of the last century. Between 1990 and 1995 Azerbaijan’s gross domestic product dropped 58 percent (International Energy Agency, 1998). Oil production fell by only 25 percent mainly because of continuing oil product exports to neighbouring countries and an increasing use of heavy fuel oil in domestic power stations to alternative for imported gas. Due to the tightening of monetary and budgetary policies, the fiscal deficit dropped from 11.4 percent of gross domestic product in 1995 to less than 2 percent in 1996. In 2006 Azerbaijans real gross domestic product grew by 31 percent when the oil production in this region significantly increased. Azerbaijans anticipate for sustained economic growth is in its managing of large oil and natural gas resources in the Caspian Sea region, through effective management of the resulting revenue stream, and non-oil sector diversification (Energy Information Administration, 2006). During the beginning of transition most Azerbaijan onshore oil fields were in decline and required momentous new investment to develop large-scale offshore projects and to reconstruct existing fields. Since independence Azerbaijan signed several agreements with foreign oil companies. While maintaining full state ownership over energy companies, Azerbaijan was quick to invite foreign investors to assume a direct role in the development of its hydrocarbon reserves (Thompson, 2004). In 1992 most of the Azerbaijan oil sector assets were merged in two state oil companies – Azerineft and Azneftkimiya. The new merger was called the State Oil Company of the Azerbaijan Republic or SOCAR. While Government organizations handle production and exploration agreements with foreign companies, SOCAR is body to all international companies developing new oil and gas projects in Azerbaijan. After the first commercial oil flows through the Baku-Tbilisi-Ceyhan pipeline during summer 2006 and the increasing oil production from the Azeri-Chirag-Guneshli project, oil revenues are expected to contribute to a doubling of Azerbaijan’s gross domestic product by 2008 (Thompson, 2004). Energy Information Administration (2007) reports that though the oil sector represented around 10 percent of Azerbaijan’s gross domestic product in 2005, it is already projected to double to almost 20 percent of gross domestic product in 2007 (see Table 3). To manage the revenues, former President of Azerbaijan Heydar Aliyev formed a State Oil Fund in 1999, which is designed to use money obtained from oil-related foreign investment for poverty reduction, education and raising rural living standards. As of the end of 2006, the State Oil Fund reported assets of almost 2 billion US dollars, but the fund’s assets are expected to increase to 36 billion US dollars by 2010 (Energy Information Administration, 2006). Table 3Azerbaijan: Economy and Energy (in millions US dollars) 2003 2004 2005 2006 2007 2010 Oil Production (thousand barrels per day) 320 319 441 648 860 1,300 Oil Exports (thousand barrels per day) 215 204 314 521 721 N/A Foreign Direct Investment 3,285 3,556 1,680 -219 -4,750 476 FDI in Oil Sector 3,246 3,461 1,459 -573 -5,198 366 Oil Sector Revenue 886 946 1,337 2,921 5,272 19,417 As share of total rev (%) 42% 38% 39% 51% 59% N/A As share of total GDP (%) N/A N/A 9.8% 15% 19.7% 43.3% Oil Fund Assets 816 972 1,394 1,936 3,093 36,387 Source: Energy Information Administration: Short Term Energy Outlook, 2007; International Monetary Fund (IMF), Article IV Consultation, Staff Report, No 07/191, June 2007 1.5.2 Summary Data on Kazakhstan As it was the case in most other former Soviet Union countries, Kazakhstan’s first attempts at economic reform were effectively taken in response to Russias one-sided price reforms in 1992. After Kazak oil production had suddenly declined for two years in the end of 1993, inflation had out of control. The efforts to create an economic union with Russia and other former Soviet Union countries didn’t meet expectations of the Kazakh Government. Looking at the dynamic Asian economies as a model, the Kazakh Government turned to market style policies. However, the government increased hard budget constraints and restrictive monetary policies due to attempts to solve non-payment problem through state financing. The remained net debts after netting out inter-industry arrears were financed from Government budget and the central bank. In 1993 International Monetary Fund (IMF) granted Kazakhstan a one-year standby package. To maintain IMF collaboration and to stop the decline in gross domestic product, the Kazakh government implemented a second stabilisation program in 1995. But this time hard budget constraints and monetary policy were strengthened by excluding of government financing of net positions in inter-enterprise debts and retreating government guarantees for loans granted by foreign and domestic banks. In the middle of 1996, the International Monetary Fund approved an Extended Fund Facility (EFF) of 446 million US dollars for three years (IMF, 2003). According to International Monetary Fund (2003) the decision was made in light of a wide-ranging three-year reform programme submitted by the government, as well as the positive longer term prospects for production and exports of energy and non-ferrous metals. In 1996, Kazakhstan experienced its first positive economic growth since 1989. 