Analytical hierarchy process Essay Example for Free

Analytical hierarchy process Essay Decision-making is human activity whereby value judgments regarding the attractiveness of preferences play a major role. There are various ways through which an organization can supplement and improve decision analysis; however, the incorporation of human decisions with technology through the design and utilization multi criteria decision analysis (MCDA) contributes towards the success of an organization to a great extent. This essay provides a detailed analysis and evaluation of the multi criteria decision analysis as applied in logistics and supply chain decision analysis in contemporary business and organizations. The first section of this essay introduces the various types of MCDA and provides details about how analytical hierarchy process (AHP) works, being one of the most popular MCDA techniques. This is followed by a detailed analysis of various decision problems in logistics and supply chain which involve the use of MCDA techniques: such include supply chain performance management, supplier selection, production-driven characteristics, logistics and supply chain capital and infrastructural investments. In section that follows, the advantages, disadvantages and limitations of MCDA are clearly detailed out, in special reference to the logistics and supply chain department of an organization. Finally, the essay provides a concluding paragraph which is based on the author’s opinion regarding the effectiveness and success of multi criteria decision analysis in supply chain and logistics management as well as recommendations on what ought to be done to make the application more beneficial to decision makers and the organization at large. Introduction MCDA refers to a multiple decision criteria that aimed at assisting decision makers who are often faced with many and inconsistent problem evaluations. The goal of MCDA is typically to emphasize on the conflicting and inconsistent areas and derive a technique of harmonization (Xiang, 2006). The MCDA methods commonly used in the contemporary decision field include analytical hierarchy process(AHP), weighted sum model(WSM), analytical network process(ANP), inner product vectors(IPV), Weighted product model(WPM), multi attribute value theory(MAVT) , multi attribute utility theory(MAUT), SMART (simple multiple attribute rating technique), Equal Swaps, MACBETH(Measuring Attractiveness by a Categorical Based Evaluation Technique) (Xiang, 2006). Analytical Hierarchy Process (AHP) This is one of the most famous decision criteria methods. It is a controlled technique used to deal with multifaceted decisions. AHP applies a quantitative comparison technique based on pair-wise evaluations of the decision criteria. It assists the decision maker in generating one among the best alternatives to their problem in accordance to the decision maker’s comprehension of the problem. The method applies the skills of psychology and mathematics to provide rational, comprehensive structure for framing a decision problem, presenting, computing and quantifying the elements, linking elements to goals and assessing other alternative solutions. It is used in education, business, healthcare and other industries as a decision support tool (Jamil and Linkov, 2004). Users of this method begin by decomposing the decision problem into a hierarchy of straightforwardly understandable sub-problems, which can be separately analyzed: the chosen decision problem elements may relate to any aspect of, the decision problem, whether tangible or not. After building the hierarchy, decision makers then evaluate the elements systematically by making well thought comparisons in pairs. Here, AHP necessitates that human judgments should be used while making the comparisons over and above the underlying information to make evaluations between the elements (Jamil and Linkov, 2004). AHP then changes the evaluations into numerical values which can be compared and processed in the whole decision problem. Numerical weights are generated for all the hierarchical elements. This allows for diversity and enables the decision maker to compare consistently and rationally between incommensurable elements. It is this ability that distinguishes AHP from all other techniques if MCDA (Jamil and Linkov, 2004). Finally, numerical values are calculated for all the alternatives. The numerical value of each alternative represents the ability of such an alternative to accomplish the goal of the decision. This makes it possible to directly consider the ability of all available alternatives using their numerical value so that a rational decision maker chooses the alternative with the highest value since it indicates that such an alternative will best suit a solution to the decision problem (Jamil and Linkov, 2004).

