The Impact of Foreign Exchange Gains and Losses

The Impact of Foreign Exchange Gains and Losses on the corporate performance of Xian Janssen Pharmaceutical: During 2003 Xian Janssen Pharmaceutical Company suffered huge losses of 60 Million Chinese Rmb which represents about 5. 7% decrease in the Operating income of the Company. While during 2004, Xian Janssen Pharmaceutical Company suffered greater losses of 75 Million Chinese Rmb which represents about 6. 9% decrease in the Operating income of the Company.These losses are not the responsibility of the parent Company Johnson & Johnson; however it’s the responsibility of the Subsidiary Xian Janssen Pharmaceutical, so Johnson and Johnson was generating profits while on the other hand, Xian Janssen Pharmaceutical was losing income. If those reductions of operating income continued, soon this will affect the profitability of Xian Janssen Pharmaceutical, and thus upset its shareholders, and so they might sell their shares till its prices fall, and then the company might suffer f rom Bankruptcy. This pure use of foreign exchange forwards would be due to some factors including;The limited availability of other foreign exchange derivatives or risk management alternatives, the restricted policies of Johnson and Jonson, the regulatory restrictions in China on the use of derivatives and currency products, and the unwillingness of Johnson and Johnson to either carry the risk itself or allow more breadth in Management of the foreign exchange exposures of its Chinese subsidiary. The relationship between actual spot exchange rate, the budgeted spot exchange rate, the forward rate, and the expectations for the Chinese subsidiary’s financial results by the U.S parent company: Nearly all multinational companies, like all organizations, ordain off of budgets. The Chinese subsidiary of J&J isn’t contradictive. Paul Young must assemble a strategic a business and marketing plan, associated with a budget, for Xian-Janssen’s showing up year. That is the a ctuality of the situation. The forecast exchange rate for the coming year , the budget rate, Usually generate either exclusively by the companies or in combination with input from the business unit for.Regardless of the process, the final budgeted rate will be used for planning, purchasing, and atrocious of all— formation of expectations. As is the case with all forecast, however, it will prove an error. Paul Young just hopes it will not be â€Å"too wrong† and that the direction of the error proves in his business unit’s favored. Once the budget was appointed and accepted by the U. S parent, Paul Young and Xian-Janssen’s results for the coming year would be graved on stone. They would then be managing the business to meet the parent company’s expectations, in this case, of 20% growth.The forward rate is calculated by the financial service providers from the current spot rate and interest differentials. Since the Rmb was fixed to the dollar at this time, and the euro was continuing to appreciate versus to dollar, Xian-Janssen’s financial results were looking at the anemic euro results. The forward rate was costing Xian-Janssen multifarious money. Paul Young would feel increase pressure to forego the hedging in order to reduce the cost. Johnson& Johnson has roughly 200 foreign subsidiaries worldwide.It has always pursued a highly decentralized organizational structure, in which the individual units are responsible for their own performance from the top to the bottom line of the income statement. Although it is not unusual for a multinational firm to make foreign exchange gains and losses the responsibility of its foreign subsidiaries, it is not typically considered very efficient. The subsidiary business unit is typically just that, a business unit, and does not ordinarily possess the resources of skills sets necessary for good exchange rate risk management Foreign exchange gains and losses have an impact on corporate p erformance at XJP.Although many people may first see these as relatively small losses, a reduction in the operating earnings of an individual business unit from foreign exchange changes alone like this would be considered significant. One way to note this is to consider that the average return on sales (ROS) for the Fortune 500 in the second quarter of 2005 was about 7. 7%. If these bottom line profits were chopped an additional 6%-7% on a consolidated basis, a lot of companies – and shareholders – would be considerably upset.

