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Tuesday, 9 January 2018
Essay on Adult Abuse in Nursing Cares | Residential Homes | Assignment H
Abuse of Elderly in a care Home- the Effects on Health and Social Care Industry
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Introduction
There has been an increase in the cases of adult abuse in care homes over the years and studies show that this menace is causing a lot of intolerance at these homes (Alzheimer, 2015).This review aims at exploring previous knowledge on the existing levels of adult abuse in care homes and their suggested causes. Fortinash (2014) explains that prevalent adult is not unidirectional as previous studies shows. He attributes the abuse staff penetration and constant strife between the residents themselves and family-related abuse. A survey conducted by, WHO (2015) most of the research conducted on the past basis its argument on resident harassment by the staff only. He shed a new light on the new look of things such as family neglect and psychological distress factors affecting the adults in the adult homes.
The Extent of Adult Abuse in Care Homes
Care homes are refined institutions that are set up to take care of aged people with special needs, mental impairments and other disabilities (Fortinash, 2014). Instead, adult abuse is predominantly grown in these institutions invalidating the concept of actual care.
Recent research conducted by Ulsperger and Knottnerus (2015) shows that the magnitude of elderly abuse differs in various care homes. Different homes attend different types of needs and therefore mistreatment varies in nature in those homes. The psychologists revert to the study conducted by Payne and add that practically there is a difference in the level of adult abuse in various types of care home (Payne, 2017). Braye (2016) reports that the problem of adult abuse frequently afflicts the resident homes as compared others. He associates the primary cause of the prevalent abuse to the increased sharing of facilities and other amenities in these resident care homes.
There are four types of care home that are designed for adults with certain traits and different level of needs.These are the residential care homes, nursing care homes, the registered care home and the special dementia care homes for people with mental instability. In his report, Kendall (2016) found out that most people are not assertive when choosing the relevant home to take their elderly. Most people take little time to evaluate the needs of the elders and end up pushing them into the wrong homes. Piredda (2015) reveals that residential homes are most populated because people value convenience over quality of what they get from these homes. Other times the elders resist alienation from their families thus ending up in residential homes in the neighborhood. Residential homes aim at helping the elderly complete simple tasks such as routine chores and other activities of convenience such as bathing and recreation (Young, 2015). Confusing the function of homes is the primary cause of adult abuse in care homes (Piredda, et al. 2015). Tosangwarn (2016) reports that most people are afraid of taking their elderly to dementia homes for fear of social stigma, even though they are aware of their mental condition. People fear public opinion over their social status hence compromising their choices. He further compares the population ratios in the four different types of adult care home and classifies the population in the demographic spectrum of individual income capabilities, gender, and age. He finds that people with low-income base mostly occupy the specialist dementia homes. Otherwise, most of these people are either very old and have a critical mental impairment or middle age adult with manageable mental health conditions but from deprived families. Yet another research by Vandervoort (2014) proves that nursing homes and dementia home are commonly mistaken for roles they offer. People for various reasons prefer taking the “needy adults” to the nursing care homes even when the problems are mental stability.
Either way, the beneficiary is the commercial organization in charge of the profits generated from the “patients” fees. Recently, Payne (2017) asserts that the gap in the specialist dementia care homes is associable to the mandatory assessment and reports that sometimes land into unauthorized hand exposing the confidentiality of the elderly with special mental needs to the public. Vandervoort (2014) argues that dementia homes and the nursing homes record minimal cases of adult abuse due to low adult intake. Managing a huge number of people is among the enigma situation facing most social organizations today. To make matters worse, learning to manage different personalities may take a long time slowing down the rate of improvement in the status of the adults.
Types of Adult Abuse in the Care Home and their Effects
According to Braye (2016), adult abuse levels are increasing every day in the care home since they are difficult to track unlike other forms of abuse such as child abuse. This research is based on the cause of age discrimination factors. From the empirical evidence gathered by researchers, adult abuse experienced in care homes can be categorized into either financial, discriminatory, psychological, neglect, physical abuse, sexual, or verbal abuse.
Neglect is the dominant type of adult abuse that is detected in care homes. Annals of Internal Medicine (2016) published an article invalidating the statement “care homes”. These researchers argue that pushing the aged and elderly with other disabilities into these care homes makes them feel abandoned in this new domiciliary environment. Pillemer (2016) endorses that neglect case is predominant in the special dementia home whereby the family takes the elderly to these homes and abandon them. Dr. Bobbie (2017) says that some of the adults in her home have stayed for more than a year without anyone from the family paying an in-visit to check on their progress. She adds that most of the problem the home is facing is the resistance by the adults who feel that it is a “human dumping site”. She asserts that most of her patients suffer psychosis and dementia but are still sociable people that need warmth and to associate with others and feel owned by their families. Bobbie’s report shows that neglect links to many health issues by the older adults including loss of appetite, induced introversion, and sometimes breathing problems.
