Financial Analysis Methods

Q1. Consider two companies: United States steel (X) and Facebook (FB). 

Look at the profiles (financial statements for 2016) of each on yahoo finance and discuss the followings (you need to calculate these value yourself and show details of your calculations):

· How many outstanding shares the company has? 

· What is the market value of the company? 

· What is the book value of the company? 

· What is the beta for the company?

· How do you find the risk free rate? (Consider the market risk premium to be 8%)

· Using CAPM calculate the expected return on the equity for the company. 

(To get the required rate of return on debt, divide the interest expense by total debt) 

(To get the total debt, add the short term debt to long term debt) 

· What is the weighted average cost of capital (WACC) for the company?

· What is the leverage (total debt/equity ratio) for the company? 

How many outstanding shares the company has? 

The United States Steel (X) has outstanding shares of 157 million of shares in 2016 while Facebook (FB) has outstanding shares of 2,925 million of shares in 2016. From the results obtained on yahoo finance, it shows that Facebook (FB) has higher outstanding shares than the United States Steel (X).

What is the market value of the company? 

Market value gives the representation of the value of the company regarding as per the stock market. Ideally, the market is considered as the generic term that gives representation of the prices that assets get in the market, implying it represents the market capitalization concerning the companies (Hegazy, 2016). The market value is calculated through multiplication of the outstanding shares of the company by its current market price. Below is the formula for calculating the market value:

For example, in the company is trading at $ 50 per share and has about 2 million shares outstanding, then the market value of that company is $ 100 million. Most often, analysts, investors, and newspapers refer to market value of the company while they mention the worth of the company. The market price of shares is dynamic throughout the day, which makes the market value of the company to keep changing proportionately (Hegazy, 2016). However, the changes to the shares outstanding are quite rare as they only occur when the company is pursuing specific types of corporate actions, whereby the market value shifts are mainly associated with the per share price variations.

The market value of the United States Steel (X) in 2016 is calculated in the following steps:

Current market price (per share) in 2016 is $ 6.15

Outstanding shares of the company in 2016 are 157 million of shares. Applying this formula can help in finding the market value of the United States Steel (X) in 2016

The market value of the United States Steel (X) in 2016 according to the data provided by the yahoo finance can be estimated as

The market value of Facebook (FB) in 2016 is calculated in the following steps:

Current market price (per share) in 2016 is $ 7.57

Outstanding shares of the company in 2016 are 2925 million of shares. Applying this formula can help in finding the market value of Facebook (FB) in 2016

The market value of the Facebook (FB) in 2016 according to the data provided by the yahoo finance can be estimated as an equivalent of $ 22. 14 billion

What is the book value of the company? 

Book value of a company literally implies the value of business as per the accounts that are reflected through the company’s financial statements. Ordinarily, the book value of a company gives thee representation of the total amount of worth of a company in situations where all the assets are sold and all the liabilities are paid back (Hegazy, 2016). In fact, this is the amount the creditors and investors of the company can expect to receive in case the company is liquidated. Mathematically, the book value of a company is calculated through getting the difference between the total assets and total liabilities of the company (Hegazy, 2016). The formula for the book value of a company is shown below:

For example, if a company has the total assets of $ 200 million and the total liabilities of $ 170 million, then the book value of that company is $ 30 million. In a wide sense, it implies that in case the company decided to sell off its assets and paid down its liabilities, then the net worth or even the equity value of the company would be $ 30 million.

The book value of the United States Steel (X) in 2016 is calculated in the following steps:

Total assets of the company in 2016 is $ 9,160,000,000

Total liabilities of the company in 2016 are $ 6,885,000,000. Applying this formula can help in finding the book value of the United States Steel (X) in 2016:

The book value of the United States Steel (X) in 2016 according to the data provided by the yahoo finance can be estimated as which is an estimate of $ 2.275 Billion Therefore, it implies that if the United States Steel decided to sell off its assets and pay down its liabilities, then the net worth or even the equity value of the company would be $ 2,275,000,000 which is quite positive for the company that wants to strive in future in terms of business.

The book value of Facebook (FB) in 2016 is calculated in the following steps:

Total assets of the company in 2016 are $ 64,961,000,000

Total liabilities of the company in 2016 are $ 5,767,000,000. Applying this formula can help in finding the book value of Facebook (FB) in 2016

The book value of the Facebook (FB) in 2016 according to the data provided by the yahoo finance can be estimated as an equivalent of $ 59.194 billion. Therefore, it implies that if Facebook decided to sell off its assets and pay down its liabilities, then the net worth or even the equity value of the company would be $ 59.194 billion which is quite positive for the company that wants to strive in future in terms of business.

