Sunday, January 27, 2013

Marketing Research under consideration

If a firm are to assign new products or to set up a new company, many things and problem have to be taken under consideration and resolved. In order to prevent losses and before other serious matters occurs, marketing research play a very important role before marketing strategy. This report will discuss few questions and the ways to solve any upcoming problem.
1 In what ways can marketing research influence the development and implementation of marketing strategy?
2 Does that means that organizations that conduct market research will perform better than organisations that does not?
3 What possible issues associated with consumer behaviour and consumption patterns might be extremely sensitive ones to directly question respondents about?
4 How might researchers overcome the difficulties of collecting these types of sensitive data?
Definition of Marketing Research
Marketing research covers a wide range of phenomena. It can be defined as “The systematic and objective process of generating information to aid in making marketing decisions.” (Zikmund et al. 2007, 4). Marketing research is not a fast path to finding solutions to all managerial problems. It involves collecting and specifying what information is required, recording and making sense of available information, define the way to collect useful data, managing and implementing the collection of data, lastly analysing the result through the right information given. By doing so, will help a business to understand more about its market, then planning the right marketing strategic for a better outcome. Information collected through marketing research is to identify the opportunities and problems, specify and get the most accurate information to prevent uncertainty when comes to decision making. The intelligent use of market research is the key to business achievement. (David 2001,18)
There are 2 types of marketing research.
Basic Research
Basic research can also be called Pure research. This is a type of research which researcher use to expand the limit of knowledge, verify the acceptability of given theory and to learn more about a certain concept. It does not aim at solving any problems. Basic research is done just to verify the acceptability of a given theory and to learn more about some particular concept. Moreover, Philip believes that such research can only achieve short-term gains. “The example of Japan shows that sustainable economic competitiveness can only be achieved by investing more in research than average [currently 3.1% of gross domestic product], with a strong emphasis on basic research,” he insisted. (Philip 2006)
Applied Research
Applied research is designed to solve practical problem of the world rather than just to acquire knowledge. Studies and research are to be done in this stage to answer question about some specific problems or have a clear mind when comes to decision making.
The value of marketing research for the development and implementation of marketing Strategic
An effective marketing strategic requires a proper marketing research. Marketing research alone, does not guarantee the success, but it helps to clear out unnecessary problems and focus on particular problems, helps to improve management decision-making by giving an accurate, relevant and timely information. Marketing research help by identifying and evaluating opportunities, analysing market segments and selecting target markets, planning and implementing a marketing mix that will satisfy customer needs, lastly analysing marketing performance. Before coming out with a proper marketing strategy, a company should determine what is the goal and the way to achieve it. Marketing research may give diagnostic data about what is happening in the market. Some problems such as trends in consumer purchasing power, behaviour, may helps a company to recognise these problems and identify the opportunity to compete in the market. For example, McDonald's identify whether the number of target customers is growing or shrinking and whether their buying habits will change in the future. (marketing research and development n.d.).
One reason that Mc Donald has been so successful in the whole world is because of 24 hours operation and free wireless services provided for customers. This services attracts lots of student and employee because of the convenience of having refreshment available while dealing with their studies. Most of the studies group are now held at McDonalds' as students can discuss in fine and hygienic environment, free wireless services provided for internet usage, as well as food and drinks in the middle of studies. The second stage of research is to analyse market segments and select target markets. Market research helps to determine which characteristics of market segments that will guide a company to set their target markets on the selected category of consumers. By using the 2 types of research mentioned, a company can plan and implement a marketing mix strategy. There are 4 P's that determine the marketing mix strategy which are Price, Promotion, Place or Distribution and Product that we will look at using Mc Donald as an example.
Pricing includes price list, promotion price, comparing competitors' prices were considered in their research to attract the middle and lower class consumers in order to increase overall sales volumes of Mc Donald.
Research investigates the effectiveness of coupons, sampling deals and limited edition product promotion for a better purposes. “Make people aware of an item, feel positive about it and remember it.” Three main objective of advertising for McDonald. (Ritabrata et al. 2009)
Research for distribution channels is important as part of the research. It is important that the product is always available to consumer at the right place, right time and in the right quantity.
Product research has to be done while to develop new products and learn to adapt into existing product lines. McDonald continuously innovates its products according to the preferences and tastes of its customers. (Ritabrata et al. 2009)
Lastly, after implementing in marketing mix strategy, analyse marketing performance are to be done in order to succeed in total quality management. As mention by Zikmund (2007), Performance-monitoring research refers to research that regularly provides feedback for evaluation and control of marketing activities in future.
From the information given above, it shows that organizations that conduct market research will perform better than organisations that does not. Marketing research helps to fulfils the marketing manager's need for knowledge of the market. It is also a principal tools for answering questions which links to consumers and customers' need. With marketing research, specified and supplied accurate information can help the managers to make a better decision-making when a problem occurs. It save lots of time and cost to solve any incoming complication. Without a proper marketing research, finding solutions can be more time consuming which can cause losses to the company. It is proven that by conducting a marketing research, it influences the development and implementation of marketing strategy and it promotes better performance as David (2001,18) stated, “the intelligent use of market research is the key to business achievement.”
Question 2
Quantitative and qualitative researches are the two main sources used for market research. The advantages and disadvantages of the two are argued and debated by researchers. Research has shown that one or the other is more useful than the other. The definition of qualitative and quantitative research will be discussed, the disadvantage and advantages of the two sources, and followed by a conclusion.
Quantitative Research
“Quantitative research is used to determine the quantity or extent of some phenomenon in the form of numbers” (Zikmund et al. 61, 2007). Quantitative research is used by researchers to determine how people perform, believe or feel. Survey interviews usually include numbers ranging from 30 to any number that is required. Closes questions are created to result in set responses. Various techniques are used to collect quantitative information. Common types of techniques are telephone interviews, street interviews, and email.
Advantages and Disadvantages
There advantages and disadvantages in using a Quantitative research method.
David A.A., V. Kumar, G Day. 2001. Marketing Research: Means Business. John & Sons, Inc.
Marketing research and Development n.d. (accessed March 16, 2009)
Philip H 2006.Science and society. Science cannot be left to the market alone: Meshing basic research with fiscal competitiveness is the key to economic success 7(6): 575-578. EMBO Journal.
Ritabrata G, D. Balaji, J. Shah, S. Niket, and D. Sidana. 2009. McDonald's: Behind The Golden Arches. (accessed March 20, 2009)
Zikmund W.G., S Ward, B Lowe, and H Winzar. 2007. Marketing research: Asia Pacific Edition. Victoria: Nelson Australia Pty Limited.