Moreover, Johannesen (2013) outlines psychological adult abuse as the central point of all the other identified types of abuse in the adult care homes. Journal of Occupational and Organizational Psychology ( 2010) argues that introversion encroaches with the rate of maturation of a person giving an analogy of how people grow to forget their early age schoolmates to becoming less talkative and less sociable. He asserts that most adults are less likely to report matters affecting them as they feel they are minor and sometimes fear the triviality perception by their caregiver. Other psychologists such as Pillemer and colleague (2016) seconds that psychological abuse in the care home is the hardest to detect and perhaps it is the most dominant type. Unlike physical and verbal abuse, psychological abuse is hard to detect as it runs within the mind of the victim. According to Charlotte (2016), the condition of some of the elders requiring special attention may end up deteriorating rather than improve. American Journal of public health (2013) documents psychological abuse as the point of centrality to all types of abuse since whenever a person is abused, the first get offended or afflicted in the brains. The brains interpret the extent of abuse and generate the possible reaction from the offended person. Since older adults lack the physical strength to react, thus most opt to remain silent, a phenomenon which is commonly mistaken to tolerance (Hatzenbuehler, et al. 2013)
Pillemer (2016) state that staff negligence cannot be the scapegoat to all the types of adult abuse that occur in the adult homes. Though most of the time circumstantial factors lead people to wrong careers, Beus’ research invalidates the facts care home caregivers are in wrong workplaces (Beus, 2015). Conversely, Kallinen (2017) believe that most of the abuse from the staff to the adults is possibly caused by trivial misunderstandings or else demotivating working routines. According to McCord (2015), workers develop different perceptions of their workplaces due to personality factors and emotional consciousness and these two factors can significantly lead to malpractices in work. For instance, district nurses visit residents to check on the older adults in this domiciliary environment. Currently, about 8% of the staff abuse on the adults comes from the outsourced human power.
In addition to that, resident-resident abuse is another commonly reported form of adult abuse in the care homes. This phenomenon occurs especially where the care home offers most facilities as shared amenities such as dining areas, areas of relief and recreational facilities such as the swimming pools and theatres. Resident-resident is a form of abuse that occurs between two counterparts receiving similar attention in the care homes. This form of abuse reveals itself in form of either physical or verbal abuse. Pillemer (2016) adds that in specialist dementia and nursing care homes where most of the elderly people have a mental impairment and poor judgment physical violence and verbal attacks occur at very high rates. Sometimes the patients might be suffering hallucination and end up passing the effects to other innocent people. Physical abuse may include burning, bites, swellings, and strangling. People suffering dementia often involve in activities they did not intend to and the consequence of such activities may physically hurt those around (Napoli, et al. 2013)
Recent research has shown an increase in the rate of sexual abuse. According to Napoli (2013), this one of the abuses that has recorded minimal frequency rates. Her research shows that sexual abuse is not so rampant in these homes; however, it occurs in rare cases. An adult with mental held in nursing homes for various reasons cannot get their conjugal rights, which might strain their sexual life and deny them the pleasure they are entitled. On the contrary, Bauer (2013) argue that most of these care home residents lack the ability to involve themselves in active sex possibly due to old age and mental state. He thus invalidates the concept of conjugal rights denial based on age and inability to make a proper judgment by the care home residents. Resident-resident sexual assault or flirting cases are minimal in the care homes since the integration of psychological therapy at a personal level. About 20 percent of adult care homes report some types of harassment by fellow residents. However, previous researchers have been basing their hypotheses on the abuse perpetrated by the staff and forget that residents too can cause chaos in these homes. Most of the workers in these homes do not have adequate psychological knowledge, as most of them are just nurses with mere technical skills to treat diseases (Zabalegui, et al. 2014)
Another form of adult abuse highly reported is the discriminatory abuse. This form of adult abuse often affects residential homes. Report by WHO and the UN published on Medical Daily Magazine (2016) reveal that the district nurses and the staff who often visit these homes mistreat these adults since they are not permanent workers in those domicile environment (Annals of Internal Medicine, 2016). Perhaps these nurses find it hard to adjust to this typically stressing workplace. Ethics report for adult care homes reveals that discriminatory abuse by the staff has escalated 5% in from 2010. The report attributes this phenomenon to absorption of the youthful workforce in the domiciliary homes where the duties require tolerance and empathy as opposed to school-based skills (Harris, 2015).
