Ifrs vs Us Gaap

ACCY200 Financial Accounting A Accounting for Property, Plant & Equipment using IFRS and US GAAP Submitted To: Dr. Mufeed Rawashdeh Lecturer, ACCY200 UOWD Project done by: Punit Hiro Lalwani 3948493 Anish Ahuja 3959569 Hitesh Kumar Bilochi 3949345 Date: 29th November, 2011 Table of Contents Executive Summary| 3| Introduction| 4| Property, Plant & Equipment| 5| Interest incurred during construction of asset| 6 – 7|Direct & indirect costs incurred in self-constructed assets| 8 – 9| Valuation/Reporting of Property, Plant & Equipment’s in the Balance Sheet| 10 – 11| Example of Annual Reports for US GAAP and IFRS| 12 – 13| Implication of Differences – 1) Interest Incurred 2) Componentization 3) Subsequent of Valuation| 14 – 15| Conclusion and Recommendation| 16|References| 17 – 18| Executive Summary This Financial Accounting report contains information on a few key areas in accounting for Property, Plant & Equipment, using two sligh tly different standards which are the US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards.The objective of this report is to state how these two standards are slightly different in terms of accounting for items of PP&E such as Interest/Borrowing Costs during the asset is being prepared for intended use, How direct and indirect costs are allocated or measured for assets constructed by the company itself, and how their fixed assets are valued at balance sheet, after initial recognition of cost. Both the standards, are pretty similar, yet have some key points which conflict with each other. These points carry a degree of importance in terms of accounting.Each point is beneficial as well as It has its drawbacks, depending upon the scenario put in place. Moreover, the above mentioned content is even widely exhibited by including Annual reports of two companies – one IFRS, and the other US GAAP reports, to show a practical example o f dealing with Property, Plant and Equipment items in the balance sheet. Introduction IFRS is a set of guidelines and rules formed by the International Accounting Standards Board (IASB) that companies and organizations can follow when compiling financial statements.The creation of international standards allows investors, organizations and governments to compare the IFRS-supported financial statements with greater ease. International Standards help investors to deal with comparing financial statements with more convenience. The International Financial Reporting Standards were previously called the International Accounting Standards (IAS). Generally Accepted Accounting Principles (GAAP) is the accounting standard used by the Organizations in the United States which is the common set of accounting principles, standards and procedures that companies use to ompile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analysing companies for investment purposes Property, Plant & Equipment (PP&E) Property, plant and equipment are tangible assets that: 1. are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and 2. re expected to be used during more than one period. Property, plant and equipment does not include: 1. biological assets related to agricultural activity, or 2. mineral rights and mineral reserves, such as oil, natural gas and similar non-regenerative resources Asset Recognition The entity shall recognise the cost of an item of property, plant and equipment as an asset if, and only if: 1. it is probable that future economic benefits associated with the item will flow to the entity, and 2. the cost of the item can be measured reliably .Interest incurred during construction of asset | IFRS| US GAAP| Definition| Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. Other borrowing costs are recognised as an expense. | Similar to IFRS but US GAAP uses ‘interest Costs’ instead of ‘Borrowing Costs’| Qualifying asset| A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. | Similar to IFRS but US GAAP does not state the word substantial’| Measurement| Borrowing cost include * Exchange rate differences from foreign currency borrowings. * Borrowing cost is offset by investment income earned on those borrowings. * Actual Interest are Capitalized. | * Interest costs do not include exchange rate differences. * Interest earned on the investment of borrowed funds generally cannot offset interest costs incurred during the perio d. * Interest cost equal to the weighted average accumulated expenditures times the borrowing rate is capitalized. Commencing Capitalization| An entity shall begin capitalising borrowing costs as part of the cost of a qualifying asset on the commencement date. The commencement date for capitalisation is the date when the entity first meets all of the following conditions: * (a) it incurs expenditures for the asset; * (b) it incurs borrowing costs; and * (c) it undertakes activities that are necessary to prepare the asset for its intended use or sale. | Similar to IFRS. Ceasing Capitalization| An entity shall cease capitalising borrowing costs when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. | Similar to IFRS| Direct & indirect costs incurred in self-constructed assets | IFRS| US GAAP| Cost| * The asset is carried at cost less accumulated depreciation and impairment. | Similar to IFRS| Depreciation| The depreci able amount (cost less residual value) should be allocated on a systematic basis over the asset's useful life.The residual value and the useful life of an asset should be reviewed at least at