What is the beta for the company?

The beta for a company is the measure of the vitality or risk that is systematic of the security as compared to the market. In essence, the beta of a company merits how the equity market of a company changes with the overall market changes (Hegazy, 2016). In fact, it is applied in the Capital Asset Pricing Model for the estimation of the return of an asset. Specifically, beta is the slope coefficient found from the regression analysis of the stock returns against returns of the market. This regression equation can be employed in estimating the beta of a company.

There is inadequate market data on the stock price of some companies which makes it difficult to estimate the stock beta. The overall market always has a beta of 1 but the individual stocks are positioned according to the extent at which they deviate from the market (Hegazy, 2016). Holistically, the stock which tends to swing more than the market over specific time is perceived to have beta more than 1. If such stock swings less than the market, the beta is less than 1. Indeed, stocks with high beta tend to be more risky but there is provision of for higher returns while stocks with low beta tend to pose less risk but ordinarily yield low returns (Hegazy, 2016). Consequently, beta is applied as a risk reward measure implying that it assists investors in the determination of how much risk they are willing to be involved in to accomplish the returns for taking on that particular risk. The price variability of the stock is significant in the consideration particular during the assessment of the risk.

The simply way of calculating beta of a risk of the market returns is through this formula below;

Covariance is used in measuring the movement of two stocks together. A positive covariance implies that the stocks are moving together with changes in their prices while negative covariance implies that the stocks are not moving together whenever there are changes in the price (Ivert et al., 2015).

On the other hand, variance refers to the extent at which the stock moves in relation to its mean, for instance, variance is applied in the measurement of the vitality of the individual price of the stock over period of time. While covariance is applied in the measurement of correlation in the price movement of different stocks (Ivert et al., 2015).

Another way of calculating beta is by dividing the standard deviation of returns of the security by the standard deviation of returns of benchmark. The solution is multiplied by the correlation between the returns of security and returns of benchmark (Ivert et al., 2015).

The beta of the United States Steel is calculated based on the following parameters.

The correlation between the United States Steel and Apple Inc. is 0.82.

The United States Steel has a standard deviation of returns of 23.43%

Apple Inc. has a standard deviation of returns of 32.20%.

In this situation, the United States Steel (X) is considered to be less volatile than the market because its beta of 0.6 depicts that the stock is experiencing 40% less vitality than the industry (). It can be assumed that investors would likely use the beta to know the state of the company with respect to the industry.

The beta of Facebook (FB) is calculated based on the following parameters.

The correlation between Facebook (FB) and Apple Inc. is 0.83.

The Facebook (FB) has a standard deviation of returns of 32 %

Apple Inc. has a standard deviation of returns of 15%.

In this situation, the Facebook (FB) is considered to be less volatile than the market because its beta of 1.8 depicts that the stock is experiencing 80% more vitality than the industry ().

How do you find the risk free rate? (Consider the market risk premium to be 8%)

Risk free rate is found by the interest that investors expect from the absolute risk-free investment over time. Theoretically, the risk-free rate is the lowest return investors expect for the investment since they cannot accept any additional risk unless the potential rate of return is significantly higher than the risk-free rate. The risk free rate can be determined using Required Rate of Return (CAPM) which its formula is as shown below:

To find the risk-free rate of the United States Steel involves listing of the parameters required in the calculation of Required Rate of Return (CAPM). The following are the details of the parameters of the United States Steel:

Expected return should be at least 6.5%

Beta of the stock of the company is 0.6

The market risk premium is 8%.

The risk-free rate of the United States Steel is approximated to 1.7% according to the parameters provided in the data.

On the other hand, to find the risk-free rate of Facebook (FB) also involves listing of the parameters required in the calculation of Required Rate of Return (CAPM). The following are the details of the parameters of the United States Steel:

Expected return should be at least 6.5%

Beta of the stock of the company is 1.8

The market risk premium is 8%.

The risk-free rate of Facebook is approximated to 7.9 % according to the parameters provided in the data.

Using CAPM calculate the expected return on the equity for the company. 

