P1 answers: AAA Ethics Model

- relevant to P1 candidates.



From left to right:
Pic 01: Disneyland, the happiest place on earth
Pic 02: Most memorable ladies
Pic 03: Your reward for graduating, be there!



Dear Intensive Practice Sessions P1 candidates,
As promised, the answer to the case study involving Disney Limited.

Remember, work very hard.

Marcus

ANSWER TO CASE STUDY: Ethics model AAA (AMERICAN ACCOUNTING ASSC.)
1. WHAT ARE THE FACTS?
The plant is in financial distress, closure is inevitable. Disney wants the contract completed or HS will face lawsuits as per contract.

2. WHAT ETHICAL ISSUES INVOLVED?
Whether the employees have the right to know about their future, albeit bleak since it involves their employment security. Naturally, if they have been told, key staff will find employment elsewhere, resulting in joepardising the Disney contract.

If employees are told, shareholders risked losing more with the contract unfulfilled. The ethical issue here is to what degree is the Board responsible to ‘both’ shareholders and employees.

3. WHAT RULES/POLICIES IN FORCE?
There is no rules requiring management to inform ‘high-level’ decisions and sensitive information to employees. Thus Board is not ‘obligated’ to communicate with staff. After staff completed the project, there is no further use of them, thus if made redundant Board merely have to comply with the redundancy laws of the land which likely involve paying compensation.

4. WHAT OPTIONS AVAILABLE?
(i) Outsource contract and inform staff. This way HS can still complete the contract and safeguard the employees interests in that they can look for other alternatives.
(ii) Keep information confidential by giving vague answers or even outright denial of rumour that plant is shutting down.
(iii) Re-negotiate with Disney to rescind the contract with amicable settlement.

5. DECISION THAT SUITS CURRENT POLICIES
Board will be compelled to protect shareholders interests by completing the contract and collect the contracted sum. This enhances both shareholders’ wellbeing by minimising losses and also Board’s performance is enhanced.

Thus, unlikely to adopt option to outsource or negotiate to rescind the contract as this works against shareholders' interests and Board as not performing their fiduciary duty to stockholders.

6. WHAT POSSIBLE CONSEQUENCES?
Consequences are minimal in view that firm is shutting down. Reputation dies with the firm.
Consequences are negative impact on employees in view that they are caught unprepared, with the sudden termination after the contract completion.

7. WHAT IS DECISION? (APPLYING KOHLBERG’S CONVENTIONAL STANDARDS)
From Deontological perspective: unfair and unjust to employees as they are seen being exploited by management only to be dismissed thereafter.
From a Teleological perspective: utilitarian perspective is at least, all employees ‘still’ have job until the plant closes. Egoist perspective shows that Board and shareholders protect their own economic interests.

Decision: by keeping information confidential, the weakest and poorest stakeholders, namely the employees, still have their jobs. Otherwise informing them pre-maturely will result in jeopardising the employment earlier when key staff leaves.

Ethical to keep information confidential, even if management is pressed for an answer.

ANTIDOTE TO STRESS = HUMOUR

Dear all,

Exams are around the corner i.e. your mock exams and of course the real exam. Stress is high. A good antidote is exercise and at times humour.

So here is some serious humour, in which I think many of you guys may agree with me that there is an angle of truth to it. Ha Ha. Women is the universe most mysterious, intriguing and potentially igniting being. It takes eternity for the (dumb) men to understand this wonderful, beautiful and meaningful being.

SERIOUS HUMOUR I : MALE AND FEMALE BRAINS
What goes through your mind when someone says "Lets go for a drink"?‏




Beer Commercial, "Thank God you are a Man."







SERIOUS HUMOUR II : MALE AND FEMALE FLIES
A woman walked into the kitchen to find her husband stalking a round with a fly swatter."What are you doing?" she asked.

"Hunting flies," He responded.

"Oh, killing any?" She asked.

"Yep, three males, two females," he replied.

Intrigued, she asked, How can you tell?

He responded, "Three were on a beer can, two were on the phone."

SERIOUS HUMOUR III : MALE AND FEMALE PROCEDURES
A sign in the Bank Lobby reads: "Please note that this Bank is installing new "Drive-through" teller machines enabling customers to withdraw cash without leaving their vehicles. Customers using this new facility are requested to use the procedures outlined below when accessing their accounts. After months of careful research, MALE & FEMALE procedures have been developed. Please follow the appropriate steps for your gender.