each financial year-end and, if expectations differ from previous estimates, any change is accounted for prospectively as a change in estimate under IAS 8. | Depreciation under US GAAP is similar to IFRS as the property plant and equipment are to be stated at cost of acquisition less accumulated depreciation based on estimated useful lives of the assets. | Revaluation| * Under IFRS, an organization has an option to use the cost method or the revaluation method to measure property, plant and equipment. The asset is carried at a revalued amount, being its fair value at the date of revaluation less subsequent depreciation and impairment, provided that fair value can be measured reliably. | US GAAP prohibits revaluations except for a discovery on a natural resource, in a business combination accoun ted for under the purchase method. Therefore uses only the cost model. | Componentization| Component depreciation is a requirement under IFRS if the components of that particular asset have differing patterns of benefit. Component depreciation is permitted but rarely used under GAAP compared to IFRS in which it is a requirement. | Valuation/reporting of property, plant ; equipment’s in the Balance Sheet | IFRS| US GAAP| Measurement| * Property, plant and equipment should initially be measured at cost. Cost is the fair value of consideration given for the asset. * The cost of an item of property, plant and equipment comprises the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.The cost also includes estimated costs of dismantling and removing the asset and restoring the site on which it is located * The costs that incur for completion of the a sset construction can be added to the amount that has to be recognized initially, if these costs exceed the recoverable amount, the excess should be expensed in the current period. | * Property plant and equipment under GAAP are measured at historical cost. * Similar To IFRS * Self-constructed assets are recorded at the incremental or direct costs to build (material, labor, and variable overhead) assuming idle capacity. Direct Costs| Directly attributable costs include costs such as: * Costs of site preparation. * Initial delivery and handling costs. * Installation and assembly costs. * Professional feesDirectly attributable costs do not include administration and other general overheads| Similar to IFRS| Indirect Costs| Non-directly attributable items are not permitted to be capitalized under IAS 16. Repair and maintenance costs are expensed as incurred, not capitalised. | Indirect costs under GAAP are called overhead or burden.For example Power, heat, light . To handle these costs one of the following ways can be applied: * Assign No Fixed Overhead to the Cost of the Constructed Asset * Assign a Portion of All Overhead to the Construction Process * A pro rata portion of the fixed overhead should be assigned to the asset to obtain its cost. | Examples of an US GAAP and IFRS Report valuing Property, Plant and Equipment Property, Plant and Equipment (US GAAP – Google Inc) Property and equipment stated at cost less accumulated depreciation and amortization.Depreciation is computed using straight – line Method over estimate useful life of assets, generally two to five years. Buildings are depreciated over periods of up to 25 years. Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful lives of the assets. Construction in progress is related to the construction or development of property (including land) and equipment that have not yet been placed in service for their intended use.Depreciation for e quipment commences once it is placed in service and depreciation for buildings and leasehold improvements commences once they are ready for their intended use. Land is not depreciated. Property and equipment value at end of 2009 and 2010 was $4,845 million and $ 7,759 million, respectively, with accumulated depreciation and amortization cost of $3,285 million for 2009 and $ 4,012 million for 2010. Property, Plant and Equipment (IFRS – Puma)Property, plant and equipment are stated at acquisition costs net of accumulated depreciation, even though they have the option of revaluation, they haven’t used it. The depreciation period depends on the expected useful life of the respective item. The straight-line method of depreciation is applied. The useful life depends on the type of assets involved. Buildings are subject to a useful life of between ten to fifty years, and a useful life of between three to ten years is assumed for moveable assets. The cost of maintenance and re pair is recorded as an expense at the time of origin.Significant improvements and renewals are capitalized to the extent that the criteria for capitalization of an asset item apply. As a general rule, lease items that qualify as a finance lease due to the terms of the underlying contract are shown under property, plant and equipment; initially they are measured at the amount of the fair value or the lower present value of the minimum lease payments and net of accumulated depreciation in subsequent accounting periods. Property, plant and equipment is valued at â‚ ¬236. 7 million in 2010 and â‚ ¬242. million in 2009. Accumulated depreciation of property, plant and equipment amounted to â‚ ¬ 233. 3 million (previous year: â‚ ¬ 201. 