1.5.3 Summary Data on Turkmenistan Preceding the collapse of the Soviet Union approximately 8 percent Turkmenistan’s gross domestic product was generated by gas exports to the rest of the USSR mostly to Belarus, Ukraine and the Caucasus. Another 5 percent of gross domestic product was earned from cotton exports. Gas and cotton exports continue to be used to cover the import of considerable amounts of grain and capital equipment from other former Soviet Republics. While estimates for the fall of gross domestic product between 1990 and 1995 vary depending on how adjustments to official gross domestic product are made, International Monetary Fund and European Bank of Reconstruction and Development agree on about -35 percent (IMF, 2003). This is much less than the 58 percent drop in Turkmen gas production. The rest of the economy is basically agricultural. The cotton industry has been less affected by the downfall of the Soviet Union. The government gradually liberalised some prices beginning in 1992. A presidential decree of 1995 removed price controls on all products except for about 50 items, including energy. The government introduced the manat as the national currency in 1993. In 1995 it unified the previously separate official and commercial exchange rates, which subsequently became determined by inter-bank auctions for foreign exchange. Between 1992 and 1995 the government compensated for the shortfall in revenue from taxes on gas production and exports by cutting expenditures and replacing subsidies to the economy with additional allocations of credit at largely negative interest rates. Controlled prices were adjusted repeatedly but declined in real terms for natural gas and for oil products through 1994. The share of gas related revenues in the central budget declined from 60 percent in 1992 to under 20 percent in 1995, which lowered the share of total budgetary revenue in GDP from 40 percent to 10 percent during this period. Due to drastic expenditure cuts in government wages and investment, including maintenance, the central budget deficit remained fairly stable over this period. It also helped that new excise taxes were introduced in 1995 on petrol (55 percent) and diesel (60 percent). This resulted in some recovery of government capital spending. The easy money policy was changed slowly in 1995 and 1996. During this time foreign exchange surrender requirements of state-owned enterprises to the Foreign Exchange Reserve Fund (FERF) were increased to 50 percent for gas and oil exports, and the money allocated directly to the central budget. Prior to that, this fund had been used to award credits to the economy, contributing to monetary expansion. In 1995 and 1996, bank credit allocation was reduced, real interest rates rose (due to credit auctions with deregulated interest rates), and reserve requirements for banks were increased. However, the pursuit of these policies was not smooth, in part due to the limited political autonomy of the Central Bank. Nevertheless, inflation decelerated by 50 percent towards the end of 1995 and is estimated to have been 445 percent in 1996, and 21 percent in 1997. Despite plummeting gas exports in recent years, Turkmenistan’s current account was slightly positive in 1994 and 1995, as long as arrears owed to the country are not taken into account. If such arrears are counted the 1995 balance swings from an estimated surplus of 54 million US Dollars to a deficit of 289 million US Dollars. The situation has probably continued to deteriorate due to weak gas exports. 2 Theoretical Frameworks 2.1 Overview of Foreign Direct Investment Theories There is variety of empirical studies on theoretical models explaining foreign direct investment (FDI) and its determinants. The various approaches from different disciplines such as economics, international business, organisation and management explain numerous characteristics of this phenomenon. The following dissimilar methods, explaining foreign direct investment as the location decision of multinational enterprises are mostly acknowledged in empirical literature on FDI: Ownership advantages as determinants of foreign direct investment (including monopolistic advantage and internalisation theory) based on imperfect competition models and the view that multinational enterprises (MNEs) are firms with market power (Hymer, 1960; Buckley and Casson, 1979; Kindleberger, 1969; Caves, 1971 for ownership advantages) Determinants according to the Neoclassical Trade Theory and the Heckscher-Ohlin model, where capital moves across countries due to differences in capital returns (for example Markusen et al, 1995,pp. 98-128; Aliber, 1970); Determinants of foreign direct investment in Dunning’s ownership-location-internalization (OLI) framework, which brought together traditional trade economics, ownership advantages and internalisation theory (Dunning, 1977; 1979); Determinants of foreign direct investment according to the horizontal FDI model or Proximity- Concentration Hypothesis (Krugman, 1983; Markusen, 1984; Ethier, 1986; Horstmann and Markusen, 1992; Brainard, 1993); Determinants of foreign direct investment according to the vertical FDI model, Factor-Proportions Hypothesis or the theory

