The Accounting Systems of the United States and France free essay sample

Nowadays, because the world is becoming more globalized and harmonized, standard-setters feel the need to report their accounting in a uniform way. The International Accounting Standards Board [IASB] was formed as a non-for-profit corporation to incorporate, monitor and assess International Accounting Standards for all countries in the world, producing what we know as International Financial Reporting Standards [IFRS]. IASB provides insight on potential amendments to current accounting standards. Furthermore, this paper will provide a description of the accounting systems in the countries of the United States and France and provide a comparison of the two systems. United States â€Å"Britains American colonies broke with the mother country in 1776 and were recognized as the new nation of the United States of America following the Treaty of Paris in 1783. During the 19th and 20th centuries, 37 new states were added to the original 13 as the nation expanded across the North American continent and acquired a number of overseas possessions† (CIA World Fact Book, 2004). We will write a custom essay sample on The Accounting Systems of the United States and France or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The history and background of the United States serves as a basis to the way accounting is reported in the US. The earliest method of accounting in the United States includes the â€Å"Dutch style† and the â€Å"method of Venice† (Secord, PowerPoint, 2006). In addition, accounting in the US highly influenced by the United Kingdom (UK); thus, their accounting development and systems were originally exported from the UK system. This British influence initially brought professionalism to accounting in the United States. In addition, the founding fathers of US accounting and early accounting societies were of expatriate Britons, in particular, Arthur Young of Ernst Young and James Marwick of KPMG (Nobes, 2006, p143). â€Å"The United States is a federation of individual states, each of which has its own legislative body with extensive powers to control business activity and levy taxes within its own boundaries† (Nobes, 2006, p144). Due to this, the right to practice as a Public Accountant and the requirements of a PA differs from state to state. Furthermore, it is not a requirement for every state to be a member of the national body the American Institute of Certified Public Accountants (AICPA). By definition, the AICPA is a national association for all Certified Public Accountants (CPA) whose mission is to provide accounting professionals with uniform certification and licensing standards, establishing professional standards, and enforcing current requirements† (Definition of AICPA). Any firm that wishes to be audited by the AICPA must follow Generally Accepted Accounting Principles (GAAP will be discussed later in this paper). The AICPA served as a main standard-setter in the United States for several years. The AICPA’s history dates back to 1887 with the formation of American Association of Public Accountants (AAPA), also known as the American Institute of Accountants, with voluntary committees to help the Institute to maintain high quality standards of the PA profession, promote interest as a CPA, act as a spokesperson for the profession, and providing any necessary services to their members (AICPA, 2006-2007). Although the AICPA gave up its role as the main standard-setter, it still issues detailed guidance called Statements of Position, concentrating from 2003 on industry-specific guidance (Nobes, 2006, p148). The United States’ â€Å"federal securities established a Securities and Exchange Commission (SEC) in 1934 to administer the securities regulations† (Nobes, 2006, p144). The accounting system in the US was strongly influenced by the SEC as opposed to a governmental influence. The SEC sells, exchanges and trades securities, protects investors while maintaining fair, orderly and efficient markets and ultimately facilitates capital formation (Pereira, 1992, p17). The US has the largest and one of the most important, stock exchanges in the world the New York Stock Exchange located on Wall Street in New York City. This makes the US a huge market for investors world-wide. All investors would like to have access to certain facts about an investment before buying it and while holding it. In order to achieve this, the SEC requires all public firms and companies to disclose meaningful financial and other information to the public, to follow GAAP (SEC, 2007). Thus, any company that wishes to be a market in the SEC’s securities must register with the SEC. For those companies with foreign registrants, the SEC requires them to either report under US GAAP or to provide reconciliations to US GAAP (Nobes, p146, 2006). The SEC also requires public firms to follow GAAP in order to be audited. It is quite evident that most of American accounting is rule based, not government based. According to Nobes’ textbook, Comparative International Accounting, the commission since its inception has intended to limit the exercise of its accounting standard-setting authority to a supervisory role, permitting and encouraging the private sector, currently through the FASB, to maintain leadership in the standard-setting process (p145). The Financial Accounting Standards Board, in short, FASB, has been the ultimate standard-setter of financial accounting and reporting in the US since the early 1970’s. The FASB is entirely financed voluntarily by the sales and contributions from PA firms, investor and creditor organizations and contributions made to the Financial Accounting Foundation (FAF). It consists of seven Board members; but for a proposed accounting standard to pass, it must obtain five out of seven votes of the members on the Board. â€Å"In drafting its standards, the FASB adopted a distinctive style: they are very detailed, prescriptive, and proscriptive. With definitions and examples, a FASB standard can be a few hundred pages long! † (Pereira, 1992, p21). The FASB established a conceptual framework regarding objectives and concepts that the FASB uses in developing standards of financial reporting that consists of four framework levels: 1. )objectives of financial reporting by business enterprises, 2. )qualitative characteristics of accounting information, 3. )recognition and measurement in financial statement of business enterprises, 4. )elements of financial statements. The framework acts as a fundamental guide to provide consistent standards, showing the function and limits of financial accounting and statements, and dentifies the goals and purposes of accounting (Nobes, 2006, p151). â€Å"Generally accepted accounting principles, commonly abbreviated as US GAAP or simply GAAP, are accounting rules used to prepare, present, and report financial statements for publicly-traded companies and many privately-held companies. Similar to many other countries practicing under the common law system, the United States government does not dire ctly set accounting standards, in the belief that the private sector has better knowledge and resources† (Wikipedia, US GAAP). The conceptual framework is a fundamental basis of accounting whereas GAAP are the rules that public companies use to prepare their financial statements. Companies’ financial information is presented in financial statements that are viewable by the public, mainly for the interest of investors. Accounting information is extremely important and thus, has to be understandable to the users, reliant and relevant. â€Å"Information is not worth presenting unless it has some minimal level of both relevance and reliability† (Nobes, 2006, p153). Relevance refers to the value and quality of the information and its timeliness availability to users; reliability means that the information is free from bias, represents what its purpose is, and should be verifiable. The consolidated financial statements were originated in the United States (as discussed in class). The statements consist of the Balance Sheet, Income Statement and Statement of Cash Flows. The elements of the financial statements are assets, liabilities, equity, revenues, expenses, gains, losses, and other comprehensive income. In addition, conventions such as historical cost, revenue recognition, matching principle, and so forth are the fundamental basis for income measurement. Thus, US accounting focuses on the measurement of income. The income statement comprises of either income from continuing operations or income from the