9 million). As we can see from the above 2 examples, both the methods of the companies are very similar, and there is very little difference in the way they report the value of their Property, Plant ; Equipment in the Balance Sheet. Implications of differences Interest incurred IFRS includes exchange rate differences and also allows the offsetting of interest revenue with interest costs, whereas US GAAP does not allow either.This method of IFRS can be very accurate because while offsetting the interest revenue with the interest costs, it will only show one entry in the financial statement, whereas in US GAAP it will show two entries, one of cost and one of revenue. Hence there is only a difference in the presentation of information BUT the end result will still be the same. IFRS can be more convenient and make things simpler because of offsetting compared to US GAAP. Exchange rate differences will most probably hold an mmaterial difference but to avoid any inaccuracies, they should be taken into consideration. Componentization Componentization is when the assets are segmented into the different parts and are depreciated separately. As stated above IFRS requires componentization, whereas US GAAP permits it but does not requi re it. A good example might be that under US GAAP, a car may be treated as a single depreciable asset, while under IFRS, every component of a car will be depreciated separately, including engine, car frame, brakes, and etc.This can be very confusing for users as not every company retains all the information about its components, but IFRS is still more accurate as it allows the companies to know the real value of its components and its estimated life, where as US GAAP will only show the real value of its asset and not know the estimated life of the components of the assets, which can be a disadvantage because the companies will not know whether it’s components need maintenance or not. The disadvantage of componentization under IFRS might be that the depreciation expenses will mostly tend to be higher than US GAAP, therefore resulting in lower profits.This implication can also have an affect on the tax the company pays. Subsequent valuation differences * IFRS permits revaluatio n of property, plant and equipment whereas in US GAAP it is forbidden. Under the revaluation model, if the carrying amount of a property, plant and equipment’s asset is increased as a result of a revaluation, the increase is recognized in equity under the heading of revaluation surplus. The revaluation surplus amount recorded is then adjusted on an asset-by-asset basis by the amount of future revaluation increase.Adjustments to the revaluation surplus account are recorded in equity. Therefore, if there is an Increase in asset revaluation IFRS would be more beneficial compared to US GAAP since it gives an appropriate measurement of the current value of the asset and would show a higher income for the company due to increase in fair value. * A decrease arising as a result of a revaluation should be recognized as an expense to the extent that it exceeds any amount previously credited to the revaluation surplus relating to the same asset.In this case US GAAP would be more prefera ble since it would state its assets value above the current market value (fair value). However from a technical point of view the value would be overstated. So overall, it is more advisable to use the IFRS standard for revaluation of assets. Conclusion and Recommendation There are many Similarities in IFRS ; US GAAP but they also have Differences that cannot be unnoticed. There are different scenarios in which one accounting method would prevail over the other.Difference between these two methods of accounting standards cause confusion which should be eliminated and there should be the need of uniform accounting standard. The best way to deal with differences in IFRS and US GAAP is to converge the both, with the most accurate method of each difference being retained. This will make it easier for the people to interpret, understand and compare financial reports because the standards will be the same for everyone.In recent years there is a huge acceptance of IFRS over US GAAP which ha s led to benefits such has increased in transparency and consistency of financial information, more efficient use and availability of global resources, streamlined internal controls, additional access to capital, and opportunities for improved cash management and income tax planning. References AICPA. (2011), ‘IFRS for SME’s – US GAAP comparison – wiki’, [online], Available: http://wiki. ifrs. com/Property-Plant-and-Equipment, [Accessed 24 November 2011] Banka. S. (N. D. , ‘US GAAP- Quick Learning Module’, [online], Available: http://usgaap. tripod. com/id14. html , [Accessed 24 November 2011] Business Dictionary. (2011), ‘International Financial Reporting Standards (IFRS)’, [online], Available: http://www. businessdictionary. com/definition/International-Financial-Reporting-Standards-IFRS. html, [Accessed 24 November 2011] Deloitte. (2011), ‘Summaries of International Financial Reporting Standards’, [online], Available: http://www. iasplus. com/standard/ias16. htm , [Accessed 24 November 2011] Ernst ;Young. (N. D. , ‘Property, plant and equipment’, [online], Available: www. csb. uncw. edu/people/rocknessj/classes/MSA500/PP%26EIFRS. ppt, [Accessed 24 November 2011] Ernst ;Young. (N. D. ), ‘Property, plant and equipment’, [online], Available: www. csb. uncw. edu/people/rocknessj/classes/MSA500/PP%26EIFRS. ppt, [Accessed 24 November 2011] FASB. (2011), ‘Accounting Standards Codification’, [online], Available: https://asc. fasb. org/subtopic;trid=2127351;analyticsAssetName=section_page_subtopic;nav_type=section_page, [Accessed 24 November 2011] Investopedia. 