UK essays

Social and philosophical foundations

UKWilliam Edward Burghardt DuBois
William Edward Burghardt DuBois was born on February 23, 1868 and died on August 27, 1963. Dr. Du Bois was an American civil rights activist, sociologist, educator, historian, writer, editor, poet, and scholar who became a naturalized citizen of Ghana in 1963.
Dr. Du Bois graduated valedictorian from high school and received his Bachelor of Arts degree from Fisk University in Nashville, Tennessee. After spending his summers teaching African American schools in rural areas, he entered Harvard University earning another Bachelor of Arts degree graduating cum laude and was one of six speakers at commencement exercises. In 1892 he pursued his graduate studies in history and economics at the University of Berlin on a Slater Fund fellowship. After completing his studies in Germany, he returned to the United States and graduated with a Doctoral degree from Harvard University, the first person of African descent to do so. His tenure as a teacher continued as he served two years as a professor of Greek and Latin at Wilberforce University in Ohio.
Dr. DuBois was one of the cofounders of the National Association for the Advancement of Colored People (NAACP). He also directed the Atlanta Conferences which generated concise scientific research on the living conditions of African Americans. As a cofounder of the NAACP and editor for the Crisis (official magazine for the NAACP) he used his position to write many influential articles on blacks in America. As a representative of the NAACP he went to the Peace Conference to discuss the situations of Africans everywhere, realizing that for blacks to be free, they must be free everywhere. One of Dr. DuBois most famous books was The Suppression of the African Slave Trade to the United States of American which proposed to set forth the efforts made in the United States of America to repress the slave trade between Africa and the United States, which has yet to be surpassed.
Dr. DuBois position as an educator and agitator often ran afoul of other influential famous blacks. He was on the opposite side of blacks such as Marcus Garvey and Booker T. Washington because he was a firm believer in working toward making blacks leaders and educators of their race. He especially had a tumultuous relationship with Booker T. Washington because Washington believed in forgiving the South and its treatment of blacks and their separate but equal doctrines. DuBois believed in immediate and uncompromising equality between the races. Booker T. Washington remarked that, "the wisest among my race understand that the agitation of questions of social equality is the extremist folly, and that progress in the enjoyment of all the privileges that will come to us must be the result of severe and constant struggle rather than of artificial forcing." Although both leaders believed in eliminating racism, segregation, and discrimination, the means to achieve such ends were immensely different.
DuBois always remained a controversial and social activist. Because of his beliefs, he would become a supporter of Communism. The U.S. Department of Justice ordered him to register as a foreign principle and he refused. DuBois refusal to do so was grounds for indicting him under the Foreign Agents Registration Act. Although he was acquitted, the damage was done and he went to Ghana where he resided until his death. While in Ghana, he became an official member of the Communist Party and a Ghanian citizen.
Dr. DuBois educational philosophy was that neither segregated schools nor integrated schools mattered, but education was the pivotal point. He also believed in immediate and uncompromising equality between the races