discontinued operations, including any gains or losses that may have happened during the accounting year. For the most part, if there is a disposal of one operation, there should be a [net of tax] gain or loss on that disposal recorded under the income from discontinued operations. The Statement of Other Comprehensive Income appears sometimes in the financial statements. It can be presented as a note, as a part of the income statement under ‘other comprehensive income’, or as a separate income statement. Also, any gains realized through the reevaluation of investments should be included in the other comprehensive income statement. (Nobes, 2006, p155) Moreover, as mentioned in the textbook, â€Å"a further difference from nearly all other countries is that three years of figures are presented; that is, the two preceding years’ comparative figures. This is the SEC requirement† (Nobes, 2006, p155). The US balance sheet is quite standard in North America. It has two sides the left side shows the assets and the liabilities and shareholders’ equity are shown on the right side. As learned in accounting courses, the total amount of assets should be equal to the sum of liabilities and shareholders’ equity. It is worth mentioning that under the United States balance sheet format, current assets precede the long-term assets (fixed assets). This order is different from the order under European national laws. Thus, the US formats are not usually well-adopted by non-technical shareholders for reading (Nobes, 2006, p154). See Appendix A for sample balance sheet. The final statement is the Cash Flow Statement. It is a more recent statement than the other two and it is a SEC requirement. It focuses on cash movements and needs the balance sheet and income statement to derive the movements in cash. Moreover, like the income statement, it is also required to show three years’ figures in the cash flow statement (Nobes, 2006, p156). The cash flow statement is comprised of three categories: cash from operating activities, cash from investing activities, and cash from financing activities. A comparison of, for example, two years’ figures from the balance sheet and income statement will provide an analysis on the sources and uses of cash, and ultimately showing the change in the beginning cash balance from the ending balance. All three statements, however, can become confusing between countries because of the variety of terminology used. Using the example used in Nobes’ textbook, the UK term ‘shareholders’ funds’ has several expressions in the US – shareholders’ equity, shareowners’ equity, or common stockholders’ equity to name a few. Another example would be the term inventory; â€Å"the most usual meanings of the UK terms ‘stock’ and ‘shares’are translated into the US term ‘inventory’ and ‘stock’ respectively† (Nobes, 2006, p156). This may lead to misunderstanding when other countries’ investors review US companies’ financial statement. Therefore, we need to recognize the terminology problem and try to translate some terms to the correct meanings. In addition to the consolidated financial statements, there are extensive notes and management discussion and analysis section. Furthermore, there is an Auditor’s Report that explains what the independent auditors have done to provide reasonable assurance that the financial statements are free from material misstatement and that the statements are in context of generally accepted accounting principles. One accounting firm is sufficient to perform the audit and sign off on the Auditor’s Report. In short, the US accounting rules are extensive and detailed. The financial statements are prepared under generally accepted accounting principles and are made extremely useful for investors to. However, there are indeed some weaknesses in the US accounting system. For example, there is no major body, like the Government, to control the accounting process; many boards can make decisions about the accounting rules that they set. Moreover, the accounting rules and principles are complicated and the accounting system lacks harmonization. A famous example of the lack of accounting system in the United States is the Enron scandal back in 2001. Enron lied about their profits, especially when they started to suddenly see a huge drop in their market share. Their accounting firm, Arthur Anderson covered up their loss and manipulated the financial statements. They ultimately destroyed any evidence with Enron, thus when the word got out, both companies’ reputation went under because of the fraud they committed. This example lead to a new, updated version of the independence standards for PA’s and had an overall affect to the way accounting was performed in the US. It is required that all firms world-wide accept and adopt IFRS within the next couple of years. Firms and companies are already preparing for the new change instead of waiting for the deadline date. France Financial reporting in France was influenced by the common law system in the late seventeenth century. As cited by Nobes, Howard says â€Å"Colbert’s Ordonnance de Commerce of 1673 during the reign of Louis XIV formed the basis for the Napoleonic Commercial Code of 1807, a Code which has spread throughout continental Europe† (Nobes, 1992, p217). During the past century, France has been increasingly impacted by global capital markets dominated by Anglo-Saxon countries, particularly the United States. Because of this, France has been able to produce a dualism in accounting on the basis of international and US standards between the financial statements of individual business enterprises and those of groups (Nobes, 1992, p217). The accounting system in France was influenced minutely by the French government but it was driven immensely by the tax law. According to Nobes, France’s rules originated from a variety of sources such as the French state, the European Union, the national accounting council (Conseil National de la Comptabilite, CNC), and the accounting regulation committee and are codified in a Commercial Code (Code de Commerce) and a national accounting plan (Plan Comptable General, PCG) (Nobes, 1992, p217). The PCG was established mainly with macroeconomic aims and little input from the accountancy profession. The French national accounting plan is the most distinctive part of French accounting regulation. â€Å"The PCG was amended and made mandatory for all companies in 1983, when France adopted the 4th and 7th Directives of the European Union† (As discussed in class, Secord, 2006). It was the start of French accounting standardization. The purpose of implementing PCG was to be the basis of the accounting legislation in France ( , 2005). It is administrated by the CNC (the national Accounting Council) that consists of a mix of public and private sector regulatory and standard-setting bodies. The PCG is not merely a chart or classified list of ledger accounts but a very detailed manual on financial accounting. Included within it are definitions of accounting terms, valuation and measurement rules, and model financial statements† (Nobes, 2006, p281). 1984 was a period of globalization, deregulation, and privatization in which the accounting profession in France was reorganized and international standards emerged as a strong opponent to national standards (Nobes, 1992, p216). In the 1990’s, more large listed French companies published their consolidated financial statements in accordance with IFRS because there were an increasing number of French companies entering international markets (Nobes, 1992, p225). Accounting laws in France apply to all public and private businesses with the primary focus to report to owners and creditors. France has a unified accounting system as opposed to a flexible system. Furthermore, their accountancy is based on tax and legal framework. Appendix 13. in the textbook shows the classification of expenses and revenues; they are classified by nature, not by function; thus enabling the PCG to be applied in a similar way regarding all business enterprises instead of just companies. The PCG mainly focuses on ‘inventory’ meaning that France accounting’s focal point is the balance sheet rather than the income statement [income measurement] (Discussed in class). As a result, the PCG asked to keep daily acco unting records such as a journal and a ledger in order to prepare the balance sheet in annual financial statements. The balance sheet is most often presented in two-sided form, with assets on one side and liabilities and capital on the other. It is noted that the capital section is broken into several