(To get the required rate of return on debt, divide the interest expense by total debt) 

(To get the total debt, add the short term debt to long term debt) 

The Capital Asset Pricing Model (CAPM) applies the principles of the Modern Portfolio Theory in the determination whether security is fairly valued. Essentially, it relies on the assumptions concerning the behaviors of investors, risk and return distributions among other things that do not conform to the reality. As a result, the CAPM concepts and the related efficient frontier that is capable of helping investors to understand the relations between the expected risk and reward as they struggle in making relevant decisions concerning the addition of the security to a portfolio.

The formula for calculating the expected return on the equity for the company provided that the risk is known is as follows:

The objective of the CAPM formula is to evaluate if the stock is valued on fair means when the risk and value of time are compared to the expected return.

To find the expected return on the equity for the United States Steel involves listing of the parameters required in the calculation of Required Rate of Return. The following are the details of the parameters of the United States Steel:

Beta of the stock of the company is 0.6

The market risk premium is 8%.

Risk-free rate can be assumed to 3%

The expected return on equity for the United States Steel is approximated to be 7.8 % according to the parameters provided in the data.

On the other hand, to find the expected return on the equity for Facebook (FB) also involves listing of the parameters required in the calculation of Required Rate of Return. The following are the details of the parameters of the United States Steel:

Beta of the stock of the company is 1.8

The market risk premium is 8%.

Risk-free rate can be assumed to 3%

The risk-free rate of Facebook is approximated to 17.4 % according to the parameters provided in the data.

What is the weighted average cost of capital (WACC) for the company?

The Weighted average cost of capital (WACC) for the company is the cost utilized in the financing of the new projects based on the structure of the company. In case the company is wholly debt financed then use interests on the debt issued and subsequently adjust the taxes because interests are tax deductible in the determination of the cost. Indeed, a company is much more complicated.

What is the leverage (total debt/equity ratio) for the company? 

Q2. By using the data (Up to the year 2008) for Euro zone countries (excluding Malta and Cyprus) from 'OECD fact book' discuss the impact of the following factors in bringing about the 'Euro crises': 

1- Budget deficits and national debt 

2- Balance of payments 

3- Social expenditures 

Using graphs compare the above factors for the countries in trouble, PIGS (Portugal, Ireland, Italy, Greece and Spain) vs. other countries in the Euro zone like Germany and France that fared well and contrast which of the above factors may have contributed to the crisis. The fact that all these countries were using a single currency and did not have the power to devalue their own currency could be another factor you need to consider when analyzing this issue. 

Budget deficits and national debt 

The European debt crisis is referred as the Eurozone crisis that is characterized with the multi-year debt crisis which took place in the EU from the end of 2009. Several countries such as Spain, Portugal, Ireland, and Greece were not able to repay their government debts (Ivert et al., 2015). Holistically, the causes of this crisis were varied from one nation to another.

The crisis led to the lowering of interest rates as well as the provision of cheap loans of at least one trillion euro for the sake of maintaining money flows among the European banks (Ivert et al., 2015). Consequently, the European Central Bank (ECB) started to calm the financial markets through the announcement of free unlimited support for all the EU nations that were involved in the bailing out of sovereign state (Ivert et al., 2015). It was done through lowering the Outright Monetary Transactions.

The crisis adverse economic effects as well as labor market effects due to the increase of unemployment rates in Spain and Greece getting to more than 27% () and it was blamed for the declined economic growth not only for the Eurozone countries but also for the whole EU (Ivert et al., 2015).

The crisis led to the rise of competition among different countries in the Eurozone. Crisis countries were significantly increasing their international competitiveness in the generation of the economic growth as well as improving their terms of trade (Ivert et al., 2015). It was done to scenario of economic shocks, where policy makers ordinarily attempt in improving the competitiveness by the depreciating the currency like the case of Iceland that ended up suffering the biggest financial crisis between 2008 and 2011 ().

The countries started to implement the internal devaluation as one of the policy to restore economic growth. For example, Ireland started to implement the relative wage moderation for a period of five years that aided in decreasing the relative wage levels by close to 16% (). In 2012, Greece decided to cut the wage level that was last seen in 1990s. The crisis led to the dropping of the purchasing power to a level last witnessed in 1986 (). Similarly, Italy experienced the reduction of salaries that affected the level of consumption that was last experienced in 1950.

Handling of the crisis led to the premature end of the EU governments as well as being influenced the outcome of several elections in the entire Europe (). Market pressure on the government bond prices in Italy in 2011 raised concerns regarding the debt levels. This made the right-wing cabinet to lose its majority in the government thus making Berlusconi to resign in on November and was later replaced by the Mario Monti. The crisis and handling of the crisis led to significant political impact in the entire Europe.