UK Essays

Advertising On Children

1.0: Introduction:
Advertisement can be conceptualized as one of communication that emanates from the producer targeted at the consumer. The aim is to prevail over the consumer so that he can consume or purchase the specific product that is been offered by the producer. The producer, when embarking on the advertisement campaign, has one goal on mind; to stimulate demand for his product or service. That is perhaps the reason why the advert has to be as persuasive as possible and tailored for the consumption of a certain target clientele.
This practice has become an integral part of our everyday life. It is hard to conceptualize any publication or any event that is devoid of at least one form of advert. Television programs together with cinema or movie programs are peppered with commercials that are trying to capture the attention of the viewer. The effect of this practice in the society cannot be downplayed. Advertisement has considerable effects on the adult consumer. These range from adjustment of lifestyle, increased consumption amongst others. But perhaps the greater influence or effects of these practice is to be found among the children, especially those who are below the age of fifteen years.
There has been a spike in the number of adverts and other commercials that are targeted at the child consumer. Producers have awoken to the fact that there is a whole basket of unexploited consumers out there amongst the children. That is why they have come up with adverts that tailored for this specific consumer. Apart from these commercials that are targeted specifically at them, children also fall prey to the adverts that are targeted at their parents or for adults in the society. This has raised concerns on the effects of advertising on children. These effects range from behavioral, psychological and cognitive. This literature review is going to examine these effects and whether they are positive or negative. The extent of these impacts will also be examined.
1.1: Objectives of the Literature Review
The writer will be guided by one major objective throughout the literature review: The psychological and behavioral impact of advertising on children. The analysis will be those adverts that are targeted at the child consumer and also those that are targeted at the adult consumer but in one way or the other, the children become exposed to them. To achieve this objective, the writer will be guided by several specific objectives as listed below:
Understanding of advertising intent amongst the adolescents
Level of exposure to advertising in children
Health effects of advertising to children
Effects of advertising on children’s cognitive development
Psychological effects of advertising on children
Purchasing behavior
Increase commercialization
Effects of age, gender and parental influence advertising
Impacts of advertising on children
There are several means through which producers can market their products and services. But advertising is the most favored and most common form of marketing technique (Nawathe, Gawande and Dethe 2001). In the year 2004, commercials placed in the print media in the United States increased by 14.7%. Those that were placed in Television grew by 13% (Robertson, 2006). This is a huge growth by all means. The upshot of this is that children continue to be increasingly exposed to adverts both in the print media and in electronic media like television and cinemas.
It is safe to presume that adults are aware of the fact that the intention of the adverts is to manipulate their feelings and emotions and make them consume the product or service been advertised. The same cannot be said for children who are aged eight years or below (American Psychological Association [APA]: 2005, 11). A task force that was set up by the American Psychological Association to carry out a study on the effects of advertising on children in the year 2005 was the one that came up with these findings. The task force was convinced that “it is obvious that children below the age of eight are not aware of the persuasive intent of advertisement. This makes them, an easy target for this form of persuasion” (APA, 2005). This is of great concern given the type of products that are marketed to these kids. They include unhealthy foods such as candies, sweets and sodas (Wallace, 2009). This, according to the task force, is an issue of public health concern dimensions.
People who are opposed to advertisement that is aimed at children are of the view that it has several undesirable effects on them (Moniek, 2000). They contend that these effects range from those afflicted on their moral fabric, belief and value systems (Spencer, 2001).
2.1: Understanding of Advertisement Intent in Adolescents
As indicated earlier, adults-at least majority of them- are aware of the persuasive intent of advertisement. But is this the case amongst adolescent and especially children? The truth is that this segment of the “consumer” is not aware of the intentions that are behind the adverts they are exposed to (Ugur and Abdulla, 1993). They are easily influenced by these commercials. The major reason is that children and adolescents at this age are trusting and accept uncritically what is propagated by their adults (Moniek, 2000).
Adverts, been created and directed by the adults, are accepted uncritically by the children. They also lack the obligatory cognitive skills that are necessary to screen and criticize stimulus that they receive from their surroundings (Gunter, Oates and Blades: 2008, p23). Adults, having developed their cognitive skills, are able to screen the stimulus from their surrounding enabling them to selectively internalize those stimuli. This is not the same for children and adolescents. They internalize every stimulus that is directed at them from the external environment. These stimuli include the adverts and commercials beamed via the radio, television and other forms of media. Children internalize every aspect of the advert. They take every message from the advert as been the truth. As such, they are easily convinced that licking on the glucose powder been advertised will give them the powers of superman.
This malleability of the opinions and values of the children is what the advertisers take advantage of. They are fully aware that this target population will consume every shred of information, misinformation and disinformation that is purveyed through the adverts (Gunter et al, 2008). To achieve this, they make use of images and characters that the children can readily identify with. It is a fact that even adult adverts contain relevant images and characters. But the portent of this form of advertising in children is that they will tend to believe in those characters and images (Tomang, 2009).
The advertisers are aware of the fact that children are fond of cartoon characters and clowns like Santa Claus. That is why most adverts make use of cartoon characters like Spiderman and Mickey Mouse. Most toys that are targeted at boys are advertised using the image of Spiderman and Superman. These characters have the effect of appealing at the fantasy of the children, and as such, they will be forced to buy these products (Robertson, 2006).
The same technique is used in adverts that are aimed at the teenagers. It is important to note that this segment of the population has a fairly developed cognitive skill relative to that of the children (Nawathe et al, 2001). As much as this is the case, their cognitive skill is not differentiated to the level where they are able to unmask the true intent of adverts. They still have remnants of fantasies and malleable opinions. The advertisers use characters and images relevant to this age group in their advertisement campaigns. They make use of pop stars and other idols that are literally worshipped by the adolescent in order to brainwash them.
The above facts should not be construed to mean that children are not able to differentiate between adverts and programs (Macklin and Carlson, 2009). In fact, studies have shown that by the age of five years, they are well aware of the difference between these two aspects of mass media (Viroqua, 2008). The only problem is that they have a different conceptualization of the intents of the adverts. They view them as source entertainment and statement of unbiased truths.
2.2: Level of Exposure to Adverts on Children
The exposure that the children have to adverts and TV programs in the 21st century is unprecedented. Children of nowadays are more exposed to adverts far more than children from the 20th century (Nawathe et al: 2001, p8). This has been brought about by the change in the lifestyle of their parents and guardians. Hitherto, parents had a lot of time that they used to spend together with their children. It was the norm, rather than the exception those days, to have families that have members who are close and intimate with each other. However, this aspect of the family institution and the society as whole has changed in the 21st century. Parents have become exceedingly busy in the workplace driving themselves to the limit in order to provide for the family. Even women, who were hitherto left behind at home to look after the family, have no time today for the same family. This is because they have taken jobs in order to supplement what the husband brings home and also to establish their emancipation from the man in the society. The upshot of this is that the children are nowadays left more or less alone. They do not have the guidance of their parents as they grow up. The lucky ones are left under the care of the house helps, who have come to take the role that the mothers used to play in rearing the children.
Given the scenario above, it is clear to understand that the children have a lot of time that they have to spend alone away from their parents. One way of spending this time is in front of the television. Since the parents have no time for these children, they even encourage them to watch television in order to keep them occupied and leave the parents with extra time to tend to their work. In the process of their interaction with the mass media, the children are bombarded with adverts and commercial more than ever before (Griffin, 1990). Producers, true to their character, have pounced on this opportunity to increase the exposure of their products and services to these free and gullible children.
Another factor that has accelerated the exposure of children to commercials and adverts is the technological revolution that the world experienced in the run-up to the 21st century. More than ever before, it has become easier now to access information from various sources. And this is all type of information. The same is true for the advertisers and producers: They have more channels of communicating to their audience and passing over the messages. It is in the 21st century that the world experienced explosive growth in information technology whereby more people can now access internet and mass media (Bandyopadhyay, Kindra and Sharp, 2001). This includes the children. Children of today can access internet and other forms of mass media like television and radio. This means that they do come across adverts that are purveyed by the producers through these means. Advertisers, waking up to the realization that children are increasingly becoming mass media consumers, have come up with adverts specifically aimed at them. A Canadian child is exposed to approximately 350,000 adverts before he is through with school (Nawathe et al, 2001). The amount that he spends in class is roughly equal to that spent in front of the TV.
In the year 2001, programs targeted at children experienced an unprecedented growth in the US (Macklin and Carlson, 2009). They made up a considerable chunk of 20% of all television viewership in that year (Wallace, 2009). But perhaps the revenue that the producers of children’s licensed products and services raked in the year 2002 will vividly explain why this segment cannot be left alone in a capitalist system. In that year alone, $132 billion was the worth of this segment (Gunter et al, 2008). The only way that this trend can be maintained is through advertisement. That is the reason why advertiser will relentlessly pursue these consumers, regardless of the criticism and opposition that is leveled at them.