Driving In India :: essays research papers

Driving in India Traveling in India is an almost hallucinatory mixture of sound and sight. It is frequently heart-rending, sometimes hilarious, mostly exhilarating, always unforgettable - and, when you are on the roads, extremely dangerous. Most Indian road users observe a version of the Highway Code based on some ancient text or on the position of the moon. In general the 12 rules of the Indian road code are: ARTICLE I The assumption of immortality is required of all road users. ARTICLE II The following Order of Precedence must be accorded at all times. In descending order give way to: cows, elephants, heavy trucks, buses, official cars, camels, light trucks, buffalo, jeeps, ox-carts, private cars, motorcycles, scooters, auto-rickshaws, pigs, pedal rickshaws, goats, bicycles carrying goods, handcarts, bicycles carrying passenger(s), dogs, pedestrians. ARTICLE III All wheeled vehicles shall be driven in accordance with the maxim: to slow is to falter, to brake is to fail, to stop is defeat. This is the Indian drivers' mantra. ARTICLE IV Use of horn: Cars (IV, 1, a-c): Short blasts indicate supremacy, i.e. in clearing dogs, rickshaws and pedestrians from path. Long blasts denote supplication, i.e. to oncoming truck, "I am going too fast to stop, so unless you slow down we shall both die". In extreme cases this may be accompanied by flashing of headlights. Single casual blast means "I have seen someone out of India's 870 million people whom I recognize", "There is a bird in the road (which at this speed could go through my windscreen)", or "I have not blown my horn for several minutes." Trucks and buses (IV, 2, a): All horn signals have the same meaning, "I have a gross weight of 12.5 tons and have no intention of stopping, even if I could." This signal may be emphasized by the use of headlights. Article IV remains subject to the provision of Order of Precedence in Article II above. ARTICLE V All manoeuvres, use of horn and evasive action shall be left until the last possible moment. ARTICLE VI In the absence of seat belts (which there is), car occupants shall wear garlands of marigolds. These should be kept fastened at all times. ARTICLE VII Rights of Way: Traffic entering a road from the left has priority. So has traffic from the right, and also traffic in the middle. Lane discipline (VII, 1): All Indian traffic at all times and irrespective of direction of travel shall occupy the centre of the road. ARTICLE VIII Roundabouts: India has no roundabouts. Apparent traffic islands in the middle of crossroads have no traffic management function. Any other impression should be ignored. ARTICLE IX Overtaking is mandatory. Every moving vehicle is required to overtake

Building an Organization II

In building an organization, there are a lot of things to consider. Many questions to answer, many materials to organize and it is important to have the enough capacity (could be financial) and manpower to realize the organization’s goal. In this particular organization, the focus is directed towards giving service and care to abused women and children, at no cost. Building an ethical organization is a challenge made easy when, as a person, seeing the hapless situation of these poor victims of violence, we aim to give an end to their suffering and help them.We feel that it is our moral obligation, given the circumstances, to extend our hand and offer as much as we can, change their lives as far as we could, and hopefully inspire them to live their lives as a whole person again. II. Description of the Organization As mentioned in the first draft of the organization’s profile. SHIELD Us, as it stands for the following goals: S – Safety of the victim is the topmost priority. The Organization deals with abused women and children and this issue is very delicate and dangerous at times, for both the victim and organization.Excessively beaten abused women and children needs emergency care at the soonest possible time and saving them is the topmost priority of SHIELD Us. Moreover, enraged abusers may hunt their escaped victims and by so doing endangering them once again. In addition to this, victims would be placed under safe keeping by hiding them in a safe house inaccessible by the abusers. Also, to provide close monitoring as to the physical and mental health of the victim, for at times they think of ending their suffering. H – Helping with open arms and without asking anything in return.The Organization was founded on the basis of moral obligation, and by so doing should emphasize that the Organization’s goal is not to gain profit, monetary or otherwise, but instead, to extend open arms to those who are unfortunately abused by thei r perpetrators, without asking for anything in return, be it monetary or services or otherwise. The Organization is built on the premise of providing free service, and unselective of people who can gain access of the Organization’s services. I – Imparting