DIvidend Policies and Financing Essay Example

DIvidend Policies and Financing Essay Dividend policy refers to the decision made by the company whether to retain the profits within the company, or they pay out the profits to the owners of the organization in the form of dividends (Garrison 2008). Once the company decides on whether to pay dividends, they may establish a somewhat permanent dividend policy, which may in turn impact on investors and perceptions of the company in the financial markets (Garrison 2008). What they decide depends on the situation of the company now and in the future. It also depends on the preferences of investors and potential investors (Garrison 2008).When deciding on the dividend policy, several factors such as legal constraints, contractual constraints, internal constraints, growth prospect, owners considerations and market considerations have to be taken into account. Considerations taken into account can be incorporated in several dividend theories such as the residual theory of dividends, the clientele theory, the signalling dividend theory, the bird-in-the-hand theory and Modigliani and miller dividend theory.Manufacturing overseas can reduce costs due to its cheap labour costs but there are other considerations that have to be taken into account. There are pros and cons for manufacturing at overseas.Companys capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities (http://en.wikipedia.org/wiki/Capital_structure). Debt financing and equity financing has their own advantages and disadvantages but certain factors have to be considered when choosing between these two financing strategies.2.0 Factors Affecting the Dividend PolicyWhen deciding on the dividend policy, several factors need to be taken into account. The factors needed to taken into account are as follows (sources taken fromhttp://freemba.in/articlesread.php?artcode=488substcode=30stcode=10):Stability of EarningsThe nature of business has an important bearing on the dividend pol icy. Industrial units having stability of earnings may formulate a more consistent dividend policy than those having an uneven flow of incomes because they can predict easily their savings and earnings. Usually, enterprises dealing in necessities suffer less from oscillating earnings than those dealing in luxuries or fancy goods.Age of CorporationAge of the corporation counts much in deciding the dividend policy. A newly established company may require much of its earnings for expansion and plant improvement and may adopt a rigid dividend policy while, on the other hand, an older company can formulate a clear cut and more consistent policy regarding dividend.Liquidity of FundsAvailability of cash and sound financial position is also an important factor in dividend decisions. A dividend represents a cash outflow, the greater the funds and the liquidity of the firm the better the ability to pay dividend. The liquidity of a firm depends very much on the investment and financial decisio ns of the firm which in turn determines the rate of expansion and the manner of financing. If cash position is weak, stock dividend will be distributed and if cash position is good, company can distribute the cash dividend.Extent of Share DistributionNature of ownership also affects the dividend decisions. A closely held company is likely to get the assent of the shareholders for the suspension of dividend or for following a conservative dividend policy. On the other hand, a company having a good number of shareholders widely distributed and forming low or medium income group would face a great difficulty in securing such assent because they will emphasize to distribute higher dividend.Needs for Additional CapitalCompanies retain a part of their profits for strengthening their financial position. The income may be conserved for meeting the increased requirements of working capital or of future expansion. Small companies usually find difficulties in raising finance for their needs of increased working capital for expansion programs. They having no other alternative, use their ploughed back profits. Thus, such Companies distribute dividend at low rates and retain a big part of profits.Trades CycleBusiness cycles also exercise influence upon dividend Policy. Dividend policy is adjusted according to the business oscillations. During the boom, prudent management creates food reserves for contingencies which follow the inflationary period. Higher rates of dividend can be used as a tool for marketing the securities in an otherwise depressed market. The financial solvency can be proved and maintained by the companies in dull years if the adequate reserves have been built up.Government PoliciesThe earnings capacity of the enterprise is widely affected by the change in fiscal, industrial, labor, control and other government policies. Sometimes government restricts the distribution of dividend beyond a certain percentage in a particular industry or in all spheres of busi ness activity as was done in emergency. The dividend policy has to be modified or formulated accordingly in those enterprises.Need for FundsDividends paid to stockholders use funds that the firm could otherwise invest. Therefore, a company running short of cash or with ample capital investment opportunities may decide to pay little of no dividends. Alternatively, there may be an abundance of cash or a dearth of good capital budgeting projects available. This could lead to very large dividend payments.Management Expectations and Dividend PolicyIf a firms managers perceive the future as relatively bright, on the one hand, they may begin paying large dividends in anticipation of being able to keep them up during the good times ahead. On the other hand, if managers believe that bad times are coming, they may decide to build up the firms reserves for safety instead of paying dividends.Stockholders PreferencesReinvesting earning internally, instead of paying dividends, would lead to highe r stock prices and a greater percentage of the total return common stockholders receive coming from capital gains. Capital gains are profits earned by an investor when the price of a capital asset, such as common stock, increases.Common stockholders may prefer to receive their return from the company in the form of capital gains and some may prefer to receive their return from the company in the form of dividends. Capital gains are not taxed at all unless they are realized. That is, unless the stock is sold. The board of directors should consider stockholder preferences when establishing the firms dividend policy.Restriction on Dividend PaymentsA firm may have dividend payment restrictions in its existing bond indentures or loan agreements. For example, a companys loan contract with a bank may specify that the companys current ratio cannot drop below 2.0 during the life of the loan. Because payment of a cash dividend draws down the companys cash account, the current ratio may fall b elow the minimum level required. In such a case, the size of a dividend may have to be cut or omitted. In addition, many states prohibit dividend payments if they would create negative retained earnings on the balance sheet. This restriction is a prohibition against raiding the initial capital. Figure 1 summarizes the factors that influence the dividend decision.Figure 1: This figure identifies key elements that make a dividend payment more or less likely.2.1 Leading Dividend TheoriesThe factors that affect the dividend policy can be incorporated in several dividend theories. Dividend theories can be divided into dividend relevance theory and dividend irrelevance theory. Dividend relevance theory refers to the value of a firm is affected by its dividend policy while dividend irrelevance theory refers to a firms dividend policy has no effect on either its value or its cost of capital (http://www.studyfinance.com/lessons/dividends/index.mv?page=01).2.1.1 Dividend Relevance TheoriesAcc ording to Gallagher Andrew (2007) dividend relevance theories are as follows:The Clientele Dividend TheoryThe clientele dividend theory is based on the view tat investors are attracted to a particular company in part because of its dividend policy. For example, young investors just starting out may want their portfolios to grow in value from capital gains rather than from dividends, so they seek out companies that retain earnings instead of paying dividends. Stock prices tend to increase as earnings are retained and the resulting capital gain is not taxed until the stock is sold.Older investors, in contrast, may want to live off the income their portfolios provide. They would ten to seek out companies that pay high dividends rather than reinvesting for growth. According to the clientele dividend theory, each company therefore has its own clientele of investors who hold the stock in part because of its dividend policy.If the clientele theory is valid, then it doesnt much matter what a companys dividend policy is as long as it has one and sticks to it. If the policy is changed, the clientele that liked the old policy will probably sell their stock. A new clientele will buy the stock based on the firms new policy. When a dividend policy change is contemplated, managers must ask whether the effect of the new clienteles buying will outweigh the effects of the old clienteles selling. The new clientele cannot be sure that the most recent dividend policy implemented will be repeated in the future.The Signaling Dividend TheoryThe signaling dividend theory is based on the premise that the management of a company knows more about the future financial prospects of the firm than do the stockholders. According to this theory, if a company declares a dividend larger than that anticipated by the market, this will be interpreted as a signal that the future financial prospects of the firm are brighter than expected. Investors presume that management would not have raised the d ividend if it did not think that this higher dividend could be maintained. As a result of this inferred signal of good times ahead, investors buy more stock, causing a jump in the stock price.Conversely, if a company cuts it dividend, the market takes this as a signal that management expects poor earnings and does not believe that the current dividend can be maintained. In other words, a dividend cut signals bad times ahead for the business. The market price of the stock drops when the firm announces a lower dividend because investors sell their stock in anticipation of future financial trouble for the firm. If a firms managers believe in the signaling theory, they will always be wary of the message their dividend decision may send to investors. Even if the firm has some attractive investment opportunities that could be financed with retained earnings, management may seek alternative financing to avoid cutting the dividend that may send an unfavorable signal to the market.The Bird-i n-the-Hand TheoryThe bird-in-the-hand theory claims that stockholders prefer to receive dividends instead of having earnings reinvested in the firm on their behalf. Although stockholders should expect to receive benefits in the form of higher future stock prices when earnings are retained and reinvested in their company, there is uncertainty about whether the benefits will actually be realized. However, if the stockholders were to receive the earnings now, in the form of dividends, they could invest them now in whatever they desired. In other words, a bird in the hand is worth two in the bush.If the bird-in-the-hand theory is correct then the stocks of companies that pay relatively high dividends will be more popular and therefore will have relatively higher stock prices than stocks of companies that reinvest their earnings.2.1.2 Dividend Irrelevance TheoriesDividend irrelevance theories are as follows (Gallagher ; Andrew 2007):The Residual Theory of DividendsThe residual theory of dividend is widely known. The theory hypothesize the amount of dividends should not be the focus of the company. Instead, the primary issue should