There is one major reason why advertisers will continue advertising with the children as their primary target. This is because in most economies, children “represent three distinct markets” (Nawathe et al, 2001). Studies conducted in Canada in 2002 are perhaps the best indicators of the segment that these consumers represent in this market. First of all, children make up a considerable segment of primary purchasers. In Canada, they account for $2.9 billion per annum as primary consumers (Macklin and Carlson, 2009). Primary purchasers mean that these children purchase directly these products. For instance when they buy candies and sweets using the money that they have been given by their parents, this can be referred to as primary purchases. The second form of market that they make up is that of future consumers (Viroqua, 2008). And perhaps this is the important aspect of these advertisements. They child has to be coached so that he remains loyal to that product or service in the future. This way, the producers are assured of a perpetuation in the consumption of their products and services. Children are also very important as purchase influencers (Pediatric Committee on Communication, 2006). What this means is that they influence the purchases that are made by the adults. This form of purchase contributes to at least $20 billion per annum in Canada (Gunter et al, 2008). This happens when the child prevails over the parent or guardian to buy for him something that he saw on a TV advert.
People are more concerned on the type of adverts that these children are exposed to. It has become obvious that the type of products that are advertised here are the ones that have the most negative effects on the child if at all they are consumed (Kelly, Smith, King, Flood and Bauman, 2006). They are mainly adverts for junk food and alcohol. In New Zealand, records for these food adverts have shown that they are on the rise. They have risen from “eight per hour in 1997 to twelve per hour in 2006” (Robertson, 2006). This means that children are more exposed to adverts that extol the virtues of junk food, leading to unhealthy consumption.
2.3: Effects of Advertising on Children
It is obvious from the above discussion that advertising has profound effects on the children. This is the uncontested fact. What is controversial is the extent and type of effect-positive or negative-that these adverts has on the child. There are several effects that are obvious when the adverts are analyzed in the context of the child. There are the intended effects and consequences of these adverts (Net Industries, 2009). These are the effects that the producer or advertiser had in mind when he was designing and beaming that particular advert. For example, when an advert about a candy is aired, the producer intends to push up the sales that are made for that particular candy. If the child happens to shop for that candy based on the information that he got from the advert, it is said that the advert has attained its intended effect. However, there are other effects that are unintended, meaning that the designer and funders of the advert did not have this intention or he did not plan for this consequence (Wallace, 2009). This is all referred to as the covert or secondary effect of the advert. For instance, a scuffle might arise between the child and the guardian when the latter refuses to buy the product that the child is demanding based on what he saw on the advert. The producer did not intend for the child to fight with his parent.
Intended or unintended, the advert can also have negative or positive effects. In other words, the intended or unintended effects of the advert can either be positive or negative (Net Industries, 2009). When the sales of a particular candy brand rise as a result of an advert campaign, this is a type of a positive and intended effect on the side of the producer. However, if the sales rise at the expense of the kid fighting with his parent, and the producer was aware of the likelihood of this happening, then this is a negative intended effect. There is also negative unintended effect of the advert. For example, when the kids increase the uptake of junk food fueled by the adverts, this may lead to obesity and is a type of negative unintended effect.
The effects that the adverts have on the child positively depend on the age of the child (Bijmolt, Claassen and Brus, 2009). This has been explained by Piaget’s theory of cognitive development. The premise of this theory as it relates to the child and adverts will be looked in detail later in this paper. From this theory, it can be deduced that children who are below the age of eight years are affected to a greater extent than their older counterparts. The reason for this is that these children who are younger have an underdeveloped cognitive capability. They assimilate the messages of the advert uncritically, unlike their older counterparts who have a fairly developed cognitive capability (Net Industries, 2009). As much as age has a positive effect on the impact of the advert on the child, many researches have concluded that the gender of the gender does not affect this impact (Bijmolt et al: 2009, p5). It is a fact that there are considerable differences between boys and girls. For instance, the processing of information (the style of processing) greatly varies between the two sexes. However, there is no significant different between the two when it comes to deciphering commercials and the intentions of the same (Spencer, 2001).
2.3.1: Health and Wellbeing Effects of Adverts on Children
Many health implications of adverts as far as children are concerned involve the promotion of the culture of consumption of unhealthy or junk food. Adverts aimed at children have several contents. Toys and snacks are the major contents of these adverts. The foods that are advertised on these television commercials are unhealthy, as they tend to contain a lot of sugars and unhealthy calories (Pediatric Committee on Communication, 2006). Fat and salt are other unhealthy contents of these foods. Rarely will you get an advert that is promoting a type of food that is healthy for the consumption of the child or even for the adult.
The frequency with which these adverts are placed on television and generally on the mass media raises concern. According to Young Media Australia [YMA] (2007), “25-48% of all commercials on Australian TV are food adverts aimed at the child consumer”. What effect this has is that the “children are consuming non-nutritious foods and not enough children consuming healthy foods” (Pediatric Committee on Communication, 2006). As if this is not enough, those commercials that promote unhealthy foods “range from 50-84%” of all of these adverts (YMA: 2007, P1). These foods include hamburgers, soft drinks, candies and chocolate. These are the same foods that are hyped on television adverts when the kids are watching.
Another covert effect of adverts on the child’s health is based on the fact that many children find these adverts entertaining. This means that they will spend more time in front of the TV watching these “entertaining adverts” (Lifestyle Lounge, 2009). A study that was conducted in the year 2006 found that “for each hour of additional TV viewing, the kid’s dietary intake increased by 167 Kcal (Robertson & Rossitter: 2007, p34). This is alarming considering the fact that this constitutes “9% of a kid’s recommended daily intake” (Lifestyle Lounge, 2009). Of more concern is the fact that most of these foods that are consumed as the child is “vegetating” in front of the TV are the same that are advertised in the commercials.
The above scenario is a recipe for obese children. In other words, children adverts have the negative effect of increasing the chances of a child been obese. The obesity is brought about by the increased intake of calories. These calories are not utilized by the body since the child does not partake in physical activities. He sits the whole day in front of the TV and this increases his chances of been obese. The little pocket money that the child is given by the parents is used to buy unhealthy foods that are promoted by commercials like ice creams and candies (Ugur and Abdulla, 1993). It is no wonder then that America and other industrialized countries are experiencing a generation of fat and obese kids. It is the unhealthy eating habits of these kids- fueled heavily by the adverts- that are contributing to this “ballooning” generation. The diagram below will help in illuminating the connection between food advertisements and unhealthy eating.
Figure 1: Food Adverts and Obesity
There are other health implications that stem from the obese condition of the child. These include heart conditions and high blood pressure. Conditions and diseases that were hitherto the preserve of the aged are now been increasingly found amongst the young. The number of kids that are suffering from heart conditions related to obesity is increasing by the day. Other conditions are dental and weak bones (Lifestyle Lounge, 2009). The excessive levels of sugars in the foods and drinks that are hungrily devoured by these children courtesy of adverts leads to dental diseases and conditions like tooth cavity and tooth aches. The preservatives that are found in the sodas and other sweet drinks promoted by the adverts have the negative effects of reacting with the calcium to be found within the bones. At the end of the day, the bones of the child are weakened.
Apart from these foods that have been expounded on here, adverts that promote cigarettes and alcohol lead to spiked consumption of the same amongst the children (Winter, Matthew, Donovan, Robert, Fielder and Lynda, 2008). According to estimations made by the Centers for Disease Control in the year 2004, America has a problem of cataclysmic extent on its hands as far as her future generation is concerned. This is because “4,000 children under the age of eighteen start smoking everyday” (National Institute on Media, 2009). This has the implication that “(more than) 6 million children living today will die early as a result of tobacco related complications” (Lifestyle Lounge, 2009). At least 80% of adult smokers in America picked this habit in their adolescent years (National Institute on Media, 2009). The same scenario applies to alcohol consumption. All of this is accelerated by the adverts that are carried out in the media. The fact these adverts are not intended at the youth is uncontested. But this does not mean that the children and adolescent are not exposed to these adverts for alcohol and tobacco and ends up been consumers of the same products (Winter et al, 2008). Given the under developed immunity of this age group, they face a risk of suffering from conditions emanating from consumption of these products. This includes respiratory conditions as a result of tobacco consumption and liver cirrhosis brought about by the consumption of alcohol.
2.3.2: Effects of Advertisements on Cognitive Development of Children
To understand the effect that advertising has on the cognitive development of the child, it is important to understand the stages that the children go through as they develop their cognitive skills. Piaget, a cognitive development theorist, came up with four stages through which children pass as they develop their cognitive abilities. These are the stages that determine the effects that advertisement has on children as far as cognitive development is concerned. At every stage, the effect of advertising is different (Macklin and Carlson, 2009).
The first stage is the sensorimotor which covers the period between birth and two years of the child’s life (Webb, Taylor and Valrie, 2003). Preoperational stage covers the period between two years and seven years of the child’s life. The third stage is the concrete operational stage which is between seven and eleven years of the child’s life (Macklin and Carlson, 2009). The last stage, according to Piaget’s theory, is the formal operational stage which takes place from the eleventh year to adulthood (Wilcox, Cantor, Dowrick, Kunkel, Linn and Palmer, 2004).
At the first stage (sensorimotor) the child is not able to distinguish the stimuli that he experiences from the environment around him. This is the reason why this stage is not of importance to the advertisers, because the advert will be lost on the child, adding up to a lost investment (Moniek and Patti, 2000). The other three stages are the ones that are very critical when it comes to advertising. During the preoperational stage, the “symbolic thought of the child is starting to develop” (Wilcox et al, 2004). This means that when it comes to adverts, they are able to differentiate between them and other programs aired on TV. But they are still excited by the “perceptual properties of the stimuli” (Lifestyle Lounge, 2009). This means they are excited by the pictures and sounds that are found on T.V. At this stage, they find the adverts to be very entertaining. It can then be said that advertisement affects the cognition of the child at this stage by exciting it. At this stage, the child is undergoing “centration. This means that he is unable to focus on more than one dimension of stimuli” (Wilcox et al, 2004). What this means is that the child is unable to comprehend both the entertainment and influential intent of the advert. He is only aware of the entertainment aspect of the advert.
At the third stage of concrete operational, the child “do not accept perception as reality but can think about stimuli in their environment in a more thoughtful and critical way” (McNeal, 2008). From the age of eight years, the child is able to question the content of the advert. He is aware of the other intent of the advert: that of persuasion (Wallace, 2009). This is because he is able to “consider several dimensions of an issue” (Winter et al, 2008 p1). He is able to comprehend the entertainment and persuasive dimensions of the advert. From the formal operational stage, the children are able to think like adults. They can objectively and abstractly consider an issue (Webb et al, 2003).