different accounts, tax being the most common. There is more detail on the face of the balance sheet than there is disclosed in the notes. See Appendix B for sample balance sheet. Ultimately, the PCG’s goal is to provide a true and fair view of the financial statements (Discussed in class). The income statement becomes the product of changing in balance sheet accounts. It also asks to show the financial statements to the taxation authorities as well as reporting to owners and creditors (Discussed in class). The cash flow statement is recommended by the CNC but it is not mandatory for individual companies. In addition, notes to the financial statements were only required by law in 1983 (Nobes, 1992, p222). An Audit Report is provided in addition to the consolidated financial statements. All companies are audited by members of the CNCC (Compagnie Nationale des Commissaires aux Comptes). An auditor is appointed for a six-year term and each audit is required to have two auditors from two separate firms to sign off on the financial statements (Nobes, 1992, p226). Accounting principles for the individual company level in France differ significantly than from the United States. Examples include the following: 1. ) Formation costs may be capitalized and amortized rather than being written off as incurred. 2. ) Depreciation rates are usually those laid down for tax purposes. French companies do not use residual values. 3. ) Weighted average cost and FIFO are used to value inventory. LIFO is not allowed because it provides too much of a tax benefit. 4. ) The percentage of completion method is the preferred method for long-term contracts according to the PCG, but the completed contract method id permissible and common (Extracted from Nobes, 1992, p224). These examples show the differences in accounting practices from one country to another. It is evident that terminology and the base of accounting, whether rule-based or government-based, affect the way countries report financial accounting. Unlike the US, tax rules in France generally take over accounting rules. Thus, tax law is compatible with the PCG. It is the most important influence on the financial statements of individual business enterprises. The Commercial Code and the Companies Act are also compatible with the PCG although they do not refer to it. Moreover, the French accountancy profession is increasingly influential but has never issued accounting standards (Nobes, 2006, p292). Because IASB has established IFRS to try and unify financial reporting across the globe, France will be reporting their financial statements in accordance with IFRS. In short, French accounting system is highly uniformed. French government can regulate and control the accounting system and government financing can go to the French companies. The focus on the country’s macroeconomic plan is one of the bases for setting up the accounting system. ( , 2005). Accounting in France is highly influenced by tax laws with financing generally provided by banks, government, and family interests. Comparison of United States and France The United States and France have different approaches as to financial reporting. The US accounting is rule based whereas the French accounting system is governmental based. The accounting rules in the US only apply to the public companies that are required to register with SEC. However, the accounting rules in France are highly uniformed and apply to all the companies. Moreover, the French accounting standards are highly influenced by tax and legal laws; in the US, accounting and tax have completely different method of reporting. In France, there is only one accounting regulation to be the basis of the accounting system the national accounting plan (PCG). Most companies in France obey the rules set in PCG. However, in the US, there are two regulations to guide the accounting work – the SEC, and is Generally Accepted Accounting Principle (GAAP). All the financial statements of the public companies in the US must follow the rules set in the conceptual framework and GAAP. Furthermore, the US accounting rules are more detailed whereas French rules tend to be more general. In short, the French accounting system is not only influenced by the government and tax law, but also related to the country’s macroeconomic plan. In contrast, the US accounting system is more related to the public companies and the US accounting rules always used to standardize the public companies’ financial accounting work (microeconomic). The financial statements in the US are prepared for the investors to aid in making investment decisions. However, the financial statements in the France are prepared for creditors, owners, and tax authorities. The US also has the largest stock exchange in the world. France has four stock exchanges but it is not nearly at the level of the US. After examining the financial statements of companies in the US and France, several differences exist. Overall, in the US, the accounting system focuses on income measurement reported on the income statement. Principles and elements, such as matching, revenue recognition, expense, and revenue are set in the conceptual framework to be the base of financial reporting. The word ‘inventory’ in the US refers to how much merchandise, raw materials and finished goods a company has in stock. On the other hand, in France, they focus on the balance sheet. They do not have many rules for the income measurement. Instead, the income statement is the product of changing in the balance sheet accounts. France focuses on inventory, which in contrast is a broader term for ‘everything’ the company has, and items on the balance sheet to provide their income. On a more detailed level, France capitalizes and amortizes its formation costs whereas the US writes them off as they are incurred. The US uses residual values for the calculation of depreciation whereas in France, residual values are not used. Moreover, for the treatment of inventories, LIFO is allowed and commonly practiced for inventory valuation in the US, as well as the weighted average cost method and FIFO. Because using of LIFO causes large reductions in balance sheet figures and the accounting in France need to obey the tax rules, LIFO is not allowed in France. As we know, the terminology for the financial reporting (for example, the term inventory or shareholder’s equity) may be a problem as a result of different language in different countries. Therefore, when looking at other countries’ financial statement, the reader should read up on the accounting system in the specific country to understand the underlying meanings of the terminologies. With respect to the auditors and the auditor’s report, there are two differences between the US and France. First, there is only one auditor required to audit the US financial statements, but in France, two auditors are required to audit the financial statements and sign off on the Auditor’s Report. Second, in the US, the key words the auditor use â€Å"in the opinion in the last paragraph are ‘present fairly†¦in conformity with generally accepted accounting principles’. Those words contrast with the words used in other countries, which note compliance with company law and that ‘the accounts give a true and fair view’†(Nobes, 2006). Furthermore, as we know, making rules is conceptually distinct from enforcing them but the roles may sometimes be combined in practice. (Nobes, 2006) The strictest and best-resourced enforcement regime in the US is the Securities and Exchange Commission in the US. Auditors in the US are supervised by the Public Company Accounting Oversight Board, and thus follow suggested rule depicted by FASB, in accordance with US GAAP. In France, the enforcement body is the stock exchange regulator, the Aurorite des Marches Financiers, which is proactive and uses advance clearance as one its operating procedures. It has delegated review of audit quality to the Comie de l’Examen National des Activites of the Compagnie Nationale des Commissaires aus Comptes. The latter body is responsible for the registration of auditors and is supervised by the Haut Conseil des Commissaires aus Comptes. (Nobes, 2006, ) In conclusion, the United States and France have different influences on accounting. Their history affects the way accounting is reported in each country. Rules within the country and governmental influences play a huge factor in the way accounting is performed. The United States is more individualistic where Public Accountants tend to display their professional ability to maintain occupational self-control in their accounting practice. France is more centralized where the accounting system is fully influenced by the government and tax laws. However, accounting is always changing. Accounting ideas move from one country to another through transfer of technology. Ultimately, in the next couple years, both countries will have adopted IFRS, along with other countries around the globe to aid in the uniformity of financial reporting. Appendix A