time and love for the care of the disadvantaged women and children.In times of crisis, these unlucky victims of violence went through a very grave ordeal. The least that the Organization can do is to offer them undivided attention and provide them with the loving and caring, as one person must give willingly, to another person, untarnished with any romantic intention, but rather of a pure love and care that they so deserve and need. E – Enhancing knowledge about the reasons why they underwent such endeavors. One of the Organization’s priorities is public awareness and education as to the causes and roots of abuse.A particular victim might blame themselves or think that it’s their fault, or that th ey deserve what happened to them, the Organization aims to remove that thought and would enlighten them about their ordeal. L – Love and trust, helping them live their lives again. As part of the rehabilitation program of the Organization, SHIELD Us aims to make available any resources, physically, emotionally, and mentally, to help the victims able to stand on their own again, and venture out into the world once more, fully equipped and armored for another try in life.D – Dedicated to the cause of stopping violence against women and children. As the Vision of the Organization, SHIELD Us’ ultimate goal is to eradicate violence against women and children, all over the world. It is the mantra of every personnel within the Organization to put a stop to whatever violence they would witness or came to know of. The Organization would utilize any means possible, legally, to end this extreme violation of women and children’s right to live, as normal individuals i n our community.Un-battered and untouched, never going out with big shaded eyeglasses, and thick make-up, to hide their bruises and cuts; never be afraid of coming home; never be afraid to commit mistakes; never be wondering why they get abused – all these things and more – would be the Organization’s end goal. SHIELD Us, is an organization functioning on its own, independent of the government and solely dedicated to providing service with no cost, and do not intend to raise any profits whatsoever for personal usage of the Board of Directors and the employees, and everybody within the organization.Therefore, SHIELD Us is a Non-Government, Non-Profit Organization providing free shelter, medical care and rehabilitation for abused women and children who are in need of help. Thus saying, the clientele mainly of this organization would be abused women and children who are in need of helping. III. Mission Statement: Mission: Providing a safe environment for abused wom en and children, where they can receive proper medical attention; appropriate psychological treatment and rehabilitation; and proper counseling about the legal workings of their cases, without judgment and maintaining their anonymity.The mission mainly addresses the means on how to achieve the ultimate goal of the Organization in eradicating violence against women and children, all over the world. As mentioned in the acronym SHIELD Us, safety for these individuals would be given through placing them in a safe environment far from their abusers. This can be achieved through acquiring a lot in a concealed area where it can not be easily located and erecting mini-clinics for provision of first aids and for emergency situations.For psychological treatment, since the Organization is non-profitable, it would find it easier to invite psychiatrists to provide free consults and join in the Organization’s cause. As for rehabilitation, milieu therapy would be quite appropriate for these individuals, thereby providing them safe and secured environment where they can release their emotions and not feel threatened and live in fear of being violated again. As for the legalities, for example, lawsuits filed by the abused individual, the Organization would support the lawsuit and the individual one hundred and one percent.If any case that the individual can not afford to sustain her complaints, the Organization would find a way of continuing the battle through solicitations, asking for donations, and inviting lawyers to join in the cause and provide pro bono services. The Organization’s values statement clearly encompasses no passing of judgment and working with the individual without bias and strictly prohibits divulging of information outside of the Organization, or even within the Organization among personnel who doesn’t have sufficient authority to gain knowledge about a particular situation or individuals.The following objectives and strategies are se lf-explanatory and need no further expansion. Objectives: 1. To provide a safe shelter where abused women and children can stay for free. 2. To give free medical care to abused women and children. 3. To provide free proper psychological treatment to help them cope with their emotional traumas. 4. To provide a favorable environment for rehabilitation for abused women and children for free. 5. To offer legal counseling about their situation for free. 6. To help women and children go to the proper authorities to report their ordeals. 