German Barbarians :: essays research papers

Just outside the boundaries of the Roman empire of the first and second centuries, beyond the Rhine River, and occupying the area of Central Europe of what is today Germany, lived the tribes of the Germanic people. In Germania, the Roman historian Cornelius Tacitus gave an account of the lifestyles and organization of these peculiar barbarians. These descendants of modern Germans proved peculiar in that they adopted many qualities typical of barbaric cultures, yet they simultaneously practiced virtues more befitting of advanced civilizations, values more ethical than even the Roman empire of the time. The German warriors had a rigid code that defined how to live honorable lives and shameful acts to avoid committing, and the warriors also adhered to strict tradition in their relationship with their king or chief.   Ã‚  Ã‚  Ã‚  Ã‚  The climate of Germany suited the warriors well. The combination of â€Å"wild scenery and harsh climate† (Tacitus, Germania) had given the barbarians an inherent endurance towards cold and hunger over time. To cope with their surroundings, the warriors had developed powerful physiques, yet their abundant resources of strength and stamina proved not to be a source of pleasure for them, for the warriors had â€Å"no fondness for feats of endurance or for hard work† (Tacitus, Germania). In earthly matters, Germany’s apparent lack of precious metals made the warriors quite utilitarian in regards to physical possession. They preferred silver to gold, as silver could be more easily fashioned into useful objects. Only the tribes of warriors on the borders of the Roman empire recognized gold and silver as trading commodities, while the ‘backwoods’ tribes traded through the simple practice of barter, yielding one item in exchange for anot her (Tacitus, Germania).   Ã‚  Ã‚  Ã‚  Ã‚  The Germanic tribes were by no means idle people. Not content with the quietness characteristic of daily lives built on routine, â€Å"for rest is unwelcome to the race† (Tacitus, Germania), the tribes warred with their neighbors. In most cases, the tribes did not engage in voluntarily combat to gain or defend land or to right some alleged wrong against them; they mostly fought for two reasons. They first believed that it was easier to distinguish one’s self in the uncertainty of war, rather than in the predictability of routine. So war became a way for the barbarians to prove their honor, or sometimes expose their shame, as the abandonment of the shield during combat was â€Å"the height of disgrace† (Tacitus, Germania).

Fiedler’s Contingency Theory Essay

The contingency Theory shows the relationship between the leader’s orientation or style and group performance under differing situational conditions. The theory is based on determining the orientation of a leader ( relationship or task ), the elements of the situation ( leader-member relations, task structure and leader position power), and the leader orientation that was found to be most effective as the situation changed from low to moderate to high control. Fred Edward Fiedler in his landmark 1964 article, â€Å" A contingency of Leadership Effectiveness. studied and emphasized the importance of both the leader’s personality and the situation in which that leader operates. Fiedler found that task oriented leaders were more effective in low and moderate control situations and relationship oriented managers were more effective in moderate control situations. Fiedler and his associates studied leaders in a variety of contexts but mostly in military context and their mo del is based on their research findings. They outlined two styles of leadership namely task-motivated and relationship-motivated. Task refers to task accomplishment, and relationship-motivation refers to interpersonal relationships. He measured leadership style leadership style with the Least Preferred Co-Worker scale (LPC scale ). According to Northouse ( 2007 ), the leaders scoring high on this scale are relationship motivated and those scoring low are task motivated. Northhouse further indicated that, central to contingency theory is the concept of the situation, which is characterized by three factors. One, leader-member relations which deals with the general atmosphere of the group and the feelings such as trust, loyalty and confidence that the group has for its leader. Two, task structure, which is related to task clarity and the means to task accomplishment. Three, the position power, which relates to the amount of reward-punishment authority the leader has over members of the group. These three factors determine the favorableness of various situations in the organization. Definitions of factors in Contingency Theory Situational elements One, is the leader-member relations. The regard with which the leader and the group members hold one another determines in part, the ability of the leader to influence the group and the conditions under which he or she can do so. It therefore follows that a leader who is accepted by the group members is in a more favorable situation than one who is not. Two, is the task structure which is determined by the following questions in mind; can a decision be demonstrated as correct? , are the the requirements of the task of the task understood by everyone? , is there more than one correct solution?. If the group’s task is not structured, and if the leader is no more knowledgeable than the group about how to accomplish the task, the situation definitely becomes unfavorable. The third factor is the leader position power. This is determined by the rewards and punishments which the leader officially has at his or her disposal for either rewarding or punishing the group members based on how they perform. The more power the leader has, the more favorable the situation. Leader Orientation Fiedler used the Least Preferred Co-worker scale commonly known as LPC scale to measure leadership style. LPC helps management identify the human relations orientation and task orientation of possible leaders. He analyses leader orientation as follows. One of the factors is relationship orientation in which he said that high LPC leaders are more concerned with personal relations, more sensitive to the feelings of others, and better of heading off conflict. Such leaders use their good relations with others to get a job done. This also enables them to deal with complex issues when making decisions. These leaders tend to have an LPC score of 73 and above. In high control situations, these leaders tend to become bored and are no longer challenged. They tend to seek approval from their superiors ignoring their subordinates or they may decide to reorganize he task. They often become inconsiderate toward their subordinates as a result, become more punishing and more concerned with performance of the task. In moderate control situations, they focus on group relations. They reduce the anxiety and tension of group members and thus reduce conflict. They handle creative decision making groups well. They see this situation as challenging and interesting and perform it well in it. Lastly, in low control situations, they always try to obtain group support often at the expense of the task. In fact under extremely stressful situations, they may also withdraw from leadership role, failing to direct the group’s work. The second factor is task oriented. According to Fiedler, the LPC score for leaders here is 64 and below. Low LPC leaders are more concerned with the task, and less dependent on group support. They tend to be eager and impatient to get on with work. They quickly organize the job and have a no-nonsense attitude about getting the work done. In moderate control situations, they are anxious and less effective. They become absorbed in the task and pay little attention to personal relations in the group. They tend to be insensitive to the feelings of their group members, and the group resents the lack of concern. However, in high control situations, these leaders are relaxed and develop pleasant relations with subordinates and they are easy to get along with. As work gets done, they do not interfere with the group or expect interference from their superiors. And lastly in low control situations, the leaders devote themselves to their challenging task. They organize and drive the group to task completion. They also tend to control the group tightly and maintain strict discipline. Fiedler and associates concluded that if a leader’s LPC scores fall between 65 and 72, then the leader must carefully analyze their leadership style as they learn more about the relationship oriented and task oriented styles. However, it is important to note that there is no single leadership style that is effective in all situations. Rather, certain leadership styles are better suited for some situations than for others. Fiedler further pointed out that the effectiveness of the leader is contingent upon the orientation of the leader and the favorableness of the situation.

