The components of Corporation Financing in the Economy - Free Essay Example

Sample details Pages: 9 Words: 2615 Downloads: 1 Date added: 2017/06/26 Category Business Essay Type Research paper Did you like this example? The major issue arising in the present times, for both management academics and practitioners, relates to the principles which determine corporate successes and failures that is why some organization prosper and grow while other collapse. The often unexpected collapse of large companies during the early 1990s and more recently in 2002 has lead analysts to look for ways of predicting company failure. Corporate failures are common in competitive business environment where market discipline ensures the survival of fittest. Don’t waste time! Our writers will create an original "The components of Corporation Financing in the Economy" essay for you Create order Moreover, mismanagement also leads to corporate failure. Predicting corporate failure is based on the premise that there are identifiable patterns or symptoms consistent for all failed firms. Definition According to Altman (1993), there is no unique definition of corporate failure. Corporate failure refers to companies ceasing operations following its inability to make profit or bring in enough revenue to cover its expenses. This can occur as a result of poor management skills, inability to compete or even insufficient marketing. COPORATE FAILURE The models to predict Corporate Failure: Several techniques have been developed to help predict why companies fail. However, these are not accurate and doo not guarantee that the prediction will turn out to be true. These models are The Z-Score, Argenti Model, and the VK model amongst others. Beaver was one of the first researchers to study the prediction of bankruptcy using financial statement data. The established practice for failure prediction is therefore a model based on financial ratio analysis. Published financial reports contain a great deal of information about the company performance and prospects. Therefore, ratio analysis is not preferred for financial accounts interpretation however; it has also played a central role in the development of bankruptcy prediction models. The Altman Model: Z-Score The Z-Score model is a quantitative model developed by Edward Altman, a financial economist and professor at the Leonard N.Stern School of business at New York University in 1968 to predict bankruptcy or fi nancial distress of a business. The Z-score is a multi variate formula that measures the financial health of a company and predicts the probability of bankruptcy within 2 years. This model involves the use of a specified set of financial ratios and a statistical method known as a Multiple Discriminant Analysis. (MDA). The real world application of the Altman score successfully predicted 72% of bankruptcies two years prior to their failure. The model of Altman is based on a linear analysis in which five measures are objectively weighted and summed to arrive at an overall score that then becomes the basis for classification of companies into one of the two a priori groupings that is bankrupt or non- bankrupt. These five indicators were then used to derive a Z-Score. These ratios can be obtained from corporations financial statements. COPORATE FAILURE The five Z-score constituent ratios are: 1. Working Capital/Total Assets (WC/TA):- a firm with negative working capital i s likely to experience problems meeting its short-term obligations. 2. Retained Earnings/Total Assets: Companies with this ratio high probably have a history of profitability and the ability to stand up to a bad year of losses. 3. Earnings Before Interest Tax/ Total Assets: An effective way of assessing a firms ability to profit from its assets before things like interest and tax are deducted. 4. Market Value of Equity/ Total Liabilities: A ratio that shows, if a firm were to become insolvent, how much the companys market value would decline before liabilities exceed assets. 5. Sales/Total Assets: A measure of how management handles competition and how efficiently the firm uses assets to generate sales. Based on the Multiple Discriminant Analysis, the general model can be described in the following form: Z=1.2WC/TA + 1.4 RE/TE + 33 EBIT/TA + 0.6 MVE/TL + 1.0 SL/TA Altman (1968) found that companies having a Z-Score greater than 2.99 clearly f ell into the non- bankrupt category, while companies having a Z-Score below 1.81 were all bankrupt. The area between 1.81 and 2.99 was defined as the zone of ignorance because of the susceptibility to inaccurate classification. Z-Score Probability of Failure Less than 1.8 very High Greater that 1.81 but less than 2.99 Not Sure Greater than 3.0 Unlikely Calculation of the Z-Score for a fictitious company where the different values are given to calculate the Z-Score. Sales 25,678 Total Assets 49,579 Total liabilities 5,044 Retained earnings 177 Working Capital -1,777 Earnings before interest and tax 2,605 Market value of Equity 10,098 Book value of Total Liabilities A Type 1 failure characterises the failure of newly formed and therefore mainly small companies. Whereas, Type 2 is characterised by the presence of a very ambitious, charismatic and active manager with an outstanding personality. Due to his over ambition the company is brought down. These failure types can occur to young organisations, but they usually survive longer than Type1 companies. Type 3 failures only occur to mature companies that have been operating successful over a fair number of years and that often are of a major social and economic importance to the community. The largest characteristic of Type 3 companies is its insensitivity towards changes in the environment, whereas the world around it is