7.To cooperate with the proper authorities and put perpetrators in jail. 8. To conduct educational seminars on the preliminary signs of abuse, and what to do about it. 9. To provide education to women and children to further enlighten them about the origin of abuse. 10. To have a self-defense class available for women and children for them to protect themselves. 11. To go on missions to rescue women and children who had been held captive or was placed in a very horrible situation. 12. To participate in programs held by other organizations with goals of furthering the cause of helping abused women and children. 13.To maintain an accepting and non-judgmental atmosphere where women and children can feel peace and security. 14. To perform all these objectives without bias and with sincerity. Strategies: 1. Acquiring a spacious lot in a concealed area where it can not be easily located. 2. Erecting a small clinic and two low-rise dormitories inside this lot. 3. Asking for volunteer health workers to constantly man the clinic 24/7 through shifting schedules. 4. Inviting volunteer psychologist and psychiatrist to join the organization. 5. Ensuing donations from private organizations and individuals to help fund the organization.6. Enlisting for grants for various charitable organizations. 7. Welcoming legal counsels to impart their expertise for the organization for free. 8. Collaborating with other organizations with the same objectives. 9 . Coordinating with the proper institute when reporting incidences of abuse. 10. Distributing leaflets, brochure, and fliers to inform people of the organization’s existence. 11. Enlisting the help of a self-defense instructor to hold free self-defense classes for women and children who wants to learn how to protect their selves. 12.Conducting seminars, approximately once a month about the early signs of abuse, and the different types of abuse. 13. Carrying out out-reach programs to help those women and children who can not afford to get out of their rural settlements, at least once a month. 14. Involving the community and making people aware about the reality of abuse. 15. Coordinating with the proper authorities when carrying out rescue missions. IV. Values Statement Values: 1. The organization would not involve itself in any malicious transactions that would put the women and children in its care in danger. a.In every organization, we can not prevent any illegal transactio ns that might put the charges or the organization in danger, intentionally or unintentionally. To prevent this, any transactions, business or personal (that directly affects the Organization) should undergo a thorough evaluation by a designated committee. 2. The employees and volunteers should always be discreet in dealing with their charges. a. We value anonymity of the charges and we encourage each and every one to be always aware of this, and NEVER divulge any information about the charges, inside or outside of the organization.This may endanger the lives of the charges, as well as the Organization. 3. Information about the women and children who sought help would always remain confidential, unless divulge by the victims themselves. a. In reference to Value No. 2, this is in connection to anonymity. 4. The organization does not allow its employees or volunteers to be romantically linked with anyone of their charges. a. Getting too attached with a charge is not encourages, even mo re so having a romantic relationship with them. This may lead to conflict of interest and surging or emotions at the wrong places at the wrong time.This may also lead to decisions based on feelings, not through reason. 5. The organization would not accept any donations or contributions that would demand the organization to act against its values. a. In reference to Value No. 1, any transactions (even if its donations) that demands the organization to act against its values and its members to go against the Code of Ethics should be immediately rejected. 6. The organization would not employ judgment towards its charges, or anyone in particular. a. Judging other people, especially the charges and commenting on their situation might aggravate their feelings more or vice versa.The personnel are encouraged to maintain a neutral point of view and avoid giving unsolicited remarks. 7. The organization would remain devoted to its vision and mission statements. a. Vision and Mission statements are created for a purpose, to give the Organization a definite direction with regards to operation, goal, management and service. Every action of every member of the Organization should always put the core statements in their minds. 8. The organization would continue to provide care without asking for any monetary compensation. a. The Organization proudly offers free services to abused women and children.Every member should always maintain this service, and not ask for any monetary or anything in payment for the services provided. 