Analysis of I Have a Dream Speech - 1857 Words

â€Å"I Have A Dream† Martin Luther King Jr. On August 28, 1963, Martin Luther King Jr. gave a speech that electrified a nation. In Washington D.C, King delivered his speech on the steps of the Lincoln memorial and as his powerful voice echoed out across an audience of 200,000 people, echoes of the Gettysburg address could be heard as well as the Declaration of Independence and the Bible. It has been called â€Å"masterfully delivered and improvised sermon, bursting with biblical language and imagery.†The passionate speech is filled with rhetorical devices that help ground into earth Kings demands of racial equality and outcries of social injustice. The second paragraph of the speech starts with â€Å"Five score years ago†, an allusion to Abraham†¦show more content†¦The fourth â€Å"paragraph† of the speech ends with an example of anaphora. A short hopeful phrase of â€Å"now is the time† is repeated four times back to back to back to back in the last four lines of the paragraph. These rhetorical devices have a powerful impact and add a decisive, hopeful feel. Martin Luther King Jr. in this conclusion also makes another metaphor with saying racial injustice is â€Å"quick sands† and brotherhood is a â€Å"solid rock.† These metaphors also link the intangible with the tangible creating a contrast. Apples and bananas are different but the difference of good and bad is harder to see. When attached to real life objects the visualization is made. The rest of the speech contains several more independent metaphors, all used to support Martin Luther King Jr.s points. â€Å"The whirlwinds of revolt will shake the foundations of our nation until the bright day of justice emerges†; making a metaphor of revolt to a whirlwind and justice to a bright day. Yet again, metaphors are used to represent abstract ideas with concrete things to create a contrast. In another place it is seen that storm are like persecution and winds like police brutality. Tying in the earlier metaphor to imprisonment, this usage of a rhetorical device shows the vicious circle Negroes were living with. At some point it becomes repetitious all of the metaphors of justice to everythingShow MoreRelatedAnalysis Of I Have A Dream Speech1152 Words   |  5 PagesThe major argument that is being portrayed in Martin Luther King Jr.’s â€Å"I Have A Dream† speech is all men and women should be treated equally, regardless of their skin color. Dr. King states, â€Å"When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the unalienableRead MoreI Have A Dream Speech Analysis1714 Words   |  7 Pagesuses words to provoke, calm, and inspire in his famous I Have a Dream speech. Using these words, he creates a connection with the audience, and he gained their trust. Cesar Chavez also gave a speech that provoked, calmed, and inspired the audience to come together and get rid of pesticides because it is causing many diseases among adults, as well as children. He also mentions King many times to gain the audience’s trust. â€Å"I have a dream that one day this nation will rise up and live out theRead MoreAnalysis Of I Have A Dream Speech758 Words   |  4 Pages delivered his â€Å"I Have a Dream† speech in 1963 to a divided and unjust nation. King’s tactful writing reached the entire nation, and his words resonated with everyone who heard them. His speech addressed the injustices and inequalities blacks face in America. â€Å"I Have a Dream† has gone down in history as one of the best speeches in modern history, received at a time of turmoil and racial tension. Therefore, King’s words have rung in the hearts of innumerable people, and his dreams and aspirationsRead MoreAnalysis Of I Have A Dream Speech1419 Words   |  6 PagesKennedy have the first televised debate, Mohamed Ali wins a gold medal and the Civil Rights Movement at its climax in