2011), ‘Generally Accepted Accounting Principles (GAAP)’, [online], Available: http://www. investopedia. com/terms/g/gaap. asp#ixzz1eL9q86ay, [Accessed 24 November 2011] Price Water House Coopers. (2011), ‘Property, plant and equipment (including borrowing costs)’, [online] , Available: https://pwcinform. pwc. com/inform2/show? action=informContent;id=0919084403183483 , [Accessed 24 November 2011] Price Water House Coopers. (2009), ‘Implications of an IFRS conversion on property, plant and equipment from a US tax perspective’, [online], Available: http://www. pwc. om/en_US/us/ifrs-tax-issues/assets/ifrs_conversion_property_plant_equipment. pdf [Accessed 24 November 2011] Wiley, 2002, ‘Acquisition and Disposition of Property, Plant and Equipment’, [online], Available: http://www. wiley. com/college/sc/kieso/samp/8658d_c10_469-518. pdf , [Accessed 24 November 2011] World Gaap Info, N. D. , ‘Property, plant and equipment’, [online], Available: http://www. worldgaapinfo. com/pdf/IAS/IAS16. pdf [Accessed 24 November 2011] Google Inc Annual Report, (2010), Available: http://wwww. investor. google. com/pdf/20101231_google_10K. pdf [Accessed 24th November 2011]

Upper Tier Rights

There are many cases in the history of constitutional law that involve the wording of the United States Constitution. One case that deals with many parts of the constitution is Miranda v Arizona. This was a case that the Supreme Court voted on in 1966. This is a case of upper tier rights, because it deals with the constitutional rights. It mostly deals with the fourteenth amendment which is a right to due process and the sixth amendment which is a right to counsel.A suspect, Ernesto Miranda, was arrested on mostly circumstantial evidence for the kidnapping and rape of an 18 year old female. During the interrogation by the police Miranda confessed to the kidnapping and rape of the female. He also signed a paper that said he was giving a voluntary statement to the police and that the police were not forcing him to confess to the crimes which he may or may not have committed. To most this sounds like the police did an alright job they got a confession out of him and there was no signs o f abuse by the police.So many would say what is the problem? Why is this even considered a constitutional law case? How did Miranda v. Arizona turn into a landmark United States Supreme Court case? When this case went to trial Miranda’s court appointed attorney found out that the police never informed Miranda of his Constitutional right to counsel. So in fact by not informing Miranda that he had the right to counsel the police violated his Fourteenth Amendment which is the right to due process and his sixth amendment which is a right to counsel.If he would have had counsel present in the room he may never have signed that form confessing to the kidnapping and rape of that 18 year old woman. Miranda’s court appointed attorney at trial objected to the confession saying that his clients fifth, sixth, and fourteenth amendment rights were violated. The trial judge overruled the objection mainly because the defendant never formally asked to have an attorney present or to see or speak with his attorney. So Miranda was convicted of the crime and sent to up to 30 years in prison.Miranda’s attorney the appealed the decision all the way up to the Arizona supreme court. The Arizona Supreme Court ruled that they also believed that his rights were not violated because he never asked for an attorney. The Next step Miranda’s Attorney took was that he asked the United States Supreme Court to hear the case and they did. Then on June 13th, 1966 then United States Supreme Court ruled that Ernesto Miranda’s Constitutional rights had been violated by the police. The vote was close it was a 5-4 vote.Chief Justice Earl Warren along with Justices, Black, Douglass, Brennan, and Fortas thought that Miranda’s rights were violated and Justices Clark, Harlan, Stewart, and White thought that the police had acted in the correct manor. This was one of the most historical cases in United States Supreme court history. This basically told police that if you did not inform the individual that he has a right to counsel you can not use any confession or information gathered from that. This is considered an upper tier rights case because it not only deals with one amendment but it actually deals with two others.The fifth, sixth and fourteenth amendments all come into play with this case. Police no Mirandize all suspects before talking to them and almost all law enforcement personal actually do it as they are arresting the suspect just to make sure. A suspect has the right to waive Miranda but then can not use it in the court case later on. In conclusion Miranda v Arizona became a land mark case in United States law history because it one had many constitutional rights broken in it that were corrected by the United States Supreme Court.It also actually helped the law enforcement agencies do their job better. It helped prevent other suspects from having their rights broken like Ernesto Miranda had his. Like stated earlier this is a prime example of upper tier rights because it not only deals with one constitutional right but three and they are three of the most important amendments, the fifth, sixth, and fourteenth amendments.Sources Miranda v. Arizona, U. S. Supreme Court Case Summary & Oral Argument. (n. d. ). The Oyez Project | U. S. Supreme Court Oral Argument Recordings, Case Abstracts and More. Retrieved December 10, 2010, from http://www. oyez. org/cases/1960-1969/1965/1965_759 Miranda v. Arizona. (n. d. ). LII | Legal Information Institute at Cornell Law School. Retrieved December 10, 2010, from http://www. law. cornell. edu/supct/html/historics/USSC_CR_0384_0436_ZS. html The Supreme Court . Expanding Civil Rights . Landmark Cases . Miranda v. Arizona (1966) | PBS. (n. d. ). PBS: Public Broadcasting Service. Retrieved December 10, 2010, from http://www. pbs. org/wnet/supremecourt/rights/landmark_miranda. html