Advantages & Disadvantages of Internet and Newspaper Advertising

Advantages & disadvantages of Internet and newspaper advertising The Internet and newspapers are considered two of the five traditional types of media used for advertising. The others are television, radio and magazines. Each medium has advantages and disadvantages that are considered when selection of the best media for advertising messages is made. The Internet and newspapers are both useful media for advertising when they effectively convey your message to the right audience. Internet Advertising Advantages The Internet is the newest of the traditional media.A main advantage of Internet advertising is its affordability as an advertising medium. Typically, you pay for your ad based on the number of people it reaches. Audience selectivity is another major benefit as you can pinpoint specific audiences by site. Tracking results of Internet ads is also a strength. Online sites have great tracking tools to track unique visitors, visits, page views and impressions on the pages your ads are on. Versatility is another advantage. You can place banner ads of various sizes, pop-up ads, text ads and streaming audio and video ads. Internet Advertising DisdvantagesLimited click-through rates are a burden with Internet advertising. People often ignore banner ads and avoid pop-up ads and other online ad types. Uncertainty with what works through online advertising is a significant disadvantage as well. As the newest of the traditional media types, Internet advertising is still evolving. Technology, such as pop-up ad blockers, helps web users avoid pop up ads. In some cases, the audience on the website controls their exposure to the ad, such as with streaming audio and video, and the need to click through an ad to see the full message.Newspaper Advertising Advantages Timeliness is a major advantage of newspaper advertising relative to many other media types. You can often drop a newspaper ad off a day or two before it runs in the paper. Newspapers are excellent for geographi c targeting as well. Local businesses make regular use of local newspapers to target a local geographic market. State, regional and national newspapers offer broader geographic opportunities. Credibility is another strength of newspapers relative to other media. People often perceive that since the ads are near fact or news-based content, they are more believable.Newspaper Advertising Disdvantages Newspapers have a short life. Relative to magazines, newspaper ads have limited potential for ongoing exposure as they are often recycled or thrown out after initial reading. Reproduction quality also affects the print quality, especially in the latter part of a production run. You also have limited ability to target segmented markets through newspapers. While geographic targeting is an advantage, you have to pay for the newspaper's audience regardless of who fits into your market segment.

Specialist Research Project Essay Example | Topics and Well Written Essays - 1250 words

Specialist Research Project - Essay Example The marketing entails presenting the business product to the customer, to create sales. Thus, these as features of business success, Nike invest largely in the various aspects of branding and marketing to establish customer loyalty; hence, establishing the successful; business culture and history as it possesses today. The company has strategic marketing capabilities that compliment the product and service brand accordingly for the successful engagement of the customer. Further, the subject area of cultural and historical developments relating to the company entails a listing of various structures established since the inception of the company. Thus, from these prospects of the company as a multinational operative corporation, the synthesis of the areas of branding and marketing, as well as, cultural and historical studies constitute the proposal of the research project. The proposed project will seek to explore the extent of these fashion business areas as they institute the profile of Nike Corporation. Marketing entails the set of processes and tools engaged in promoting the business success. However, in developing an identity of the product or service the business engages the area of branding remains the influential factor for consideration. Further, organizational culture developed over time also defines the success of the business venture as developed in the area of operation. Thus, in selecting a portfolio to establish and synthesis the subject areas of marketing and branding in addition to cultural and historical studies, the â€Å"Fashion Icon† Nike, remains most conveniently placed as an illustrative reference. Branding entails the culture itself, the message that permeates and regulates the processes of the business (Katz, 2004, 39). Thus, the project proposal seeks to establish the common misconceptions over the subject areas of branding and marketing as they develop a culture and

Alexander Hamilton and Thomas Jefferson Essay Example | Topics and Well Written Essays - 250 words

Alexander Hamilton and Thomas Jefferson - Essay Example As the President he worked on reversals of a number of Federalist policies like the removal of the excise tax on whiskey, the cut back on military budget and reduction of the national debt, secured repeal of the Naturalization Act, and also worked on getting the Alien and Sedition Act to expire and pardoned anyone affected by it (Wright, 2008). Alexander Hamilton on the other hand was born very simple however he grew to become a very strong and recognised figure in the powerful central government. He as well joined the Cabinet as the secretary of the treasury when Washington became the first President in 1789. He has proved to be very productive and has secured in the creation of the national bank and dealing with the government debts (DiLorenzo, 2008). Although he had been very helpful to the country and proved to be a very successful leader, he was in a scandal of adulterous affairs which led him to be public ridiculed. Both these leaders were equally good politically and with the amount they provided to the public, however Alexander Hamilton was the only one who was faced with a lot of public ridicule. Later Alexander needed to choose between two political opponents for the presidency and this is when the two, Hamilton and Jefferson worked on the same side to win over Adam Burr, who was considered to be unprincipled. Both Hamilton as well as Jefferson were to extremely principled and focused (Wright,

A case study report- POLYSUBSTANCE ABUSE Term Paper

A case study report- POLYSUBSTANCE ABUSE - Term Paper Example Furthermore, although it is not known which factors actually contribute to the polysubstance abuse, perhaps, a mix of many factors actually precipitates it. Chaotic home environment, parental substance abuse, parental mental illness, ineffective parenting, and lack of parental involvement, all of which seem to arise from a family environment are factors that need to be considered in this case. It is considered that family factors are most crucial in promoting drug abuse by the youth. Even the mentally healthy youth demonstrates high risk of abusing when the parents abuse. Poor parental attachment, nurturing, and monitoring, increase the risks of developing substance abuse. It is evident from Antonios case that he was in the middle of a dysfunctional family life. His fathers alcohol abuse and constant domestic fight between his parents leading to marital disruption can be functionally responsible for Antonios abuse behaviors. These led to substantial amount of stress at home and is definitely causative of little or no cohesion, organization, expressiveness, consistency, all leading to absence of communication between family members. More over, in Antonios case, there had been marital disruption between his parents over alcohol abuse, and this could have led to the belief that substance abuse is a normal part of the life. Cohesion among family members prevents delinquency, depression and low self-esteem and fosters self-control and absence of all of these increases the level of social estrangement that strongly predisposes to substance abuse (Dinges & Oetting, 1993). Sudden change in environment occurred in Antonios life due to their relocation from Huntington Beach to Redlands. It created pressure on him, and the factor of ineffective coping came into play. This led to his association with conduct-disordered peers, which was another precipitating factor. Lack of