Generally, adult care homes face a number of both controllable and uncontrollable types of abuse. Most of these affect the psychological state of the patients / older adults, which eventually changes the self-concept of these individuals (American Psychiatric Association, 2013). For instance, some of these people hate the reality that at some point in their lives they could carry out routine activities without depending on the help of the caregivers.
Indicators of Adult Abuse in care homes
Different forms of adult abuse are detectable while several others are hard to detect. The easiest of all being verbal, physical abuse and neglect (Pillemer, et al. 2016). However, neglect can be hard to figure out in some cases. Psychological abuse poses a great problem to the adult yet it is not easily identifiable. Recent studies show that there is a various indicator of each type of abuse to some extent. Since adults may not report mistreatment always to the caregivers, indicators such as bruises, burns, and blue faces may be translated as resident-resident physical abuse (Alzheimer's Society, 2015). These residents share common amenities such as recreation areas, dining rooms, and facilities. Such conflicts often occur in cases where there is a scarce supply of these facilities and some individuals want to take advantage of others. Although researchers suggest that introversion and other personality traits change as people grow, very rapid changes in behavioral patterns and instant introversion may be because of psychological abuse. Sexual abuse, other than direct resident-resident or staff-resident may be hard to detect (Maiuro, 2015).
Conclusion
It is evident that various authors and researchers already document much of the prevailing forms of adult abuse. Care homes are now adopting a cognitive psychology to run most of their indoor activities (Reisberg, 2013). This approach aims to understand the traits of both the staff and the residents in order to reduce counterpart conflicts in these homes. In nutshell, care home play a major role assisting older adult and the gap that prevails is refurbishing the amenities and the increasing ratio of shared amenities.
References
Alzheimer's Society, 2015. Safeguarding people with dementia: Recognising adult abuse.
American Psychiatric Association, 2013. Diagnostic and statistical manual of mental disorders (DSM-5®). American Psychiatric Pub.
Annals of Internal Medicine, 2016. Medical Daily. Annals of Internal Medicine.
Bauer, M., McAuliffe, L., Nay, R. and Chenco, C., 2013. Sexuality in older adults: Effect of an educational intervention on attitudes and beliefs of residential aged care staff. Educational Gerontology, 39(2), pp.82-91.
Beus, J.M., Dhanani, L.Y. and McCord, M.A., 2015. A meta-analysis of personality and workplace safety: Addressing unanswered questions. Journal of applied psychology, 100(2), p.481.
Black, K., Dobbs, D. and Young, T.L., 2015. Aging in the community: Mobilizing a new paradigm of older adults as a core social resource. Journal of Applied Gerontology, 34(2), pp.219-243.
Charlotte Chisnell, C. K., 2016. Safeguarding in Social Work Practice: A Lifespan Approach.
Cherry, K., 2015. Erikson's psychosocial stages summary chart. About.com.
Di Napoli, E.A., Breland, G.L., and Allen, R.S., 2013. Staff knowledge and perceptions of sexuality and dementia of older adults in nursing homes. Journal of Aging and Health, 25(7), pp.1087-1105.
Fortinash, K. W. P., 2014. Psychiatric Mental Health E-book. s.l. Elsevier Health Sciences.
Harris, M.D., 2015. Handbook of home health care administration. Jones & Bartlett Publishers.
Hatzenbuehler, M.L., Phelan, J.C. and Link, B.G., 2013. Stigma as a fundamental cause of population health inequalities. American journal of public health, 103(5), pp.813-821.
Jäntti, M. and Kallinen, H., 2017, June. Exploring service desk employees' motivation and rewarding. In Service Systems and Service Management (ICSSSM), 2017 International Conference on (pp. 1-6). IEEE.
Jason Ulsperger, J. D. K., 2015. Elder Care Catastrophe: Rituals of Abuse in Nursing Homes and What You Can Do About It.
Johannesen, M. and LoGiudice, D., 2013. Elder abuse: a systematic review of risk factors in community-dwelling elders. Age and aging, 42(3), pp.292-298.
Journal of Occupational and Organizational Psychology, 2010. Journal of Occupational and Organizational Psychology, 74(4).
Kendall, D., 2016. Sociology in Our Times.
Maiuro, R., 2015. Perspectives on Verbal and Psychological Abuse.
Payne, M., 2017. Older Citizens and End-of-Life Care: Social Work Practise Strategies.
Pillemer, K., Burnes, D., Riffin, C. and Lachs, M.S., 2016. Elder abuse: global situation, risk factors, and prevention strategies. The Gerontologist, 56(Suppl_2), pp.S194-S205.