The Panic Of 1893 As One Of The Worst - 2326 Words

Throughout its history, the United States has experienced a series of panics, or economic downturns. Some financial experts believe that the way the economy is set up in this country contributes to panics being cyclical. In other words, there is no way to avoid an eventual bump in the road when it comes to the economy. The Panic of 1893 was one of the biggest in the country’s history, with unemployment across the country reaching record highs and banks failing at an alarming rate. When compared to the Great Depression that occurred decades later, the legacy of the Panic of 1893 as one of the worst we have experienced holds. To understand the Panic of 1893, one must look back 20 years to a very similar situation that arose with the Panic of 1873. The country was experiencing a post-Civil War hangover that caused the economy to experience inflation. After the war, efforts were increased to expand the railroad. These efforts required substantial investments that were mostly unbac ked. The country was already running on a large trade deficit. The large trade deficit along with these investments put a massive strain on bank reserves, which plummeted in New York City during September and October 1873 from $50 million to $17 million. Similar causes came 20 years later with the 1893 panic. Come 1893, the United States was overextending itself when it came to railroad expansion. These expansions had an unstable financial backing, similar to the 1873 panic. The result was a seriesShow MoreRelatedJIM CORW LAWS Essay1524 Words   |  7 Pagessegregation in the 1890s was not a mere expression of racism but developed out of a complex and corrupt outworking of many political causes like removal Northern troops and the disintegration of Republican influence, and economic interests like Panic of 1893, which imposed separation of blacks to avoid competition, in the impoverished, post-Reconstruction south. 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Describe the main features of American federalism. Essay

American federalism is constantly used as a benchmark for democratic societies. Having been successfully implemented along with the constitution, it has shown that it has been able to adapt to the changing environments throughout history. One scholar has claimed, â€Å"Federalism – old style – is dead.† However I disagree. In the following paragraphs, I will show how federalism is a part of the United States but how some problems make it seem like it is failing in the modern environment. American federalism is a system of dual-sovereignty between two levels of government. It is a constitutional feature that power is divided between the national government and the governments of the states, and that both are mutually dependant on the other†¦show more content†¦Extend the sphere and you take in a greater variety of parties and interests; you make it less probable that a majority of the whole will have a common motive to invade the rights of other citizens By introducing a federal system of government, the power is diffused between the states and the national government. Because this system takes in a large number of people, it is better than a centralised government as â€Å"†¦you take in a greater variety of parties and interests† meaning minorities are protected, as there are too many interests for any one majority to have power. Following on from this, it prevents centralised power. As both the states and the national government share the power, one cannot act without the support of the other. 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The characteristics of host country such as democracy (Li and Reesnick, 2003; Jensen, 2008); restrictions on the executive (Henisz, 2000); federalism (Jensen and McGillivray, 2005), and corruption (Habib and Zurawicki, 2003; Javorcik and Wei, 2009), all impact the businesses and foreign direct investment to a given host country. Previously researchers have focused on different aspects of politicalRead MoreUnit 1 Economic Environment of Business14187 Words   |  57 PagesManagement 1.8 Economic and Non-Economic Environment : The Interaction Matrix 1.9 Summary 1.10 Key Words 1.11 Further Reading 1.12 Self-assessment Questions 1.1 INTRODUCTION You may have a variety of reasons for studying this course, but the main reason, we presume, is to become a successful manager. Your success or failure as a manager depends on a number of factors and these factors may not always be within your control; very often such factors constitute your work environment. These

China Unbalanced Essay - 921 Words