9. The organization would uphold professionalism and decency when dealing with people inside and outside of the organization. a. Professionalism and decency of an Organization’s personnel, reflects the core values of the Organization. Therefore, if the members of the Organization demonstrate good attitude, then they are giving out good word about the Organization. V. Code of Ethics. List your organization’s code of ethics, with a minimum of ten items.How does the code inspire a tangible outcome from the employees? How is it related to the mission and values of the organization? 1. Integrity a. The Integrity of every individual is important, for his or her own self-preservation, and the Organization’s benefit as well. A person with Integrity would make sure to follow the core values of the Organization, and would not engage in any malicious transactions that would cause the collapse of the Organization. An Organization with Integrity would gain more trust from the public and would gain more sponsors and donations for its cause.2. Loyalty to the Mission and Vision of the Organization a. Adhering to the core statement of the Organization would give the members a definite direction and purpose for all their actions. 3. Right people at the right position a. In every Organization, placing the right people at the right positions is very integral for the Organization’s success. Choices should be made accordingly to a pre-set criterion that would be presented by a committee. 4. Law –abiding a. It is always important for every Organization to get the support of the Law.Therefore, the Organization should ALWAYS keep into mind the laws that govern the location, the practices, and the methods that are to be used and exercised. The Organization should not be involved in any lawsuit or whatsoever questioning its standards and services. 5. Prudence a. In making decisions, it is always advisable to exercise Prudence. Caution saves a lot of trouble. 6. Honesty a. Honesty is always the best policy. The Organization encourages its members to be always honest with their intention, feelings, or apprehensions that would be properly addressed by a committee.7. Efficiency and Effect a. In every service that the Organization offers, time management that shows efficiency and effectively addressing the issue is of utmost importance. Sometimes, in this life-saving business, being efficient could save mor e and more lives. 8. Dedicated a. The Organization fosters dedication to their job. Dedicated personnel would do anything in his or her power to achieve whatever is needed for a certain situation. Having a pool of dedicated people always makes an Organization climb to success. 9. Respect a.Respect begets respect. 10. Legitimacy a. The legitimacy of the transactions should always be thoroughly reviewed by a committee to avoid problems with the law. The legitimacy of the Organization should also be prioritized, as every public individual or organization that are willing to donate for the SHIELD Us cause, deserves the truth and no horseplay from the organization. 11. Anonymity a. Maintaining the anonymity of its charges is a prime concern for the Organization. VI. Organizational Culture: What type of culture do you plan to foster and how?How will the culture institutionalize the organization’s values? An accepting, unbiased and utilitarian culture would be most apt for the Organ ization to develop. Since the Organization deals with very fragile and very personal issues, an accepting non-judgmental culture and point of view of personnel working within the Organization, would be better to foster trust, and improvement of the charges’ condition. The Organization’s values state that each personnel should always be careful of the feelings of each member of the Organization, especially the charges’ feelings.The Organization aims to develop a conducive environment for the victims to pick their selves up from despair, and a warm, friendly, non-judgmental and safe environment is the best way to achieve it. To be able to foster this culture, there should be a committee assigned to relate specific rules and regulations, and the personnel should undergo orientation and training, for them to be better equipped in dealing with one another, and their charges. VII. Leadership: What approach to leadership will you take? How will you develop and maintain organizational culture as a leader?What is your moral responsibility as a leader? A democratic leader, dedicated and who firmly believes in the cause of the Organization, would be the better approach. A democratic style of leadership would better foster trust and camaraderie among the higher positions and the lower positions. A democratic leader, who is open to suggestions, to criticisms and to change, a leader who is willing to listen to his or her subordinates and to his or her charges (the victims) on ways in which to improve the Organization.This type of leader would easily know the concerns surrounding the Organization, since he or she would convene his or her members frequently and create a platform of open discussion of any apprehensions. However, a democratic leader should also decide by himself if the suggestions are appropriate and for the betterment of the service the Organization provides. Disregarding his pride and previous decisions, a democratic leader should abide b y the values of the Organization, and submit himself to the Code of Ethics. A leader should be the model