changing with its environment. Symptoms of corporate failure There are three classic symptoms of corporate failure. These are namely: 1. Low profitability 2. High gearing 3. Low liquidity Each of these three symptoms may be indicated by trends in the companys accounts. Symptoms are interrelated. The classic path to corporate failure starts with the company experiencing low profitability. This may be indicated by trends in the ratios for: ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Profit margin ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Return on Capital Expenditure ÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬Ãƒâ€šÃ‚ ¢ Return on Net Assets A downward trend in profitability will raise the issue of whether and for how long the company can tolerate a return on capital that is below its cost of capital. If profitability problems become preoccupying, the failing of the company may seek additional funds and working capital by increasing its borrowings, whether in the form of short term or long-term debt. This increases the companys gearing, since the higher the proportion of borrowed funds, the higher the gearing within the capital structure. The increased debt burden may then aggravate the situation, particularly if the causes of the decreasing profitability have not been resolved. The worsening profit situation must be used to finance an increased burden of interest and capital repayments. In the case of a publicly quoted company, this means that fewer and fewer funds will be available to finance dividend payments. It may become impossible to obtain external credit or to raise further equity funds. Confidence in the company as an investment may wither away leaving the share price to collapse. If the company is sound, for instance, but ineptly managed, the best that can be hoped for is a takeover bid for what may be now a significantly undervalued investment. At this point, a company may not be really failing but unfortunately, more often rescue attempts are not mounted. This may be because the companys management does not recognize the seriousness of the situation, or is by now too heavily committed or too frightened to admit the truth to its stakeholders, when refinancing is attempted profits fail to cover payments leading to a cash flow crisis. CAUSES OF CORPORATE FAILURE AND THEIR EXAMPLES: Technological causes Traditional methods of doing work have been turned upside down by the development of new technology. If within an industry, there is failure to exploit information technology and new production technology, the firms can face serious problems and ultimately fail. By using new technology, cost of production can be reduced and if an organization continues to use the old technology and its competitors start using the new technology; this can be detrimental to that organization. Due to high cost of production, it will have to sell its products at higher prices than its competitors and this will consequently reduced its sales and the organization can serious problems This situation was seen in the case of Mittal Steel Company taking over Arcelor Steel Company. Arcelor Steel Company was using its old technology to make steel while Mittal Steel Company was using the new technology and as a result, Mittal Steel Company was able to sell steel at lower price than Arcelor Steel Company d ue to its low cost of production. Arcelor Steel Company was approaching corporate failure and luckily, Mittal Steel Company merged with Arcelor Steel Company and became ArcelorMittal Steel Company, thus preventing Arcelor from failure. Working capital problems Organizations also face liquidity problems when they are in financial distress. Poor liquidity becomes apparent through the changes in the working capital of the organization as they have insufficient funds to manage their daily expenses. Businesses, which rely only on one large customer or a few major customers, can face severe problems and this can be detrimental to the businesses. Losing such a customer can cause big problems and have negative impact on the cash flows of the businesses Economic distress 7 COPORATE FAILURE A turndown in an economy can lead to corporate failures across a number of businesses. The level of activity will be reduced, thus affecting negatively the performance of firms in several industries. This cannot be avoided by businesses. The recent economic crisis in the USA led to many cases of corporate failures. One of them is the insurance AIG insurance company. It is facing serious problems and it might close its door in the near future. COPORATE FAILURE MISMANAGEMENT Inadequate internal management control or lack of managerial skills and experience is the cause of the majority of company failures. Some managers may lack strategic capability i.e. to recognize strengths, weaknesses, opportunities and threats of a given business environment. These managers tend to take poor decisions, which may have bad consequences afterwards. Furthermore, managers of different department may not have the ability to work closely together. There are dispersed department objectives, each department will work for their own benefits not towards the goal of the company. This will bring failure in the company. One example can be WorldCom, where the finance and legal functions were scattered over several states and communication between these departments were poor. OVER-EXPANSION AND DIVERSIFICATION Research has shown that dominant CEO is driven by the ultimate need to succeed for their own personal benefits. They neglect the objective set for the company and work for their self- interest. They want to achieve rapid growth of the company to increase their status and pay level. They may do so by acquisition and expansion. The