be to determine the amount of earning the firm should retain within the firm for investment. The amount of earnings retained, according to this view, depends on the number and size of acceptable capital budgeting projects and the amount of earnings available to finance the equity portion of the funds needed to pay for these projects. Any earnings left after these projects have been funded are paid out in dividends because dividends arise from residual or leftover earnings, the theory is called the residual theory.The residual theory focuses on the optimal use of earnings generated from the perspective of the firm itself. This may appeal to some, but ignores stockholders preferences about the regularity of and the amount of dividend payments. If a firm follows the residual theory, when earnings are large and the acceptable capital budgetin g projects small and few, dividends will be large. Conversely, when earnings are small and many large acceptable projects are waiting to be financed, there may be no dividends if the residual theory is applied. The dividend payments will be erratic and the amounts will be unpredictable.Modigliani and Millers Dividend TheoryFranco Modigliani and Merton miller (commonly referred as M;M) theorized in 1961 that dividend policy is irrelevant. Given some simplifying assumptions, M;M showed how the value of a company is determined by the income produced from its assets, not by its dividend policy. According to the M;M dividend theory, the way a firms income is distributed (in the form of future capital gains or current dividends) doesnt affect the overall value of the firm. Stockholders are indifferent as to whether they receive their return on their investment in the firms stock from capital gains or dividends so dividends dont matter.2.2 Advantages and Disadvantages of Overseas Manufactu ringManufacturing at overseas certainly saves cost of production in some degree due to cheap labor and material cost but it has its advantages and disadvantages for overseas manufacturing.2.2.1 Advantages of Overseas ManufacturingEase and Speed of Distribution: Manufacturing in overseas shortening the distance between the original location of manufacturer and its distribution market (if the manufacturer has its markets around the region of the considered location). For example, when Nike manufacturer from United States manufactures in Malaysia, they have greater ease and speed of transportation for goods and people to other Asian markets. Besides that, transportation and shipping cost may be reduced due to a shorter distance for shipping and distribution.Cost Savings: In less-developed countries, labor cost is cheaper than developing and developed countries. It is estimated that a company that manufactures in less-developed country can cut costs by between 30% and 80% depending on h ow labor intensive the product is. Besides that, material cost is also cheaper compared to developed countries too.Gain in Efficiencies and Economies of Scale: Besides that, in the long run, manufacturing overseas can gain efficiencies and economies of scale which will assist in reducing unit cost as output increases. Moreover, the initial investment of capital may be spread over an increasing number of units of output and therefore the marginal cost of producing a good or services decreases as production increases.Low Capital Costs: Low capital cost is one of the advantages that encourages manufacturing overseas. The cost of capital in developing or developed countries is higher than the cost of capital in less-developed countries.Incentives for Manufacturing: Some of the less developed countries encourage overseas manufacturers to invest or manufacture in their country. In order to attract manufacturers, these less-developed countries do offer incentives for the manufacturers. For example, Penang has offered incentive to Motorola from USA in order to attract them to manufacture at Penang.2.2.2 Disadvantages of Overseas ManufacturingQuality of Production Suffers: Cheap labor is an advantage for cost savings. Inversely, it reduces the quality of the products as cheap labors usually produce less quality productions. Therefore, the products will suffer in quality as most of the cheap labors are unskilled or semi-skilled. Indirectly, the manufacturer may lose its customers due to the production of less quality products.Time Consuming: When an organization wants to manufacture in overseas, the organization has to analyze and comprehend the considered location and also the facilities available around the setting up area. The analysis and comprehension takes considerable time to complete in order to have a perfect set up in overseas. Therefore it spends considerable time and energy to understand the considered location (Sweeney N.D.).Complexity: To operate oversea i s not as easy as locally. Most of the manufacturers have adapted to their own manufacturing culture and therefore adapting to another manufacturing environment would be difficult for them to familiarize with it. First of all, language may be a barrier, for example, it is difficult to communicate with the South Americans labors if we are not familiar with Latin (Sweeney N.D.). Besides that, finance, tax, and labor laws will be different and must be understood (Sweeney N.D.). Sweeney (N.D.) stated that, understanding national cultures and subcultures are important for any activity as manufacturers have to deal with government and private sector people and especially selling into the market.Brand Risks: Nowadays, consumers are perceived where the product is made from. The production location is a factor that will affect the brand image and reputation. For example, consumers would prefer a product made in USA rather than made in China. If the manufacturer produces in Bangladesh it may m ore or less affect their images as some of the consumers believe that products from developed countries are much better than less-developed countries and therefore the image and reputation of the brand may suffer.Availability of Expertise: The availability of expertise is one of the factors that should be considered when organization seeks to manufacture overseas. Less developed countries may not provide the expertise in the fields required.Long Start Up Time: It is not easy for manufacturer to start up their manufacturing process. To manufacture in a smooth way requires time. It usually requires a considerable of long time start up and familiarize.3.0 Debt ; Equity Financing3.1 Equity FinancingEquity financing is a method to acquire capital that involves selling a partial interest in the company to investors (Brian 1990). In return of the money paid, shareholders receive ownership interests in the corporation (Brian 1990).3.1.1 Pros and Cons of Equity Financing3.1.2 Pros of Equity FinancingThe advantages of equity finance are:Commitment of Funds: The funding is committed to the business and intended projects. Investors only realize their investment if the business is doing well (eg. through flotation or a sale to new investors).Vested Interest: Investors have the same interest that is to keep the business going on well and generate maximum profits which leads to an increase in the value of the business.Follow-up Funding: When business grows, investors are often prepared to provide follow-up funding.(Source of reference:http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES;itemId=1073789573)Wider Pool of Finance: When company is listed in stock exchanged, the company has the access to wider pool of finance.Quality Products: The owners will pay proper attention for improving the quality of products. The reason is the appropriate of quality product goes to them.No Interest Cost: No payment of interest for the funds provided by the shareholders. The c ost of production remains low as there is no burden of interest.Earning Remains with the Firm: When funds provided by shareholders for improvement in the business are making profits, the earnings are remained with the owners. Earnings are not shared by the creditors.To Tide over Emergencies: Firm is in a better position to tide over recession period and other emergencies due to no burden of rate of interest.Ability to borrow: Borrowing ability is improved if the equity capital is financed well.(Source of Reference: http://www.blurtit.com/q303144.html)Sources of Skills and Experiences: Good investors can bring resources for the business. They can help one to get skilled people, right contacts to build the business. They might also help out with their own experience in the formation of the strategy or with decision making.No Obligation for Repayment: No obligation for the repayment of the finances in the initial phase of the business when the cash flow is quite slow. Whereas, in bank loans there are severe obligations and penalties in case a business fails to generate monthly interests and make the monthly payments to the bank.(Sources of Reference:http://www.freewarefiles.com/techfi/Advantages_of_Equity_Financing.html)Pledge No Assets: Corporation does not have to pledge their assets as collateral to obtain equity investments.Availability of Cash: Business will have more cash available due to no debt payments have to be made.(Source of reference:http://forums.forbes.com/forbes/board/message?board.id=entreforum;message.id=399)3.1.3 Cons of Equity FinancingThe disadvantages of equity finance are:Costly and Time Consuming: Raising equity finance is costly and time-consuming. Business may suffer as times are devoted to the deal. Potential investors will seek background information on owner and his business and they will closely scrutinize past results and forecasts and will delve the management team.Interference in Management: The equity investors can interfere in the management of the company and in addition they also have the voting rights which could influent the making of major decisions.Extra Effort to Provide Information: Founder will have to invest management time to provide regular information for the investor to monitor the situation of the business.Share Dilution: Founders share in the business will be diluted which means lessen in strength. Besides that, businesss profits will be shared by other equity investors.Legal and Regulatory Compliance: There can be legal and regulatory issues to comply with when raising finance (eg. when promoting investments).(Source of Reference;http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES;itemId=1073789573)Limitation of Control: Founders must give up some control of the business. If investors have different perceptions and ideas about the companys strategic direction or day-to-day operations, they can pose problems for the entrepreneur.(Source of Reference: http://www.answers.com/eq uity+Financing?cat=biz-fin)No Tax Deduction: Dividend payments are not tax deductible.(Source of Reference:http://forums.forbes.com/forbes/board/message?board.id=entreforummessage.id=399)3.2 Debt FinancingAccording to (http://www.answers.com/debt+financing?cat=biz-fin) debt financing is a strategy that involves borrowing money from a lender or investor which the full amount will be repaid in the future usually with interest within a certain period. It asserted that it does not include any provision for ownership of the company. Debt financing has a prior claim on the company irrespective of the profits earned despite the company goes into liquidation (Joseph 2008).3.2.1 Pros and Cons of Debt Financing3.2.2 Pros of Debt FinancingMaintain ownership: The debt holder cannot interfere in the management of the company and they do not have the voting rights. Therefore, business can be run without outside interferenceTax deductions: Principal and interest payments on a business loan are cla ssified as business expenses and thus tax deductible. It also lowers the actual cost of the loan to the company.Lower interest rate: There is a lower interest rate of debt financing when interest rate is lower than tax rate (where the business can take a loan and have a deduction on tax rather than high interest rate).