of everything good within the organization.He or she must encompass in himself the core values and practice it professionally and personally. VIII. Oversight: How will you measure your organization’s performance in maintaining an ethical standard? What structures or systems will you put in place for oversight? The Organization would be better equipped in the realization of its core statement and values by placing committees designated to follow through each function of every department. This would help measure the organization’s performance in maintaining an ethical standard. These committees would create criteria that would place firm rules and regulations in place.These rules and regulations should be followed by all members of the Organization, regardless of their positions. It should apply to everyone and not only to the select few. Also, these committees should take it upon themselves not to be influenced by power, by position or by self biases. IX. Conclusion In building an organization, ethical principles and values are the most important. Since it deals with people’s attitude and this dictates the working environment. Inculcating values in each and every one of the members of the Organization is not that easy, and admittedly, this takes a lot of time and effort.There may be cases that one member may not conform with the Organization’s policies and standards – this should be handled discreetly by committees designated for such function. A non-government, non-profit organization gets funding from donations and solicitations to people and to big companies; raises money through fund raisings and participates for grants and charitable awards – to be able to qualify for these things, the Organization needs to be a trustworthy organization solely devoted to their cause and has strict adherence to their code of cond uct.For an organization to raise funds and sustain the organization, it must maintain a CLEAN REPUTATION, and must show improvement and eagerness to help accordingly. Therefore, observing zealously the values statement, the core statement and the code of ethics of the Organization is very significant to achieve its vision in the near future. References Independent Sector 5. Statement of Values and Code of Ethics for Nonprofit and Philanthropic Organizations. February 3, 2004. www. independentsector. org. 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Grading Summary Essay

Question 1. Question : (TCO A) The Financial Accounting Standards Board employs a â€Å"due process† system, which: has all CPAs in the United States vote on a new statement. enables interested parties to express their views on issues under consideration. identifies the accounting issues that are the most important. requires that all accountants receive a copy of financial standards. Points Received: 5 of 5 Question 2. Question : (TCO A) The cash method of accounting  is used by most publicly traded corporations for financial statement purposes. is not in accordance with the matching principle for most publicly traded corporations. often is used on the income statement by large, publicly held companies. All of the above Question 3. Question : (TCO A) Which of the following is an ingredient of relevance? Verifiability Completeness Neutrality Predictive value Question 4. Question : (TCO A) The characteristic that is demonstrated when a high degree of consensus can be secured among independent measurers using the same measurement methods is relevance. reliability. verifiability. neutrality. Question 5. Question : (TCO A) Which of the following is not a basic element of financial statements? Assets Balance sheet Losses Revenues Question 6. Question : (TCO A) Which basic element of financial statements arises from peripheral or incidental transactions? Assets Liabilities Gains Expenses Question 7. Question : (TCO A) Which basic assumption may not be followed when a firm in bankruptcy reports financial results? Economic entity assumption Going concern assumption Periodicity assumption Monetary unit assumption Question 8. Question : (TCO D) Balance sheet information is useful for all of the following except to compute rates of return. analyze cash inflows and outflows for the period. evaluate capital structure. assess future cash flows. Question 9. Question : (TCO D) The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as solvency. financial flexibility. liquidity. exchangeability. Question 10. Question : (TCO A) The quality of information that gives assurance that is reasonably free of error and bias and is complete is relevance. faithful representation. verifiability. neutrality. Question 1. Question : (TCO D) The basis for classifying assets as current or noncurrent is conversion to cash within the accounting cycle or one year, whichever is shorter. the operating cycle or one year, whichever is longer. the accounting cycle or one year, whichever is longer. the operating cycle or one year, whichever is shorter. Question 2. Question : (TCO A) What is FASB Codification? Explain in detail. Instructor Explanation: The codification takes the statements and other pronouncements and arranges the information by topic. Per the FASB, the new