World trade organization essays

World trade organization essays One should probably start an argument on the issue of the Group of 21 proposals with a statement from Oxfam International's 2002 report Rigged Rules and Double Standards: "the problem is not that international trade is inherently opposed to the needs and interests of the poor, but that the rules that govern it are rigged in favor of the rich.' Starting from this, I aim to prove not only that WTO's role is almost exclusively in favor of the rich, but also that the important players in the WTO system do not abide by the very rules that they have created. The recent Cancun round of negotiations within the WTO, regarding especially agricultural subsidies, showed that finally the developing countries starting with giants such as India and Brazil, preponderantly agricultural countries with significant contribution to world trade, backed up by China, could finally make a common point and a stand still against the European Union and the United Stated. The strange and somewhat revolting point of discussion is that, while boasting liberalization and free trade, the EU and the United States spent an approximated $300 billion in subsidies, almost all of them going to agriculture. Isn't a subsidy a way to ignore the free trade boasted as the main program by the WTO' Of course, you do not use taxes to raise imported goods prices, but you follow a reverse pattern and use subsidies to lower national goods prices and make them more competitive on the foreign market. The agricultural problem is a first concern for the G-21 demands and it should be noted that these demands are not necessarily for lowering custom taxes or creating a privileged position for the developing countries in the group, but for respecting the conclusions of former WTO negotiations. If trade is to be liberalized, how can this be done in an environment of high subsidies from developed countries' How can the G-...

6 Disappeared LinkedIn® Partner Applications and What to Do About Them †Part IV TripIt and SlideShare

6 Disappeared LinkedIn ® Partner Applications and What to Do About Them – Part IV TripIt and SlideShare The saga of the disappeared LinkedIn Partner Applications continues with this weeks episode TripIt and SlideShare! For more LinkedIn tips please visit How to Write a KILLER LinkedIn Profile e-book! TripIt TripIt was an application that allowed LinkedIn users to report easily on their travel plans. Disclaimer: I questions the wisdom of publicizing ones travel to LinkedIn, since I’ve heard stories of people who post this type of information and whose houses get robbed while they are away. However, if you do feel comfortable letting the world know when you will be traveling, you might wish to follow these steps which were provided directly from TripIt: Dear Traveler, A friendly reminder to link your TripIt and LinkedIn accounts in order to continue accessing and sharing trips with your LinkedIn network. As you may have heard from LinkedIn, they have redesigned the LinkedIn profile page, which will no longer include your TripIt My Travel app. Dont lose your access: Link my accounts. We hope you like the new and improved experience! Learn more about TripIt and how it can help you organize all your travel plans into one master mobile itinerary. By the traveler, for the traveler, The TripIt team The basic idea here is that you can log your travel in TripIt and easily share it to your LinkedIn profile. You can even sign in to TripIt using your LinkedIn username and password! Once logged in, enjoy the magic and convenience of keeping all your travel information in one place (I havent used it fully yet but am intrigued by the possibilities! Theyve got a great video you can watch at https://www.tripit.com/trip/show/id/64396342. Happy travels! SlideShare In May 2012, LinkedIn acquired SlideShare for $118.75 million. Although the SlideShare application no longer exists, you can bet LinkedIn wants you to keep using this resource! You can log in to SlideShare with your LinkedIn username and password and import your LinkedIn profile information to complete your SlideShare profile. With a single click, you can follow all your LinkedIn contacts through SlideShare, thus ensuring that you receive notifications of their updated content and comments. When you add a new presentation, document or video to SlideShare, it will *automatically* post as an Activity Update on your LinkedIn profile! Plus, if your settings allow it, you can automatically post to LinkedIn when you â€Å"favorite† a SlideShare presentation. Heres what your update might look like in LinkedIn Signal: For details on the above tips, see SlideShare Content Sharing with your Professional Network on LinkedIn, posted on the SlideShare blog on January 9, 2012. Finally, you can always post the link to a SlideShare presentation to your Summary or Experience sections by clicking on the box with the blue + sign. Once you click on that box you will be brought to a box where you can paste a link: How do you get the correct link for your presentation? In SlideShare, go to your list of presentations: Click on one of the images and you will be brought to the page with the presentation: Copy the URL from the upper left corner and paste it into the box on LinkedIn. The presentation or video will then be part of your permanent LinkedIn profile until you decide to remove or change it! Next week: How to accommodate for the disappearance of the WordPress application. See you then! Category:Archived ArticlesBy Brenda BernsteinFebruary 18, 2013

Challenges to Nonprofits Essay Example | Topics and Well Written Essays - 1750 words

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Quality of Work Life and Turnover Intention Coursework

Quality of Work Life and Turnover Intention - Coursework Example Though, we are in the middle of a recession period these days, but if we recollect the events unfolding couple of years back, it becomes abundantly clear that the policies of globalisation and liberalisation resulted in many more opportunities for the skilled workers around the world. This resulted in high levels of turnover ratios, particularly in the IT industry. The industry had to eventually think about innovative measures to reduce the turnover ratio and retain the employees. Quoting the figures from a study HR.com (2008) states that on account of economic pressures and an evolving workforce; the voluntary as well as total turnover intentions have seen consistent increase over the last four years. The study indicates that the voluntary turnover intention has seen a more prominent increase. Employee turnover results in multiple impacts for the organisation. When an employee all of a sudden decides to leave a company and join another one, offering better facilities, pay packages etc. then the parent stand to lose by way of; The generally held belief is that life at the working place leaves a big impact on the levels of motivation of the worker. Motivation in simplest terms can be defined as a means of providing motives. Motives can act towards doing a job more efficiently or for distorting the work environment. Quite often the lack of any positive motivation by the managers also results in an automatic provisioning of negative motivation. Mullins (2005) contends that organisations comprise 'people, objectives, structures' and 'management'. While objectives and structure depend upon the manner in which management wishes to work and do not require regular updating, the people require more attention on a regular basis. There are a number of determinants towards shaping the working environment within an organisation. The factors are both internal and external to the organisation. Internal factors will include the strengths of the organisation, in terms of its finances, human resources, management, strategies etc. These factors can be controlled well by the organisation. On the other hand the external factors like the legal and political scene prevailing within the state/ country of its operations, number and types of competitors, suppliers in the market, terms and conditions from financial institutions, alternative products available in the market, newer technological innovations etc. On these factors the organisation may not be able to exert much control. This study is therefore an attempt to take a look at all such factors which affects the quality of work life and how this quality of work life impacts the turnover intentions of the individual. 2. Preliminary Literature Review The search for better ways of retaining the employees to counter the increasing turnover intentions and dysfunctional consequences of job designs based on traditional principles began with the