Piredda, M., Matarese, M., Mastroianni, C., D'Angelo, D., Hammer, M.J. and Marines, M.G., 2015. Adult patients’ experiences of nursing care dependence. Journal of Nursing Scholarship, 47(5), pp.397-406.
Reisberg, D., 2013. The Oxford Handbook of Cognitive Psychology.
Singh, D.A., 2014. Effective management of long-term care facilities. Jones & Bartlett Publishers.
Suzy Braye, M. P.-S., 2016. Practising Social Work Law.
Tosangwarn, S., Clissett, P. and Blake, H., 2016. Psychiatric-Mental Health Nursing. Int J Ment Health, 2(5).
Vandervoort A, Houttekier D, Vander Stichele R, van der Steen JT, Van den Block L. Quality of dying in nursing home residents dying of dementia: does advanced care planning matter? A nationwide postmortem study. PloS one. 2014 Mar 10;9(3):e91130.
YouTube. (2017). Nursing Home Neglect and Abuse Video 1. [online] Available at https://www.youtube.com/watch?v=3Y9tj36usHY [Accessed 3 Dec. 2017].
Zabalegui, A., Hamers, J.P., Karlsson, S., Leino-Kilpi, H., Renom-Guiteras, A., Saks, K., Soto, M., Sutcliffe, C. and Cabrera, E., 2014. Best practices interventions to improve quality of care of people with dementia living at home. Patient education and counseling, 95(2), pp.175-184.
Monday, 8 January 2018
Market Analysis | Coca Cola Company | Get Assignment Help| Affordable prices
Introduction
This
research paper explores the core microeconomic principles that apply to the Coca-Cola
Company, how these economic canons are influencing the sustainability of this multinational
company, the impact on business decisions made by the company executives. More
the paper investigates the market structure and segments that Coca-Cola Company targets in order to evaluate
the viability of these market in the future for the firm.
Coca-Cola
is a multinational nonalcoholic beverage company based in Atlanta, Georgia. Coca-Cola gained popularity upon the launch of her
most striking product by a pharmacist known as John Stith in 1886. However, Asa
Griggs Candler bought the company three years later and incorporated it in
Wilmington, Delaware. Coca-Cola Company
produces over 3600 products having a long history of acquisitions of huge
brands of various products. For instance, she acquired the Minute Maid Company
in 1960 and many other companies. The products produced by coca cola range from tea, coffee, energy drinks, juices
among others.
The
Coca is the leading world producer and supplier of these beverages and syrup
concentrates. However, Coca-cola
collaborates with other bottlers to enhance logistics of its products. The
company has its central bottling center in North America known as Coca-Cola Refreshments (Greenfield, 2016).
The
company is listed on the NYSE stock
exchange market and constitutes part of DJIA and S&P indices. Moreover, Coca-Cola Company comprises of the Rusell 1000
index and the Rusell 1000 Growth Stock index. Muhtar Kent is the current chairperson
of this company, with James Quincey as the president and the C.E.O.
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Supply and Demand Conditions of the
Company
Coca-Cola Company dominates the beverage
market offering over 500 carbonated and still drinks to over 200 nations. Her
brand portfolio recorded only 17 brands early in 2014 that accounted for over
one billion dollars annual retail sales. In the same year, the company’s
sparkling drinks comprised of the Diet Coke,
Coca-Cola, Fanta, Coca-Cola Zero, Sprite, and Schweppes, all attributing to
about six billion-dollar brands.
Out
of the 11 still drinks brands, Coca-Cola
Company was able to create an annual retail revenue of over a billion dollars
in 2014. In the same year, the company expanded her still beverage brands by
three more brands namely Gold Peak Tea, Fuze Tea, and I LOHAS mineral water.
The expansion illustrated a rise in demand for drinks free of carbon and readily
drinks.
On
average, the company sells out over 1.8 billion bottles of Coke on a daily
basis across the world comparing to the only 25 bottles that were sold in the first year into beverage industry. The company
has extensively reached many parts of the world with about 275 bottling
companies globally. Statistics show that Coke Company has over 50 consecutive
years recording an increment on the dividends, which implies an increasing
supply of the 3500 products over the years.
In 2016, the company made a retail sales revenue of $41.28 billion
dollars. There has been a general increase in the overall demand for
ready-to-drink beverages, and Coca-Cola
Company has used this opportunity to expand her products, a phenomenon that
explains the overly hiked single share value for the company’s shares. Lately,
a single Coca-Cola share that was bought
in 1919 is worth more than $0.092 million dollars.