situation of over expansion may arise to the point that little focus is given to the core business and this can be harmful as the business may become fragment and unfocused. In addition, the companies may not understand the new business field. Enron and WorldCom can be an example for this situation where the managers did not understand how growing overcapacity would influence its investment and therefore did not comprehend the risks associated with it. FRAUD BY MANAGEMENT Management fraud is another factor responsible for corporate collapse. Ambitious managers may be influenced by personal greed. They manipulate financial statements and accounting reports. Managers are only interested in their pay checks and would make large increase in executive pay despite the fact that the company is facing poor financial situation. Dishonest managers will attempt to tamper and falsify business records in order to fool shareholders about the true financial situation of the company. These fraudulent acts or misconduct could indicate a serious lack of control. These frauds can lead to serious consequences: loss of revenue, damage to credibility of the company, increased in operating expenses and decrease in operational efficiency. POORLY STRUCTURED BOARD Board of Directors is handpicked by CEO to be docile and they are encouraged by executive pay and generous benefits. These directors often lack the necessary competence and may not control business matters properly. These directors are often intimated by dominant CEO and do not have any say in decision making. Example Enron and WorldCom where poorly structured board was a contributor towards their failure Financial distress Firms that become financially distressed are found to be under- performing relative to the other companies in their industry. Corporate failure is a process rooted in the management defects, resulting in poor decisions, leading to financial deterioration and finally corporate collapse. Financial distresses include the following reasons also low and declining profitability, investment Appraisal, Research and Development and technical insolvency amongst others. A firm may fail, as its returns are negative or low. A firm that consistently reports operating losses probably experiences a decline in market value. If the firm fails to earn a return greater than its cost of capital, it can be viewed as having failed. Falling profits have an obvious link with both financial and bankruptcy as the firm finds it is not generating enough money to meet its obligations as they fall due. Political and legal causes also can affect organisations. New legislation for example on product safety s tandards or pollution controls, can affect a companys main products. The imposition of a complete ban on an organisations product might be damaging and lead the firm to loses. The Tobacco industries are at present faced with the prospect of a ban on advertising for their product. Another cause that will lead the company to fail is the investment appraisal. Many organizations run into difficulties as they fail to appraise investment projects carefully. The long- term nature of many projects means that outcomes are difficult to forecast and probabilities are usually subjective. Big project gone wrong is a common cause of decline. For example the acquisition of a loser company. This has happen in the case for the failure of Parmalat Co Ltd of Italy, which made the acquisition of several losses making company. Inappropriate evaluation of the acquired company, its strengths and weaknesses. COPORATE FAILURE Preventing corporate failures It is a fact that some companies perform well and that some underperform and some fails. In many, if not most cases, these companies are led by executives that are quite experienced. Below are some recommendations that can help to reduce the risk of failures of organisations: Appointment of non-executive directors The non-executive directors will bring their special expertise and knowledge on strategies, innovative ideas and business planning of the organization. They will monitor the work of the executive management and will help to resolve situations where conflict of interest arises. Overall, the non-executive directors will act as a Cross Check. Audit committees Very often, there is occurrence of fraud in management and financial reporting. The presence of the audit committees will help to resolve this problem. Audit committees have the potential to reduce the occurrence of fraud by creating an environment where there is both discipline and control. Code of ethics Corporate governance is based on enterprise and integrity. Directors of companies need to do their jobs with good faith and in the interest of the company. There must be a relationship of honesty, openness and fairness between the stakeholders. Development of environment learning mechanism Some organizations fail because they lose touch with their environment. Therefore, to counter this problem, there is a need to develop the environmental learning mechanism. Through it, new information can be brought on continuous basis. This is mainly done by carrying customer- feedback surveys. In this way, the organisation can realign itself with the new needs and challenges. Focus on research and development Organizations can generate new knowledge by investing and focusing more on research and development. Thus, there will be more ideas how to make the products much better than that of their competitors. Conclusion It can be deducted that a director has a big responsibility that he has to assume The recommendations mentioned above can help directors to reduce corporate failure, provided that the directors abide. Proper planning also is critical to the success of a business.