"MALE PROCEDURE"
‘1. Drive up to the cash machine.

‘2. Put down your car window.

‘3. Insert card into machine and enter PIN.

‘4. Enter amount of cash required and withdraw.

‘5. Retrieve card, cash and receipt.

‘6. Put window up.

‘7. Drive off.

FEMALE PROCEDURE
‘1. Drive up to cash machine.

‘2. Reverse and back up the required amount to align car window with the machine.

‘3. Set parking brake, put the window down.

‘4. Find handbag, remove all contents on to passenger seat to locate card.

‘5. Tell person on cell phone you will call them back and hang up.

‘6. Attempt to insert card into machine.

‘7. Open car door to allow easier access to machine due to its excessive distance from the car.

‘8. Insert card.

‘9. Re-insert card the right way.

‘10. Dig through handbag to find diary with your PIN written on the inside back page.

‘11. Enter PIN.

‘12. Press cancel and re-enter correct PIN.

‘13. Enter amount of cash required.

‘14. Check makeup in rear view mirror.

‘15. Retrieve cash and receipt.

‘16. Empty handbag again to locate wallet and place cash inside.

‘17. Write deposit amount in check register and place receipt in back of checkbook.

‘18. Re-check makeup.

‘19. Drive forward 2 feet.

‘20. Reverse back to cash machine.

‘21. Retrieve card.

‘22. Re-empty hand bag, locate card holder, and place card into the slot provided.

‘23. Give appropriate one-fingered hand signal to irate male driver waiting behind you.

‘24. Restart stalled engine and pull off.

‘25. Redial person on cell phone.

‘26. Drive for 2 to 3 miles.

‘27. (AND the final part) Release Parking Brake.


Other Fun Links:
http://marcusong88.blogspot.com/2008/10/humourously-serious.html
http://marcusong88.blogspot.com/2008/10/world-is-fair-isnt-it-egg-heads-also.html

MALAYSIA STOCK EXHANGE: BEAR MARKET RALLY

-related to P3, P5 and Uncles & Aunties in Malaysia whose favourite investment motto is "Buy High, Sell Low".

1. The Bursa Malaysia Stock Market has risen by 100 points past 2 weeks to 963 Composite Index. It usually is a precursor to future economic performance of 6 months. However, is it really a sign of recovery? I have my reservations. Its simply too early to cry out, "All's well."

2. But the current reality is all those who invested, say 4 months ago, would profit handsomely. Assuming they buy blue chip stocks. For instance, Topglove Berhad rose from RM3.50 to RM5.50 per share since December 30, 2008. An 57% rise.

3. As a general rule of thumb, the stock market looks to the future for its current performance. The past is well past. Still it tells us what kind of future it should bring. In this case, one should see in the past say the 2008, how much damaged the economic global recession has caused.

4. A simple logic, is if a patient is in out-patient treatment ward, one expects a speedy recovery.
Here, the USA economy is in the Intensive Care Unit, though I doubt the undertakers will have their day to see this giant economy dies.

5. 2nd quarter of 2009 may yet bring more upside for investors, but they should be mindful of the fact that when many countries (G-20 & G-7), all try to de-lever from the USA economic crisis. This is by no means an easy feat even if with all the coordinated governments stimulus package initiatives. For Malaysia's case, its hardly a stimulus: http://marcusong88.blogspot.com/2009/03/rm60-billion-stimulus-package-how-man.html .

6. History repeats itself. After the 1929 crash, the President Hoover's administration spied similarly hopeful signs in the U.S. economy. “Recovery is just around the corner”, is first attributed to economist, Irving Fisher (Noble Prize winner), but Team Hoover repeated this phrase and variations of it right up until he was crushed by the landslide election of FDR in 1932.

7. It is true the U.S. economy in 2009 has yet to see the massive reversals suffered during the Great Depression, but the root causes of each period — easy monetary policy and an over-reliance on debt — are the same.