The graph below shows the
cumulative total shareowner return from 2007 to 2011.
The graph illustrates the
rise in shareowner return over a period of 5 years after the expansion of Coca-Cola Company to more bottling companies.
The implication of adding more bottling companies and affiliates lines the
logistics and distributions of the company’s products across the world, making
it easier for the company to concentrate on the production of the syrup.
Otherwise, through the extension of the bottling channels, the company achieves
her goal to reach market segments in remote areas.
Similarly,
the demand of some of coca cola products is declining in the United States with
the medical critics warning the consumers of sodium benzoate used as a primary
ingredient in the manufacture of soda. According to Lennerz (2015, p.73-79),
sodium benzoate used in the manufacture of soda damages the yeast cells of
children and may also generate hyperactivity behaviors in human beings. Other critics such as Evans et al. (2015), argue
that cocaine extract in the soda can be harmful to the health of human beings and aims at creating an addiction for competitive advantage, which is
an unethical strategic approach for achieving a competitive advantage. However,
Coca-Cola Enterprises
has initiated plans to seek for substitute ingredients for the Diet Coke.
Whereas
Price Elasticity of the demand for Coca-Cola Products
Price
elasticity of the demand for coca cola products is quite elastic, however, based on a number of determinants of
price elasticity. A number of factors affect the quantity demanded the
company’s products along the prices attached to the products. The existence of strong substitute companies in
the beverage industries such as Pepsi, Mirinda, and NESTLE inc, significantly
influence the price elasticity of demand for coca cola products. For instance,
if coca cola raises the price of each commodity by $5 the price will shoot
downwards and reduce the sales to a
significantly high figure. This phenomenon would not necessarily be out of
unaffordability of the product but due to the prevalence
of cheaper substitutes.
Currently,
the price elasticity of demand for some of her products is quite inelastic due
to quality and time factor. What happens is that Coca-Cola Company uses high-quality
commodities and sophisticated technology to manufacture distinguishably unique
commodities that can still sell off better at higher prices in the market. A
good example is the Diet Coke soda. It sells at a higher price than substitutes yet generates very high incomes for
the company. Time factor aids Coca-Cola
Company greatly when setting prices for various products. According to Forbes (2017),
time factor causes price inelasticity to most of Coca-cola products in that, it takes time for loyal customers to
shift from a particular product experiencing a price fluctuation to opt a
substitute. During this time before the customers adjust their tastes and
preferences, the company is able to learn the most responsive price for a
particular commodity. Other factors such as increase and decrease in consumer’s
income affect the price elasticity of demand for products majorly consumed by
the middle-class customer segment. To
adjust for such market hiccups, Coca-Cola
offers differentiated products of a similar kind
in terms of packing and packaging. For instance, the company offers juices in
bottles of different capacities. Therefore, small-scale users are able to
access small quantities for little amounts of money. There is the inadequacy of close substitute in remote areas due to
unavailability of bottling companies for substitute products in remote areas.
Cost of Production for Coca-Cola Company
The
giant beverage company faces both variable and fixed cost of huge magnitude
while running her manufacturing operations. By 2016, the company had an
estimate of 100, 300 skilled workers excluding casual laborers and the
associates in the bottling companies. A huge percentage of her revenue is
greatly cut by recurrent expenditure, which involves paying the huge number of
employees every month. Another significant cost driver for Coca-Cola Company is the increasingly high
marketing and advertising cost. The beverage
industry has gigantic companies capable of using the money to manipulate the markets in terms of
marketing and pricing.
In
order to cope in such a competitive environment, Coca-Cola Company highly invests in marketing and aggressive
marketing maintain her market share. According to Muhtar Kent, the company
C.E.O they spent more than one billion dollars in media and building by the end
of 2016. He adds that the company uses over half a billion dollars for
marketing purpose in the United States alone, and over 3.3 billion dollars for
worldwide marketing in the same year.
Lately, criticism on the ingredients used in the
manufacture of Diet Coke has brought in
some financial hiccups, increasing costs in the research and development
department, which embarked on the endeavor to find alternative ingredients to
substitute the previous sodium benzoate. Nevertheless, the department has not
established a concrete solution to solve this problem, an element that is
retarding manufacturing and distribution processes of soda. According to Muhtar
(2016), the company spent about $138 million in a period of 5 years from 2010
to 2016 on scientific research to counter the health concerns that associates
soda with obesity. Being a multinational
company Coca-Cola has a tax obligation in
over 200 countries across the world. These taxes culminates from the import of
ingredients and export of finished and intermediate syrups to the diverse
bottling companies.