Fitting And Installing External Bifolding Doors - 1448 Words

Fitting and Installing External Bifolding Doors External bifolding doors are perhaps the best and most affordable solutions when you are looking to bring a little extra light and warmth into your home. More often than not, the space in which you ll be installing these doors will also already be an existing aperture, so it s not like you ll need to get the sledgehammer out and take down the kitchen or living room wall! If you re reading this then that s something you probably already understand, as you re presumably considering installing a set of bifolding doors yourself. These doors will most likely either be installed leading out into your garden or patio from a kitchen, lounge or dining room area, so please take into account that, whilst you re working, this area will be exposed to the elements. As such, this is a job you re going to want to get done in as expeditious a manner as humanely possible, so whilst you obviously feel you have the DIY skills to do the job, you might want to ask for some help from a friend or family me mber to get the job done in a single day or, at the very least, weekend. Please note that the following guide relates specifically to exterior bi-fold doors. Whilst many of the steps involved with installing interior bi-fold doors will be similar, or even identical in some cases, there are also some serious differences, some of which will be less obvious than others. How To Fit External Bifold Doors Before you begin, check that you don t

Plunkitt of Tammany Hall Free Essays

Summer School I can blame no one but myself for my need to attend summer school for this year. However: I would like to blame it on my Spanish teacher, my mother, my siblings, my dog ate the homework, anyone but Christopher L. Martin. We will write a custom essay sample on Plunkitt of Tammany Hall or any similar topic only for you Order Now Summer school was not in my game plan the first day of school last year. I entered my school, Lake Catholic HAS, with the calm surety and purpose of a bona-fide tenth grader, Vie been here before. My anxiety level was low but my expectations for the future year were high. There are times when I think that I remain overwhelmed in some way by the enormity of the campus; the numerous classrooms, by the tough rules that are actually enforced. Transitioning from a small Catholic parish school boasting an 8th grade graduating class of 34 students to a large campus of hundreds of students present a challenge to â€Å"fit-in† that I had never experienced. I began the August, 2011 school year anticipating the spectacular athletic and academically successful year ahead of me. I ever thought that such a hopeful day would end in humiliation a years end. You might ask what caused this major shift in my universe. I failed both semesters of Spanish II and had to retake the entire year during summer school at SST. Robert Williams in Euclid, OH. I will be honest and admit that prior to formulating thoughts to Jot down in preparation of writing this personal essay; I thought the most devastating result of having to attend summer school was that I was automatically ineligible to participate in football. I was not allowed to attend practice or to Join the am for the annual trip to the Edinburgh campus where players honed their skills and bonded as men. I now realize and accept the fact that my behavior placed a heavy financial burden on my families finances. Summer school is not cheap! . The cost of attending summer school hit our budget so hard that my 2011-2012 grades were not paid for until it was too late to pick up the summer reading assignments. I am therefore very grateful to have the option of writing this personal essay. Paying for summer school had our family without food and water. Not only did my having to attend summer school overwhelm our family budget, the time factor ruined any chances I might have had for summer employment. I had to wake up every morning to go to school and remain in that hot stuffy building for four hours a day, 5 days a week for 4 weeks. It may be difficult to believe, but there were times when our instructor would keep us in class for an extra hour or two. The requirements were so intense that I spent most of the long hot summer nights and week-ends stuck in the house completing homework assignments. Unfortunate as it was, I feel this experience has opened my eyes to my need to take personal responsibility for myself in all areas of my live including school. Writing this essay also makes me realize the unconditional love and faith my mother has in me in spite of what I did or didn’t do. Hardship it placed on her as a divorced single parent and her ability to provide for me and my siblings. My athletic scholarship has been revoked because of this and still she works hard to keep me here so that I can get the best education available. She didn’t even include caring for herself into the equation because she was focused on supporting me and my siblings. Yea, she stayed on me to the point of angry outbursts; however, I realize the reason for her persistence at keeping me focused is based on her love for me and her hopes for me to enjoy a bright future. It is also noted in my mind, that accurate, timely completion of class assignments is a precursor to life as a college student and as a functioning, contributing member of society. I am considering this summer school experience from beginning to end as a â€Å"lesson learned. â€Å" How to cite Plunkitt of Tammany Hall, Papers