Balance of payments 

The euro sovereign debt crisis began with Greece in 2010 and then it spread to other states including Portugal, Italy, and Spain. Evidence about the Greek crisis associated with unsustainable fiscal scenario contributed to several authors believing fiscal mismanagement underlying issues in other countries. Other countries began to reduce the domestic spending with the global recession in 2009 thus decreasing their dependence on the foreign borrowing (). Over some years, Portugal, Greece, and Spain noted improvements in the current account balances; for instance, Spain succeeded in reducing the deficit to about 5% of the Gross Domestic Product. However, the sovereign debt crisis in 2010, Portugal and Greece had big gaps between the spending and income totaling to close to over 10% of Gross Domestic Product.

Intrinsically, the sovereign debt crisis and the subsequent push towards the markets through foreign investors significantly intensified the adjustment pressures on other nations (). These nations responding through reducing spending even through the use of force. Ideally, the results were enough to narrow the current account deficits where exports increasing relative to the imports as well as saving to the increasing relative to the spending on the investment(). In the mid 2013 painful action was taken by reducing the spending to the domestic income levels that was greatly completed.

It is more considerable to lose access to the foreign capital for the sake of boosting exports instead of cutting back on imports. Greater exports could translate to greater domestic production and incomes, decreasing the need of reducing the spending (). Surely, lowering the imports may have positive impact of job loss moderation in case consumers and business enterprises are shifting to domestically produced goods and services. Nevertheless, the adjustment of the current accounts is accomplished through cutting back of the overall spending.

Several trade adjustments happened that made the current accounts to go close to zero in Portugal, Italy, and Spain due to greater export revenues (). Between 2010 and 2013, the exports of nominal goods and services in some of these countries rising to 15% and above, a rise in line with increase of exports from Germany (). Greater exports in these states supported growth through the softening the economic downturns (). Contrastingly, Greece experienced rise in the export sales by only 6% over three years. It was due to the increase of more limited assistance in easing the serious downturn of the country (). The success of other periphery countries was the achievement of the exports through sales to the countries that are outside the Eurozone.

Inherently, low import spending resulted in the closing of the current account deficits in Greece, Italy, and Portugal.

Greater public and private saving also resulted in stopping external borrowing with Spain and Italy showing the modest records about increasing saving whereas Portugal and Greece were experiencing more prominent increases as shown in the figure below. Besides, the narrowing in other nations’ current account deficits associated with the reductions on the spending on the investment with great declines that ranged from 3% to 5% of the Gross Domestic product ().

While greater savings and reductions in the spending on the investment were fundamental in the restoration of the balance to the current accounts in other countries; they had experienced the effect of reducing output as well as raising the unemployment rate (). Besides, the drop in the investment spending especially outside the residential sectors has adverse effects for the future growth through limitations of the productivity improvements. The only demerit is especially acute due to the recent decrease in the investment brought on the helms of a big drop between 2008 and 2009 associated with the Great Recession though prior to the Eurozone crisis taking hold.

Social expenditures 

During the crisis there was notable decline in the social spending and majorly witnessed in Greece. The social spending increased by 10% in Netherlands; reflect the OECD average. The Eurozone was greatly affected with the crisis that led to significant reduction in the real social spending just like Greece.

The crisis contributed to the rise in social spending across the OECD. Intrinsically, the timing was completely different where for Ireland it occurred in 2007/ 2008 and in France it happened in 2008/2009 (). With increase in the joblessness, spending on the unemployment compensation rose significantly from 0.8% of the Gross Domestic Product in 2007 to 1.2% in 2009. Ideally, the rise in the spending on unemployment was mostly observed in Iceland from rose from 0.32% of the Gross Domestic Product in 2008 to 1.68% in 2009, Ireland from 1.41% to 2.57%, and Spain from 2.23% to 3.49% (). According to the Active labor Market Programmer (ALMPS), the rise in the average public spending was not much by comparing: from 0.52% in 2007 to 0.62% of the Gross Domestic Product in 2009 ().

In states where the support of family is mostly income-tested, the public spending on the benefits rose to higher number than before. In the year 2009, the public spending on these benefits was the highest in Ireland and closely followed by Iceland (). The graph below shows the public spending on the family benefits as the percentage of Gross Domestic Product.