Muhtar
(2017) confirms that the company has no intentions to retreat or cut down the
volumes it intends to produce in the future but rather aims at completing the franchising strategy that commenced in 2015 to
create a stronger base in North America. This implies that both the fixed and
variable cost drivers have little to no impact on the corporate output
decisions by the coca cola company.
Generally,
the total effect of all these and many other hidden cost drivers would be a
significant decrease in the quarterly gross revenue. However, Coca-Cola Company has a small-packaging
strategy such as cans that greatly helps her generate more sales for the fast-moving beverage products. Muhtar says that
in 2016 the company annual income surpassed the estimated profit by $1.1
billion. He attributes the small can
packaging to this achievement and affirms that the strategy aids in generating
more returns on sale subsidizing the impact of costs, divestitures and other
income leakages. Otherwise, there was a
slight decline in profits between 2014 and 2015 due to an increase in the cost
drivers facing the company.
Overall
Market share for Coca-Cola Company
The
pie chart below illustrates how different beverage companies divide the global
market.
.
Apparently,
Coca-cola dominates in the non-alcoholic
drink production across the world covering about 42% of the total market share.
However, Pepsi follows closely in market domination and accounts for about 27%
of the worldwide market. Other competitors span a small market share and these
include the National Beverage, Dr. Pepper, and Monster in the United States.
These hold about 31 percent of the global market, which is slightly higher than
what Pepsi Inc., spans. Perhaps Coca-Cola
dominates the market due to her capital investment in acquisitions, marketing, and
brand building.
The
company is popular for acquiring big brands such as Dasani mineral water,
Minute Maid, and many other over 20 billion worth companies each. This and
other high capital strategies inhibits potential new entrants in the beverage
industry thus helping Coca-Cola maintain
her domination in the global market. In case other companies get adequate financial and administrative
authority to expand their operations or invent
a new technology of using ingredients with less health side effects, then Coca-Cola, who hardly spans half of the global
market might experience a great hassle trying to position herself again in the
market.
Coca-cola is market structure best defines an
oligopoly market, where there a few firms competing to sell generic products. This
is because two giants, Coca-Cola and
Pepsi, dominate the whole market. The other small firms have quite an insignificant effect on the market. This gives Coca-Cola a closer to monopoly effect in the
beverage market allowing the company to forge many alliances, manipulate the
prices and acquire other big brands (Lingyu, 2015).
Recommendations
Coca-Cola is in an oligopolistic market and
thus it would be better to focus on quality products
as well as mass production in the future to reach and create more customers
that are loyal. High-quality products do not only attract but also help embed the
brand in a customer’s mind. Being an oligopolistic market is an opportunity to
acquire as much as possible market share before new threatening firms enter the
beverage market. Talking of quality, Coca-cola
should reduce the focus on the creation of new marketing strategies and focus
more on the production of user-friendly
commodities that will face little criticism, an element that negates all
marketing efforts rendering marketing expenses to loss.
References
Coca-Cola
History │ World of Coca-Cola. (2017). World
of Coca-Cola. Retrieved 15 December 2017, from
https://www.worldofcoca-cola.com/about-us/coca-cola-history/
Evans,
R., Nguyen, T., Blair, I., Blair, O., & Newman, M. (2015). The Effects of
Soda on the Human Body.
Forbes
Welcome. (2017). Forbes.com. Retrieved 15
December 2017, from https://www.forbes.com/sites/laurengensler/2016/02/09/coca-cola-fourth-quarter-earnings/#3ad611dc2171
Greenfield,
S. (2016). Giving the Global High Sign: Coca-Cola Advertising of the “American
Way” in Life Magazine, 1941-1947.
Lennerz,
B. S., Vafai, S. B., Delaney, N. F., Clish, C. B., Deik, A. A., Pierce, K. A.,
... & Mootha, V. K. (2015). Effects of sodium benzoate, a widely used food
preservative, on glucose homeostasis and metabolic profiles in humans. Molecular
genetics and metabolism, 114(1), 73-79.
Ma,
L. (2015). Examination of the influences of the industrial attributes on the
entry mode selection: case studies of the Coca-Cola Company from US entering
the Chinese beverage industry and the BT Group plc from the UK entering the Chinese telecommunication
industry.
Saturday, 16 December 2017
Critically appraise the circumstances where an impairment loss is deemed to have occurred
Introduction
IAS 36 Impairment of assets published in 1998 and subsequently amended in 2004 and in 2008, seeks to ensure that an asset is not carried on the statement of financial position at a value that is greater that it's recoverable amount. This paper aims to critically appraise the circumstances where an impairment loss is deemed to have occurred and explain when companies should perform an impairment review of assets, while discussing the effects of impairment decisions on the firm's financial position and performance.