America. As the chaos of segregation was unfolding in the Southern states, Governor George C. Wallace and Dr. Martin Luther King Jr, were at the forefront of the Civil Rights Movement. In the beginning of the year, Governor Wallace will address his constituents with his, â€Å"Segregation Now, Segregation Forever† speech and seven months later, Dr. King will deliver his famous, â€Å"I Have a Dream†Read MoreAnalysis Of I Have A Dream Speech1199 Words   |  5 Pagesthe forefront of the Civil Rights Movement. In the beginning of the year, Governor Wallace will be addressing his constituents with his well-known, â€Å"Segregation Now, Segregation Forever† speech. Nevertheless, it will be seven months later, that Dr. King will convey his message in his famous, â€Å"I Have a Dream† speech. Individually, they deliver historical speeches concerning civil rights, however, the dialogue encompasses completely different messages. Comparatively, the two speeches will be presentedRead MoreI Have A Dream Speech Analysis1154 Words   |  5 PagesMartin Luther King Jr.s impact of path os throughout his speech has the impact of exploit the audience, empowered, determined, and grateful. Throughout his speech, his audience responds to him by applauding with agreement. Impact of Pathos Martin Luther King, Jr. uses attribute within the starting of his known, I actually have a Dream Speech, to realize the audience to feel as theyre fighting with several alternative known Americans, like the beginning Fathers and Abe Lincoln. Since, several AmericansRead MoreAnalysis Of I Have A Dream Speech937 Words   |  4 PagesMany people have different perspectives on hope. Some hope for a life full of happiness, being wealthy, or just being happy. Martin Luther King Jr. had hope, he had hope for equality and for everyone to be treated equal. In MLK’s â€Å"I Have a Dream† speech this is the most uplifting segment of it. King knows that his audience has suffered from injustice, so they must have faith that things will soon change. King also stresses in the speech about non-violent resistance, African American equality, actionRead MoreAnalysis Of I Have A Dream Speech1086 Words   |  5 PagesI am writing this letter to you in hopes of gaining insight on how to ha ndle the grave issues of racism and injustice that appear to be a curse upon our great country, the United States of America. Back then, you used your cogent words to penetrate into the minds of all those listening in hopes of uniting our nation, and erasing racial barriers along the way. You fought for peace and freedom using non-violence and preached equality to the people of this country. From your involvement in the firstRead MoreI Have A Dream Speech Analysis1441 Words   |  6 Pagesorder to procure its ultimate victory throughout the 1960s. From his civil rights-related endeavor, the â€Å"I Have a Dream† speech, given on the steps of the Lincoln Memorial during the â€Å"March on Washington for Jobs and Freedom† in 1963 (â€Å"March on Washington For Jobs and Freedom) arose. In his speech, he spoke about the injustice of segregation and discrimination of African Americans. His speech had a prodigious impact as it succeeded to illustrate the issue of racism a t the time and instigated theRead MoreI Have A Dream Speech Analysis847 Words   |  4 Pagesget along, but that isn’t what life really is. If you want something to change you don’t sit back and hope it will change you have to make it change. In the story Cairo: My City, Our Revolution, Ahdaf Soueif goes and fights for her country. In the speech I Have a Dream, Dr. Martin Luther King Jr. was influencing people to go and protest to get their rights and in the speech A Eulogy for Dr. Martin Luther King Jr., Robert F. Kennedy influences people to change and do as Dr. Martin Luther King Jr. The

“Explain what it means to say religious language is non...