The Eurozone crisis led to the provision of impetus of several reforms for ensuring that there is financial sustainability of the pension system. As a result, several countries increased the retirement age. However, such reforms may not lead to immediate decrease in the social spending. It only helps in the illustration of the crisis for putting focus on the reform requirement on the social welfare system for the sake of coping with the ageing and contributing the structural pressure on the social spending. As a result, the crisis target key social areas that were observed in Europe particularly dealing with the old people in the society ().

The Eurozone crisis as well as the efforts of fiscal consolidation highly put pressure on the social protection system, ageing population as the common the elements in pursuing the future improvements in the social spending (). In addition spending on the health related cases contributed to doubling from 7.1% in 2009 to 13.2% by 2050, which is on average across the entire OECD ().

Using graphs compare the above factors for the countries in trouble, PIGS (Portugal, Ireland, Italy, Greece and Spain) vs. other countries in the Euro zone like Germany and France that fared well and contrast which of the above factors may have contributed to the crisis. The fact that all these countries were using a single currency and did not have the power to devalue their own currency could be another factor you need to consider when analyzing this issue. 

Among the three factors that have contributed immensely to the crisis is Budget deficits and national debt. The origin of Budget deficits and national debt was seen to have started in the wake of Great depression which happened around 2009. The following graphs compare debts of PIGS (Portugal, Ireland, Italy, Greece and Spain) to other countries in the Euro zone.

Debt of Portugal compared to Eurozone Average since 1999

Debt of Ireland compared to Eurozone Average since 1999

Debt of Italy compared to Spain since 1995

Debt of Greece compared to Eurozone Average since 1999

Debt of Spain compared to Eurozone Average since 1999

Q3. You have owned and operated a successful brick-and-mortar business for several years. Due to increased competition from other retailers, you have decided to expand your operations to sell your products via the Internet. Using your responses from previous discussion questions and assignments (be sure you include them in your analysis), develop a plan to implement and execute your strategy to go e-business. 

The plan to be implemented and executed in the strategy to go e-business involves the how negotiations are applied in getting new opportunities in the business world. Intrinsically, it has been established that business can only expand through formation of merger or even acquisition to aid in becoming more competitive in the market. Consequently, the company must be in dire situation to assist in developing the best plan to utilize in running the affairs of the company.

Negotiation is quite in making of business deals particularly when it involves different companies. This could be portrayed through having a strategy plan to aid in the completion of a project that should be initiated in its entirety. The concept also applies to countries that are trying to get the best ways of creating mergers among their companies. As a result, these countries or companies engage in the negotiations to form an agreement that would be used in running the merger (Cullen & Parboteeah, 2013). In fact, there should be a plan of outsourcing some elements of production to the company or country when the governments are involved in the issues for the sake of reducing the costs. Before starting the journey to negotiation, management and its team should be well-prepared. It can be depicted how they made inquiry regarding the information about company that includes production facilities, quality of the products, and costs of production. Therefore they knew what they needed to make a mutually fair proposal.

The negotiating counterpart and its team should do their homework thoroughly. They had made inquiries about the company, and felt they had full knowledge of the company’s overall corporate culture; employees, production technology, and business philosophy (Cullen & Parboteeah, 2013). Intrinsically, they were keen to have full information about the company with hopes of entering long-term partnerships embedded on the mutual trust, enabling them to learn from the technological know-how of the workers.

Managers were informed that their counterparts were tough negotiators, but when looking back, he did not find them to be. He believed they played bad games and tried to cheat wherever possible. He did feel impressed by the reception they received upon arrival in the company because of a large delegation that waited for them at the airport as well as the presence of a banner placed across the gate for welcoming them.

Subsequently, several meetings must be held in order to reach the best agreement and also avoid one party dominating the discussion in the whole session and should several people from the company and other company officials. The meetings should be done without a formal schedule and agenda. It increasingly annoyed Scott and his team despite receiving a warm welcome. The counterparts were utterly ignorant about having a detailed timeline of the meetings. In spite of annoyance from the people, they could still answer business case-related questions asked by the company for the sake of maintaining good ambiance.

The company, however, did not respond to similar questions from the team. Instead, they changed the conversation to various topics such as the ‘long-established’ friendship between among the countries or companies. For example, the deals that were made between Americans and Chinese through the following scenarios. Scott had a feeling that the Chinese were not honest to him and did not see that manner in which how he could trust these Chinese. On the other hand, Sung was thinking that Americans were naïve for being honest in the negotiations.