(Source of Reference: http://entrepreneurs.about.com/od/financing/a/debtfinancing.htm)No Complex Procedures Required: Debt financing is easier to obtain than equity financing. Raising debt capital is less complicated because the company is not required to comply with state and federal securities laws and regulations.No Profits Sharing: Profits of company are not shared with the lenders who require capital appreciation and dividends on their investments.Forecasting: Interest and principal payments are typically a know amount that can be forecast.(Source of Reference: http://www.job-employment-guide.com/business-financing.html)No Extra Rewards: Debt holders are entitled only to repayment of the agreed-upon principal of the loan plus interest and have no direct claim on future profits of the business if the company has made extra profits.Saving Management Time: Company does not have to send periodic mailings to large numbers of investors, hold periodic meetings with shareholders and seek the vote of shareholders before taking certain actions.(Source of Reference: http://smallbusiness.findlaw.com/banking_financing/be1_5debtvsequity.html) David H. Schwartz3.2.3 Cons of Debt FinancingRepayment: Sole obligation to the lender is to make payments on time. If the business fails, the company still has to make payments. If business goes into bankruptcy, lenders will have claim to repayment before any equity investors.Impacts Credit Rating: It seems to be attractive to keep bringing on debt when company needs money, a practice known as levering up, but each loan will be noted on your credit rating. The more borrowings, the higher the risk to the lender and th e higher interest rate the company will have to pay.Cash and Collateral: The company is usually required to pledge assets of the company to the lender as collateral, and owners of the company are in some cases required to personally guarantee repayment of the loan.(Source of Reference:http://entrepreneurs.about.com/od/financing/a/debtfinancing.htm)Difficulty in Business Growth: Interest is a fixed cost which raises the companys break-even point. High interest costs during difficult financial periods can increase the risk of insolvency. Companies that have large amounts of debt as compared to equity often find it difficult to grow because of the high cost of servicing the debt.Restrictions on Activities: Debt instruments often contain restrictions on the companys activities, preventing management from pursuing alternative financing options and non-core business opportunities which results in losing of other investment opportunities.(Source of Reference:http://smallbusiness.findlaw.co m/banking_financing/be1_5debtvsequity.html)3.3 Consideration Factors for Sources of FinanceEquity financing and debt financing is the option for a company that needs financing. Each company is unique and they have their own financing requirements and therefore, it is inappropriate to determine any one of the financing methods is the best option for companies. There are certain factors that a company needs to consider before choosing the right financing method:The size of the company: Larger companies may obtain financing by equity financing due to the needs of wider pool of finance for company growth (Joseph 2008). However for smaller companies, debt financing is much easier to obtain because its not easy to reach the status of public limited company and the issuance cost of equity finance is unaffordable by smaller companies (Joseph 2008).The ability to generate cash flow: This relies upon the operations of the company (Joseph 2008). If the company is able to generate enough cash f low, the company may seek debt financing because debt financing requires cash make frequent repayment of interest and principal (Joseph 2008).Any Restrictive Covenants: If the company is restricted by the lender from subsequent borrowings, equity financing is more appropriate due to the bindings against the company.The Cost of Financing: The cost of financing for debt financing is cheaper than equity financing due to the debt financer is exposed to lesser risk and he is entitled for prior claim in the companys profits and interest payable are tax deductible (which means actual cost of debt is lesser) (Joseph 2008).The Duration of Borrowing: The longer the duration, the interest rate charged on the borrower will be higher (Joseph 2008).The Current Gearing Level: If a company has a high gearing level, it is the best to go for equity financing whilst if a company has a low gearing level, they can go for debt financing (Joseph 2008).4.0 ConclusionNot every dividend policy suits a compan y. When deciding on how much dividend should be distributed to their investors, factors such as legal constraints, contractual constraints and etcetera have to considered to obtain the most suitable and appropriate dividend policy for better financing.Factors that affect dividend policy can be incorporated in several dividend theories such as residual dividends theory, clientele theory, signalling dividend theory, bird-in-the-hand theory and Modigliani Miller dividend theory. These theories can be classified into dividend relevance theory where its dividend policy will affect on companys value and cost of capital and dividend irrelevance theory where its dividend will not affect on companys value and cost of capital.Overseas manufacturing gains advantages such as cost savings and economies of scale. Inversely, it also has other effects such as no expertise available and also time consuming for starting a new factory.Companys capital structure can be financed through debt financing and equity financing. These are the strategies that a company can get its fund. However, these two strategies have their own advantages and disadvantages. When implementing any of those strategies, factors such as size of the company, ability to generate cash flow, current gearing level and other factors have to be considered in order to have the most suitable strategy to finance the organization. DIvidend Policies and Financing Essay Example DIvidend Policies and Financing Essay Dividend policy refers to the decision made by the company whether to retain the profits within the company, or they pay out the profits to the owners of the organization in the form of dividends (Garrison 2008). Once the company decides on whether to pay dividends, they may establish a somewhat permanent dividend policy, which may in turn impact on investors and perceptions of the company in the financial markets (Garrison 2008). What they decide depends on the situation of the company now and in the future. It also depends on the preferences of investors and potential investors (Garrison 2008).When deciding on the dividend policy, several factors such as legal constraints, contractual constraints, internal constraints, growth prospect, owners considerations and market considerations have to be taken into account. Considerations taken into account can be incorporated in several dividend theories such as the residual theory of dividends, the clientele theory, the signalling dividend theory, the bird-in-the-hand theory and Modigliani and miller dividend theory.Manufacturing overseas can reduce costs due to its cheap labour costs but there are other considerations that have to be taken into account. There are pros and cons for manufacturing at overseas.Companys capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities (http://en.wikipedia.org/wiki/Capital_structure). Debt financing and equity financing has their own advantages and disadvantages but certain factors have to be considered when choosing between these two financing strategies.2.0 Factors Affecting the Dividend PolicyWhen deciding on the dividend policy, several factors need to be taken into account. The factors needed to taken into account are as follows (sources taken fromhttp://freemba.in/articlesread.php?artcode=488substcode=30stcode=10):Stability of EarningsThe nature of business has an important bearing on the dividend pol icy. Industrial units having stability of earnings may formulate a more consistent dividend policy than those having an uneven flow of incomes because they can predict easily their savings and earnings. Usually, enterprises dealing in necessities suffer less from oscillating earnings than those dealing in luxuries or fancy goods.Age of CorporationAge of the corporation counts much in deciding the dividend policy. A newly established company may require much of its earnings for expansion and plant improvement and may adopt a rigid dividend policy while, on the other hand, an older company can formulate a clear cut and more consistent policy regarding dividend.Liquidity of FundsAvailability of cash and sound financial position is also an important factor in dividend decisions. A dividend represents a cash outflow, the greater the funds and the liquidity of the firm the better the ability to pay dividend. The liquidity of a firm depends very much on the investment and financial decisio ns of the firm which in turn determines the rate of expansion and the manner of financing. If cash position is weak, stock dividend will be distributed and if cash position is good, company can distribute the cash dividend.Extent of Share DistributionNature of ownership also affects the dividend decisions. A closely held company is likely to get the assent of the shareholders for the suspension of dividend or for following a conservative dividend policy. On the other hand, a company having a good number of shareholders widely distributed and forming low or medium income group would face a great difficulty in securing such assent because they will emphasize to distribute higher dividend.Needs for Additional CapitalCompanies retain a part of their profits for strengthening their financial position. The income may be conserved for meeting the increased requirements of working capital or of future expansion. Small companies usually find difficulties in raising finance for their needs of increased working capital for expansion programs. They having no other alternative, use their ploughed back profits. Thus, such Companies distribute dividend at low rates and retain a big part of profits.Trades CycleBusiness cycles also exercise influence upon dividend Policy. Dividend policy is adjusted according to the business oscillations. During the boom, prudent management creates food reserves for contingencies which follow the inflationary period. Higher rates of dividend can be used as a tool for marketing the securities in an otherwise depressed market. The financial solvency can be proved and maintained by the companies in dull years if the adequate reserves have been built up.Government PoliciesThe earnings capacity of the enterprise is widely affected by the change in fiscal, industrial, labor, control and other government policies. Sometimes government restricts the distribution of dividend beyond a certain percentage in a particular industry or in all spheres of busi ness activity as was done in emergency. The dividend policy has to be modified or formulated accordingly in those enterprises.Need for FundsDividends paid to stockholders use funds that the firm could otherwise invest. Therefore, a company running short of cash or with ample capital investment opportunities may decide to pay little of no dividends. Alternatively, there may be an abundance of cash or a dearth of good capital budgeting projects available. This could lead to very large dividend payments.Management Expectations and Dividend PolicyIf a firms managers perceive the future as relatively bright, on the one hand, they may begin paying large dividends in anticipation of being able to keep them up during the good times ahead. On the other hand, if managers believe that bad times are coming, they may decide to build up the firms reserves for safety instead of paying dividends.Stockholders PreferencesReinvesting earning internally, instead of paying dividends, would lead to highe r stock prices and a greater percentage of the total return common