Financial Risk Essay Example | Topics and Well Written Essays - 2250 words

Financial Risk - Essay Example Both companies have carried out work in Africa, Asia, Australia, the United States and other parts of Europe. The company operates from offices in the UK and Spain and focuses on the development of residential properties. In the UK the company operates from 24 regional offices across England, Scotland and Wales (Taylor Wimpey 2011b). Over the years, the company has built a wide range of properties from one and two-bedroom apartments to five bedroom detached houses. In addition to its UK and Spain construction business Taylor Wimpey also operates two other businesses - Prestoplan and Taylor Wimpey Logistics (TWL). Prestoplan is the company’s timber frame solutions business which allows for the simplification of on-site construction while TWL is its supply chain logistics business that sources materials in bulk from suppliers ‘just in time’ for carrying out construction (Taylor Wimpey 2011c). The industries in which Taylor Wimpey competes include residential constru ction contractors, the construction sector, and residential real estate development (Hovers 2011). The company’s main competitors are Bellway plc which is located in Newcastle Upon Tyne in the UK and The Berkeley Group Holdings plc in Cobham, Surrey. 2.0 Financing Decisions According to Edum-Fotwe et al (1995) the construction industry in the UK has always experienced a high level of insolvencies when compared to other industries. One of the main causes of this is the improper use of cash resources (Chen et al 2010). It is therefore important that regular performance evaluation be carried out in order to determine the strategies to use in order to ensure survival. Financial analysis using a number of ratios therefore becomes important. Liquidity and solvency ratios look at the ability of a firm to pay to meet short-term and longer-term financial commitments as they fall due (BPP 2009). Financing decisions will affect Taylor Wimpey’s financial risk 2.1 Financial risk Ac cording to Holton (2004) risk as it is commonly used refers to both exposure and uncertainty, neither of which can be defined operationally. There are many different types of risk. However, this paper looks at financial risk. Financial risk is the risk that is associated with debt financing. This synonymous with Gabriel and Baker (1980) definition which states that financial risk is ‘the added variability of the net cash flows of the owners of equity that results from the fixed financial obligation associated with debt financing and leasing.’ It also involves the ‘risk of cash insolvency’ and has been extended to include the risk of not being able to fill obligations in relation to prior claims with the cash that the business generates Gabriel and Baker (1980). A firm’s ability to meet its obligations is determined by the level of its fixed obligations as well as its liquid resources (Gabriel and Baker 1980). It is the risk that a company will not be able to meet its financial commitments due to insufficient cash flows. It is the additional risk that shareholders face when debt is used in addition to equity capital. Financial risk arises as a result of various transactions of a financial nature including legal transactions, new projects, mergers and acquisitions, debt financing, and through the activities of management, stakeholders and competitors (Horcher 2005). Financial risks are associated with both short-term and lon

Proposal Essay Example | Topics and Well Written Essays - 3000 words - 1

Proposal - Essay Example However, due to the high stress level in the hospital environment where pain and agony abound from the patients, workers are usually left with no choice but to concentrate on their own discipline in providing therapy, care or help for their patients. Add to that, the obligatory meetings set up by management to ensure that things are flowing smoothly, create resistance among the staff, as they are anxious to be questioned about their cases in detail. Such a scenario prevents effective communication to flow within the workers, staff and management of the hospital. This is a cause for concern, as the situation may bring about more problems that can affect the quality of treatment afforded to the patients that has gained recognition for Pinewood Hospital. The clinical director, Dr. Baxter has hired an internal consultant to help improve communication within the hospital. The following are proposed steps the consultant may make to gain a better understanding of the problem and to find appropriate solutions for it. The consultant needs to be immersed in the hospital to get a better perspective of the culture of the organization and the flow of movement and communication. He needs to attend all meetings himself to keep track of the agenda and see if there is overlapping information and investigate how these may be minimized to save time and effort. As a consultant, he is available to anyone who would be in need of his advice regarding concerns about communication, be they rank and file or in the administrative staff. Being so, he would have access to information that may able to help the organization. Another way to gather information is to conduct a survey on communication among all the hospital workers from the management to the professionals to the staff. â€Å"Staff surveys that provide a thorough understanding of staff attitudes and perceptions