The discussion was going back and forth as can be seen when the Chinese often re-opened subjects which Scott thought had been settled, and a lot was ‘subject to approval.’ The Chinese did not attempt responding with a ‘no.’ they just mentioned ‘it could be pretty difficult,’ or ‘provided that. .’. Scott and his team realized after a while that these expressions meant no (Pyle & Ghoukasian, 2015). The Chinese considered reality too complicated to be divided into yes and no.

To analyze means to take apart. How can one take things apart that are connected? As a result of this perception, negotiations for the Chinese team were a circular, iterative process whereby one can revisit issues.

Scott and his team decided not to honor negotiations since they are tough in presenting their views as such could not be blackmailed by the Chinese. Sung thought it was miserable. It is common tactical behavior trying to get some final points towards the end when your negotiation partner is getting tired as well as having eager to go back home. Sung did not expect a full agreement to his proposal. A minor concession would have demonstrated his negotiation skills to his superiors. Sung did not see how they could do business even in the future with people who behave in such a way.

The scenario above could be utilized in proper planning as well as having the best strategy that leaders should applying when making decision concerning policymaking process. It is quite fundamental and helpful in leaders have adequate and quality negotiating skills. It is because all the businesses across the world are operated based on the agreement or even formation of partnership to allow creation of economies of scale.

Q4. Write an 8 - 10 page APA formatted paper that explains the following: (1) three to four important concepts you have learned throughout this seven-week course; (2) identify the two to three concepts you would like to apply to your work setting and how you will go about implementing them; (3) identify the key elements of your plan to strengthen your practice of leadership. 

The important concepts I have learned throughout this seven-week course include ethical behavior reinforcement at the workplace, critical factors that lead to the success of business, application of the market ratios in determination of the leadership performance in an organization. Intrinsically, the identified concepts would be applied in the work setting are ethical behavior reinforcement at the workplace and critical factors in business.

Clear and specific standards of conduct bring an ethical workplace. In essence, these values are put into practice from top to bottom, where executive officers set the tone for other staff in the company (Yidong and Xinxin 448). Besides, ethical behavior needs reinforcement at all times and to strengthen ethical behavior in the workplace, it requires the use of many methods. One of the ways that are applicable in the workplace is the establishment of ethical standards.

Ethical standards are partial rules and regulations that the company sought to work with while executing its functions. Creation of ethical standards in the workplace is probably the source of happiness for the employees and satisfied customers. Also, ethical standards should be clear and without ambiguity to help in reducing human resources issues, picking up morale and increasing productivity. They should be specified such that rather than writing “Be respectful,” just write “Employees should not make unwanted sexual advances” (Rubin and Babbie 312). The establishment of ethical standards is done in the following ways. First, the company’s standards of conduct are put in writing. It is done by compiling an exhaustive list of workplace standards in the language acceptable to ethical business practices. Then post these written standards in the frequent access areas and publish them in the handbook of employees.

Second, regulatory codes are included, and they do not define the company’s ethics. Employees are educated on the industry-specific regulations, and in a way that they do not limit the ethical standards to legal codes (Yidong and Xinxin 451). For instance, employees are assured of the safety standards for manufactured or repaired products. Nevertheless, rules are set beyond safety codes. It gives room for terminating or disciplining employees if they overcharge for services or even repair parts that were not broken on the product.

Third, enforce standards consistently which includes modeling ethical behavior from top to bottom. It is useful if an organization’s leadership follows written ethical standards since executives, members of the board, and heads of department act as role models for other staff in the organization (Greene 178). Consistent enforcement of standards involves subjecting a senior manager to face similar consequences as a clerk.

Lastly, the organization hires applicants with values that reflect its ethical standards to help in reinforcing ethical behavior in the workplace. It is done through including specific questions in the interview that aid in gauging the values of prospective employees. Besides, the company prefers to hire an individual with strong ethical reasoning over one with questionable ethics despite the latter having a strong professional record (Rubin and Babbie 313).

Intrinsically, this method used to reinforce ethical behavior in the workplace is quite successful in the sense that the company’s operations have been efficient over time. The company has a high level of ethics which is fundamental in good business practice and breeds loyal customers. It also sets the tone of offering top customer service from the employees (Yidong and Xinxin 454). The company has indeed improved on its customer service since goods are delivered without incidents. Establishment of ethical standards in the workplace has helped in the reduction of legal risk, customer conflicts and unhappiness among the employees hence contributes to better company morale and higher employee productivity. In reality, it is because all employees are following the set level of ethics.