stockholders receive coming from capital gains. Capital gains are profits earned by an investor when the price of a capital asset, such as common stock, increases.Common stockholders may prefer to receive their return from the company in the form of capital gains and some may prefer to receive their return from the company in the form of dividends. Capital gains are not taxed at all unless they are realized. That is, unless the stock is sold. The board of directors should consider stockholder preferences when establishing the firms dividend policy.Restriction on Dividend PaymentsA firm may have dividend payment restrictions in its existing bond indentures or loan agreements. For example, a companys loan contract with a bank may specify that the companys current ratio cannot drop below 2.0 during the life of the loan. Because payment of a cash dividend draws down the companys cash account, the current ratio may fall b elow the minimum level required. In such a case, the size of a dividend may have to be cut or omitted. In addition, many states prohibit dividend payments if they would create negative retained earnings on the balance sheet. This restriction is a prohibition against raiding the initial capital. Figure 1 summarizes the factors that influence the dividend decision.Figure 1: This figure identifies key elements that make a dividend payment more or less likely.2.1 Leading Dividend TheoriesThe factors that affect the dividend policy can be incorporated in several dividend theories. Dividend theories can be divided into dividend relevance theory and dividend irrelevance theory. Dividend relevance theory refers to the value of a firm is affected by its dividend policy while dividend irrelevance theory refers to a firms dividend policy has no effect on either its value or its cost of capital (http://www.studyfinance.com/lessons/dividends/index.mv?page=01).2.1.1 Dividend Relevance TheoriesAcc ording to Gallagher Andrew (2007) dividend relevance theories are as follows:The Clientele Dividend TheoryThe clientele dividend theory is based on the view tat investors are attracted to a particular company in part because of its dividend policy. For example, young investors just starting out may want their portfolios to grow in value from capital gains rather than from dividends, so they seek out companies that retain earnings instead of paying dividends. Stock prices tend to increase as earnings are retained and the resulting capital gain is not taxed until the stock is sold.Older investors, in contrast, may want to live off the income their portfolios provide. They would ten to seek out companies that pay high dividends rather than reinvesting for growth. According to the clientele dividend theory, each company therefore has its own clientele of investors who hold the stock in part because of its dividend policy.If the clientele theory is valid, then it doesnt much matter what a companys dividend policy is as long as it has one and sticks to it. If the policy is changed, the clientele that liked the old policy will probably sell their stock. A new clientele will buy the stock based on the firms new policy. When a dividend policy change is contemplated, managers must ask whether the effect of the new clienteles buying will outweigh the effects of the old clienteles selling. The new clientele cannot be sure that the most recent dividend policy implemented will be repeated in the future.The Signaling Dividend TheoryThe signaling dividend theory is based on the premise that the management of a company knows more about the future financial prospects of the firm than do the stockholders. According to this theory, if a company declares a dividend larger than that anticipated by the market, this will be interpreted as a signal that the future financial prospects of the firm are brighter than expected. Investors presume that management would not have raised the d ividend if it did not think that this higher dividend could be maintained. As a result of this inferred signal of good times ahead, investors buy more stock, causing a jump in the stock price.Conversely, if a company cuts it dividend, the market takes this as a signal that management expects poor earnings and does not believe that the current dividend can be maintained. In other words, a dividend cut signals bad times ahead for the business. The market price of the stock drops when the firm announces a lower dividend because investors sell their stock in anticipation of future financial trouble for the firm. If a firms managers believe in the signaling theory, they will always be wary of the message their dividend decision may send to investors. Even if the firm has some attractive investment opportunities that could be financed with retained earnings, management may seek alternative financing to avoid cutting the dividend that may send an unfavorable signal to the market.The Bird-i n-the-Hand TheoryThe bird-in-the-hand theory claims that stockholders prefer to receive dividends instead of having earnings reinvested in the firm on their behalf. Although stockholders should expect to receive benefits in the form of higher future stock prices when earnings are retained and reinvested in their company, there is uncertainty about whether the benefits will actually be realized. However, if the stockholders were to receive the earnings now, in the form of dividends, they could invest them now in whatever they desired. In other words, a bird in the hand is worth two in the bush.If the bird-in-the-hand theory is correct then the stocks of companies that pay relatively high dividends will be more popular and therefore will have relatively higher stock prices than stocks of companies that reinvest their earnings.2.1.2 Dividend Irrelevance TheoriesDividend irrelevance theories are as follows (Gallagher ; Andrew 2007):The Residual Theory of DividendsThe residual theory of dividend is widely known. The theory hypothesize the amount of dividends should not be the focus of the company. Instead, the primary issue should be to determine the amount of earning the firm should retain within the firm for investment. The amount of earnings retained, according to this view, depends on the number and size of acceptable capital budgeting projects and the amount of earnings available to finance the equity portion of the funds needed to pay for these projects. Any earnings left after these projects have been funded are paid out in dividends because dividends arise from residual or leftover earnings, the theory is called the residual theory.The residual theory focuses on the optimal use of earnings generated from the perspective of the firm itself. This may appeal to some, but ignores stockholders preferences about the regularity of and the amount of dividend payments. If a firm follows the residual theory, when earnings are large and the acceptable capital budgetin g projects small and few, dividends will be large. Conversely, when earnings are small and many large acceptable projects are waiting to be financed, there may be no dividends if the residual theory is applied. The dividend payments will be erratic and the amounts will be unpredictable.Modigliani and Millers Dividend TheoryFranco Modigliani and Merton miller (commonly referred as M;M) theorized in 1961 that dividend policy is irrelevant. Given some simplifying assumptions, M;M showed how the value of a company is determined by the income produced from its assets, not by its dividend policy. According to the M;M dividend theory, the way a firms income is distributed (in the form of future capital gains or current dividends) doesnt affect the overall value of the firm. Stockholders are indifferent as to whether they receive their return on their investment in the firms stock from capital gains or dividends so dividends dont matter.2.2 Advantages and Disadvantages of Overseas Manufactu ringManufacturing at overseas certainly saves cost of production in some degree due to cheap labor and material cost but it has its advantages and disadvantages for overseas manufacturing.2.2.1 Advantages of Overseas ManufacturingEase and Speed of Distribution: Manufacturing in overseas shortening the distance between the original location of manufacturer and its distribution market (if the manufacturer has its markets around the region of the considered location). For example, when Nike manufacturer from United States manufactures in Malaysia, they have greater ease and speed of transportation for goods and people to other Asian markets. Besides that, transportation and shipping cost may be reduced due to a shorter distance for shipping and distribution.Cost Savings: In less-developed countries, labor cost is cheaper than developing and developed countries. It is estimated that a company that manufactures in less-developed country can cut costs by between 30% and 80% depending on h ow labor intensive the product is. Besides that, material cost is also cheaper compared to developed countries too.Gain in Efficiencies and Economies of Scale: Besides that, in the long run, manufacturing overseas can gain efficiencies and economies of scale which will assist in reducing unit cost as output increases. Moreover, the initial investment of capital may be spread over an increasing number of units of output and therefore the marginal cost of producing a good or services decreases as production increases.Low Capital Costs: Low capital cost is one of the advantages that encourages manufacturing overseas. The cost of capital in developing or developed countries is higher than the cost of capital in less-developed countries.Incentives for Manufacturing: Some of the less developed countries encourage overseas manufacturers to invest or manufacture in their country. In order to attract manufacturers, these less-developed countries do offer incentives for the manufacturers. For example, Penang has offered incentive to Motorola from USA in order to attract them to manufacture at Penang.2.2.2 Disadvantages of Overseas ManufacturingQuality of Production Suffers: Cheap labor is an advantage for cost savings. Inversely, it reduces the quality of the products as cheap labors usually produce less quality productions. Therefore, the products will suffer in quality as most of the cheap labors are unskilled or semi-skilled. Indirectly, the manufacturer may lose its customers due to the production of less quality products.Time Consuming: When an organization wants to manufacture in overseas, the organization has to analyze and comprehend the considered location and also the facilities available around the setting up area. The analysis and comprehension takes considerable time to complete in order to have a perfect set up in overseas. Therefore it spends considerable time and energy to understand the considered location (Sweeney N.D.).Complexity: To operate oversea i s not as easy as locally. Most of the manufacturers have adapted to their own manufacturing culture and therefore adapting to another manufacturing environment would be difficult for them to familiarize with it. First of all, language may be a barrier, for example, it is difficult to communicate with the South Americans labors if we are not familiar with Latin (Sweeney N.D.). Besides that, finance, tax, and labor laws will be different and must be understood (Sweeney N.D.). Sweeney (N.D.) stated that, understanding national cultures and subcultures are important for any activity as manufacturers have to deal with government and private sector people and especially selling into the market.Brand Risks: Nowadays, consumers are perceived where the product is made from. The production location is a factor that will affect the brand image and reputation. For example, consumers would prefer a product made in USA rather than made in China. If the manufacturer produces in Bangladesh it may m ore or less affect their images as some of the consumers believe that products from developed countries are much better than less-developed countries and therefore the image and reputation of the brand may suffer.Availability of Expertise: The availability of expertise is one of the factors that should be considered when organization seeks to manufacture overseas. Less developed countries may not provide the expertise in the fields required.Long Start Up Time: It is not easy for manufacturer to start up their manufacturing process. To manufacture in a smooth way requires time. It usually requires a considerable of long time start up and familiarize.3.0 Debt ; Equity Financing3.1 Equity FinancingEquity financing is a method to acquire capital that involves selling a partial interest in the company to investors (Brian 1990). In return of the money paid, shareholders receive ownership interests in the corporation (Brian 1990).3.1.1 Pros and Cons of Equity Financing3.1.2 Pros of Equity FinancingThe advantages of equity finance are:Commitment of Funds: The funding is committed to the business and intended projects. Investors only realize their investment if the business is doing well (eg. through flotation or a sale to new investors).Vested Interest: Investors have the same interest that is to keep the business going on well and generate maximum profits which leads to an increase in the value of the business.Follow-up Funding: When business grows, investors are often prepared to provide follow-up funding.