China â€Å"Unbalanced† Continual economic growth for the past 30 years has allowed China to rise as an economic power. As the Chinese manufacturing industry continued to grow many of the people moved from rural areas into urban centers. The continued economic growth has taken China from a poor country to the 2nd largest economy in the world. Using many of the principals of capitalism China has overcome obscurity and increased exports to the point of drawing a large trade surplus with Europe and the United States. The growing wealth of China has drawn much criticism form the global leaders as trade deficits rise. China has continued on policies of currency fixing and implementation of subsidies that are consistently controversial with the†¦show more content†¦Pensions and Social Security were almost completely non-existent for many workers. The government has gradually increased pensions for urban and rural workers consistently since 2005. The majority of the people still do not have pension cov erage. The move towards providing increased financial security for the people is expected to have a positive result on domestic consumption. Domestic consumption is the key to growth in China as the global economy has slowed. Rising unemployment has been an increased concern for the Chinese government. Students are graduating from college and are unable to find employment. As unemployment continues to remain stubbornly high the government has taken to stimulus to assist in creating jobs. With local governments having submitted for projects in the past the stimulus was implemented quickly. Jobs were created and the infrastructure of China was improved. A continual effort has been made to improving the Chinese infrastructure in both the costal cities as well as the inland. Government infrastructure projects have become increasingly important in the fight against unemployment. New technology in construction equipment is commonly not used in favor of using manpower over machine power. Social programs have proven to be expensive. Increased wages and the development of social programs all result in more expenses for businesses and government. China has sustained growth forShow MoreRelatedChina Unbalanced Essay815 Words   |  4 PagesAbigail Brown China Unbalanced Write-up International Trade and Development 12/7/12 In 2001 China became a member of the World Trade Organization. China’s accession into this organization had many advantages and disadvantages for the country. Some of the advantages of being a member of the WTO for China was the strong increase in GDP growth rate which the country experienced as a result of the facilitation of trade and the increase in imports/exports. 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Puyi, who had been proclaimed the son of heaven, followed tradition; however, his time in being emperor was short-lived as the Qing dynasty ended in 1912, introducing the Republic of China. Oblivious to life outside the temple doors, Puyi continuously assured himself that he was stillRead MoreChica go Chinatown1861 Words   |  8 Pagesdemand for housing. However, half of the housing plan was cut because some major city projects needed to use this area. Due to many restrictions on the growth of Chinese community, it significantly affected the demography. The gender ratio was unbalanced because family s life style had changed. In 1910 there were only 65 Chinese women and 1,713 men in Chicago, and by 1926 women were still less than 6 percent of the population. 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Laws of Globalization and Business Applications †MyAssignmenthelp

Question: Discuss about the Laws of Globalization and Business Applications. Answer: Introduction: This is a Switzerland based food and drink company, headquartered in Vevey Vaud, Switzerland. The company is spread all over the world and considered as the largest food company in the international market. Nestle was founded in 1866 by Henri Nestle, Charles Page and George Page and rapidly spread over the world with its products which includes medical food, baby food, bottled water, tea, coffee, cereals and many more (nestle.com. 2017). Reasons behind selecting the organization are due to its international presence where cage model can be studied and the business innovation model applied by the company which will contribute in the study. As Nestle is an international business CAGE analysis can be done on their business. CAGE stands for culture, Administrative, Geography and Economy, as the company also requires reducing their distance in the target market (youtube.com. 2017). Netles cross cultural facilitates them to communicate their products to the target market. Companys market study proves to be important part of their business strategy to provide the desired products to the target market. The divide their target market into three part based on their products that are baby food for children, coffee for the adults and foods and beverages for mostly teenagers and adults. They have separate policies operating under different administration in different countries. On the geographical grounds, the company targets the developed countries and also the working class of the society to ensure their product demand. On to it, urban societies of the countries are the primary target of these countries to make maximum profit. T he working class is considered as the target as it best possible segment of the society that will avail their products. Business model is strongly related with the customer value. According to Teece (2010), business model is used to explain the customer value and the process used