Ethical Business Practice- Walmart

Question: Discuss about the Report for Ethical Business Practice for Walmart. Answer: Introduction The assignment will focus on addressing ethical issues of Walmart. The purpose of this paper is to evaluate the sustainable practices of the company. It also discusses the ethical issues faced by the company. Carrolls four-part Corporate Social Responsibility has been used to assess Walmarts commitment to entire society. The paper has identified key stakeholders of the company according to their power; legitimacy and urgency. It is also important of Walmart to be ethical in communication and business practice. In this paper, some questions will be answered based on the case study of ethical business practice of Walmart. Analysis Walmart is one of the most powerful companies in the international market. The business practice of this company is often inspected carefully. By evaluating the sustainability activities regarding employees; society and environment, it can be said that whether Walmart is doing enough to become more sustainable is future. Walmart has been criticized over the years for the way it treats its employees. The company failed to offer health insurance to the most of its employees and to avoid health coverage it encouraged part-time workers. This has significant ripple effect on the economy, as a company like Walmart engages significant number of work-force. After the bad publicity of the company, Walmart improved the health benefits package and offered low deductibles. It also implemented generic prescription plan to save millions of dollars of the employees (Ferrell and Fraedrich 2015). Moreover, its low price strategy has reduced the wage of the workers and this has been highly criticised. This has led to high dissatisfaction of the workers. Hence, it can be said that Walmart is not practising enough to attain sustainability. Existence of Walmart has put other companies out of business. This is a social issue. The reduction is wage of Walmart has reduced the wage at other retail firms as well. However, Walmart works together with suppliers to reduce the cost of packaging and shipping to maintain low costs of products to the customers (Ji, Gunasekaran and Yang 2014). It has developed Sustainability Index in order to maintain the quality of the product and to have a sustainable supply chain. However, the critics argue that the sustainability goal of Walmart is actually shifting burden on the suppliers. Walmart is one the major violators of environment activities. In 2005, US Attorneys office of California has announced violation of safe environment practice by the company, in terms of recycling; treatment and hazardous material storage and transportation. In 2013, the company pled guilty due to dumping hazardous waste materials. Opening up of Walmart has caused urban extension, which means the acres of green space in the city consumed by Walmart store construction. Apart from these negative impacts on environment, this company has aims to offer renewable energy. It has installed 115 rooftops solar electricity in several countries. It also taken up many projects for its own renewable projects. By reducing the energy consumption and purchasing green power have facilitated the country to conserve energy. Walmart has replaced their old freezers and reduces emission of greenhouse gas by 20 million metric ton by 2015. It has also attempted to reduce the use of fossils fuel (Slattery 2015 ). By transporting many products in each time has resulted into fall in carbon emission. Walmart has been successful in converting million pounds of used cooking oil into biodiesel; soap etc. The recycling method of this company has reduced global plastic waste since 2007 and it has been able to keep waste out of landfills by a significant amount. Hence, it can be said that, Walmart is becoming environmentally sustainable over the years by practicing environment friendly business. 2. The worlds leading retail company Walmart has been criticized for low benefits and wages to its workers. Even if they promote hiring healthy and productive employees, it actually encourages part time workers in order to avoid health benefit package. When employees earn very little, the Federal government offers health benefits to those people. Therefore, burden of health care coverage has been shifted to federal government. Moreover, even if the company is expanding its stores a but has decreased workforce it used to engage. As a result of this, unemployment in the society has been taken place. Due to lack of workers, it is also hard to handle huge customers at the stores. This has led to customer dissatisfaction. Later the company has offered low deductibles to improve the health benefits. Moreover, it has always opposed formation of labour union (Boudway 2012). Whenever, any situation arises to form union, Walmart manages to by-pass it diplomatically. For example, when butchers of the company voted to join union, Walmart announced they would sell pre-cut meat to get rid of workers of the meat-cutting department. Moreover, the company prevented the workers to join union technically in China, where the working condition was very poor along with a very low wage. This is one of the unethical behaviours of the company. However, mounting pressure the company allowed union in its store (Li and Liu 2016). Some major unethical practices of