(Source of reference:http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES;itemId=1073789573)Wider Pool of Finance: When company is listed in stock exchanged, the company has the access to wider pool of finance.Quality Products: The owners will pay proper attention for improving the quality of products. The reason is the appropriate of quality product goes to them.No Interest Cost: No payment of interest for the funds provided by the shareholders. The c ost of production remains low as there is no burden of interest.Earning Remains with the Firm: When funds provided by shareholders for improvement in the business are making profits, the earnings are remained with the owners. Earnings are not shared by the creditors.To Tide over Emergencies: Firm is in a better position to tide over recession period and other emergencies due to no burden of rate of interest.Ability to borrow: Borrowing ability is improved if the equity capital is financed well.(Source of Reference: http://www.blurtit.com/q303144.html)Sources of Skills and Experiences: Good investors can bring resources for the business. They can help one to get skilled people, right contacts to build the business. They might also help out with their own experience in the formation of the strategy or with decision making.No Obligation for Repayment: No obligation for the repayment of the finances in the initial phase of the business when the cash flow is quite slow. Whereas, in bank loans there are severe obligations and penalties in case a business fails to generate monthly interests and make the monthly payments to the bank.(Sources of Reference:http://www.freewarefiles.com/techfi/Advantages_of_Equity_Financing.html)Pledge No Assets: Corporation does not have to pledge their assets as collateral to obtain equity investments.Availability of Cash: Business will have more cash available due to no debt payments have to be made.(Source of reference:http://forums.forbes.com/forbes/board/message?board.id=entreforum;message.id=399)3.1.3 Cons of Equity FinancingThe disadvantages of equity finance are:Costly and Time Consuming: Raising equity finance is costly and time-consuming. Business may suffer as times are devoted to the deal. Potential investors will seek background information on owner and his business and they will closely scrutinize past results and forecasts and will delve the management team.Interference in Management: The equity investors can interfere in the management of the company and in addition they also have the voting rights which could influent the making of major decisions.Extra Effort to Provide Information: Founder will have to invest management time to provide regular information for the investor to monitor the situation of the business.Share Dilution: Founders share in the business will be diluted which means lessen in strength. Besides that, businesss profits will be shared by other equity investors.Legal and Regulatory Compliance: There can be legal and regulatory issues to comply with when raising finance (eg. when promoting investments).(Source of Reference;http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES;itemId=1073789573)Limitation of Control: Founders must give up some control of the business. If investors have different perceptions and ideas about the companys strategic direction or day-to-day operations, they can pose problems for the entrepreneur.(Source of Reference: http://www.answers.com/eq uity+Financing?cat=biz-fin)No Tax Deduction: Dividend payments are not tax deductible.(Source of Reference:http://forums.forbes.com/forbes/board/message?board.id=entreforummessage.id=399)3.2 Debt FinancingAccording to (http://www.answers.com/debt+financing?cat=biz-fin) debt financing is a strategy that involves borrowing money from a lender or investor which the full amount will be repaid in the future usually with interest within a certain period. It asserted that it does not include any provision for ownership of the company. Debt financing has a prior claim on the company irrespective of the profits earned despite the company goes into liquidation (Joseph 2008).3.2.1 Pros and Cons of Debt Financing3.2.2 Pros of Debt FinancingMaintain ownership: The debt holder cannot interfere in the management of the company and they do not have the voting rights. Therefore, business can be run without outside interferenceTax deductions: Principal and interest payments on a business loan are cla ssified as business expenses and thus tax deductible. It also lowers the actual cost of the loan to the company.Lower interest rate: There is a lower interest rate of debt financing when interest rate is lower than tax rate (where the business can take a loan and have a deduction on tax rather than high interest rate).(Source of Reference: http://entrepreneurs.about.com/od/financing/a/debtfinancing.htm)No Complex Procedures Required: Debt financing is easier to obtain than equity financing. Raising debt capital is less complicated because the company is not required to comply with state and federal securities laws and regulations.No Profits Sharing: Profits of company are not shared with the lenders who require capital appreciation and dividends on their investments.Forecasting: Interest and principal payments are typically a know amount that can be forecast.(Source of Reference: http://www.job-employment-guide.com/business-financing.html)No Extra Rewards: Debt holders are entitled only to repayment of the agreed-upon principal of the loan plus interest and have no direct claim on future profits of the business if the company has made extra profits.Saving Management Time: Company does not have to send periodic mailings to large numbers of investors, hold periodic meetings with shareholders and seek the vote of shareholders before taking certain actions.(Source of Reference: http://smallbusiness.findlaw.com/banking_financing/be1_5debtvsequity.html) David H. Schwartz3.2.3 Cons of Debt FinancingRepayment: Sole obligation to the lender is to make payments on time. If the business fails, the company still has to make payments. If business goes into bankruptcy, lenders will have claim to repayment before any equity investors.Impacts Credit Rating: It seems to be attractive to keep bringing on debt when company needs money, a practice known as levering up, but each loan will be noted on your credit rating. The more borrowings, the higher the risk to the lender and th e higher interest rate the company will have to pay.Cash and Collateral: The company is usually required to pledge assets of the company to the lender as collateral, and owners of the company are in some cases required to personally guarantee repayment of the loan.(Source of Reference:http://entrepreneurs.about.com/od/financing/a/debtfinancing.htm)Difficulty in Business Growth: Interest is a fixed cost which raises the companys break-even point. High interest costs during difficult financial periods can increase the risk of insolvency. Companies that have large amounts of debt as compared to equity often find it difficult to grow because of the high cost of servicing the debt.Restrictions on Activities: Debt instruments often contain restrictions on the companys activities, preventing management from pursuing alternative financing options and non-core business opportunities which results in losing of other investment opportunities.(Source of Reference:http://smallbusiness.findlaw.co m/banking_financing/be1_5debtvsequity.html)3.3 Consideration Factors for Sources of FinanceEquity financing and debt financing is the option for a company that needs financing. Each company is unique and they have their own financing requirements and therefore, it is inappropriate to determine any one of the financing methods is the best option for companies. There are certain factors that a company needs to consider before choosing the right financing method:The size of the company: Larger companies may obtain financing by equity financing due to the needs of wider pool of finance for company growth (Joseph 2008). However for smaller companies, debt financing is much easier to obtain because its not easy to reach the status of public limited company and the issuance cost of equity finance is unaffordable by smaller companies (Joseph 2008).The ability to generate cash flow: This relies upon the operations of the company (Joseph 2008). If the company is able to generate enough cash f low, the company may seek debt financing because debt financing requires cash make frequent repayment of interest and principal (Joseph 2008).Any Restrictive Covenants: If the company is restricted by the lender from subsequent borrowings, equity financing is more appropriate due to the bindings against the company.The Cost of Financing: The cost of financing for debt financing is cheaper than equity financing due to the debt financer is exposed to lesser risk and he is entitled for prior claim in the companys profits and interest payable are tax deductible (which means actual cost of debt is lesser) (Joseph 2008).The Duration of Borrowing: The longer the duration, the interest rate charged on the borrower will be higher (Joseph 2008).The Current Gearing Level: If a company has a high gearing level, it is the best to go for equity financing whilst if a company has a low gearing level, they can go for debt financing (Joseph 2008).4.0 ConclusionNot every dividend policy suits a compan y. When deciding on how much dividend should be distributed to their investors, factors such as legal constraints, contractual constraints and etcetera have to considered to obtain the most suitable and appropriate dividend policy for better financing.Factors that affect dividend policy can be incorporated in several dividend theories such as residual dividends theory, clientele theory, signalling dividend theory, bird-in-the-hand theory and Modigliani Miller dividend theory. These theories can be classified into dividend relevance theory where its dividend policy will affect on companys value and cost of capital and dividend irrelevance theory where its dividend will not affect on companys value and cost of capital.Overseas manufacturing gains advantages such as cost savings and economies of scale. Inversely, it also has other effects such as no expertise available and also time consuming for starting a new factory.Companys capital structure can be financed through debt financing and equity financing. These are the strategies that a company can get its fund. However, these two strategies have their own advantages and disadvantages. When implementing any of those strategies, factors such as size of the company, ability to generate cash flow, current gearing level and other factors have to be considered in order to have the most suitable strategy to finance the organization.