Have a look at the Fortune 500 Annual List is out for 2008. It is Not Pretty:
▪ 2008 was the worst year in the history of the Fortune 500 for America’s largest companies;
▪ Profits fell from $645 billion in profits in 2007, to just $98.9 billion - an 84.7% decline;
▪ Eleven of the top 25 largest corporate losses in list history took place last year;
▪ Insurance giant AIG posted a $99.3 billion loss — the biggest corporate loss of all time. Dwarfs the Corporate Enron losses by a large margin;
▪ Thirty-eight companies disappeared from the list altogether;
▪ Newcomers to the Fortune 500 list: Polo Ralph Lauren, Visa and Mastercard;
▪ 17% working Americans — 25.6 million people — work for the nation’s largest companies;

Glimmer of good news on equality of the sexes:
▪ 15 women ran Fortune 500 companies in 2008 — an all-time high

Verdict
Economic recovery? Don't count on it until you see a real economic recovery turnaround. So, hold on to your purse strings.

"Caveat de Emptor" : Let the Buyer (investor) beware.

ANALYSING STEVE SKIDMORE

-related to P3 candidates

P3 examiner has broke away from the conventional step of setting the exam paper. This June 2009 will be his debut show of what he is truly interested. One can only suspect that his consultancy background in IT and being a former Paper 2.1 examiner, his approach will be more advisory capacity.

I have inserted a good link "Where Technology is Business" for all of you to read and familiarise with the practical exposures. On the left side bar is category and link named ENHANCING ACCA SUCCESS LINK : http://www.zdnetasia.com/news/business/

A good article to start with is the Takeover of Skype for a sum of US$1billion. Original owners are buying back with intention to list it next year. This case study shows finance strategy at play and the rewarding aspects of innovative culture that leads to the development of Internet Phone free services. Yet Skype can still generate revenues excess of US$500million in 2008. A case of offering free services but by word of mouth, it became popular worldwide. This article's link is in http://www.zdnetasia.com/news/business/0,39044229,62053179,00.htm.

Happy reading and sharpening exam preparations.

P3 Business Analysis: Changes (Steve Skidmore)

- Relevant to all P3 ACCA candidates. Extracted from Student Newsletter, January 2009.

The Paper P3, Business Analysis Study Guide currently defines the exam format as follows:

This question is worth 50 marks and will be closely based on the capabilities defined in Sections A, B, and C of the syllabus, and supported by capabilities defined in Sections H and I. It will occasionally be supported by capabilities defined in Sections D, E, F, and G of the syllabus.

The case study scenario will always include quantitative information, which might include financial data.

Section B will include three discrete questions, each worth 25 marks. Candidates must answer two questions in this section. At least two of the questions in this section will be based on capabilities defined in Sections D, E, F, G, and I of the syllabus. At most, one question in this section will be based on capabilities defined in Sections A, B, and C of the syllabus. Capabilities defined in Section H of the syllabus may be used to support questions in this section.

WHAT IT MEANS?
Quote, “However, to provide more flexibility and to allow appropriate coverage of the syllabus, it is proposed that, from June 2009, the exam format will change to the following:”

Section A still contain 50 marks as the compulsory portion. The standard tests areas consist of :

STRATEGIC ANALYSIS : focusing on environmental analysis, business strategy, competitors and rivals response, ethics and culture.
STRATEGIC CHOICES : options available and to be evaluated on feasibility, suitability and acceptability conditions.
STRATEGIC IMPLEMENTATION : improving structures, parenting styles, Mergers & Acquisition issues.

Worth highlighting is the input of Processed Data where you are not expected to re-construct a new one but to recommend a redesigned format. Please note this is highly dynamic as Steve Skimore could extract any industry he so chooses. Its unfortunate to say that for full time student i.e. meaning with no industrial experience this is high disadvantageous. Primarily due to inability to visualise and appreciate work flows and processes.This means that answers becomes shallow and points provided lack richness in content.

To illustrate, a process data may state that important documents are moved around with no real value-added purpose. Construct a solution would be the normal question. Students will likely state, have the document stored in a single location and officersin charge to come and inspect them. This is not an answer but mere stating the ‘opposite’ to what case study highlights asa problem. Students need to first appreciate what is the importance of the documents? Can it be outsourced? Should it be eliminated in the first place? Then the answers should address the “need” of the process. More case examples will be provided in my Intensive Revision Class this 1st to 3rd of May, 2009 (Friday to Sunday). In view that there are no precedent case study other than the one provided by ACCA website, original case examples will be given by yours truly.

Section B will include three discrete questions, each worth 25 marks.Candidates must answer two questions in this section.there is no tricks here except that the emphasis should be on Human Resource Management, Configurations design and Paradimic Shifts theories.