Proponents of child advertisement are of the view that it helps in developing the cognitive ability of the child. This is done by providing the child with information regarding the environment that surrounds him. In other words, they opine that it helps in developing the child cognitively because it educates him. The bottom line, according to this school of thought, is that adverts are educational (Lifestyle Lounge: 2009, p1). Consider an advert for a snack that gives the nutritional formula of the contents. The child is able to realize that there are differences in nutritional formulae of various food items. But critics of child advertisement, as much as they concede that the adverts are educative, they are of the view that they nudge the cognitive development of the child in the negative direction (Pediatric Committee on Communication: 2006, p13). The adverts are misleading as they are misinforming. This is why they affect the cognitive development of the child in a negative way. They make the child to be materialistic. Consider the same advert of a snack, which misleads the child to think that a sugary and fatty snack is healthy, while the truth is to the contrary (Bandyopadhyay et al: 2001, p25).
2.3.3: Psychological Effects of Advertisement on Children
The connection between the advertisements that are aimed at the children and their psychological effects on their audience cannot be denied. As common to all forms of advertisements, the ones aimed at children aims at creating a need within the child. The major goal of creating the need having been attained, the advert then embarks on the next step; that of positioning the product or the service as the ultimate solution to the need (Lukas: 2008, p1). For example, when the advert is about a toy that is aimed for boys, the first task of the advert is to stimulate or create the need for that toy. The child feels the urge to own that particular type of a toy. The advert goes ahead and convinces the child that for him to satiate the need for that toy, he has to buy the particular one been advertised.
What the creation of need creates within the child is a psychological effect of inadequacy (Robertson, 2006). The child feels that he is incomplete and cannot exist without the particular product that is been advertised. This is made worse especially when the child is aware of the fact that every child around him has that particular item. For instance, an advert for a video game might hype it so much to the extent that every kid in the neighborhood has one. This particular kid who does not have one will feel that he is inadequate and does not fit with the others till he gets a video game too.
These adverts also have the psychological effects of making the child be unhappy. This is because the adverts has already stimulated the need and urge to posses the item. It is important to note that as much as the child is a very important factor when it comes to stimulating sales, he has no disposable income of his own that he can use in buying the item. He relies on handouts from the parents and guardians to make the purchases (McNeal: 2008, p29). The problem is there are times when these handouts are not forthcoming, meaning that the child cannot afford the item been advertised. He will be forced to do without it, leaving him with a sense of unhappiness.
Another psychological effect is that the child gets predispositions, either positive or negative, concerning some attributes of his surroundings (Valerie: 2009, p16). This is because as indicated earlier, the adverts are taken as the presentations of undoubted truths propagated by the adults to the child. The child will tend to believe whatever is said on the advert (Viroqua: 2008, p15). If this happens to be negative, the child will tend to have a negative predisposition. For example, some of the adverts especially for toys meant for boys are peppered with scenes of violence, the aim been to show the boy that to be macho, he must have the toy. The child will grow up with a predisposition towards violence, since he witnessed it been glorified on the advert (Dollan and Macbeth, 2005,).
But the psychological effects are not solely negative. There are others, albeit few, that are positive. For example, an advert that depicts a villain who is defeated by a hero will have the effect of making the child have the positive predisposition of realizing that as a rule, good always triumphs over the evil (McIntyre: 2007, p599).
2.3.4: Purchasing Behavior and Adverts in Children
The aim of the advert is to stimulate purchase and influence the purchasing habits of the target audience (read the child). The effectiveness of the advert is gauged by the degree to which it influences the behavior of the audience.
Apart from purchasing behavior, there are other forms of behavior that are affected by advertisements in children (Wallace, 2009). For instance, adverts that depict violence will tend to influence the behavior of the child such that he is likely to be violent in future. Children also adopt a demanding mien towards their guardians when they are asking for the items that are advertised on the TV. This demand is expressed in form of tantrums and fits of revolting behavior. This is because the child will not be satisfied until the parent or the guardian buys him what he wants. Scenes of children throwing tantrums in supermarkets as they demand for toys and sweets are the norm rather the exception in many places in America.
When it comes to teenagers, they are likely to adopt behavior characteristic of a negative lifestyle. For instance, adverts that glorify alcohol, drugs like tobacco and sexual acts tend to have a negative effect on the life of the teenagers. They will adopt cigarette smoking, imbibing alcohol and premature sexual activities.
Adverts affect the purchasing habits of both the adults and the children as well (Hotchkins, 2006). For instance, children engage in impulse buying in order to acquire the item that they saw on the TV advert. These buying are unplanned for and hence have a negative effect on the financial well being of both the child and the parent. Some of the purchases are unnecessary. They amount to wastage of meager income that is enjoyed by the parents and the children. For instance, when the child rushes to the shops to buy a certain design of cloth, leaving behind the ones that were bought by the parent but do not conform to the design seen in the adverts, this amounts to wastage of resources.
The adverts that are directed at the children also affect the purchasing habits of the parents. As previously noted, the parents are perennially busy in the office or out there working hard to provide for the family. This means that they do not have the time to interact with the media as their children do (McIntyre: 2007, p600). Even if they will have the time to interact with the media, their interaction will not be as extensive as that of their children. At the end of the day, the children are exposed to more adverts in a given period than their parents or guardians. This aspect, coupled with the fact that children have a relatively higher level of retaining information relative to their parents, means that the children are always well informed than their parents when it comes to new products in the market (Dolan and Macbeth, 2005). It is not surprising then to find out that the parents consult their children regarding a product or a service that they want to acquire. Given the ability of the media to mold the opinions and believes of the child, he will be more likely to inform the parent or guardian on the item that he saw on the advert. And so the parent will end up buying that particular product or service.
There is also another way that the adverts are able to utilize the child to influence the purchasing habits of the adults. For instance, the child will demand an item that he saw on TV. The child will have no option but to purchase the item so that the kid is satisfied and happy (Craig: 2003, p34). If the advert was not aired, probably the child will not have been aware of it, meaning that the parent or guardian will not have been harassed into buying it.
There is a positive attribute of adverts as far as purchasing habits of both the adults and the children are concerned. As a result of the adverts, the purchasing habit is likely to be well informed and directed (Kingston, 2007). For instance, as a result of the information gleaned from an advert, the parent and the child are able to purchase the clothing item for the child that is of quality and fashionable. This is because the advert informed them on the quality and fashion aspects of the clothing item. And since there are very many items that are identical in the market, the consumer is able to discern the best and thus able to make a choice from the myriad of others out there (Robertson, 2006).
2.3.5: Advertisement and the Effects on the Relationship between the Child and the Parent
Some adverts have the tendency of spoiling the relationship that exists between the child and the parent or guardian. This is because when a child demands for an item that he saw on TV, he expects the parents to comply and buy it for him (Spencer: 2001, p101). Woe unto the parent who goes against these wishes. The child will tend to throw a tantrum, and affect the mien that he hopes will coerce the parent to buy the item (Herbert: 2007, p123). This will include rebelling, disobedience and other negative behaviors that will be affected until the parent gives the kid the money to buy the item (McNeil: 2008, p140). In extreme cases, conflicts between the child and the antagonistic parent may lead to violence between the two. If the advert was not aired, the child would not have been aware of the item and so the conflict with the guardian would have been averted.
2.3.6: Increased Commercialization
Advertisement to children has led to increased commercialization of the products and services that are aimed at the child (Baldacci, 2009). The child has been turned into a consumer overnight. Children have become a market segment on their own. The adverts have stolen the innocence of the child and his dependence on the parent to make decisions regarding his purchases (Abrams: 2006, p131). The child has been assumed to have the capability of making his own decisions regarding purchases and satisfaction of needs (Kingston: 2007, p46).
The child market has been so commercialized such that there are whole departments and stores that are solely dedicated to the satisfaction of the various needs of this segment of the market (Peterson and Allan, 2006). It is not amazing to find that there are stores that cater exclusively for the child consumer. These stores, to reach their client the child, has to invest in marketing, and advertisement is such one tool of marketing that is adopted to reach out to the children (Jeffrey: 2006, p240).
There are also advertising agencies that cater exclusively for adverts that target the child. These agencies are so specialized to the extent that they are bale to determine the best way to package an item that is targeted at the child (Tomang: 2009, p25). The clients of these advertisement agencies are the companies that produce goods and services that are aimed at the child.
3.0: Conclusion
Due to the realization that children and teenagers can-and actually does- compose a market segment on their own, producers have come up with strategies aimed at addressing and communicating with this market segment. One of the strategies that they have come up with is that of advertising. They have come up with advertisements that are either targeted at the children directly or indirectly. The aim of these adverts is to create awareness about and need for the particular product or service that is been advertised. When this awareness and need has been stimulated, the logical progression of events calls for the child to purchase this item and thus, sales of that item are increased. This paper looked at the various effects that these advertisement has on the child. The adverts that were addressed were those aired on TV, radio, print media, online and other forms of mass media like bill boards. The effects observed ranged from behavioral, where by the behavior of the child is affected. Other effects that were addressed are those on the health and well being of the child, together with those on the kids’ cognitive development. It was noted that most of these effects are negative. However, there are other positive effects of advertisement on the child’s behavioral and cognitive aspects. However, these positive effects are greatly outweighed by the negative ones.
4.0: References
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The legal regulation of pornography in United Kingdom