The need for more success in the company is something dynamic, and the ethical behavior reinforcement has to continue. Another method that could be implemented to make the company more successful is through ethics training in the workplace. There is a need to have consistent and regular practice to employees in fully grasping and absorbing the expected ethic policies. It supplements written and published ethics policies in the training manual or employee handbook, which is not enough in reinforcing ethical behavior (Greene 183). Besides, it aids people in realizing that the situation could be in an inadvertent violation. For instance, many diversified standards are not understood and are most frequently violated accidentally either through jokes or funs but can be interpreted differently. Employees should be taken through diversity training to avoid employee complacency on ethical issues as well as ensuring that all employees follow the same standards of excellence.

There is a lesson in class by the professor which addresses factors to the success of business. The professor discusses about business leaders that stay focus and concentrate on the essential factors to be consider for the business to be successful. One of the most critical things he talks about is clarity among the leaders. Intrinsically, leaders are people perceived to know what they want and most importantly what they do to accomplish their goals. Besides, narrates about leaders thinking of the future of the business. As such leaders should always stay ahead in order to dominate the market for as long as they could. It is crucial to have full knowledge about your customers particularly those they are easier to satisfy and the type of products and services that make them happy. Essentially, such steps could set a path for great success irrespective where they are applied either in business or everyday life. Intuitively, being focused and high concentration on the significant things in business or life reduce amount of stress as well as distractions. Moreover, thinking about the future is quite critical because it has a lot of benefits. When a person knows the objectives and goals make him or her to what he or she wants as well as what to do in order to achieve the overall outcomes. Finally, this thinking can be implemented through taking the steps that are needed to achieve particular outcome.

Application of the market ratios in the determination of the business performance is quite great since they are critical in making the business to make adequate profits. The notable ratio to apply in this situation is market. Market value gives the representation of the value of the company regarding as per the stock market. Ideally, the market is considered as the generic term that gives representation of the prices that assets get in the market, implying it represents the market capitalization concerning the companies (Hegazy, 2016). The market value is calculated through multiplication of the outstanding shares of the company by its current market price. Below is the formula for calculating the market value.

Additionally, a company may be trading at $ 50 per share and has about 2 million shares outstanding, and then the market value of that company is $ 100 million. Most often, analysts, investors, and newspapers refer to market value of the company while they mention the worth of the company. The market price of shares is dynamic throughout the day, which makes the market value of the company to keep changing proportionately (Hegazy, 2016). However, the changes to the shares outstanding are quite rare as they only occur when the company is pursuing specific types of corporate actions, whereby the market value shifts are mainly associated with the per share price variations. It is relevant in the determination of what types of debts to pay as well as what types of assets to acquire for smooth operation in the organization. A good must be capable of understanding the financial need of a company to aid in proper planning of the operations in the entire management.

There are several key elements used in strengthening the practice of leadership in an organization. Leaders should be clear on what they are doing; in fact, clarity is a fundamental factor in the proper leadership system. Intuitively, leaders are people perceived to know what they want and most importantly what they do to accomplish their goals. Besides, narrates about leaders thinking of the future of the business. As such leaders should always stay ahead in order to dominate the market for as long as they could. It is crucial to have full knowledge about your customers particularly those they are easier to satisfy and the type of products and services that make them happy. Essentially, such steps could set a path for great success irrespective where they are applied either in business or everyday life. Intuitively, being focused and high concentration on the significant things in business or life reduce amount of stress as well as distractions. Moreover, thinking about the future is quite critical because it has a lot of benefits. When a person knows the objectives and goals make him or her to what he or she wants as well as what to do in order to achieve the overall outcomes. Finally, this thinking can be implemented through taking the steps that are needed to achieve particular outcome.

A leader should be dynamic while conducting his or her duties in an organization by adopting the right ethics at the place of work. In essence, the need for more success in the company is something dynamic, and the ethical behavior reinforcement has to continue. Another method that could be implemented to make the company more successful is through ethics training in the workplace. There is a need to have consistent and regular practice to employees in fully grasping and absorbing the expected ethic policies. It supplements written and published ethics policies in the training manual or employee handbook, which is not enough in reinforcing ethical behavior (Greene 183). Besides, it aids people in realizing that the situation could be in an inadvertent violation. For instance, many diversified standards are not understood and are most frequently violated accidentally either through jokes or funs but can be interpreted differently. Employees should be taken through diversity training to avoid employee complacency on ethical issues as well as ensuring that all employees follow the same standards of excellence.