In Brief: Steve Skidmore, being a former IT examiner of Previos Syllabus Paper 2.1 now can insert all his favourite models in the Professional Stage. Good for candidates who passed this paper as this becomes a foundation knowledge to answers in P3.

You can obtain the sample case study on : www.accaglobal.com/students/study_exams/qualifications/acca_choose/acca/professional/ba/technical_
articles

MALAYSIA POOR RATING IN CORRUPTION PERCEPTION INDEX

- Relevant to P1 and P3. Also of interest to all Malaysians.

"Corruption is stealing from the poor." (Latin Proverb)

Malaysia's corruption perception index remains unchanged from year 2007 at 5.1. While the score remained the same, the country had, however, slid from 43rd to 47th place in the ranking of 180 countries. It rates them on a scale of zero (highly corrupt) to 10 (highly clean). Year 2008, Denmark, New Zealand and Sweden share the highest score at 9.3, followed by Singapore at 9.2.

President of Transparency International Malaysia Tan Sri Ramon Navaratnam said that this development was disconcerting. Malaysia's CP index has fluctuated between 4.9 in 2002 and 5.1 in 2008."What the latest findings show is that what the government has done so far to eradicate corruption has failed to make an impact. People don't believe any of these changes are real or meaningful for fighting corruption in the public sector required strong political will." Navaratnam told a press conference during which he released the results of the Transparency International's survey on corruption.

The Transparency International CPI measures the perceived levels of public-sector corruption in a given country. It is a composite index, drawing on different expert and business surveys. At 47th ranking, Malaysia is more corrupt than unstable countries like Hungary and Israel. Even gambling based economy, Macau, is cleaner with ranking of 43.

Highly clean scorecard is strongly related to strong economic performance. You can right to think that Singapore, Hong Kong, Sount Korea, Japan, Luxembourg and of course Anglo-American powers have high scores.

Tan Sri Ramon statement is incomplete for he says the people themselves must move to put a stop to it. That can be done if Maaysia authorities have set up strong governance system with follwoing qualities:
1. Government reporting structure that is lean and efficient. Set up Information Technological links to Anti Corruption Agency. Have the Judicial Court system expedite backlogged cases and publish case studies on web sites.
2. Report immediately all cases of alleged corruption. Invest in Human Resource Training with knowledge of the law and ethics knowledge.
3. Respond speedily, putting deadlines of 100 days to solve all alleged corruptions.
4. Involve top leaders and politicians to be visible to civil servants that they support Clean Government. Speeches alone are insufficient. Have seminars and set up Clean Government Agency headed by top leaders. Repeat stories, reward anti-corruption actions with symbols such as promotion, commendations and awards.
5. Regulate policies with clear punishmnent for misconduct. Automate referals to authorities when sufficient evidences warrant public prosecution.
6. Set up independent bodies. MACC (Malaysian Anti Corruption) is a good initiative, however its independence and objectivity can be enhanced with ‘parelel’ bodies such as Ethics Council, Lawyers Volunteers and Police Enforcement Volunteers, all of which plays the role of watchdogs.
7. Ensure the enforcement task force Human Resources are taken care off. Instill sense of pride in carrying out duties, use mission statements and remunerate according to merits. Encourage task force pursue academic qualifications with scholoarships offers and pay according to market rate benchmarked to private sector.
8. Review all of the above every 3 years to stay in relevance. This should be done by Government sponsored independent Body comprising of Transparency Index Council members which in itself should be drawn from private sectors, business leaders, university professor researchers and task enforcement (police).

All of the above are mere wishful thinking, if the government remained unconvinced and people are resigned to the thoughts that nothing will change. Well, world economic infrastructure has changed with :

• Weak commodoties price
• Over capacity of manufacturing machineries
• Weak entrepreneurships discouraged by corruption
• International unrest and uncertainties dampening tourism industry.

Notice all of the above are core economic pillars of Malaysia, which are now undermined. Sooner than later it will hit the country hard causing social unrest and political mire. Lives could be lost too. We don’t need to look far. Just watch Thailand, Cambodia and Myanmmar all of which have high poverty rates. Our poverty level is ‘manageable’ largely due to the country's rich natural resource to finance it. This is coming to an end.