Before the 1960s, sex education was conceived by sex reformers to be problematic business of 'reforming' an inadequate and possibly perverse public. For these reformers, the problem of sexuality in mass society was typified by the conjunction of two things: first, by ? generalized and pervasive sexualized aesthetic, which was held by many intellectuals before and after 1945 to epitomize the incitements and repressions of popular culture; and second, by pornography and other obscene material. Although it has been attempted, defining obscenity and pornography is impossible unless the protean nature of the terms is addressed. (Elmer-Dewitt 1994, p102) As ? number of writers have demonstrated, the obscene is an empty category, usually legal and cultural, which can include anything and is not necessarily defined by its sexual content. (Potter 1996)


Cultural battles to secure the meaning of pornography and obscenity are therefore inherent in the very formation of the terms as legal and cultural categories, and are best seen as varied attempts to establish ? particular brand of artistic or moral authority. As Walter Kendrick has pointed out, the obscene is always deemed to be in the process of threatening the health and welfare of an imagined reader. For the Victorians this reader was of either sex, young and probably working class. (Rimm 1995, p184) Protecting the consciousness of the consumer, ostensibly preventing social pathologies and properly dividing aesthetic categories of art from pornography are the aims of those who seek to define precisely what is meant by the obscene and the pornographic.
Since the 1970s and the rise of ? feminist critique of pornography, the imagined reader, prey to psycho-sexual neuroses of all kinds, has been the adult, heterosexual man. In the worldview of early twentieth-century sex reformers, the object of concern was an undifferentiated mass of new working-class readers and consumers with sufficient leisure and disposable income to place themselves in peril and multiply their misconceptions. Battles over the meaning of pornography were, then, not only used to establish the authority of modernism, but also featured strongly in the formation of ? new breed of expert who defined sexual health and education as his or her field of action, and who sought to reach out to this mass readership and revolutionize its knowledge. (Rimm 1995, p184)
Arguments over what was properly obscene had to encounter the fact that the legal meaning of obscenity and the nature of the pornographic changed in important ways in the early twentieth century. These changes can be mapped in legislative and cultural terms, and can be traced in ? legal sense to the Obscene Publications Act of 1857. (Potter 1996) The interpretation of that Act in the case of R v. Hicklin in 1868 described the obscene in famous terms, as that which has the capacity to 'deprave and corrupt'. Walter Kendrick and Lynda Nead have pointed out that the Hicklin judgement made the obscene ? question of access. While nudity or sexual imagery were confined to high art, or restricted to those assumed to practise moral selfpossession, it was not necessarily considered problematic. However, if mass print culture made such material accessible to ? wide audience, including vulnerable groups like women or the young, then it could be judged obscene. (Elmer-Dewitt 1994, p102)


Nead suggests that the category of the obscene in Victorian London contained not only postcards depicting sexual acts, but also ? huge variety of borderline material ranging from pictures of actresses and nude 'art studies' to French novels. From its legal beginning in 1857 obscenity was ? performative category, dependent on specific judgements about production, sale and distribution, and on police practice. Its definition depended on an enormous range of variables. (Potter 1996) However, one way for magistrates and juries to judge whether an article had the required capacity to 'deprave and corrupt', and to decide what the audience was for any obscene material, was to judge the 'circumstances of publication' - how and where ? book was advertised, sold or displayed. (Rimm 1995, p184)
Therefore, if artistic or medical works about sex were sold, advertised or distributed next to hard-core or even mildly indecent material, then they too could be judged obscene on the grounds that they would reach ? 'corruptible' audience. Moreover, the police practice of raiding bookshops and confiscating indiscriminately ? vast volume of different material for examination by ? magistrate made the situation even worse. In those circumstances serious works of instruction or of sexology could be bracketed with indecent magazines, cheap postcards or erotic literature at subsequent court hearings. (Elmer-Dewitt 1995, p38-45) The result of the way the law and the police worked was ? series of trials in Britain which revolved around the question of 'circumstances'. In addition to the founding imprecision of the Obscene Publications Act, other legislation worked to expand the category of the obscene. In ? 1907 case brought against the illustrated magazine Judy, the proprietor, Alphonse de Marney, was held to be responsible for the advertisements of pornography dealers which his magazine contained. (Rimm 1995, p184)
Papers like Judy, which were collectively known to the Home Office as the 'illustrated press', were part of ? racy genre which grew up after about 1910, and which included titles like Fun, Photo-Bits and Brighter London. These papers dealt in fiction on 'advanced' topics, celebrity gossip and pictures of bathing beauties. In addition, most of them carried advertisements for art studies, sexual instruction books and, most damagingly, continental book traders who were known to the police as dealers in pornography. (Harmon and Boeringer 1997) The action against de Marney had been brought specifically as ? test case in order to establish the possibility of controlling the pornographers who operated through the illustrated press, and as ? way of reining in the obscenity of these papers by making them liable to prosecution.


Not only was obscenity ? performative category, dependent on the implementation of the law, it also differed depending on where you were. This situation reflected the notorious imprecision of the Obscene Publications Act, and the necessary estimation by the courts of any potentially 'corruptible' audience for obscene material. In London, the frequent assumption of courts was that metropolitan consumers were capable of reading works of sexual instruction which included detailed and explicit description. (Finkelhor et al 2000) Outside the capital, however, the same material often received very different treatment on the grounds that it was sold to an entirely different audience. Magistrates in the north of England were particularly zealous in their defence of provincial sensibilities. (Ogilvie 2000)


Elmer-Dewitt, P. (1994). Censoring Cyberspace: Carnegie Mellon's attempt to ban sex from its campus computer network sends ? chill along the info highway. Time, November 21: 102.
Elmer-Dewitt, P. (1995). On ? screen near you: Cyberporn. Time, July 3: 38- 45.
Finkelhor, D., K. J. Mitchell & J. Wolak (2000). Online Victimization: ? Report
on the Nation's Youth. Washington, D.C.: National Center for Missing and Exploited Children.
Harmon, D. & W. S. Boeringer (1997). ? content analysis of internet-accessible written pornographic depications (sic). Electronic Journal of Sociology 3(1) [iuicode:].
Ogilvie, E. (2000). Cyberstalking. Trends and Issues, No. 166. Canberra: The Australian Institute of Cri
minology. Potter, H. (1996). Pornography: Group Pressures and Individual Rights. Sydney: The Federation Press.
Rimm, M. (1995). Marketing pornography on the information superhighway. Georgetown Law Journal, 83, 184-1934.
Rimmer, S. (1995). Planet Internet. New York: Windcrest/McGraw-Hill.