The Winning Formula for Writing Success

The Winning Formula for Writing Success The Winning Formula for Writing Success The Winning Formula for Writing Success By Mark Nichol When I wrote the heading for today’s post, I thought to myself, â€Å"I should be making infomercials and workshop presentations, offering my ‘secret’ for a thousand dollars.† A thousand dollars a head for even a few dozen participants? That’s what I call successful writing: With one phrase and a few platitudes, I could take a couple of years off from work. Nah. I’ll give it to you free of charge: Quality requires quantity. Yes? And? That’s it. Quality requires quantity. Oh, all right. I’ll expound. That’s a layered statement, one that’s as deep as you want to dive. But on its most basic level, it means that an output of high quality must be preceded by an input of high quantity. In other words, a return of quality takes an investment of quantity. The new publishing model is that, thanks to the Internet, everyone’s a writer. That’s the good news. But it’s also the bad news, because it means that because many writers in this suddenly expanded universe are not highly qualified, the universe is degraded. There have always been less-than-stellar writers, but it was more difficult for them to publish their work and sustain success. Now, however, nonprofessional writers can be forgiven for believing that because it’s easy to type, it’s easy to write. And the remaining exemplars of great writing are lost in the leveling of the signal-to-noise ratio if they are sought out at all anymore. The brave new world of formal publishing is also degraded, in this case by a business model that no longer values quality because remember, quality requires quantity (and quantity, of course, requires financial investment). So now, I can find six typographical errors stuffed into a twenty-word caption in the website for a major metropolitan newspaper (since corrected because, hey, it’s the instant Internet, and we can always fix it later!), and I can find my enjoyment of a newly published book compromised by shoddy editing (improvement of which must wait for the second edition, if there is one, and if there is the wherewithal to improve it but that’s too late for me). That’s why I may come across as a dinosaur about these things, because I believe that if something is worth doing, it is worth doing well. And because I believe that, that’s why I’m proud to remain part of the old-school old guard, editing book manuscripts for publishers willing to spend time, effort, and especially money to ensure that their products reflect their high standards. Quality requires quantity. Oh, quality is sometimes accidentally produced with a minimum of quantity, but standards cannot rely on serendipity. The work ethic is called that for a reason: Good isn’t easy. It takes effort. Quality requires quantity. There’s at least one other layer to the formula. Last week, I wrote a post about another formula, what I call a writing-competence matrix. Rather than explain it here, I invite you to read the post, if you haven’t already, or to review it, if you have. Go ahead. I’ll wait. What does it take to score high on this matrix? Don’t expect to ever hit â€Å"Expert† on all three counts; many successful writers may excel in only one category. But to rate highly in even one area takes time. Remember the 10,000-Hour Rule? (That’s all right. I’ll still be here when you get back.) If you want to be a great writer, be content at first with endeavoring to be a good writer. Great can wait. But to become a good writer, you must invest quantity in your quest for quality quantity of time and effort. And you must be willing to labor not only longitudinally, putting in years of skill development, but also latitudinally, massaging, refining, and polishing each piece of writing along the way. Remember this truism: If it’s easy, you’re probably not doing it right. Quality requires quantity. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Writing Basics category, check our popular posts, or choose a related post below:75 Synonyms for â€Å"Angry†Do you "orient" yourself, or "orientate" yourself?Is "Number" Singular or Plural?

Nursing Change initiative paper Essay Example | Topics and Well Written Essays - 2500 words

Nursing Change initiative paper - Essay Example This paper will discuss the change effort to be made in one institution, Comanche Regional Hospital. Most people that have a change issue in their company are aware that a change needs to happen. They begin to get complaints or sales fall off. In the case of Comanche Regional Hospital the bottom line is running in the red and the turnover rate of new motivated managers is very high because of the age and beliefs of the older senior team running the facility. Even when there is a need for change as great as this one, however, complacency is most often the problem (Kotter, 1996). Urgency, at this stage must be created. In this case, there is a huge barrier and that is the mature management team that has been there for some time and talks a lot about change but never sees it happen. The next step in this case is the board. Creating a sense of urgency demands risky action. Going to a board meeting with a group of recent department directors who turned over quickly and customers that have in the past used the hospital is the move in this case that will create urgency the fastest. At the same time take a well created report to a management meeting showing how the bottom line is dropping off, how many jobs will be lost in what departments (it is much more urgent for a department director who must go to his staff and tell them they are laid off) and show over the last two years the number of department directors that have been hired and who have left the organization. Relate that to the cost of recruiting, hiring, and orienting this group. Continue by showing where the hospital could be as far as raises and incentives and management bonus if the bottom line is improved and that money is not spent recruiting the same positions all the time. Most recently there has been a very poor JCAHO review which came close to causing a closure of the facility. This has created a sense of urgency in itself and because of that and that we will create it is time to strike. Create a Coalition In every organization there are formal and informal leaders. Those people must be identified at this time as they will need to be on the guiding coalition. There are two champions that have influence and could be chosen at this time. One is Dr. Ben who has general influence in the hospital as well as in the community. He is well liked and retired from practice but working closely with other physicians. The other is Dr. Dale who is the head of the hospitalist program and this year will be Chief of Staff. Nurse D will be added to the list as she is a manager of the medical departments and has a good ability to work well with management as well as the nurses and staff. She is highly respected. Nurse A is the department director for the critical care units and due to the fact that she is fairly new to the hospital and has led successful change in her past, she is a great addition to this coalition. JP is a board member who has good communication skills among all of the different faction s and has respect on both side of the boundaries. He will provide the coalition with more power and be able to carry what is needed back to the board. Each of the other seats will be filled by staff people who have been progressive in stepping out of the box to improve things in their

Reflectionson culture diversity Essay Example | Topics and Well Written Essays - 500 words

Reflectionson culture diversity - Essay Example This exposure to direct, first hand experience is the only way I have learned about cultural diversity, as there is limited education and training from school or healthcare institutions available. 2). Reflections: Cultural Aspects of Epidemiology( This subscale concerns practitioners’ knowledge of cultural, environmental and related etiologic factors that contribute to disease. It probes health disparity and risk and protective factors for underserved groups and communities. Part of the admission assessment in the questionnaire given to our patients that include etiologic factors that contributed to their disease as well as different indicators on well being. I learned that there is such a big difference between cultures. For example, majority of health concerns such as back pain, Cancer, Alzheimers’ disease, are from the Caucasian group which implies that their environment and lifestyles have something to do with it. Being aware of the factors that contribute to their disease is as important as knowing their cultural background. However, sensitivity and privacy should be considered when it comes to interviewing a patient during the admission process. Health care providers must be knowledgeable in asking the right questions without being offensive or else they might overlook related factors or symptoms of the prevailing condition making diagnosis and treatment more difficult. 3) Reflections: Clinical Decision-Making.( This subscale concerns practitioner’s knowledge of culturally-defined health beliefs and practices, and the ability to integrate this knowledge in approaches to health care delivery.It addresses intake, assessment,/diagnosis,treatment/discharge planning and use of community-based resources. Many factors affect clinical decision-making. Some cultures make decisions for treatment of the patient as a group consensus.

HRM Essay Example | Topics and Well Written Essays - 2500 words - 7

HRM - Essay Example What’s more, the productive handling of conflicts provides the chance for all the parties to understand the diverse nature of people working within a specific environment (Pardey, 2007). This enables them to improve their methods of working and build a solid team that reflects the mission and vision of the organization. As inevitable as the conflicts between the employees are, organizations must strive to implement a sustainable conflict resolution program. The dominance of conflict often disrupts the departmental productivity, increases the rate at which good employees quit the organization, and reduces the morale of the company. Therefore, effective resolution of the conflicts within the workplace presents a chance for the organization to capitalize on the diversity of the employees and attain a comprehensive employee retention program. The first step towards logical resolution of workplace conflicts as Mrs. R.O states, involves the identification of the cause of the conflicts. The general distinctions of the conflicts at the workplace include the constructive and destructive conflicts. The constructive conflicts constitute disputes that have more benefits over costs. Such conflicts often translate into productivity to benefit the parties that are involved in the conflict. The constructive conflicts enable the team members to come together under the basic benefits from the conflict and strengthen their relationship. On the other hand, destructive conflicts present an opposite of the constructive conflicts. Such conflicts offer more harm and destruction to the organization and often bring no growth to the company. The major contributor to this conflict is unacceptable actions by two or more participants who perform actions that elicit resentment amongst the larger workforce. The continued actions by these parties