One report estimates state that corruption cost Malaysia RM$160 billion a year! It includes bureaucratic red tape, Unnecessary human resources to ‘entertain’ authorities, unwarranted police interventions. All of these result in poor food product quality with banned ingredients, shoddy infrastructures, sub-quality utilities to name a few. All of these cause sufferings and economic losses like yielding to sicknesses (cancer is a major culprit), loss of workers productivity and pre-mature deaths.

Final Word: Who should do the job? The following Latin Proverb is thought provoking,

"It is said that power corrupts, but actually it's more true that power attracts the corruptible. The sane are usually attracted by other things than power.” (Brineous, 568 A.D)

References :
1. Anonymous-A, 2009, Corruption Index, http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table, Visited on : 9th April
2.Bahmani-Oskooee, Mohsen & Nasir, Abm, 2002. "Corruption, Law and Order, Bureaucracy and Real Exchange RATE," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 1021-28, July.
3.Dreher, Axel, 2005. "IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality," Proceedings of the German Development Economics Conference, Kiel 2005 11, Verein für Socialpolitik, Research Committee Development Economics
4.Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-92, May.
5.Paolo Mauro, 1996. "The Effects of Corruption on Growth, Investment, and Government Expenditure," IMF Working Papers 96/98, International Monetary Fund.

Author’s official political stand: As an independent observer and politically neutral, the article below is intended to demonstrate practical knowledge and application of ACCA Professional Papers, P1 & P3. The author does NOT endorse, support or recommend affiliation to any political party.

WONDERFUL TO BE WIVES OF STATESMEN

- Relevant to P1 and partially P3. Also of interest to all Malaysians.

PIC 01: DISNEY, THE HAPPIEST PLACE ON EARTH

PIC 02: PRACTICE GOOD GOVERNANCE?

Author’s official political stand: As an independent observer and politically neutral, the article below is intended to demonstrate practical knowledge and application of ACCA Professional Papers, P1 & P3. The author does NOT endorse, support or recommend affiliation to any political party.

Corporate Governance at Play
1) Balkis was the welfare and charity organization set up by the wives of Selangor’s elected representatives during Barisan Nasional (BN) rule. RM10million was transferred to Bakti, the charity organization for wives of federal government ministers.

2) The Selangor Select Committee on Competency, Accountability and Transparency (SELCAT) concluded its public inquiry into the expenses of the now-defunct Balkis on Wednesday, March 31, 2009.

Here are a few interesting facts found on Balkis:

3) State investment agency Permodalan Negeri Selangor Bhd (PNSB) spent almost RM1m on a Dec 2004 Eurodisney trip for then Selangor Menteri Besar Datuk Seri Dr Mohd Khir Toyo, his wife, their three children and maid.

4) If that is not enough, Datuk Seri went to Disneyland in Orlando, Florida, in Jan 2008 with his entourage of advisors- his wife, their three children and again the maid. Cost him nothing but taxpayers of RM650,000 for their entire USA trip.

5) PNSB CEO Datin Khairiyah Abu Hassan defended the expenditure was justified as this was on a fact finding mission in preparation for setting up an 10 acres theme park in Bagan Lalang. I wonder how the children, wife and of course the maid is useful in contributing to the project evaluation program which involves a proper study of feasibility, acceptability and suitability analysis.

6) Obviously, a mega project such as this, any company or project team will meet with Disney top management, CEO Steve Jobs, to discuss strategic collaboration opportunity. But a closer look at the receipt expenditures for the trip showed that the team only ‘went as far as’ buying ordinary entry tickets into the park as ordinary public visitors. No meetings with Disney senior management, none whatsoever. But I must admit, the team must have met Mickey Mouse and friends.

7) Perhaps they are on secret finding mission. But at Malaysian base, PNSB Board has received no progress and evaluation report based on both trips to Disney.

PIC 03: RECENT CHARGE AGAINST SELCAT's INITIATOR, TAN SRI KHALID, FOR MISUSE OF TAXPAYERS FUND IN BUYING 46 COWS AS GIFTS TO LOCAL COMMUNITIES. IRONICALLY THE WHISTLE-BLOWER IS DATUK SERI DR. MOHD. KHIR!

8) SELCAT has practice good corporate governance in making public or being transparent about Balkis. The only downside is the body is not an independent body as it is the initiative of Pakatan Rakyat that controls Selangor state. For SELCAT is to be an effective watchdog, then its committee members should comprise of independent Non Executive Directors selected from various sectors such as:

- Inland Revenue Department to audit expenditures,

-Industry captains of Trade Associations to offer business advise,

-University Professors specialising in research of Economic Development and Regional Strategic Planning and perhaps

'

-NGO of green environment movements to win over CSR investors.