Previously there was little authoritative guidance on the accounting for asset impairments. The absence of explicit guidance for many assets permitted substantial discretion in terms of amounts and timing of write offs (Francis et al, 1996). Over time accounting standards have moved towards presenting more items at fair value on the Balance Sheet. In doing so IAS 36 tries to remove as much discretion as possible. The primary objective of IAS 36 Impairment of Assets is to ensure that an entity's assets are carried at no more than their recoverable amount and the standard sets out the criteria for defining how the recoverable amount is determined. Entities are required to conduct impairment tests where there is an indication of impairment of an asset, with the exception of goodwill and certain intangible assets for which an annual impairment test is required. Intangible assets with an indefinite useful life, an intangible asset not yet available for use and acquired goodwill should all be measured annually whether or not there is any indication of impairment.
Impairment is deemed to occur when the carrying amount is higher than the recoverable amount (i.e. the value in use. the asset's net selling price or the fair value as determined in accordance with IFRS 13). At the end of each reporting period an entity is required to assess whether there is any indication of impairment. If an indication of impairment is evident then the assets recoverable amount must be calculated [IAS 36.9]. An impairment loss is recognised where the recoverable amount is below the carrying amount [IAS 36.59]. The impairment loss should be immediately recognised, generally as an expense unless it relates to a revalued asset where the impairment loss is treated as a revaluation decrease [IAS 36.60]. In the case of goodwill, a cash-generating unit to which goodwill has been allocated shall be tested for impairment at least annually by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit: [IAS 36.90] In each situation, if the carrying amount of the unit exceeds the recoverable amount of the unit, the entity must recognise an impairment loss. This is a radical change in accounting for goodwill. Previously, International Accounting Standards required recognition of Goodwill subject to amortisation over its useful lifetime.
Indicators of impairment are set out in IAS 36 with a view to making the decision less subjective than previously was the case. Negative changes in technology, markets, economy and law could all have adverse impact on the value of an entity's assets. Indicators of impairment could be as a result of internal or external sources. The market value of an asset may decline as a result of usage or the passage of time. Other external indicators of a decline in value could be the result of significant technological, market, economic, or legal changes which occur and have an adverse effect on the asset or entity. Market interest rates may impact the discount rate used in calculating the value in use of an asset and therefore decreasing its recoverable amount. Internal indicators of an impairment review could be the result of obsolete or physically damage assets, or if an asset is part of a restructure or held for sale, or where the economic performance of an asset is worse than expected.
Despite the standard being objectively set, it can be difficult in determining the measurement of value attributable in assessing impairment options. The timings and measurement of asset write-downs rely heavily on estimates. A number of features of impairment testing and measurement process make implementation a challenge. Triggering events to indicate impairment are many and vary greatly in significance and severity. Different valuation models are used and there is little conformity in the selection of discount rates. (Comiskey and Mulford, 2010). A difference in nature continues to exist between fair values disclosed by management. While the standard seeks to increase transparency and eliminate the subjectivity of accounting for impairments, the exercise for determining if an asset is impaired and by how much remains at management's discretion. It was felt that previously management took advantage of the discretion afforded by accounting rules to manipulate earnings either by not recognising impairment when it has occurred or by recognising it only when it is advantages (to them) to do so (Francis et al, 1996). The standard now seeks to address this discretion by requiring annual impairment (Goodwill and intangibles) or impairment reviews to be carried out whenever there is an indication of impairment. Even still, there is an element of discretion afforded to the calculation of impairments and so management incentives to manage earnings can still play a part in any impairment decisions. These estimates might be managed to alter or avoid impairments, limiting the comparability across firms. A goodwill impairment loss, for example, is estimated in most cases from management's projections of future cash flows (Z Li et al, 2011). This is problematic to the investors who are unable to see through these potential manipulations. Indeed, investors and analysts have the option to adjust, or indeed totally ignore, reported accounting numbers, therefore it is far less certain whether this reporting behaviour actually misleads users or reduces reliability and relevance (Lhaopadchan, 2010). Additionally, financial statements differ from the management accounts used by an entity and the effect of any impairment further widens a gap already existing between management information accounts used by the board and the financial statements audited and published.