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Case Studies: Corporate Social Responsibility across world Introduction Over the past decade, Malaysia has witnessed tremendous economic and social changes. Hence, the business world is becoming more complex and demanding. Corporate social responsibility has emerged as one of the major issues in the modern-day businesses. However, developing countries are slower in reacting to this issue as the studies in this area are still scarce. Even though there is some increase in research and studies in corporate social responsibility (Abu-Baker Naser, 2000; Belal, 2001; Imam, 2000; Tsang, 1998), the results of these studies are not satisfying due to the scarcity of studies in the developing countries. Corporate social responsibility (CSR) is becoming more important for national and international businesses. Large corporations discovered and recognized the benefits of providing CSR programs in various locations, these multinational companies are serving as global providers. Now, CSR activities are being performed around the world. Customers nowadays believe that modern businesses have the obligations to serve them better or in a more responsible manner instead of just focusing on maximizing profits for its organizations stakeholders or shareholders. However, only large firms apply this concept compared to those small or middle-sized enterprises due to the power which large firms have. We also refer CSR as corporate or business responsibility, corporate or business citizenship or community relations. The environment that business organizations operate in is filled with dynamism, complexity and uncertainty. Thus, managers must take into consideration the interests of stakeholders and public in performing their respective duties. According to Wartick and Cochran (1985), the concept corporate social responsibility (CSR) has a philosophical orientation. Jones (1996) described CSR as an ideology which has been enhanced and advanced during the past 50 years with the business and research. CSR refers to corporate performance that is normatively correct with respect to all constituents of the firm (Epstein, 1987). How do we clarified the actions that certain firms took are related to corporate social responsibility? According to Carroll (1991), social expectations can be translated into four different stages of corporate social responsibility, viz: economic, legal, ethical and philanthropy. The first stage is economic responsibility. This stage is where the public and society expect corporate organizations to generate profit and at the same time producing goods and services that meet the customers needs. A firms prime social responsibility must be economic involving the production of goods and services at a reasonable profit. Second stage is legal responsibility. Businesses are expected to run within the legal boundaries in order to achieve their goals. However, not all ethical behaviour are codified, businesses should act in the manner that serve the society while meeting economic objectives. Hence, this is categorized as ethical responsibility. Last but not least, the philanthropy responsibi lity. A corporate organization should actively involve in programs promoting human welfare and goodwill. One common difference between philanthropy and ethical responsibilities is that the former are not expected in moral sense. Community expect firms to contribute their resources to social activities. However, they do not hold those firms unethical if they do not practice these social activities. Hence, philanthropy is more to voluntary part of business in conducting social activities. According to Palazzi (2006), there are an increasing number of companies in Western Europe, Japan and North America discovered that by fully integrate the self-interest and needs of customers, employees, communities and their beloved planet, they can make good business. Therefore, corporate social responsibility includes 6 elements where management of each organization should implement in order to enhance growth and profitability. CSR is about how to manage these 6 responsibilities: customers, employees, business partners, environment, communities and investors (Palazzi et al., 2006). Providing goods and services in a fair price so that the customers will get to enjoy the added value of the products provided by the firm and at the same time the firm will earn profits. By adopting CSR, a firms image is strong and well recognised; it provides good welfare for its employees. Business partners such as suppliers, suppliers will only build long term relationship with firms that are well-re spected and trusted. Firm must never conduct any operations that will harm the environment such as toxic dispersion; it will only bring damage to the environment and also the society. Health, stability and prosperity of the communities are the success factors of any businesses nowadays; businesses must involve themselves in social activities such as charity or donations. Practicing CSR in daily operations no doubt maximize profit in long-run which will benefit the investors. In contrast of co-founder of Hewlett Packard Company in 1939, Dave Packard, he thinks many people assume, wrongly, that a company exists simply to make money. While this is an important result of a companys existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately they make a contribution to society, a phrase which sounds trite but is fundamental. No doubt that people assume the purpose of a company is to generate profit, primary objective of a company is to continue its existence or to survive, followed by maintaining growth and development and then make a profit. Company is a structure of people where these people wish to achieve objectives that could not be achieved by the efforts of individuals on their own. CSR involves the responsibilities corporations have to the societies within which they are based and operate. CSR is about the organizations and businesses taking actions beyond their boundaries which will impact the environment and society even though doing so incur higher cost. Several concepts that are closely related to CSR: social and environmental auditing, stakeholder theory, business ethics, environmental sustainability, strategic philanthropy and corporate governance. Definition The issues of corporate social responsibility has been debated and argued since 1950s, latest analyses by Secchi (2007) and Lee (2008) reported that the definition has been changing in meaning and practice. In both corporate and academic world there is uncertainty as how to defined. According to Jackson and Hawker (2001), we have looked for a definition and basically there isnt one. However, this is not quite accurate because the truth is there is an abundance of definitions, which are, according to Van Marrewijk (2003), often biased toward specific interests and thus prevent the development and implementation of the concept. Five dimensions of CSR were identified through a content analysis of the definitions; these five dimensions are environmental dimension, social dimension, economic dimension, stakeholder dimension and voluntaries dimension. Jones (1980) defined CSR as the notion that corporations have an obligation to constituent groups in society other than stockholders and beyond that prescribed by law or union contract, indicating that a stake may go beyond mere ownership. Corporate social responsibility is defined as a principle stating that corporations should be accountable for the effects of any of their actions on their community and environment by Frederick (1992). CSR is defined as the degree of moral obligation that may be ascribed to corporations beyond simple obedience to the laws of the state by Kilcullen and Kooistra (1999). According to Foran (2001), CSR can be defined as the set of practices and behaviours that firms adopt towards their labour force, towards the environment in which their operations are embedded, towards authority and towards