9) Now on UMNO's Corporate Governance. UMNO, a monopoly power in Barisan Nasional owing to the fact that they control largest number of Parliament seats has had single handedly selected Datuk Seri Dr Mohd Khir Toyo as Selangor’s leader. The very senior UMNO politician has not denied spending RM1.65m of public money on a private family holiday. What happened to their governance, or the lack of it? Their leader is accused of gross misconduct and poor accountability to the rakyat. Spending RM1.65 million with no feasibility reports to show? No disciplinary actions are suggested nor did the Nomination Committee reject the application of Datuk Seri Dr Mohd Khir Toyo as an election candidate for supreme council position. (By the way, he lost. Two possible explanations : (i) UMNO 2800+ division heads rejected his poor performance(ii) A rival candidate successfully swing the votes to his favour through money politics.
PIC 03: THE NEWLY ELECTED UMNO YOUTH HEAD.

10) What about us, the rakyat? There is no public outrage? Is RM1.65million an insignificant sum for us to voice out? Bear in mind, the trips made aren’t illegal but could be deemed as Benefits in Kind accorded to top executive statesmen. Usually this is justified if stakeholders feel that the Board has done a tremendous job for Selangor state. Such benefits are ‘earned’. Justified? Travel back to end-2007 and early 2008. You will recall USA sub-prime property sector bubble burst, oil prices were sky high and local food prices were inching up due to record high commodities prices. Trying and nervous economic times. I cannot say that the Board of Selangor has done a splendid job to manage such external shocks, can I?

11) RM1.65 million is an opportune sum! In INTI College Subang, full tuition fee for 9 CAT subjects is RM6,300 per candidate. The amount could provide scholarships to 262 students! That brings financial relieve to 262 families. Think of the economic benefit of developing intellectual capabilities. Education brings bright future! But was spent instead on roller coaster rides – in foreign lands. Why lack of public reaction? Likely as private individuals, we lack the resource, time and voice to speak up. Weak we are as Keep Informed" stakeholders.

12) Conclusion: this article focuses on Corporate Governance through use of Committees and Stakeholders’ influence. The article strives to take an objective view evaluating the effectiveness of both the Federal Government and Selangor’s Opposition Ruling Government.

13) Final statement :

“A statesman is a politician who places himself at the service of the nation. A politician is a statesman who places the nation at his service.” - Georges Pompidou

PIC 05: Fikiran Gadis Jelita, "Manalah saya dapat cari suami yang baik? Yang berupaya bawa saya ke Disney land?"

CONSUMERS TRADING DOWN: LESSONS FROM GLOBAL RECESSION

-relevant to P3 and sensible youths (by UMNO Youth's defnition is 18 to 45 years old)

Pic 01: ACCA Graduates' Dream Coupe?

Pic 02: I have absolutely no blinking idea why the ladies are there and obstructing the view?

Click on the HYUNDAI GENESIS commercial (I Bet you don't know how to pronounce the Brand name) :

VIDEO #1 link :

http://www.nfl.com/videos?videoId=09000d5d80e8100d

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When you think of luxury, thoughts of the usual German suspects of Audi, BMWs and Merc come to mind. But Hyundai "broke the rules" with the debut of the 2009 Hyundai Genesis at the Detroit Motor Show, USA.

'

The Korean-made Genesis will hit the US sometime later this year with a price tag that stays below the magic US$30,000 mark. That is far yawning gap of US$20,000 compared to the German counterparts. Already it is gaining market share at the expense of German Marques and TOYOTAs & HONDAs aren't spared either!

'

Don’t be quick to write off the Genesis just because it’s a Hyundai - Hyundais of recent times often have features that seem impossible for their relatively tiny price tags. The Genesis offers features found only in the top of the line German marques as options -adaptive headlamps, active front head restraints, stability control, 8 airbags, heated/cooled seats, a navigation system and satellite radio. There isn’t much word on the interior but according to Hyundai cabin space is larger than an E-class and a BMW 7-series and can even boast a leather dashboard.

'

From the outside, the car looks very un-Hyundai like and if you didn’t see the badge you might be forgiven for thinking it was something a little more expensive. Its clean lines and new grill give us an idea of Hyundai’s new design direction, and most significant of all is the lack of a Hyundai badge on the front.