the company have been alleged by the workers themselves. It has been complained by the employees that Walmart denied meal breaks or rest breaks. In fact, the managers of the company deliberately changed time cards to prevent the overtime. The company denied the allegation but pay $640 million for settle down 63 lawsuits. Walmart has been accused on ethical grounds for discriminating its employees. The company paid less to the female store managers than the males in the same job position. It is claimed that Walmart not only practices sex-discrimination in terms of wage, but also in terms of promotion; training and job assignment. Walmart claimed that promotion is made on individual basis and it took the case to the Supreme Court firms right is violated by local suit. Walmart has also faced various scandals. During 2005, the Vice Chairman Thomas Coughlin resigned as he was caught stealing $500000 from the company for irrelevant expenses and reimbursement. He also used gift cards that were unauthorised. In spite of getting millions of dollars of compensation from the company, he has misused Walmarts fund for paying his personal expenses. Again in 2012, bribery scandal was discovered in Mexico. In this scandal, the top executives of Walmart paid millions of dollars as bribe to the Mexican officials (Barstow 2012). It was paid in order to get approval of zoning permits and license to open stores in this country. The executives covered their tracks with the help of fraudulent methods of reporting. Around $24 million has been paid as bribes to get the required permits. While investigating, it has been found that when the Walmart was informed about the bribery evidence, the CEO Lee Scott and higher authority were reluctant to report this issue as, revel ation of bribery would create negative impact on the reputation of the company. Hence, Walmart has suffered from ethical leadership issues. Even if the stakeholders voted against reselection of Mike Duke; Lee Scott and Robert Walton, these members were reselected, which signalled lack of confidence in the ability of leadership to prevent misconduct of the stores (Ferrell and Fraedrich 2015). Therefore, it is required to ensure that Walmart is adheres to ethics and compliance. 3. Corporate Social Responsibility (CSR) refers to behaving as a socially responsible apart from just earning high profit. It addresses the social problem of all levels and focuses on ethical behaviour of the company. There must be some motivation within the business apart from making profit. Business does not exist because of making high profit, rather it has to meet some need that the society values for. CSR is both corporate and stakeholder responsibility. According to Carrolls four-part model of CSR, it involves four layers of business. This defines that the business should be profitable; law abiding; ethical and socially supportive (Carroll and Buchholtz 2014). This is also called pyramid of responsibilities. The pyramids must be seen as a whole and the four parts of it should not be separated. Making high profit by minimizing costs or maximizing sales and strategic choice are at the base of the pyramid, i.e. the economic responsibility. Better economic performance is required by t he society. The business or the company must obey the law as law reflects what is socially accepted and what is not. Hence, the second layer is the legal responsibility. Ethical responsibility is not required but it is expected by the society. The firm must avoid questionable business practices. By operating above minimum standard of law indicates ethical responsibilities. At the top of the pyramid, the philanthropic responsibilities stand. When a company improve the quality of life for the society then they aim for this responsibility. The companys contribution to the community and its engagement in volunteerism program is example of philanthropic responsibilities. The stakeholders are affected by the different responsibilities. The economics responsibility affects the employees and owners; legal responsibility affects the owners mainly, but also related to the workers and consumers. The ethical layer of responsibility has impact on all stakeholders but it mostly engages employees and consumers. The philanthropic responsibilities affect the community. It also influences the morale of employees by performing what is socially desirable and expected. The Walmart has put the small merchants out of the business. Due to the ability of charging low price for reasonable quality, it becomes harder for the local stores to compete with this international giant. The small firms are unable to reduce their cost of production, thus unable to earn profit by charging low price. Walmart is socially responsible for downward pressure of the wage in the towns where it opens store. This is because; to compete with low pricing of Walmart, the other firms reduce their cost of labours (Lichtenstein 2014). The predatory pricing of the company left no place for the competitors in the market. However, in the other way around, it can be said that low price of the products has helped to save millions of dollars of the consumers, who are unable to afford high priced goods. Walmart requires huge space for construction of its stores, as the superstores occupy 20 to 30 acres of land. It selects a busy and prime location to attract more customers of the city. This results into stressing the roads parking and the congestion on the road affecting the