civil society. CSR is also defined as the integration of social and environmental concerns in business operations, including dealings with stakeholders (Lea, 2002) . According to Andersen (2003), he defined corporate social responsibility broadly to be about extending the immediate interest from oneself to include ones fellow citizens and the society one is living in and is a part of today, acting with respect for the future generation and nature. There are many available definitions of CSR and they are consistently linking to the five dimensions. From 1980s to 20th century, definitions of CSR must include the 5 dimensions, it is not a must to include all 5 but it is best to do so. Importance of CSR CSR has become increasingly important, now it is considered as a business strategy. Consumers prefer to purchase products or services from companies which they trust; suppliers want to form business partnerships with companies they can rely on; employees wish to work for companies they respect and being respected in return; and NGOs want to cooperate with companies seeking feasible solutions and innovations in areas of common interests. According to Carly Fiorina, Chairman and CEO of Hewlett Packard Company, winning companies of this century will be those who prove their actions that they can earn profit and increase social value at the same time. Shareowners, customers, partners and employees are going to vote with their feet in order to reward those companies that fuel social change through business. This has become the new reality of business, one that everyone should embrace and adopt. Arguments and debates about the importance of CSR, the main topic is why CSR became more import ant? Many factors and influences have led to increasing attention being devoted to the role of companies and CSR. These include: Sustainable development Paul Hawken has defined sustainability as an economic state where the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations. Leave the world a little better than you found it, take no more than you need, try not to harm life or the environment, make amends if you do. According to Hohnen (2007), United Nations studies showed that humankind is using natural resources at an excessive rate, a rate where the used resources failed to be replaced in time. If this scenario continues, future generations will not have the resources they need for their development. According to Maurice Strong, Chairman of the Earth Council (1992), he said as we enter the next century, industry will be the most important engine for change in the drive for sustainable solutions to the worlds environmental problems. These issues alerted the world and required immediate actions. Organizations must play their parts in aiding the environmental problems. Corporate social responsibility is one of the solutions and organizations are advised to practice and implement social responsibility in their daily operations. Globalization Globalization is a complex process because it involves rapid social change that is occurring simultaneously across a number of dimensions in the world economy, in politics, in communications, in the physical environment and in culture and each other these transformations interact with the others (Tomlinson, 1999). Growing concerns on human resource management, environmental protection, health and safety due to the economic globalization, CSR can play a vital role in locating the impacts and effects that a business might have on labour, society and economy. CSR also provide certain steps that can assist the business to build and maintain the public welfare. Governance According to Hohnen (2007), governments and intergovernmental bodies such as the UN, the Organization for Economic Co-operation and Development (OECD) and the International Labour Organization (ILO) have developed several guidelines and declarations which companies can follow and apply in their future business conduct. Example, government in Penang restricted food sellers from using polystyrene for food packing every Monday. Finance Consumers and investors are more interested in supporting responsible business practices; they are seeking more information on how organizations going to react accordingly after defining risks and opportunities which related to social issues. What actions can the organization take so that it will best serve the society and meet the economic objectives? In the CSR context, a sound CSR approach can help build share and market value for an organization, lower the cost of capital and improve the responsiveness to markets (Hohnen, 2007) Protect the environment Some of the worlds largest companies have showed their commitment to CSR by showing initiatives at reducing their environmental footprint. These companies believe that financial and environmental performance can work together to drive company growth and social reputation. We green the earth slogan made by some multinational companies in Malaysia who own large golf courses within residential area is one of the CSR initiatives seems to protect the environment. According to Hohnen (2007), a CSR approach can improve corporate governance, transparency, accountability and ethical standards. Environment stewardship helps build and retain a companys value. In addition, undergraduates and postgraduates will expose to the importance of taking care of the environment through studying corporate social responsibility. Potential Benefits of Corporate Social Responsibility Being socially responsible is increasingly important for modern organizations. This is due to the public becoming more demanding towards firms in terms of being socially responsible. Einer Elhauge, a professor of law at the Harvard Law School, as part of his contribution on the Environmental Protection and the Social Responsibility of Firms, quoted that Corporate managers have the operational discretion to sacrifice corporate profits in the interest of the public. Lower Operating Cost Companies must view this as an opportunity and see the benefit it can obtain from giving back to the communities and employees (McKee, 2005). Lower operating cost may be the most immediate and dependable benefit for a corporation committed to high ethical standards and social responsibility (Ashforth, 1989). On environmental issues, a company who is striving to minimize its emission of greenhouse gasses will be looking at ways of minimizing fuel consumption. Initial investment in more energy efficient vehicles and appliances may incurred very high cost, it will eventually lead to cost saving. If a company is using less energy, then its energy bills will be lower. If a company is minimizing water usage, then its water bills will be lower. The same is true for maximizing the use of recycled materials. Recycled materials are much lower priced compared to raw materials. Employees: Recruitment, Retention and Productivity According to Ivy (2005), the other benefits of adopting corporate social responsibility practices include attracting the most talented and loyal workers. Their employees are more committed to their work because they are proud to be part of that organization. Employees value a corporation that is able to improve the life of the community. A Socially Responsible Corporation considers a workers dignity and offers good health care and retirement plan. Therefore, these employees are not keen to take lifts when opportunity is at hand. Bloemer (1992) found out that the corporation benefits from a stable workforce and reduced training costs. Evidence for this view are clearly stated in the Kelly survey in Crains Detroit Business report found that corporations that behave in socially and environmentally responsible manners attract the top talent and ninety percent of those interviewed would prefer to work for organizations are ethically and socially responsible. Brand Image and Customer Loyalty McKee (2005) suggested that the most significant business benefit of corporate social responsibility is the positive effect it can have on brand image and customer loyalty. If a company is known to be responsible and ethical, and if it markets itself as such, then it will be well positioned in a competitive market. Consumers, weary of the tales of ruthless corporations doing everything in their power to maximize profits, are becoming more and more interested in supporting companies who are socially responsible. Many firms which have such practices include Body Shop that uses all natural, non chemical substances to make their products. They emphasis on no animal testing and many customers are