Religious Language refers to statements or claims made about God. It is stated that religious language is non-cognitive and analogical, just as Aquinas asserted that ‘all human language about God is analogical’. Non-cognitive language is language that cannot be empirically verified. For example, â€Å"obey God to be sure of heaven.† Firstly the statement requires verification that there is a God and also that there is another place after death. None of this can be totally verified until after death. Religious statements are really moral statements, they express an attitude and so have an emotive meaning, they are designed to shape peoples feelings and behaviour and are meaningful in having such results. An analogy may be defined as a†¦show more content†¦Non-cognitive statements are argued to be meaningless by A.J Ayer. Ayer observed that since the existence of God could not be proven rationally, it was not even probable, since the word ‘godâ₠¬â„¢ is a metaphysical term referring to a transcendent being, and therefore cannot have any factual significance. Ayer also stated that claims about God’s existence, which are non-cognitive, could neither be contradicted nor proven, so were not ‘significant propositions’. In other words, they were neither true nor false, but could not be valid. However, one could argue that non-cognitive statements are useful as they allow the believer to use statements that can be understood and are meaningful to themselves and the wider community. Analogies are descriptive terms that, when applied to God, mean neither the same, nor something completely different than when they are applied to humanity. They are used in religious language to enable us to express something about God and his relationship with humankind that the use of univocal and equivocal language cannot achieve. Univocal language is where a word has only one meaning. This doesnt work when applied to religious language as it anthropomorphises God, as in the example when the word ‘love’ applied to one’s husband or wife means the same thing when applied to God. However, this cannot be, as God is not a part of the created order. Equivocal language, on the other hand, is when we use the same wordShow MoreRelatedDevelopmental Psychology14082 Words   |  57 PagesDEVELOPMENT * THE COURSE OF DEVELOPMENT (CONTINUOUS OR DISCONTINUOUS) * THE COURSE OF DEVELOPMENT: ONE OR MANY * FACTORS THAT DETERMINE DEVELOPMENT (NATURE/NURTURE) Introduction Child development has many theories with different ideas about what children are like and how they change. Children are beings who change physically, cognitively emotionally and socially. There are many different theories and they all take a stand on 3 basic issues: Is the course of development continuous or discontinuousRead MoreDevelopmental Psychology14091 Words   |  57 PagesDEVELOPMENT * THE COURSE OF DEVELOPMENT (CONTINUOUS OR DISCONTINUOUS) * THE COURSE OF DEVELOPMENT: ONE OR MANY * FACTORS THAT DETERMINE DEVELOPMENT (NATURE/NURTURE) Introduction Child development has many theories with different ideas about what children are like and how they change. Children are beings who change physically, cognitively emotionally and socially. There are many different theories and they all take a stand on 3 basic issues: Is the course of development continuous or discontinuous