system will 1. reduce the amount of time and effort required to solve an accounting research issue; 2. mitigate the risk of noncompliance with standards through improved usability of the literature; 3. provide accurate information with real-time updates as new standards are released; and 4. assist the FASB with the research and convergence efforts required during the standard-setting process. Question 3. Question : (TCO C) At Ruth Company, events and transactions during 2010 included the following. The tax rate for all items is 30%. (1) Depreciation for 2008 was found to be understated by $30,000. (2) A strike by the employees of a supplier resulted in a loss of $25,000. (3) The inventory at December 31, 2008 was overstated by $40,000. (4) A flood destroyed a building that had a book value of $500,000. Floods are very uncommon in that area. What would the effect of these events and transactions on 2010 income from continuing operations net of tax be? Instructor Explanation: $25,000 – $7,500 = $17,500 Question 4. Question : (TCO C) For the year ended December 31, 2010, Transformers Inc. reported the following. Net income $60,000 Preferred dividends declared $10,000 Common dividend declared $2,000 Unrealized holding loss, net of tax $1,000 Retained earnings, beginning balance $80,000 Common stock sold during the year Retained earnings, beginning balance $80,000 Common stock $40,000 Accumulated Other Comprehensive Income, Beginning Balance $5,000 What would Transformers report as the ending balance of retained earnings? Instructor Explanation: $80,000 + $60,000 – $10,000 – $2,000 = $128,000 Question 5. Question : (TCO C) Madsen Company reported the following information for 2010. Sales revenue $510,000 Cost of goods sold $350,000 Operating expenses $55,000 Unrealized holding gain on available-for-sale securities $40,000 Cash dividends received on the securities $2,000 For 2010, what would Madsen report as other comprehensive income? Instructor Explanation: Other comprehensive income = $40,000 Question 6. Question : (TCO B) Allowance for doubtful accounts on 1/1/10 was $50,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $65,000, and during 2010, bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. Instructor Explanation: DR Bad Debt Expense 55,000 CR Allowance for Doubtful Accounts 55,000 Ending balance $65,000 Beginning balance 50,000 Difference 15,000 Written off 40,000 Adjustment $55,000 Question 7. Question : (TCO B) Allowance for doubtful accounts on 1/1/10 was $75,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000, and during 2010, bad debts written off amounted to $30,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. Instructor Explanation: DR Bad Debt Expense 15,000 CR Allowance for Doubtful Accounts 15,000 Ending balance $60,000 Beginning balance 75,000 Difference -15000 Written off 30000 Adjustment $15,000 Question 8. Question : (TCO B) Allowance for doubtful accounts on 1/1/10 was $60,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $55,000, and during 2010, bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment. Instructor Explanation: 12/31/10 Ending Balance 55,000 1/1/10 Beginning Balance 60,000 Adjustment -5,000 Written off 40,000 Adjusting entry 35,000 DR Bad Debts Expense, 35,000 CR Allowance for Doubtful Accounts, 35,000 Question 9. Question : (TCO B) Prepaid rent at 1/1/10 was $30,000. During 2010, rent payments of $120,000 were made and charged to â€Å"rent expense.† The 2010 income statement shows as a general expense the item â€Å"rent expense† in the amount of $125,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. Please indicate DR (debit) or CR (credit) to the left of the account title, and place a comma between the account title and the amount of the adjustment Instructor Explanation: DR Rent Expense 5,000 CR Prepaid Rent 5,000 Rent expense $125,000 Less cash paid 120,000 Reduction in prepaid rent $5,000 Question 10. Question : (TCO D) Which of the following should be reported for capital stock? The shares authorized The shares issued The shares outstanding All of the above Question 11. Question : (TCO D) An example of an item that is not an element of working capital is accrued interest on notes receivable. goodwill. goods in process. temporary investments. Question 12. Question : (TCO A) Financial information exhibits the characteristic of consistency when expenses are reported as charges against revenue in the period in which they are paid. accounting entities give accountable events the same accounting  treatment from period to period. extraordinary gains and losses are not included on the income statement. accounting procedures are adopted which give a consistent rate of net income Question 13. Question : (TCO D) The current assets section of the balance sheet should include machinery. patents. goodwill. inventory. Question 14. Question : (TCO D) Houghton Company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes, $100,000, and retained earnings, $313,000. What total amount should Houghton Company report as stockholders’ equity? $848,000 $948,000 $1,048,000 $1,118,000 Instructor Explanation: General Feedback: b. $720,000 – $85,000 + $313,000 = $948,000.