'

The Genesis will come in sedan form first and then later as a coupe, with a choice of three engines ranging from the 3.3L to a 4.6L Tau V8, as well as a 3.8L model in the middle. With almost 370hp, Hyundai expects the top of the line model to hit 60 miles/ 100 km/h in well under 6 seconds. Yes, yes...quite pointless feature as we hardly need use it. But we men makes a big deal on car acceleration factor. Call us dumb, but hey, we didn't deny it.

'

Ultimately, its major German competitors are priced $20,000 to $50,000 more than the Genesis, and the idea of a budget luxury car seems almost contradictory to many people so only time will tell if this was a smart move from Hyundai and whether the budget-luxury segment can carve a larger market share for itself.

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In global recession today, people are getting smarter. Why pay more for some brands when you can have the same functionality with another not so famous brand? Hyundai certainly found that gap.

Enjoy the Youtube video car critique who said, "At this price (US$30,000) you can call it anything whether an Oldsmobile or what nought, I'll buy it."

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VIDEO #2 link : http://video.google.com/videosearch?hl=en&q=hyundai%20genesis&gbv=2&ie=UTF-8&sa=N&tab=iv#q=hyundai+genesis+&hl=en&emb=0

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Emerging competitors such as Hyundai truly are taking advantage of the global economic crunch. Many people need a car, but they are trading down.

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Malaysian Scene

Perodua is experiencing roaring sales, so expect companies like UMW, MBM Resources adn TSM Global to make strong sustainable financial performance. Perodua is expecting to increase their market share. Malaysians are avid savers, cash rich if you like but they are wise and sensible in not 'splurging' in unnecessary luxury.

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TSM Global is trading at RM1.18 per share despite the fact that it has a net cash per share of RM1.52!

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Can we all too "wise up"? Why spend in Starbucks that set you back RM15 when for equivalent price in Kopitiam you can have a dinner plate, Ipoh coffee and dessert.

'

Your next purchasing decision (goods or services), consider HYUNDAI's strategy.

Related Link:

http://marcusong88.blogspot.com/2008/08/external-strategic-analysis-with.html

P1 PRACTICE QUESTION: EXXON MOBIL LTD

- related to P1 (ACCA). Only for serious P1 candidates.

Action may not always bring happiness...but there is no happiness without action. (Benjamin Disraeli)

Pic 01: Digging for black gold. What risks shareholders face and how you appease them?

Pic 02 : Boys will be boys, forever like to play with toys

Pic 03: Ultimate risk of Oil & Gas? (Picture of USA T-82 tanks in Kuwait)

Dear P1 IPS,

A very good question of reporting and communicating Board's risk management's actions. This is a 'virgin' topic, as it neither appeared in Pilot paper or was tested previous sittings. On this, becomes a high risk topic.

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Please attempt it as this is a practical case study involving Oil & Gas insdustry. As usual answers will be given in our next class.

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Please don't work hard but WORK HARDER!

Always worried for you lecturer, Marcus Ong

Practice Question : Information, Communication And Monitoring
A family owned company, Hasnan Berhad, recently had successfully listed their business on the London Stock Exchange. The Board consists of 6 members of which 4 are iNEDs with the father chairing while 2 Executive Directors are capable and talented daughters who have deep experience in business of fashion magazines. The 2 EDs were essentially given powers to operate their respective subsidiaries and their performance were reported by Archie, Chief Accountant, who is the adopted son of one of the EDs, Madonna.

At the next Board meeting, a first since the listing in LSE had voiced the following:
i. “Every firm is concerned with risk management. We trust the 2 EDs but we must be in the loop as we have to be accountable to shareholders. They need to know what we are doing with their money,” said the Managing Director, Miss Anna.
ii. “We are unsure on what to report contents should be in the shareholders’ Annual Report pertaining to risk management,” said the Chief Accountant

Required:
a) In view of point (i) above, explain what should be done that should primarily involve the NEDs on Board? (10 marks)

b) In view of point (ii) above, state how it could set up appropriate monitoring risk systems giving emphasis on control environment & procedures, communication systems and evaluation risks systems. (10 marks)

c) Based on Turnbull’s report, advise the Board on reporting principles that should contain in the annual report. Hansan Bhd principal business is a major supplier to Exxon Mobil Limited, oil and gas industry. [5 marks]