proud to be using their products that support the humanity values that the company share. Differentiated Products According to Klein and Dawar (2004), differentiated product is one of the benefits that enable an organization in order to remain competitive in todays marketplace. Through product differentiation, organizations aim at achieving a competitive advantage by increasing the perceived value of their products relative to the perceived value of the products of their competitors. Particularly, for organizations that implement socially responsible policies, product differentiation can satisfy the unmet needs of consumers offering both financial and business benefits to the firm. Firms that offer environmentally friendly products experience higher sales growth than firms that sell conventional products (Ramasamy Ting, 2004). Besides, firms that offer unique value propositions to consumers differentiate their products in consumers minds and contribute to building customer loyalty based solely on ethical values. Therefore, in the context of corporate social responsibility, organizations develop new products aiming, not only to become more competitive, but also to make a greater impact on society through their ethical practices. A CSR Europe MORI study in 2000 showed that 70 percent of European consumers say that a companys commitment to corporate social responsibility is important when buying a product and one in five would be willing to pay more for products that are socially and environmentally responsible. On the other hand, one in six shoppers frequently boycott or buy products because of the manufacturers reputation. Improved Risk Management Improved and proper management is one of the benefits gained when a corporation embarked in corporate social activities. Modern organizations implement risk management strategies to decrease or even eliminate the risk posed on the organization by a variety of practices associated to several potential threats (Porter Kramer, 2002). Organizations that have made countless efforts over the years to build a good reputation and have spent a lot of money to maintain it through product development and customer loyalty strategies. However it could be ruined is seconds (Tencati, Perrini, Pogutz, 2004). Such incidents include scandals, environmental accidents, foreign labour transgressions and internal corruptions draw the attention of the media and may cause irreversible damage to a firms reputation. The only way to anticipate such events are to embed social responsibility into organizational culture that contributes to a stable reputation for a form and in order to offset such risks. This c ould save cost and time in repairing and building firms reputation using the usual ways. Access to capital Financial institutions such as banks and private loan companies are increasingly incorporating social and environmental criteria into their assessment of projects. When making decisions about where to place their money, investors are looking for indicators of effective CSR management. Maignan, Tomas and Hult (1999) argued that a business plan incorporating a good CSR approach is often seen as a must for good management. When a company engage in corporate social activities shows that they care about their planet and it give a good impression towards to the investors. Hence both private and public investors are more willing to invest in such ventures because it will gain support from many parties and corporate social responsibility based companies tend to last longer. Arguments underpinning CSR Today many persons are discussing the social responsibilities of business; there are various reasons both for and against businesss assumption of social responsibilities. People in the business world argue and debate about social responsibility, some supporting this concept and some do not see it that way. Arguments for corporate social responsibility Long-run self interest Long-run self interest is one of the arguments which favour corporate social responsibility, this ideology makes the society expects the businesses to accomplish and conduct various social goods and actions. According to Davis (2001), a business must conduct social practices if it expects to achieve objectives and earn profits in long-run. The firm that responds fastest to the needs of the society hence will have a better community in for the firm to run its business. Recruiting employees will be easier, the employees hired are better in quality. Besides that, absenteeism and turnover will decrease. As the social of one society improved, crime rate will definitely go down and money can be saved up as the properties are well protected. The dispute can lead to several directions, for example a better society provides a better environment for business. It is hard to believe that incurring higher cost for social activities will result in higher profit for the business. However, it is the normal outcome that business can perform better when it runs in a better environment. Recent surveys confirm that the correlation between social and financial performance is their positive or neutral (Margolis Walsh, 2003). Public Image A firms main objective is to attain and retain more customers, desirable employees and various benefits through enhancing its public image. According to Davis (2001), it is easy to extend this public-image concept through the accomplishment of a variety of social goods. Public holds social goals as top priority, firms which has intention of achieving a benevolent public image must reinforce and prioritize these social goals. CSR has become a vital tool in promoting and improving the public image of some worlds largest corporations (Christian, 2004). Let Business Try Many institutions tried and failed in handling social issues, why not give business a chance to do so. Many comments were made due to the failures of other institutions, people are turning to business. Comments like the following: Give business a try. Maybe they can come up with some new ideas. Let business have a role. They couldnt do any worse! These comments were made out of frustration and desperation instead of reasoning; many people are expecting that business institution will fail in handling the social issues. The truth is that there is no evidence showing that we perform badly in handling and solving the social problems using businesss capabilities (Davis, 2001). Business Has the Resources Business is believed to have valuable resources which can be used in handling social problems; hence society should put the resources into good use. Sadly, many people wrongly assumed that business has all the money where the society need to do is to tap the till of business and the social problems will just fades away. In most cases, there is a reasoned assumption that business has a pool of management talent, functional expertise and capital resources (Davis et al., 2001). With this pool, business definitely has the requirements to solve social problems in the society. In addition, business is well known for its innovative ability. In some social problems, innovation is needed badly for application. Problems can be Profits While the creativity of business can contribute to social problems, it can also be an advantage at times when apply conventional business theories to these social problems. Although this idea cannot be applied to all of the social problems, it is encouraged that business should involve in social areas more effectively. According to Davis (2001), many problems can be solved and settled profitably according to traditional business concepts. Prevention is better than Curing It is argued that business should resolve social problems once encountered. This supports the idea of saving resources and the managements time and also preventing the social problem from developing into a disastrous situation to the business. Furthermore, the progress of producing goods and services can be affected when business is busy dealing with serious social problems that have yet to be resolved. Argument against Social responsibility Profit Maximization The most prevailing argument against business assumption of social responsibility is the classical that it challenges the traditional mindset of the companies is to focus on profit maximization (Friedman, 1971). According to the industrys point of view, the companys desire is to think in the best interest of the shareholder and satisfy them by maximizing profit and find all means to increase profit. One common practice in most industries to maximize profit is to minimize cost. Friedman (1971) mentioned that in a free enterprising firm system, employees responsibility is do what their superiors command them to do as long they do what their are told, they would survive in the economy provided their actions are abiding to the laws and ethical customs of the society. The employees desire is accord with the shareholders interest that is to maximize profit. However imposing a new concept of corporate social responsibility, the company dilutes the aim of profit maximization and makes the sh areholders unhappy. This is due to the managers spending their money on something that has no direct impact on their cash flow. Besides that, Friedman argued that the concept of corporate social responsibility may overthrow the old doctrine of the economy to maximize profit. Cost of Social Involvement Friedman (1962) found out that imposing the culture of corporate social responsibility in a firm takes away a lot of the firms financial resources though the outcome may not be as rewarding as predicted. The company must make wise decision to allocate their resources in the right causes for it is scarce. Most companies commit small resource to corporate social activities due to social pressure and obligation. However, the public tend to forget the firms effort towards corporate social activities after a period of time. Therefore it is very tiring for a company to keep renewing their commitment towards social acts since the customers cannot remember the organizations contribution towards society even it was just last month ago. When the business is pushed into social obligations, many additional costs will drive out marginal firms in all the industries (Friedman et al., 1971). In the chemical industry, many chemical firms shut down because they are unable to meet the requirement of pu rchasing the new pollution equipment that is highly priced. Lack of Social Skills Traditional companies do not have the skills to handle the social matters regarding the publics concern towards the companys effort in corporate social goals. As mentioned Friedman (1971), it is insane for a firm to give social related duty to technicians or accountants. They are unfit for the job because they are not trained to work in such way. The firm may need to hire sophisticated people which are public relation officers to create an image for the company and handle all the social matters. This may require the organization to create a new department just to achieve these goals. Problems may arise since the firm needs to incur new costs to the company. Dilution of Businesss Primary Purpose Friedman (1962) suggested that a firms involvement in social goals might hinder businesss emphasis on economic productivity, divert the interest if its leaders, and weaken business in the market places, with the result of the firm achieving poorly in both economic and social aspects. The effect of social goals in corporations is confusing the societys perception in the economic role of the business. If a company is inadequate to achieve its social goals, the society would suffer socially and economically (Friedman et al., 1962). Weakened International Balance of Payment Argument against business assumption social responsibility requires the international balance of payments thought it is frequently ignored. In normal practices, social programs are counted in business costs. In order to recover these costs, the business would usually add the cost into the price of the product. If social activities dilute businesss capacity for high productivity, then this lower efficiency is likely to lead to higher product cost (Friedman et al., 1962). A company would lose its competitive advantage in the international market if they comply with the social obligation. In the international market especially regarding raw material, the price is an essential criterion to consider. When a product is priced higher than its competitor due to social obligation, the clients will choose cheaper choices and outcome is the company loses out a lot of customers. Lack of Accountability From economic point of view, entrepreneurs have no accountability towards the public. Friedman quoted that Accountability always go with responsibility. A firm which embarks into social activities must be responsible towards the people. Until the firm is ready to be establish a proper line of social accountability from business to public, the business is preferable just focus on maximizing profit and not engage in any social activities. Lack of Broad Support One final point is that social involvement may lack a broad range of support from all groups of the society. Although many people support the idea of corporate social responsibility, many parties opposes it (Henderson Hazel, 2001). Unlike China, there are a lot of countries that does not give full support to firms that has social goals. The lack of agreements is among the general public, in government, even among the businessmen themselves. Many reasons are mentioned in the above statements. Such hostile oppositions will create disastrous effects on the company if it fails its social mission. Case Summary Burgerville USA is a family owned fast-food restaurant, founded by George Propstra in Vancouver, Washington 1922. Burgerville applies this mentality made fresh from local ingredients, this concept still stand strong up till today. Burgerville had never used frozen patties, used only the freshest ingredients. Besides that, onions rings sold in Burgerville are made from onions grown in nearby Walla Walla. Burgerville has expanded up to 39 locations in the northwest United States, currently run by Propstras son in law, Tom Mears. The key element in the companys strategy remains unchanged which is the fresh, local concept. Company is using fresh, local products in order to offer higher quality food. This strategy moves Burgerville out from the fast-food industry into fast-casual dining sector, a niche in the restaurant industry. Mears decided that the company will not play the chea

Competitive Rivalry

Competitive Rivalry * Industry dominance by few large firms The car automobile industry -There are various competitors in this market but the dominant ones include General Motors, Volkswagen, Chrysler, Ford, and Honda etc. Entry barriers prevent other entrants and pricing is mostly by competition and mutual understanding between top manufacturers. * Huge setup cost and complete resource ownership * Prices remain stable if a  firm reduces product price others follow suit and cut down their price as well,   if a firm increases product price, others do not increase their price. oyota focusing on continuously finding ways to reduce production costs. The company also optimized its processes to accelerate the various phases of production — from initial design to production — so that it could introduce new models faster than its competitors. Seek less expensive ways to produce desirable products -BMW Group and the Toyota Motor Corporation announced a collaborative effort a imed at developing new products and advanced-powertrain technologies. Toyota also has an agreement with Ford to develop hybrid systems for light trucks and sport utility vehicles. Threat of substitute products * There are a lot of substitutes in the automobile industry. When the price of the vehicles rises, the substitutes will emerge, there are many types of equipment that can take the place of vehicles, such bus, subway, bicycle and even walking. The Hybrid Synergy Drive also must be evaluated using Porter's model factor for threat of substitute products.Other companies could potentially enter the hybrid market by developing a similar drive and neutralizing Toyota's advantage. In fact, Nissan and Honda have developed similar technologies for their sedan models. However, Toyota continues to dominate the market for hybrid vehicles because Honda and Nissan do not have a significant impact on the market yet. In the future, Toyota may lose their competitive advantage if hybrid vehicles take a bigger market share in the automotive industry.However, currently Toyota is adding Sport Utility Vehicles (Toyota Highlander) to their line of vehicles using the HSD. By being the first to add SUV's to the hybrid market, they have currently protected their competitive advantage from substitute products. Bargaining power of Suppliers Toyota Production System which developed a network of suppliers who would supply the right quality, quantity at a point just in time for Toyota to use in building its cars. This reflects weak bargaining power on the part of the suppliers in terms of our model.