Adopting Corporate Governance And Social Responsibility Accounting Essay

In the United States, corporate governance legislation was introduced primarily directed at listed enterprises requiring executives to certify financial statements as accurate and requiring increased oversight of boards and auditors. Private unlisted enterprise however, remains free from such regulatory control and security.
Chapter Two – Adoption of Corporate Governance Principles
Evaluations & Recommendations
I would recommend the following Corporate Governance principles; gleaned from the Sarbanes Oxley Act (2002), OECD (2004), Combined Code (2003) and the Australian Securities Exchange (2007).
Corporate Governance and Managerial Compensation
Being a mining company in today’s economic climate, a major responsibility as far as corporate governance goes is for the board of directors is to determine managerial compensation systems. How should managers be compensated? Should pay be tied to performance?
From an accounting perspective, organizing the firm into cost centers and evaluating managers on the basis of costs alone is essentially an input based monitoring system. For managers, though, output measures are more likely to be used than input measures. These measures are not direct measures of effort but, instead, are what are called instrumental measures. They either measure something that is thought to be closely related to effort or compare outputs to inputs. Historically, such measures have included net income, profit margins, return on assets and return on equity (both measures that compare outputs to inputs), and growth in earnings and sales (Levitt, 2005; pg. 145). In terms of maximizing the wealth of the existing owners of the company, the company's stock price is also assumed to be related to these measures. So, increasingly, more and more companies are using the stock price itself or some compensation scheme that ties rewards to the stock price to finesse the ever-present problem of measuring effort. Still, the problem of separating the contributions management makes to performance from factors that are not under management control (luck, noise) remains (Carroll, 2001; pg. 27). How do we get out of this box?
Measures of relative performance may be one answer. Owners can measure managerial performance relative to the performance of other firms in the industry or some other benchmark. For example, managerial performance can be benchmarked against such industry wide financial ratios as profit margins, return on assets, return on shareholders' equity, and rates of growth in sales and net income. As we will discover, many companies do use such relative performance measures and measure performance against peer groups’ With respect to the stock price, managerial performance can be evaluated by adjusting the change in the company's stock price for what happened to the market in general-all companies-during the same period. Suppose the per share price of XYZ Corporation fell by 8 percent over the year. Was the decline in the share price due to poor management or to factors beyond the control of management, such as an economy wide recession? Some insights into this question can be gained by looking at what happened to a broad-based market index such as the Standard & Poor's 500. If the index fell by 20 percent, perhaps the managers of XYZ Corporation should be paid a substantial bonus because they were able to guide the company through the recession far better than the managers of other companies. However, if the index rose by 20 percent during the period, a different story emerges.
Common Pay And Performance Schemes
In the United States, senior managers' pay typically has three components: a fixed or base salary, a short-term or annual bonus payment, and a long-term bonus or performance payment. Both the short-term and long-term bonus payments are tied to performance measures, with the long-term bonus often taking the form of stock options. In 1996, the median CEO pay, inclusive of all forms of compensation, was $3.2 million in mining and manufacturing, $4.6 million in financial services, and, $1.5 million in utilities' (Lunnie, 2007; pg. 189). For U.S. CEOs, the fixed base cash salary represents between 20 and 40 percent of total compensation, with the fixed salary percentage being lowest among large manufacturing firms and financial services companies (a category that includes investment banks) and highest among utilities. Furthermore, the CEO's base salary as a percentage of total compensation has been dropping since 1990. However, one explanation for the reduction in fixed salaries as a percentage of compensation may be a 1993 change in the U.S. tax code that prohibited firms from deducting as business expenses nonperformance pay over $1 million to executives. Consequently, any compensation in excess of $1 million is likely to be disguised in one form or another as incentive-based pay (Carroll, 2001; pg. 121).
Corporate Governance Dividend Issues
Managers can do two things with current year's earnings: They can distribute them as cash dividends, or they can retain them in the company. If the earnings are retained, management can use them to make additional investments or to pay down debt. The decision to pay down debt is part of the financing decision and is connected to the notion of an optimal capital structure and solving governance problems through the financial structure decision. So, setting aside the ʻpay down the debtʻ alternative, when should management retain earnings and reinvest them in the company, and when should management distribute the earnings as cash dividends ? Arguably, the best reason for paying cash dividends is that management knows that no positive NPV investments exist for the firm. Therefore, rather than keeping cash in the company, where it earns no return, the managers should distribute it to the owners of the company as cash dividends. The owners of the company can then use these cash dividend payments to invest in other companies that have positive NPV projects available to them. Thus, they would be able to create jobs and economic growth for the economy as a whole were they to receive the funds-essentially the public policy objective of a well-functioning corporate governance system . This theory is called the residual theory of cash dividends. If corporations were actually following this policy, though, we would observe much more volatility in year-to-year cash dividend payments than we do in reality-volatility that would be more akin to that observed in net income and earnings per share (Drucker, 1984; pg. 156).
The Board of Directors and Shareholders’ Rights
The board should have audit, compensation, and nominating committees made up entirely of outside directors. The audit committee ensures that the books aren't being cooked and that shareholders are properly informed of the financial status of the firm (Levitt, 2005; pg. 109). Typically, the audit committee recommends the CPA firm that will audit the company's books, reviews the activities of the company's independent accountants and internal auditors, and reviews the company's internal control systems and its accounting and financial reporting requirements and practices. The compensation committee normally does the following : (1) recommends the selection of the CEO, (2) reviews and approves the appointment of officers who report directly to the CEO, (3) reviews and approves the compensation of the CEO and the managers reporting to the CEO, and (4) administers the stock compensation and other incentive plans (Lunnie, 2007; pg. 256). The nominating committee establishes qualifications for potential directors. It also puts together a list of candidates for board membership for the shareholders to vote on. In all these cases, the point of having only outside directors is to prevent management from concealing information, deciding on its own pay, and gaining effective control of the company by controlling the board election process. Diversity should be an important factor in constructing a board. The members should all be qualified individuals, but there should be a diversity of experience, gender, race, and age.
The corporate scandals of recent years have resulted in a wave of new regulations and legislation. Most prominent among them is the Sarbanes-Oxley Act of 2002 (often referred to as SO). This Act addresses perceived weaknesses in auditing, reporting, and corporate governance of U.S. public companies and has been hailed as the most dramatic change to federal securities laws in over 50 years. In combination with related actions and provisions from the Securities and Exchange Commission (SEC), which administers the laws set forth in the act, and rule changes from the major stock exchanges, notably the New York Stock Exchange (NYSE) and the Nasdaq Stock Exchange (NASDAQ), the Sarbanes-Oxley Act has established enhanced regulations for public company governance and reporting requirements (Pava & Krausz, 2005; pg. 83). The rule changes at the NYSE and NASDAQ came in response to a request from the Chairman of the SEC, who asked the exchanges to examine their listing standards with an emphasis on all those related to corporate governance. In response, the NYSE and the National Association of Securities Dealers (NASD) through its subsidiary, the Nasdaq Stock Market, Inc., filed corporate governance reform proposals with the SEC. Specifically, in August of 2002, the NYSE filed the NYSE Corporate Governance Proposal to amend its listed company manual. In October of 2002, the NASD, through the Nasdaq, filed a proposed rule change known as the Nasdaq Independent Director Proposal. Both proposals were subsequently amended and eventually approved by the SEC.
The audit committee makes sure that the books aren't being cooked and that shareholders are properly informed of the financial status of the firm. characteristically, the audit committee advocates the CPA firm that will audit the company's books, appraises the activities of the company's independent accountants and internal auditors, and reviews the company's internal control systems and its accounting and financial reporting requirements and practices. The compensation committee usually does the following : (1) recommends the selection of the CEO, (2) reviews and approves the appointment of officers who report directly to the CEO, (3) reviews and approves the compensation of the CEO and the managers reporting to the CEO, and (4) administers the stock compensation and other incentive plans. The suggested committee establishes experience for potential directors (Lunnie, 2007; pg. 90). It also puts collectively a list of candidates for board membership for the shareholders to vote on. In all these cases, the point of having only outside directors is to prevent management from concealing information, deciding on its own pay, and gaining effective control of the company by controlling the board election process. Diversity should be an significant factor in constructing a board. The members should all be qualified persons, but there should be a diversity of experience, gender, race, and age.