Accounting Principles And Financial Statements - 1682 Words

Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP), which refers to a set of rules, standards, and practices. They are used throughout the accounting industry to prepare and standardize financial statements that are issued and help investors and creditors compare companies within the same industry. Companies are expected to follow generally accepted accounting principles when they report their financial information. GAAP affects the measurement of economic activities and the disclosure of information about activities. It also affects the preparation and summarization of economic information, and the record keeping of measurements at average intervals. Other than the numbers on the balance sheet, income statement, and statement of cash flows, a great deal of information is provided in the notes to the financial statements. They contain information that may be significant and include tables which are included as a footnote. The notes will contain information about the company accounting policies, including information on securities held, inventories, debt, and other elements which can determine a company s financial position. Under GAAP, companies often have discretion to use varying methods for valuing assets, and recognizing costs and revenue. The Summary of Significant Accounting Policies appears as the first note to the statement or in a separate section. Accounting control procedures are systems designed to ensure all employeesShow MoreRelatedWorking With Financial Statements : Accounting Principles1415 Words   |  6 Pages Working with Financial Statements Accounting principles are like the Ten Commandments to a CPA. The principles are recommendation or instructions on what an account should follow when logging and informing on all accounting transactions. Businesses rely on their account every month to maintain the financials records of the company. At the end of each month, it is important for every transaction to be documented and posted as a financial entry in the monthly trail balance. An account needs to ensureRead MoreBasic Financial Statements Under Generally Accepted Accounting Principles1820 Words   |  8 PagesUnderstanding Basic Financial Statements Companies report their financial activities in four basic financial statements under generally accepted accounting principles (GAAP). The four basic financial statements are as listed below: 1. The balance sheet shows in a tabular form, the asset, liability and owners’ equity of a company, at a particular time. The assets of a company will always equal to the sum of liabilities and owners’ equity, this is called the accounting equation. i.e Asset = liabilityRead MoreThe Accounting Principles Of Financial Statements And Balance Sheet And Valuations For The Health Care Organization976 Words   |  4 PagesAccounting in health care has profound effects on financial statements, and knowing the necessary components to conducting financial reports and balancing the assets is vital. Many things contribute to the overall foundation of the balance sheet and valuations for the health care organization. A lot of moving parts are required to keep health care organizations running and afloat for the long-term. One must understand the accounting concepts, and methods, terminology, in order to explain the variousRead MoreSummary of Research for Accounting Changes and Error Analysis1143 Words   |  5 PagesResearch for Accounting Changes and Error Analysis Companies have always faced issues of how to reflect changes in accounting methods and error corrections in financial statements. A change in accounting principle results when an entity adopts a generally accepted accounting principle different from the one it used previously (Hall 2007). A presumption exists that an accounting principle once adopted shall not be changed in accounting for events and transactions of a similar type (Financial AccountingRead MorePrinciples and Assumptions Used in Preparing Accounting Statements1605 Words   |  7 PagesIntroduction 1. definition of accounting: [2] *Accounting is a set of principles and procedures relating to the registration and compilation, analysis and interpretation of financial data for the purpose of determining the outcome of business and its financial position. * A method of recording and tabulating and summarizing operations and financial events and then interpret the results. *Body: 2.Assumptions used in accounting: [1] What assumptions used in accounting is generally predict solutionsRead MoreBAF 301 Accounting and financial management Assignment 1 Mohammad Gholamali 20101147 Dr. Suja900 Words   |  4 PagesBAF 301 Accounting and financial management Assignment 1 Mohammad Gholamali 20101147 Dr. Suja Sarah Thomas Colleague of Electrical Electronics Engineering Introduction In this report I am going to write some of the important principle and assumption and guidance used to prepare accounting statements. In the world of business there are some general rules and principles which the universe of accounting uses them as a general guidance. There are some international framework like Financial accountingRead MoreAccounting Principles And Its Impact On Accounting1210 Words   |  5 Pages revised accounting standards require companies to change accounting methods. The three categories for changes are accounting principles, estimates, and reporting entity. Change in accounting principles happens when a company changes from one generally accepted accounting principle to another. For instance, Company A uses FIFO inventory cost method but decides to uses LIFO instead. Revision of an estimate because of new information or new experience is called change in accounting estimate.Read MorePrinciples Of Gaap And Ifris1742 Words   |  7 PagesPrinciples of GAAP and IFRIS GAAP- GAAP (generally accepted accounting principles) is a collection of commonly-followed accounting rules and standards for financial reporting. Principles regarding GAAP 1. Economic Entity Assumption The accountant keeps all of the business transactions of a sole proprietorship separate from the business owner s personal transactions. For legal purposes, a sole proprietorship and its owner are considered to be one entity, but for accounting purposes they are consideredRead MoreGeneral Accepted Accounting Principals Essay735 Words   |  3 PagesGenerally Accepted Accounting Principles Health care organizations financial statements are the key tools to show the economic stability of an organization and guide leadership in making informed decisions. The Generally Accepted Accounting Principles (GAAP) is basic assumptions, and principles of accounting to determine the financial position of an organization. These principles offer consistency across health care organizations, and businesses maintaining track of the organizations fiscalRead MoreEthical and Legal Obligations in Accounting1329 Words   |  6 PagesMarshall (2004), accounting is the process of identifying, measuring, and communicating economic information about an organization for the purpose of making decisions and informed judgements (p. 3). Specifically, financial accounting refers to the process that results in the preparation and reporting of financial statements for an entity (Marshall, McManus, Viele, p. 5). While many entities prepare their own financial statements, firms can also contract with a public accounting firm or a Certified