European Medical Device Regulations

European Medical Device Regulations Practical Application Project The intent of the proposed revisions to the existing European Medical Device Directives is to better protect public health, ensure free and fair trade of goods, and adapt the legislation to the technological advancements observed throughout the industry.1 These revisions have been in process since 2008, when the EU Commission initiated a public forum to collect comments on the existing European medical device directives.TUV In 2010, the need for change was even more apparent with the discovery of the French PIP breast implant scandal. Emergo In 2012, the European Commission released the initial draft of the proposed regulations. The directive on active implantable medical devices (90/383/EEC) and on medical devices (93/42/EEC) was combined into one proposed regulation on medical devices, referred to as MDR. A proposed regulation on in-vitro diagnostic (IVD) medical devices, referred to as IVDR, is intended to replace the existing directive (98/79/EC). The European Parliament and the European Council amended the proposed regulations, and final texts were released in June 2016.1 The regulatory approach utilized in the MDR and the IVDR is a life-cycle approach, rather than pre-approval path as outlined in the existing directives. Guidance documentation related to Authorized Representation, Clinical Evaluation, Vigilance, and Post-Market Clinical Follow-Up were essentially incorporated into the regulations. The major changes included in the final texts of the MDR and IVDR are described below and the subsequent affects on manufacturers, notified bodies, regulatory agencies and patients are outlined. Scope Expansion The MDR and IVDR include a revised medical device definition, which broadens the application of the regulation to include products not currently covered under the existing directives. For example, the MDR will apply to products used for cleaning, disinfection or sterilization. Under the current directive, these types of products were considered accessories to medical devices and thus were out of the scope of the Directive.Emergo Other product groups now within scope of both the MDR and IVDR include devices that do not have a medical intended purpose, such as colored contact lenses, cosmetic implant material, lifestyle and nutritional diagnostic tests. TUV, BSI MDR/IVDR The definition of a medical device accessory was also revised, to include products that assist devices, which will cover additional products. Classification rules in MDR and IVDR changed as well. The MDR increased classification for some devices or requires heightened oversight by the Notified Body but did not change the actual classification of the device. Rather than utilizing the list-based classification system in the Directive, IVDs will be classified per the system developed by the Global Harmonization Task Force into four risk-based classes using seven distinct rules. For IVD devices that do not fit into the classification rules and were self-certified under the existing Directive, the IVDR will classify these devices into a higher risk class which will require Notified Body certification. This is a pivotal shift for the IVD industry since approximately 80-90% of IVDs will now require Notified Body certification to sell in the EU.BSI MDR/IVDR Placing Products on the Market The number of Essential Requirements increased, as well as the number of detail for each requirement. The concept of common specifications was added to the MDR. Referred to as common technical specifications in the IVD Directive, common specifications are documents (not standards) that describe technical or clinical requirements and provide a method of conformity to a requirement of the Regulation. Manufacturers are generally required to comply with common specifications, unless justification can be adequately demonstrated to ensure the same level of safety and performance. The regulations require common specification compliance for aesthetic products. Clinical Evaluation Clinical Investigation The requirements for clinical evaluation and clinical investigation are more rigorous under the new regulations. Clinical investigations may be required for class III and implantable devices if the existing clinical evidence does not fulfill the new requirements. Clinical performance studies will be required and significantly more evidence will be required for IVDs.BSI IVDR Both the MDR and IVDR control the conduct of interventional and other clinical performance studies and require the use of good clinical practices, including informed consent. Another major change is the Post-Market Clinical Follow-up requirement as part of the clinical evaluation cycle for the device. For clinical evidence that relies on equivalence with another predicate device, there are several additional requirements that will likely limit the path to market for this type of clinical justification. In order to leverage equivalence to another device the manufacturer must scientifically justify technical, biological and clinical similarity. There needs to be no significant difference in the clinical performance and safety of the device and the predicate. The manufacturer must be able to demonstrate access to the data on the predicate device in order to substantiate this claim. Since that data is typically proprietary between market competitors, this requirement will likely severely limit the use of comparator equivalence justifications. Supply Chain Enhancements Both the MDR and the IVDR implement new supply chain requirements that affect each step of the medical device supply chain. Each supply chain participant, including importers and distributors, will be responsible for verifying regulatory compliance. Better definition on roles and responsibilities is defined between the authorized representative, distributor and importer. Vigilance reporting of adverse events and subsequent implementation of corrective action (as required) will be expanded to include importers and distributors as well as the manufacturer. All members of the supply chain must be able to maintain traceability of devices and retain those records for at least five years after the last device is supplied to the EU market. The regulations define the financial liability of the manufacturer as well as the authorized representative in the case of injury caused by the device. Labeling Unique device identification (UDI) will also be required. The UDI is compromised of two parts, a device identifier(DI) and a production identifier (PI). The DI is a fixed portion of the UDI that identifies the model number of the device and links the device to the manufacturer. The PI is the variable portion of the UDI that identifies the lot/batch number, expiration date/manufacturing date or serial number for the device. There are many changes to labeling and instructions for use requirements. All device labels, on all levels of packaging will likely be revised as a result of the new regulations. There are special labeling requirements for certain implant products. The patient must have easy access to all safety information, including warnings and precautions, expected lifetime of the device and any mandatory follow-up. With regards to the actual implanted device, the patient must receive identification of the device including UDI information. Vigilance and Post Market Surveillance There are substantial changes to the post-market surveillance and vigilance reporting requirements under the new regulations. Some reporting rules were changed, which will result in more reports. The timeline for reporting serious public health threats did not change, but the timeline for reporting all other adverse events decreased from 30 days to 15 days. The reduced time allowed for reporting will likely result in an increase in the number of follow-up reports in order to provide additional information. The combination of the change to reporting rules and the reporting timeline shift will result in an overall increase in the number of vigilance reports submitted by manufacturers. A requirement for post-market clinical follow up was added as well as periodic (annual) safety update reports. These reports will summarize post-market data and analysis, a description of any actions taken as a result of post market trends and include sales volume data. The Affect on Key Stakeholders Manufacturers There is no provision for grandfathering of existing products under the new regulations. Therefore device manufacturers will need to review product portfolios to determine the affect of the new regulations and subsequent actions needed for both CE marked products and non-CE marked products. BSI MDR/IVDR Due to the increased clinical and regulatory requirements, manufacturers may need to invest in additional resources to adequately satisfy the clinical and regulatory requirements. It is possible that new clinical data will need to be generated, which is a substantial undertaking, both from an economic and resource perspective. Under the new regulations, device manufacturers (and authorized representatives) are required to retain at least one person permanently and continuously who is responsible for regulatory compliance, regardless of the size of the organization. The one exception noted for this is for manufacturers of custom devices who are micro-enterprises. Notified Bodies One of the major role changes driven by the new regulations is the evolution of the notified body role from an industry partner under the Directives to a police-like extension of the Competent Authorities. In the new regulations, notified bodies are required to undergo a designation process and stricter requirements for notified body staff are defined. The demand for notified bodies will increase dramatically, as not all current notified bodies may seek or may not seek full designation for all services currently supplied to manufacturers. Further increasing the demand for notified bodies, is the classification changes, especially in the IVDR, which will require more resources from designated notified bodies. Another major change in the MDR is that notified bodies will be required to submit their clinical evaluation assessment report to an expert panel appointed by the EU Commission prior to certifying a class III implantable device or class IIb device intended to intended to administer/remove a medical product. The regulations will require notified bodies to conduct unannounced audits at least once every five years, which originated as a recommendation from the commission in 2013. Notified bodies are required to test manufacturing samples, or even market samples. However, the responsibility for the cost of this testing is not defined. Regulatory Agencies In an attempt to harmonize efforts between member states, a new regulatory body called the Medical Device Coordination Group (MDCG) is defined with a primary purpose of increasing collaboration between member states while allowing the EU Commission to act when required. The additional vigilance requirements will demand more resources to support processing data at the member state level. Member states will be need to work together in order to coordinate enforcement activities and report surveillance plans to be incorporated into the European Market Surveillance Plan. Member states also can begin applying fees to cover the costs associated with the new requirements. Patients One of the primary objectives of the new EU regulations is to better protect public health. Patient access to information is enhanced. The addition of UDI and vigilance reporting to the European database systems will help make essential device information and user experience data more readily available. UDI information will improve recall and field safety corrective action effectiveness. Additional labeling requirements will better inform the end user. One drawback is that due to the tightened clinical requirements, patients may experience a longer delay in access to new medical devices and technologies. However, more robust regulatory controls with the intent to improve overall patient safety should outweigh this risk. The changes the new regulations bring to the European medical device community and vast. Although the new regulations will not go into effect until three years after formal publication in the Official Journal of the European Union (OJEU), it is important to begin preparing now for implementation. References: http://europa.eu/rapid/press-release_IP-12-1011_en.htm Medtecheurope, European Unique Device Identification Database (EUDID), Accessed February 29, 2017 http://www.medtecheurope.org/sites/default/files/14_MedTech%20Europe_Background%20Paper_EU%20UDI%20Database_PUBLISHED.pdf EU Commission Recommendation. n.d. https://www.3ec.sk/fileadmin/user_upload/Product_Certification/UNANNOUNCED_AUDITS_2014.pdf.2. Commission Recommendation. September 2013, 2013. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:253:0027:0035:EN:PDF.