Chapter Three – Adoption of Corporate Social Responsibility Initiatives
Analysis & Recommendations
Corporate Social Responsibility Initiatives
Corporate social responsibility tends to mean different things in different business settings and times. As a concept, it emerged first in the 1960s among internationalizing companies from America and those involved in former colonial states in Africa and Asia. US corporations such as IBM, and Xerox in its earlier day, with marketing companies throughout the world, developed concepts of stakeholder relations to justify their positions as overseas companies engaged in new markets (Carroll, 2001; pg. 65). It also evolved as a response to the American civil rights movement in the 1960s and 1970s and claims for economic justice in the troubled US cities and later in the conflicts in UK inner cities.
Those multinational enterprises engaged in commodities and natural resource developments, evolved the concept in the face of sustained threats to post-colonial investors, nationalization and an increasingly negative environment for business. Some, in any case, had a long tradition of good business standards and active, if paternalistic, community support. The pressure was on companies to justify their presence, and the little interest taken in business at that time by the UN system was essentially negative in its approach to multinational enterprises, some of whom had been accused of engaging in 'political interference'. Some of the first social impact studies appeared at this time, focusing on economic, social, and human development contributions and far less on environment which had not yet emerged as a significant concern.
In the main, corporate social responsibility was seen as a defensive shield at times when business and its property were under threat. It emerged in a similar form at the time of intensive anti-apartheid campaigning against South African investment in the 1970s, with calls for disinvestment and an onus on demonstrating the contribution(s) that could be made by a continued presence (Lunnie, 2007; pg. 167).
Throughout these years, corporate responsibility, sometimes used interchangeably with 'corporate citizenship', was often equated with corporate philanthropy as there were a large measure of community support and charitable donations involved in action, whether in the regeneration of US cities, the building of schools and health centres or the funding of scholarships (Carroll, 2001; pg. 11). To this day, US corporate and foundation behaviour, conditioned to major roles as a donor in US society, sees corporate responsibility mainly as a philanthropic strategy, whereas a European model is emerging with far greater emphasis on nonphilanthropic activity. Japanese major company behavior has often followed the American model, even though it gives significant emphasis to its supply chain contributions (Guerra, 2004; pg. 3).
According to the view of social responsibility as social responsiveness, socially responsible behavior is preventive rather than restorative. The term social responsiveness has become widely used in recent years to refer to actions that go beyond social obligation and social reaction. The attributes of socially responsive behavior include taking stands on public issues, anticipating future needs of society and moving toward satisfying them, and communicating with the government regarding existing and anticipated socially desirable legislation (Drucker, 1984; pg. 67). Corporate managers, according to this view, use their skills and resources to solve an existing or anticipated problem. This view places managers and their corporations in a position of social responsibility, far removed from the traditional one that was concerned only with economic means and ends.
Events during the 1980s reinforced the attitude that corporations must react to problems created by their own actions. More important, the 1970 crisis initiated the idea that corporations have to be proactive and should be responsive to a wide range of social problems because they have the expertise and power to do so. The current debate on the social responsibility of business is not concerned with obligatory behavior but with socially responsive behavior.
The proliferation of product certification schemes touches many of the issues. A broad government-backed mechanism emerged to certify that international trade would be free of “conflict diamonds” associated with human rights violations in Africa. Exports of soccer balls and rugs from South Asia feature certification processes to assure the goods were not produced using child labor. “Green” labels tout the environment-friendly record of many products, from recycled paper or plastic products to energy-saving devices to “dolphin-safe” tuna (Guerra, 2004; pg. 5). Remarkable variety exists in the types of issues addressed and certification measures employed. The constellation of certifying and supporting organizations can also mix public agencies, business organizations and civil society groups.
Fair Trade initiatives represent a particular application of product certification schemes, usually but not exclusively applied to products based on agricultural commodities. The basic concept seeks to establish a dependable, long-term relationship with commodity growers in developing countries, offering them a higher price for their products by eliminating middlemen traders. Many schemes also provide an additional premium to growers for using environmentally friendly methods and/or for community social development projects. The general approach reportedly stems from efforts begun in 1986 by the Max Havelaar Foundation in the Netherlands to respond to desires for development projects that emphasize trade rather than aid. Starting with coffee and expanding to honey, bananas, tea and orange juice, the Foundation supported Fair Trade products sold primarily in Europe. During the 1990s fourteen other Fair Trade organizations were established, reaching over $200 million in sales by the end of the decade (Guerra, 2004; pg. 11), still largely concentrated in European markets. Some approaches expect consumers to pay a somewhat higher price for certified Fair Trade products while other efforts try to remain price-competitive, using cost savings in the distribution chain to redistribute profits toward developing country growers (Lunnie, 2007; pg. 19).
An important extension of the Fair Trade mechanism to the US market occurred in 2000 when Starbucks announced the introduction of a blend of Fair Trade coffee certified by the non-profit TransFair organization that encourages farmer co-operatives in developing countries to sell direct to coffee roasters or retailers. The breakthrough with Starbucks came after some of its coffee houses were vandalized during anti-globalization protests at a World Trade Organization meeting hosted in the company's hometown of Seattle, Washington. This initiative complemented Starbucks' broader social responsibility programs and helped expand Fair Trade coverage in the United States beyond craft shops and a few grocery stores. Subsequent discussions between Starbucks and Oxfam also led to cooperation on a project to aid coffee growers in poverty-stricken areas of Ethiopia.
Wage standards represent one of the most problematic labor issues in code of conduct debates. The wage debate revolves around the question of where to set an ethical minimum wage rate. Traditional choices involved either the local legal minimum wage or the local industry market wage (that may fall below the legal minimum where laws are not well enforced). In many developing countries, neither choice appears ethically acceptable to civil society groups. Governments often set legal minimum wage rates low as an incentive to attract foreign investment and promote labor-based exports. In these countries, excess labor acts as a competitive economic factor endowment, meaning market forces of supply and demand also repress wage rates. Under these circumstances, either standard can leave workers with insufficient money to live, even well below the local poverty line.
The concept of a living wage attempts to address this issue by setting an ethical minimum wage rate based on a worker's survival needs rather than other possible distributive justice standards such as contribution (productivity), equality, seniority, etc. The normative argument draws on the employee's position as a central stakeholder to whom the firm owes a strong social responsibility (Drucker, 1984; pg. 2). A major difficulty, however, lies in defining “living wage.” For example, while providing enough money for minimum survival requirements appears reasonable, agreement rapidly disappears as the list of included items lengthens: food, clothing, housing, health care, transport, education, savings, etc. If a list of items is agreed and priced by the local cost of living, troublesome questions still remain regarding, for example, whether a worker's salary should provide only for that person or also for family members (spouse, children/how many, extended family). Wage-related standards may also conflict; for instance, two workers, one single and the other the head of a large household, might require a different minimum living wage, but such a differential would conflict with an equal pay for equal work standard.
Chapter Four
Many companies, including mining conglomerates object to extending social responsibility beyond the direct employee relationship, particularly in cultures where large extended family ties are common and important. Living wage standards, particularly if liberally defined, could quickly push labor compensation far above local law or industry market levels, leaving the firm at a competitive disadvantage. Losing their low wage rate advantage could also drive investing or purchasing firms to look elsewhere for a production site, leaving the workers without any wages. Companies also argue that governments or other social institutions should be responsible for providing individual minimum income needs; employee wage rates should be set by market forces that respond to worker productivity (contribution to the production process). The rejoinder from critics often relies on the thesis that corporate social responsibility becomes greater where market forces do not work efficiently and governments are ineffective or unresponsive to the needs of their people circumstances that mark many developing countries.