traffic flow. However, the Walmart started to open its smaller stores of 1500 square feet as in the places like New York city, it is hard to get such huge vacant land for its stores. The expansion of stores has caused stretching of urban area that implies less greenery in the region. Many cities were not eager to welcome Walmart, because of loss of green space and urban sprawl. Hence, the ethical responsibility of Walmart is questionable. In terms of environment, Walmart has fulfilled philanthropic responsibilities by reducing its energy consumption. Daylighting feature dim or switch off the lights when daylight increases and enters through skylights. This reduces the demand for electricity during the peak hours. In addition to this, Walmart controls heating and cooling to manage the energy consumption. Using LED lights; secondary loop refrigeration system in the stores helped the company to meet its goal of reduction in the greenhouse gas emission (Plambeck 2012). This indicated that Walmart is following its philanthropic responsibilities that are socially desirable and expected. Stores in Mexico and Northern Ireland are powered by wind energy. Walmart has also contributed to disaster management program; women empowerment. It has donated over 1.5 million dollars for aiding the victims of Hurricane Sandy. Moreover, it also granted $2 million for the associates damaged home and for creating toll-free number for the associates who needs help. It has also addressed obesity problem in America and lowered its price for fruits and vegetables to encourage healthy buying and reduced fats; sugar and salts in the foods. Therefore, it is reflected from the practice of Walmart that it meets responsibilities of all tyres that are expected and socially desirable. 4. According to Mitchell et al. the stakeholders are identified based on three variables; power; legitimacy and urgency. Power is the extent to which the party has the access of physical; material and social esteem to impose the will on the company (Ravi 2015). Legitimacy is the perception that the actions of a party are proper or appropriate within some social norms. Urgency is defined as degree to which a party claims for immediate action. It defines how important the claim of the stakeholders to the company. Based on these typologies the managers give priority to the stakeholders. Greatest priority will be given to the stakeholders with urgency; power and legitimacy. These variables are interrelated with each other and hence represented in the Venn Diagram. Source: Ravi 2015 The stakeholders of Walmart are the top managers; employees; customers and environment stakeholders etc. Customers are the only demanding stakeholders as it does not have any power or legitimacy. In the initial years of Walmart, the companys only focus was on providing high quality service to its customers (Lukic 2013). However, at present, the customer loyalty; interest of the customers has diminished that has affected the brand value. The major reason for this was its increasing bad reputation. Hence, even if they do to have any power, the customers are the major stakeholders of the company. this is because; without fulfilling the demand of these stakeholders the business cannot sustain for long. The lower price of the products is one of the major way to keep these group of stakeholders happy. The employers are considered to be definitive stakeholders. They have the power to influence the decision of the company. Employers also have legal support and their claim is also urgent. Many lawsuits have been filed against Walmart by the employees. Walmart has mistreated its employees of California by giving no proper break for meal and deliberately hide the record of overtime done by the workers. Hence, Walmart had to pay $640 million to settle 63 lawsuits (Hirsh and Cha 2015). In the class -action lawsuits of workers of San Francisco, it has been claimed that Walmart practices sex-discrimination. With many appeal and re-appeal in the court, it has been determined that there is nothing common in the women to classify for class-action status. The grievances against Walmart focused on the condition of working in the company. This has led to protests and picketing. Hence, employees are major stakeholders of Walmart whose interests have to be addressed by the firm. The environmental stakeholders are also dominant stakeholders. Such as government; policy makers or other social activists. The environment related activity of Walmart affects the society as a whole. Due to disposal of hazardous waste component, the had to pay charges in 2013. The company faces problem while expanding their stores as it has been destroying the greenery (Tate, Ellram and Glgeci 2013). Moreover, Walmart has faced many ethical issues, thus the shareholders demand that the leaders of the company should improve the transparency. Moreover, the top managers played vital role as stakeholders. In spite of shareholders vote against re-election of some former members, they were elected that indicates power of the higher authority. This has led to lack of confidence shown by the investors into this company, who are the major stakeholders with urgency to change the firms decision. 