Earnings manipulation is one such concern given the judgemental approach to the indication of and calculation of impairment. One of the most widely cited papers that investigate the effect of executive compensation plan on accounting choice is Healy (1985). Healy hypothesizes that managers have an economic incentive to manipulate earnings in order to increase their cash compensation, this being the case certain accounting standards allow for this more than others and IAS 36 still allows for an element of judgement in the calculation of impairments. Furthermore, papers have cited the nature behind recognition (or lack of recognition) of impairments and IAS 36 permits an impairment loss on a long lived asset to be reversed if the economic value of the asset recovers. This has been seen to have a direct impact on the practice of impairments whereby reversibility has a positive effect on a manager's decision to record asset impairments. 'Permitting reversals significantly increases the likelihood that a manager will record the impairment' (Trottier 2013) thus highlighting the discretion that management can withhold towards the treatment of impairments.
Volatile financial markets and shifting economic conditions can impact the value of a company's assets across the Balance Sheet. The recent global meltdown of financial markets was accompanied by highly publicised asset write-downs (Spear and Taylor 2011) and so the standard seeks to address the transparency of the financial statements by ensuring that impairments are directly reflected through the profit and loss account and statement of comprehensive income, disclosed by class of asset. It is not surprising that the most frequent write down activities took place during periods of economic recession confirming the strong relationship between asset write-downs and economic conditions. In 2013 the consolidated results of PSA Peugeot Citroen saw a €1,101 million impairment charge, mainly recognised with respect to the assets of the Automotive Division, primarily to reflect the deteriorating automobile markets and adverse exchange rate movements in Russia and Latin America. Additionally, in 2014 Vodafone's end of year profits dropped after a £6.6bn impairment relating to the value of European operations whereby lower than expected cash flows were the result of a tougher macroeconomic environment and heavy price competition contributing to a total decline in revenues. Both investors and financial analysts revise their expectations downward on the announcement of an impairment loss. The negative impact of the loss serves as a leading indicator of a decline in the future profitability of an entity. (Z Li et al, 2011).
Conclusion
In conclusion, despite the presumed benefits associated with Fair Value accounting, it is shown that in practice managerial self-interests and earnings management concerns appear to motivate many impairment decisions (Lhaopadchan, 2010). IAS 36 goes further than any previous standard and subsequent amendments to eliminate any subjectivity involved in highlighting and calculating an impairment loss. While goodwill should be assessed annually for impairment other potentially impaired assets are only reviewed in detail for impairment if there is an indication of impairment, some of which are highlighted by the standard itself, however the indicator of impairment could go unidentified resulting in misleading financial statements. Additionally many calculations of impairment use management projections which could include error or contain an element of managerial self-interest and manipulation. Generally speaking the reaction of market participants to any impairment disclosed in the financial statements is of a negative nature with the exception of restructuring costs for which highlight future spend. While the standard seeks to provide a truer and fairer representation of asset value it should be noted with caution the subjective nature of any calculations. Even with an unqualified audit report on the financial statements the audit opinion on impairment is only as good as the information provided and made available to the external auditors.
Hence, it can be concluded that IAS 36 Impairment of assets has come far to contribute to improve the transparency of the financial statements by successfully determining when and how impairment reviews should be conducted, however there will remain an element of managerial judgement for which caution should be taken by all users of the financial statements.
References
'Causes and effects of discretionary asset write-off', Francis, J.. J. D. Hanna, and L. Vincent. Journal of Accounting Research Volume 34, 1996.
'Goodwill, Triggering Events and Impairment Accounting', Eugene E Comiskey; Charles W. Mulford. Managerial Finance, Volume 36 (9): 22 – August 10 2010
'Causes and Consequences of Goodwill Impairment Losses' Z Li et al. Review of Accounting Studies, Volume 16 (4) – Dec 1, 2011 – May 11 – 2010.
'Fair Value Accounting and Intangible Assets.' Lhaopadchan. Journal of Financial Regulation and Compliance, Volume 18 (2)
'The Effect of Reversibility on a Manager's Decision to Record Asset Impairments', Trottier, Kim. Journal Accounting Perspectives , Volume 12 (1) – Mar 1, 2013
'The Effect/Decisions of Bonus Schemes on Accounting Choices', Healy, P M. Journal of Accounting and Economics Volume 7 (1), 1985
'Asset Write Downs: Evidence from 2001-2008', Spear, Nasser A; Taylor, Alexandra M. Australian Accounting Review, Volume 21 (1) – Mar 1, 2011
Monday, 6 November 2017
EssayBay Uk - Social Sciences
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Social science as an academic field of study developed out of the Age of Enlightenment as individuals began to take a more disciplined approach to quantifying their observations of society. Over time, similar aspects of a society, such as communication, were separated into unique fields of study. Statistical surveys and research methodologies helped prove or disprove theories.
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