by the company to convert these values into profit. Hence, business model theory explains the development processes opted by the company for increasing customer value to increase the revenue generation (Bocken et al. 2014). Nestles business model innovation includes adaptation of shared value strategy replacing the traditional value chain, taking society into consideration. They have implemented Creating Shared Value Advisory Board and Creating Value Alignment Board for governance of their shared value chain and the companys sustainability and compliance. Example can be drawn from their Nespresso division, where they generate their revenue not from the coffee machine but from the capsules. On to it, they im plemented companies for making the coffee machines as they dont want to enter the household accessory industry. They give away the coffee machines for a comparatively low cost and charge for the coffee capsules comparatively high. This strategy is often considered as razor blade strategy as it was first proposed by Gillette where they used to give away razors at cheap rate and charged for the blades in a comparably high price. Nestle also adopted this during their business model innovation (Gobble 2014). Hence, more than one innovation in their business model can be spotted in a single business setting of Nestle. The company was founded by Jerry Baldwin, Zev Siegl and Gordon Bowker in the year 1971 as a coffee store in Seattle in America that used to sell roasted coffee bean. Since then, the company has came a long way and spread all over the world. They have also moved from just selling the beans to coffee beverages, smoothies, tea, baked goods coffee machines and many more (starbucks.com. 2017). Their story and the evolution over this short period of time is the primary reason for considering the company for studying their innovative business model. The application of CAGE framework in Starbucks international business strategy to reduce can be clearly spotted. These factors mentioned in the CAGE framework are sometimes overlapping and cant be distinguished from one another. Starbucks opted local adaptations for promoting their companies in the international market which is country and its culture specific. For instance, the company focused on its chic western image to get into the Chinese and Japanese market. Considering coping with the economic factor, they expanded to only the developed and few developing countries. Moreover, they focused on the major metropolitan cities of the countries (Ghemawat 2016). In order to reduce the political dilemma in the countries, the company modified their policy to pay premium prices for coffee beans from local farmers in Mexico and Peru as these countries uses environmentally friendly techniques. Finally, to reduce the geographical and administrative gap and problems, they partnered with some of the local business. On the other hand, excellent work of the strategic team of the company needs appreciation (youtube.com. 2017). Five innovations using business model innovation can be highlighted that are sustainable culture, customers experience, technological adaptation, ambiance creation and business is more than just coffee. The company changed their business model based on the operating market. They change their store ambiance based on the culture and their expectance and make them feel like home. The company also embrace new technology and uses it as the fro better serving their customers. Moreover, they offer more than just coffee depending on the cultural settings they are operating in that enables them to provide customers the lifetime experience for which they will revisit the store. To achieve this above mentioned innovation the company went through the four steps mentioned in business model innovation. In the initiation part, they had to examine their business mod el and identify the required changes. Ideation is the confrontation of business model with other business model models available, and this is how they find the required model in the target model. In the integration part, they build new model and verify its efficiency. The final part is the implementation of the new business model of which the outcome is in front of us. In short, they examined their existing business model, studied the target market from various aspect, drew the framework of the advisable business model required and finally implemented it in the market for the best revenue generation (Massa and Tucci 2013). References Bocken, N.M.P., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to develop sustainable business model archetypes.Journal of cleaner production,65, pp.42-56. Ghemawat, P., 2016.The Laws of Globalization and Business Applications. Cambridge University Press. Gobble, M.M., 2014. Business model innovation.Research-Technology Management,57(6), pp.58-61. Massa, L. and Tucci, C.L., 2013. Business model innovation.The Oxford handbook of innovation management,20, p.18. nestle.com. 2017.History. [online] Available at: https://www.nestle.com/aboutus/history/nestle-company-history [Accessed 29 Aug. 2017]. starbucks.com. 2017.starbucks. [online] Available at: https://www.starbucks.com/ [Accessed 29 Aug. 2017]. youtube.com. 2017.CAGE Framework. [online] Available at: https://www.youtube.com/watch?v=7FpUJaG7uMk [Accessed 29 Aug. 2017]. youtube.com. 2017.Business Model Innovation. [online] Available at: https://www.youtube.com/watch?v=B4ZSGQW0UMI [Accessed 29 Aug. 2017].