5. Ethical communication is one of the socially responsible practise of a company. Employees along with other stakeholders get to understand ethical practice of the firm if the communication is transparent and made clear to them. Walmart has lacked communication process with the employees that has caused loss of money to the company (Collins 2011). Walmart did not trained workers properly about disposing the harmful waste. Hence, incurred million dollars as compensation. Moreover, prior to the scandal in Mexico, research claimed that the CEO was informed about the bribery evidence, however, no report or files lodged against this incident (Barstow 2012). This lack transparency in communication. The bribery scandal and scam of 2005 sends negative signal to the customers as well as the stakeholders. By filing lawsuits against the workers and terminating relationship with the suppliers who are engaged in misconduct, Walmart communicate with the shareholders to get back their support and con fidence on the firm. Moreover, Walmart demanded that suppliers must not subcontract to any other firms, as this would make the supply chain more complex. Walmart auditing and approval mechanism is done by the third party. Suppliers pay for inspection process and this caused limitation in reaching information to the parent company, i.e. Walmart. The company hired staffs of warehouses by employing agencies or contractors. Many complaints raised against the company but it argued that the third party agencies are responsible for poor working condition. Walmart must ensure that the third party obeys proper labour law. Hence, it required proper communication. The factory audit has to be made public to be accountable truly. Walmart has released promotional campaign to control its damage. This way of communication would lead to improve the brand image of the company. the company emphasizes on providing healthier food alternatives and uses different advertisement to communicate with the people and shareholders. By developing relationships with influential people the company has practised ethical communication. Its sustainable environmental business practices conveyed the message of social responsibilities. It is recommended that company should develop good relationship with its stakeholders. By initiating goodwill with the customers and looking after the well-being of the workers would help the company to improve its ethical business practices. The internal control mechanism of Walmart must be improved in order to overcome the bad reputation from bribery scandals. It is important that the company should become more responsible to the community as a whole (Barnett 2016). Conclusion The main purpose of the assignment is to evaluate the ethical business practice of Walmart that also takes into account the corporate social responsibility. The research has used data and information from the given case study and assess the impact of Walmart on society. It has been found that the major issue of Walmart is being unethical to the employees. In addition to this, some unlawful practices like bribery and scam of top executives led to bad reputation. However, the company is achieving environmental sustainability over the years. The major limitation of this study is that, Walmart has its stores over many countries. Business practice is different in different region. This aspect is not addressed in this assignment. References Barnett, M.L., 2016. The Business Case for CSR: A Critique and an Indirect Path Forward. Business Society (forthcoming). Barstow, D. (2012). At Wal-Mart in Mexico, a Bribe Inquiry Silenced. [online] Nytimes.com. Available at: https://www.nytimes.com/2012/04/22/business/at-wal-mart-in-mexico-a-bribe-inquiry-silenced.html?pagewanted=all_r=0 [Accessed 3 Sep. 2016]. Boudway, I. (2012). Labor Disputes, the Walmart Way - Bloomberg. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2012-12-13/labor-disputes-the-walmart-way [Accessed 3 Sep. 2016]. Carroll, A.B. and Buchholtz, A.K., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education. Collins, D., 2011. Business ethics: How to design and manage ethical organizations. John Wiley Sons. Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making cases. Nelson Education. Hirsh, C.E. and Cha, Y., 2015. Employment Discrimination Lawsuits and Corporate Stock Prices. Social Currents, 2(1), pp.40-57. Ji, G., Gunasekaran, A. and Yang, G., 2014. Constructing sustainable supply chain under double environmental medium regulations. International Journal of Production Economics, 147, pp.211-219. Li, C. and Liu, M., 2016. A pathway to a vital labour movement in China?: a case study of a union-led protest against Walmart. Lichtenstein, N., 2014. Two cheers for vertical integration: corporate governance in a world of global supply chains. Unpublished manuscript. University of California-Santa Barbara. Lukic, R., 2013. Sustainable cost management in retail. Revista de Management Comparat International, 14(2), p.268. Plambeck, E.L., 2012. Reducing greenhouse gas emissions through operations and supply chain management. Energy Economics, 34, pp.S64-S74. Ravi, S.P., 2015. Corporate Social Responsibility, Stakeholder Perception, and Firm Performance: Walmart. Technological Solutions for Sustainable Business Practice in Asia, p.105. Slattery, M., 2015. Energy Security in the United States Department of Defense: How and why the US Army and Navy are reducing their reliance on fossil fuels and the electrical grid, and what it could mean for the rest of us. Senior Capstone Projects. Tate, W.L., Ellram, L.M. and Glgeci, I., 2013. Diffusion of environmental business practices: A network approach. Journal of Purchasing and Supply Management, 19(4), pp.264-275.