Cyber Bullying Essay Essay

Bullying. It is something everyone has heard of, witnessed or experienced. When the word â€Å"bullying† is heard, many people think of the classic school kid being picked on at lunch, in a physical and/or verbal manner. Although verbal and physical bullying still occur, there is a form of bullying that has grown to be quite prominent, due to the vast use of technology in this generation. This form of bullying is known as; cyber bullying. Cyber bullying is a deliberately harmful, aggressive, and repetitive form of bullying through the Internet and related technology. Cyber bullying is just as harmful as physical or verbal bullying, and should be taken just as seriously. Cyber bullying negatively impacts children in many ways. The most prominent effects of cyber bullying are the toll it can take psychologically, and emotionally on the people involved. These effects are exacerbated by the current popularity of social media. The psychological effects of cyber bullying are obvious , and in some way more severe than physical bullying. The psychological effect of cyber bullying can be more severe because there is often no escape from one’s tormentors. Unlike the typical bullying thats takes place at school or on the bus, cyber bullying follows students around 24/7. With technology like smartphones, the repetitive harassment is nearly impossible to escape. In many cases of cyber bullying, it begins with one bully but ends with many. The internet is open to everyone. Once something is out there, for example a picture, it can be sent to phones everywhere and is essentially on the Internet forever. With one click of a button, information can instantly spread like wildfire. It is psychologically damaging to know that even if that picture, those words, that rumor, are deleted, it is never actually gone. Although cyber bullying isn’t necessarily as public as a punch at school would be, it can often be easily hidden by the victim. If there are no bruises or bumps, it is hard for any family or friend to see what the targeted person may be suffering with inside. Fifty-two percent of cyberbully victims never tell anyone about what is going on. Isolation, is often where internalizing problems leads. Cyber bullying becomes a battle not only with the bullies, but also a battle with oneself. Social media has become the main way of communication. Many people have at least one of these sites available to them: Twitter, Facebook, YouTube, Tumblr. It is no secret that there are bullies who target certain, or any people online. Thirty-percent of online  teens say they have been targets of menacing and/or hurtful online activities; and 88 percent of online teens say they have witnessed someone being mean or cruel to someone else on a social network. Most bullies have the power online; there is really no way to be stopped through a computer screen. Especially with the â€Å"anonymous† option, harassing the target can be the easiest thing to do, because the power the bully feels; being unknown, and knowing there is little chance of any consequences. Eighty percent of teens use their cell phones regularly making it the most common form of technology used. Many teens are willing to take the risk of being cyber bullied, not because they don’t think it is serious, but because social media affects one’s social status. In a world where almost every teen has some sort of social media, it can be hard to feel â€Å"normal† or involved if you don’t have one too. As a result of most o f this generation communicating online, cyber bullying has become more popular and dangerous. Much like physical bullying, cyber bullying has a huge emotional burden. Being a victim of cyber bullying often leads to depression. Since in most cases, teenagers cannot escape the relentless harassment, it can lead to feeling hopeless and isolated. When hundreds of people, some you may or may not know, begin harassing you, it can feel like the entire world is against you. Being harassed constantly can slowly eat away at the victim. Self esteem is what gets damaged most. Being degraded, made fun of, or accused of actions that never happened can lead to the victim eventually believing the rumors. Lastly, an emotional struggle triggered by cyber bullying is anxiety. It becomes a constant fear, every time you use your social media, you wonder what may be waiting for you. The worst part about cyber bullying is it follows you everywhere; at home, at school, etc. While cyber bullying can affect a person at any time or place, it often comes to head at school. If there are rumors, or a private picture circulating for everyone at school to see, simply attending school can provoke anxiety. In many cases, victims of cyber bullying have such bad anxiety about facing schoolmates in this situation, that they stop going to school. It is time that we as as a society treat cyber bullying just as we would physical bullying. It may not leave a scar or bruise visibly on one’s body, but it leaves an emotional wound that may never completely heal. Cyber bullying can take place anytime, anywhere, and creates psychological and emotional burdens for the victim.  Since technology is becoming more and more evident in this generation and will only become more prevelant in the future, this would be the time to act.

Good Communication Skills Are Essential for Teachers Essay

There are many Primary School teachers that work in our society, teaching children different subjects and skills whilst at school. These subjects consist of Maths, English, art, PE and History. The curriculum set by the board of education is essential so children can learn to read and write amongst other skills learnt so they may be able to as adults live and function productively in society. For students to learn these skills efficiently Early Primary school teachers need to have good communication skills. The four key areas that good communication is imperative is teaching students, interacting with parents, consulting with staff and behaviour management. Early Primary school Teachers need great communication skills to be able to teach children so they can learn to the best of their ability. Teachers will be teaching children who are in different levels of development and abilities. They need good communication skills verbally and physically to cater for the different capacities th at children learn at, and cater their teaching styles to them. Teachers have goals and objectives they aim to achieve whilst teaching children in primary school. They need to be able to differentiate their teaching style whilst teaching a subject or activity the class is doing to cater for the different learning abilities. This needs to be communicated to the students in a simple , clear format both written and verbal . This enables students who have low attainment levels

Practice in Identifying Helping Verbs in English

Practice in Identifying Helping Verbs in English A helping verb (also called an auxiliary verb) is a verb (such as have, do, or will) that comes before the main verb in a sentence. This exercise will give you practice in identifying helping verbs. Instructions Each of the following 15 sentences contains at least one helping verb. Identify the helping verb(s) in each sentence, and then compare your answers with those on page two. Keep in mind that more than one helping verb (such as has been) can be used in front of a main verb. In addition, remember that sometimes another word (such as not) separates the helping verb from the main verb. My sister has promised to come with us to the Thousand Islands.Sam and Dave will prepare a PowerPoint presentation for the class.I must return to Yellowstone National Park to appreciate its significance and astonishing beauty.We should read another book by E.B. White.We should not waste our time watching TV.My brother will be flying out of Cleveland tomorrow morning.We have been studying all week for the final exam.Katie has not been studying very hard.My car was stolen by a couple of kids out for a good time.I can help you tonight if you will drive me home later.Thousands of people, braving the cold and the rain, had been waiting for hours for the band to show up.Tony and his friends are bored with their lives, and so they are always looking for trouble.I know that I must make a decision soon, but first I may ask my teacher for advice.Marie could not start her car this morning, so she will probably not go into work at all today.I have finished the quiz on helping verbs, and now I am going home.   Below are the answers (in bold) to the practice exercise in  Identifying Helping Verbs. My sister  has  promised to come with us to the Thousand Islands.Sam and Dave  will  prepare a PowerPoint presentation for the class.I  must  return to Yellowstone National Park to appreciate its significance and astonishing beauty.We  should  read another book by E.B. White.We  should  not waste our time watching TV.My brother  will be  flying out of Cleveland tomorrow morning.We  have been  studying all week for the final exam.Katie  has  not  been  studying very hard.My car  was  stolen by a couple of kids out for a good time.I  can  help you tonight if you  will  drive me home later.Thousands of people, braving the cold and the rain,  had been  waiting for hours for the band to show up.Tony and his friends  are  bored with their lives, and so they  are  always looking for trouble.I know that I  must  make a decision soon, but first I  may  ask my teacher for advice.Marie  could  not start her car this morning , so she  will  probably not go into work at all today.I  have  finished the quiz on helping verbs, and now I  am  going home.

Word choice betrays your personality - Emphasis

Word choice betrays your personality Word choice betrays your personality Whatever online persona you may have chosen to adopt in your blog, your deepest personality traits may be given away by your choice of words, a new study has found. The specific words bloggers use relate to which of the big five personality factors dominates in that person. These factors are: openness, conscientiousness, extroversion, agreeableness, and neuroticism. For the highly neurotic, the most commonly used words were: awful, though, lazy, worse and depressing; while with wild-child extroverts, bar, other, drinks, restaurant and dancing kept cropping up. Agreeable people happily repeated wonderful, together, visiting, morning and spring, while the conscientious made sure to reiterate completed, adventure, stupid, boring and adventures. For open types, folk, humans, of, poet and art appeared most often. The research project run by Tal Yarkoni, a psychology and neuroscience postdoctoral fellow at the University of Colorado at Boulder is one of the largest conducted examining the connection between writing and personality. Thanks to bloggers typically prodigious outpourings, Yarkoni had around 115,000 words from each of the 700 or so participants. This larger-than-usual sample meant that the research could go beyond broad topics focused on, and look at particular words that recur. The results suggest we cant completely separate our online and offline selves, however much you might want to maintain a particular facade of yourself. And this is hardly surprising, says Yarkoni: Our personalities dont dramatically change just because weve turned on our computers. Still, at the very least, its probably best to try to keep work and business blogging separate, no matter how lazy, awful and depressing you may find your boss.

Ethical Problems in Subprime Mortgage Crisis Essay

Ethical Problems in Subprime Mortgage Crisis - Essay Example The lack of transparency and accountability had distorted the decision-making process for granting the loans, weakened the banking and finance system and allied industries and eroded public confidernce in the subprime lending sector. First, the international credit rating agencies gave investment-grade ratings to the securitization transactions holding the subprime mortgages. This consistent high ratings misled the corporate and individual investors and large banks to invest heavily in subprime stocks since the ratings did not reflect the high default rates and foreclosures which were beginning to show in this sector. This is highly unethical since many international banks were duped into investing in housing stocks which did not reflect real market values or in some cases were actually worthless. Second, the mortgage brokers failed to be transparent enough to determine if the prospective borrowers really had the capacity to pay the debt. They were more concerned about earning their financial commissions from the sales of homes. This is unethical since they were giving a resource (asset) to persons who cannot afford it. There is a need to link their compensation to the financial performance of their respective loan accounts. Third, the mortgage lenders

Disaster Resilient Engineering Innovations Essay

Disaster Resilient Engineering Innovations - Essay Example For a holistic approach to mitigating the impact of the catastrophe, a multi-stakeholders collaboration is necessary. For engineering plans to be successful, knowledge, researchers, and information from other disciplines such as geologists, sociologists, public administrators, information technology, the government and several others must be involved. With the experiences of the countries on the different types of calamities, the government and the concerned private groups that includes engineering organizations, continually devise plans and designs to make communities resilient and sustainable amidst the threat of natural disasters. This paper will present the innovations and initiatives implemented in the field of engineering to mitigate the impact of natural disasters, particularly earthquakes, flood, and tsunami. Earthquakes, flood, tsunamis, and other natural disasters have occurred in more frequency around the globe have caused billions of dollars lost and an unaccounted number of deaths. These natural calamities have challenged the stability of buildings, bridges and other infrastructures. Thus, engineers and planners have continually engaged in innovative engineering approaches in order to mitigate the impact of these natural forces. Floods, earthquake, and tsunamis, as well as landslides, cyclones, etc. have posted a major challenge to governments, much more than they have become a regular occurrence. 1 A great challenge to the government is to protect the lives of people and animals, as well as properties. 2 In order to attain these goals, engineering plans must be designed capable of bearing the force that these natural disasters bring forth. Also important is building of rehabilitation and medical institutions that could bear the load since victims will be treated in these facilities when a disaster strikes. 3 Rehabilitation and medical facilities must be constructed farther from fault zones and coastal.