Q5. Answer the following questions in a 3-5 page APA format paper: 

1. If you have been involved previously as a manager of change, how would you rate yourself in terms of your handling of the need to take actions that sustain change? What have you done well? What not so well? 

I would rate myself as good a leader but not the best since there are must challenges that may hinder performance as leaders in any organization. I have experienced this because have been previously involved as a manager of change who majors on the ways on which a company can participate in the negotiation so as to get a considerable deal when signing the contract.

I have been involved in the negotiation before in the company as a manager to help in signing a number of deals. Negotiation is quite in making of business deals particularly when it involves different companies. This could be portrayed through having a strategy plan to aid in the completion of a project that should be initiated in its entirety. The concept also applies to countries that are trying to get the best ways of creating mergers among their companies. As a result, these countries or companies engage in the negotiations to form an agreement that would be used in running the merger (Cullen & Parboteeah, 2013). Indeed I do propose negotiation when the company has plans of outsourcing some elements of production to the company or country when the governments are involved in the issues for the sake of reducing the costs. Prior to engagement in the process, I always prepare the management of the company to have the right information about production facilities, quality of the products, and costs of production. Therefore they knew what they needed to make a mutually fair proposal.

2. When you've been on the receiving end of the change initiatives of others, how well have they handled the need to take actions that sustain change? What have they done well? What not so well? 

I have been on the receiving end of the change initiatives of others particularly when the management does not endorse my idea. It happens when the deal is not beneficial to the entire organization but just spoonful sections of the organization.

3. Of the various cases presented in chapter 12, which one resonates best with you? What is it about this case that you can relate to? Are there any implications for how you would act in the future? 

4. How good are you at handling unanticipated outcomes? 

I am good at handling unanticipated outcomes by first investigating and understanding what brought such outcomes. Then I would know how to deal or handle the outcome. If they are bad outcomes then I would suggest ways of getting rid of them to avoid facing the negative consequences accompanied by such outcomes. If an unanticipated outcome is good then I would make an attempt of implementing them on the probation to see how they respond to issues with the company. As a leader you should be prepared of any outcome to avoid be caught in situations that cannot be handled.

5. If there was one main idea that you took away from chapter 12 that you believe can be of most use to you as a change manager, what would it be? 

One main idea that I took away from chapter 12 that I believe can be of most use to me as a change manager is adherence to ethical standards. Intrinsically, the ethical standards are partial rules and regulations that the company sought to work with while executing its functions. Creation of ethical standards in the workplace is probably the source of happiness for the employees and satisfied customers. Also, ethical standards should be clear and without ambiguity to help in reducing human resources issues, picking up morale and increasing productivity. They should be specified such that rather than writing “Be respectful,” just write “Employees should not make unwanted sexual advances” (Rubin and Babbie 312). The establishment of ethical standards is done in the following ways. First, the company’s standards of conduct are put in writing. It is done by compiling an exhaustive list of workplace standards in the language acceptable to ethical business practices. Then post these written standards in the frequent access areas and publish them in the handbook of employees. Ethical standards should be applied by all managers then transferred to all the staff to ensure the right codes of conduct is fully implemented in the operation of a company.

6. If you were to add an idea to the treatment of sustaining change that is provided in chapter 12, what would be your contribution?

An idea that I can add the treatment of sustaining change that is provided in chapter 12 would the application of the socio-ecological matrix. It will assist in the revelation of risks that could be witnessed in the company. In essence, if the risks are not detected there is possibility of losing customers thus affecting sales in the overall production. The matrix is fundamental in the identification of the opportunities that are accessible due to the use of technology through innovation. It enhances customer gain as well as increases the margins. It is also a collaborative and open process is applied in companies in the provision of tools used in the cross-disciplinary teams. It comprises of high level and quick assessments that the detailed information and data are made with the consumers’ preference. Eventually, a good should come with unique ways of doing things to run the organization, and the uniqueness must be related or connected to the vision and mission of the company.

References

Al-Hihi, M. M. (2009). Arab immigrants in the Canadian labour market: expectations and compromises (Doctoral dissertation, Concordia University).

Barone, Guglielmo, Guido De Blasio, and Sauro Mocetti. "The real effects of credit crunch in the great recession: evidence from Italian provinces." Regional Science and Urban Economics 70 (2018): 352-359.