Weighing In Essay Essay Example

Weighing In Essay Essay In Essay Racism has repeatedly played a controversial role throughout the course of history. This is a topic fueled by the heated arguments of the parties on both ends of the matter, may it be the cry of the victim or defense of the offender. As described in the works of two members of ethnic minorities coping With the alienation they both faced in what is supposed to be the land of diversity, Froze Dumas The F Word, and Brent Staples Black Men and Public Space, racism is portrayed as a dark shadow cast upon those who may not me to conform to the norms of western culture to the typical American. Such stereotypes and predispositions should not hold the power to classify and simplify human beings to one single standard of a certain background, as one single Story or idea does not define an entire mass Of people. In Froze Dumas The F Word, she describes her life growing up as an Iranian in America. From the very beginning of her transition into western society, Dumas was exposed to the ugly world of racism at the tender age of seven, an idea almost too outlandish to even entertain. The idea that children t such a young age could feel the need to alienate someone due to unfamiliarity shows that indifference to foreign culture and background can begin at almost any age. She writes that her cousin was named Forbad, a respectable Iranian name meaning greatness, but in a land filled with Joeys and Mars, this was completely alien to his peers, resulting in his nickname Forehead. Similarly, her brother, Fairish, meaning he who enlightens became known as Farthest. A friend of Dumas sounded too similarly to an African American slur and her brothers name reminded those of a skin indention. We will write a custom essay sample on Weighing In Essay specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Weighing In Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Weighing In Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer These children earned themselves such vulgar names solely due to the fact that they were raised and named accordingly to their culture, something that should never be disrespected or looked down upon as abnormal just because it is uncommon. When she reached the age of twelve, Froze opted for an American middle name, understandable for a young girl bearing the pressure of her surroundings, yet unacceptable for her to feel pressured to do so in the first place. She explains that she regrets this decision as it only complicated her life in the long run, even though it seemed o be a quick fix to her problems at the time. She had always received incredulous glares or horribly executed pronunciations, many without even a hint of actual effort in attempting to properly address her, a sad but common occurrence for those who are not often exposed to foreign cultures. Dumas finally settled on the name Julie and even introduced herself to her next-door neighbor using her new name. Her brothers even made fun of her for wanting to Americanize herself, who then later became Fred and Sean. In college, she did away with Julie and went back to her old name, but found that applying for jobs was a more successful venture when she used her American name, interestingly enough. Once she got married, it was almost as if she was living a double life, with family calling her Froze and most friends referring to her as Julie. This prompted her to permanently go back to her original name, forcing herself to cope with the mispronunciations and comments, which she simply now finds humor in. It is a huge relief that Dumas ended up referring to herself by her original first name, as dont feel that she should have ever felt pressured into conforming to the standards of stern culture and trying to Americanize herself. The fact that simply changing her name from Froze to Julie on job applications is mind blowing, as it is clearly not her credentials or talents that are being considered, but her American name. I appreciate that Dumas was able to come to the realization that although her American name would often allow her more job interviews and less of an intense reaction in every day life, her original Iranian name was part of her struggle growing up as an immigrant in America and was a better telltale of her story than Julie would ever be. Rather than being another Joe or Mary, people would just have to adjust to her, not the other way around. Similar to Dumas struggle in America as an Iranian, Brent Staples Black Men and public Space details the struggle of being a black man in America. There are countless stereotypes implanted in the minds of Americans of the typical black person, aggressive, dishonest, ruthless, and overall ill intentioned. The first encounter with this racist outlook on blacks Staples had was in a wealthier area of downbeat Chicago, who began to appear irksome and soon after proceeded to run from the author, who had done nothing intentionally to provoke fear in her. I agree that women should always place their safety as their first priority and should remove themselves from any situation in which they find themselves uncomfortable or at risk, but if blacks and whites cant manage to walk the same streets without one race thinking the other is going to attack at any given moment due to the misconceptions floating around in their heads, then America really isnt a land of diversity. It then becomes a land of hierarchy. As he says, Staples is too scared to even wield a knife at a chicken, let alone wield a knife at another human being, but by the color of his skin and appearance, one would never know this. Being perceived as dangerous, he writes, is a hazard in itself, and could easily land him in the back of a police car simply due to the stereotypes of the black man. Staples understands that women are vulnerable in situations involving street crime, and that blacks have a tendency to be the offenders in such situations, yet this is no excuse for the complete isolation teen blacks and whites that occurs on an everyday basis. He recalls a fascinating incident in which police attempted to arrest a black journalist whom they mistook for the murderer, further proving that many will forever have these misconceptions that almost all blacks are violent by nature. On late nights now, Staples finds himself whistling classical music, as he explains that many do not seem to think that a typical, violent black man would ever be whistling Beethoven or Vivaldi, which is one of the saddest parts of this story. It is almost disgusting to me that blacks and minorities in general feel he need to prove themselves to American society by doing White things. It is often understandably easier to do so and conform to western ways, but it is never necessary because one should not ever be ashamed of their background. No single story or stereotype or standard defines a human being. That persons actions, impact on the world, and the lives they touch are what define them. America, the land of the free and the home of the brave, is often an image of hopes and dreams and opportunity for those who wish to create better lives for themselves, yet the stereotypes people tend to hold of each racial aground impede any sort of progress in continuing to paint America as this beacon of hope. Racism not only simplifies humans to one single story, but almost dehumidifies a person, as well, looking past their traits and qualities and defining them as where they come from and what their culture is. It is necessary to learn that what society may deem normal to us is not necessarily normal to others, and rather than one party adapt to the other or furthermore alienate one another, we must begin to respect and not reject the diversity which surrounds us.