Enrons Collapse free essay sample

Enrons Collapse In the case of Enrons collapse, many would blame the external auditors collusion with the management, the aggressive accounting policy it had adopted to manipulate its earnings or the Special Purpose Entity (SPE) it had created as a sham to conceal its debts. However, everything began from an internal environment with weak controls. The internal environment is the capstone of all other components within an organizations ERM framework, influencing strategy formulation, objective setting, as well as risk management. The internal environment is largely shaped by the tone at he top. And in the case of Enron, its failure was primarily attributable to the board and managements failure to take responsibility for the risks inherent in the companys business plan and strategy. Various elements of the internal environment had contributed to Enrons failure. Risk Management Philosophy and Risk Appetite Enron had a huge risk appetite which can be seen from its speculative trading activities as well as the use of mark-to-market accounting and SPE to manipulate earnings and conceal debts. We will write a custom essay sample on Enrons Collapse or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The source of revenue was vague and highly volatile. It was almost like Enron was engaged in gambling. However, well knowing the nature of income, the management still continued to carry out such activities. Managements huge risk appetite reassured the employees that Enron could easily handle these risks. Hence, everyone in Enron became risk-seeking. Board of Directors Attitudes One of the core principles of Anglo-American corporate governance is that the board should maintain a sound system of internal control to safeguard shareholders investment and the companys assets. Enrons board had defended itself by laiming that they had no idea about the unethical conducts Enrons management was involved with. However, the board had, in the first place, failed to make an appropriate assessment of the risks to which the company was exposed of. And it did not put in place the procedures by which it could obtain the information needed to oversee and monitor the management. Moreover, the independence of the board was also questionable as they allowed own conflict of interest to get in the way of their monitoring role. The board members received substantial payments for consultancy service apart from their directors fees. In addition, they were indirectly compensated by receiving gifts made by Enron to their universities and hospitals. As a result, the failure of boards monitoring role further weakened the internal control of Enron. Integrity and Ethical Values Integrity and standards of behavior are required for the organization to achieve an internal environment with strong controls. There should be a strong corporate Enrons corporate culture was usually described as arrogant, where everyone in the company, employees, managers or directors, believed that they could handle ncreasingly toxic risk without danger of going bust. Besides the arrogance, greed was as well evident across the organization. Top executives made use of mark-to- market accounting and SPE to manipulate earnings and conceal debts in order to further enrich their compensation which was tied to the performance of the company. Top executives actions of striving to enrich personal wealth rather than generate profits for shareholders had set the tone at the top which in turn led to employees efforts of maximizing individual wealth instead of creating value for the ompany as a whole. Assignments of Authority and Responsibility Corporate officers owe fiduciary duties to the organization, hence they must act in the best interest of the company and avoid incidences where conflicts of interest would arise. Although this is not enforced by legislation, it is normally set out in the organizations own code of conduct. A strong code of conduct is a critical element of assignments of authority and responsibility, not only in form but in substance as well. And Enron indeed had such code of conduct, explicitly restraining self-dealing. FastoWs involvement in LJM SPEs management would amount to self-dealing, which was a clear breach of Enrons code of conduct. However, the board had waived it under Ken Lays advice. Therefore, it can be seen that the tone at the top made Enrons code of conduct form over substance, which as well contributed to the failure Human Resource Standards Jeffery Skilling was usually credited with creating a system of forced rankings for employees, under which the bottom 20% was regularly dismissed on the basis of performance rankings drawn up by peers and superiors. Whereas those remained ere rewarded with stock options and performance-based increments. Thus employees attempted to crush not Just outsiders but also each other. And it is not surprising that they would keep silent even that they well knew about the unethical behavior of management. As a result, the ranking policy contributed to the diminishing of the organizations transparency and a widening communication gap between the board and the rest of the organization, making it even harder for the board to effectively carry out the monitoring role.