A New Business in Masdar City in the UAE - Term Paper Example

Table of Contents Introduction 2 Identification of Issues or Problems 2 Analysis of the Problem 3 Collection of Evidence 4 Analysis of result and identification of Different Alternatives 6 Develop the Conclusion 7 Communicate the Result 7 References 8 Introduction This report provides a professional accounting research on whether Abdullah an X Strata aircraft engineer should look at opening a new business in Masdar City in UAE, Abu Dhabi for aircraft engine component. Abdullah has the required technical expertise but faces threats from rising environmental concerns and the manner the government of Abu Dhabi operate in Masdar city as an environmental friendly city. This report looks to analyze the issue and presents the different opportunities which the business has and also helps to formulate the required directives based on which the decision to carry out the business would be taken. Masdar city is looking towards developing itself into an economy where they are more environmental friendly and look at preserving the environment. Masdar city has further looked at developing the city where zero tolerance level towards pollution is developed and aims to have different strategies which will help to control pollution. Identification of Issues or Problem The main problem is to find out whether aircraft engine work can be carried out in Masdar city considering the fact that the government of Abu Dhabi is looking to change it into an environmental friendly city. Increasing government interventions along with United Nations agreement on gas emission is an area of consideration (ADPC, 2008). This make it imperative that while setting up a new business the new opportunities are properly looked at and based on the different stance which the place provides business decisions have to be made. Issues The different issues which the situation could unfold into are as Additional pressure from the government due to the fact that emission of harmful chemicals and gas while carrying out aircraft engine work could be objectionable and would lead towards shut down of the plant. The business could also face objections from different environmentalist, government bodies and the society on a large as the increase in gas emissions could have an impact on the future projects and could tarnish the image of the place regarding their concerns towards carbon emission. Problem Analysis: The government of Abu Dhabi is looking to take stringent steps and is imposing heavy fines and penalties for organization which tend to emit pollution. The government is looking to be very strict and is aiming towards developing Masdar city into a model town where they look to develop strategies which will be aimed towards reduction in pollution. the government has also engaged into entering partnership with United Nations and is looking to act in a manner where the government will tend to control gas emission. The government is aiming towards reducing emission and is working on line with the United Nations so that appropriate policies can be adopted in the same direction The cost associated with neutralizing the cost associated with harmful chemical emission could outweigh the benefits and could make the entire process of setting up a new project to be futile Problem Analysis: the government is imposing a carbon tax and will allow trading of carbons so that organizations take appropriate strategies and look towards preserving the environment. This will help to reduce the level of pollution and will provide a better framework through which control will be exercised Continuous pressure and interventions from the Abu Dhabi government could also result in impacting the entire operations and could make the entire process of carrying out different activities to be a waste Problem Analysis: the government in tandem with the United Nations has drafted a policy where they look to control emission. The government on this front is very clear with their stand and will look to carry out every required activities so that the different functions can be controlled and better gas emission can be reduced IAS 37 states that it could lead towards a contingent liability which will have an impact on the business assets and liabilities and could result in an additional cost for the business Problem Analysis: the government through the process has also looked to bring about a change in the manner of working and is imposing carbon tax so that better control can be exercised. The government is looking towards having better control over the different activities and using carbon tax as a weapon through which emission can be controlled (Carbon Tax, 2008) The process of accounting, recognizing and measuring the environmental cost associated with pollution could have an indirect impact on the manner the business functions and could impact the business performance Problem Analysis: the imposition of taxes and fines will lead towards a very high increase in the overall cost of carrying out activities and would make the entire process of carrying out activities to be a waste Collection of Evidence The different directives bring forward the fact that Masdar city will make organization account for environmental accounting where the different concepts of recognition, measurement and accounting need to be assured. Masdar city needs to ensure that proper accounting policies with regard to the different management of environmental recording are adhered (IAS, 37). This leads towards the following Firstly, the imposition of different fines and penalties will have an impact on the manner organizations work as they will have to work within the jurisdiction provided by the government. This is binding on every organization working in Masdar city and needs to follow the different rules which have been provided for. Secondly, the cost associated with the emission of carbon is very high and organizations need to choose their future strategy carefully and after planning so that the different benefits are not marginalized (Climate, 2011). The imposition of different taxes and penalties will have an impact on the manner organizations carry out their business and would lead towards impacting the business potential Thirdly, the government is allowing the process where trading of carbons will take place. This would lead towards bringing a change in the manner business is carried out as organizations who emit less carbons can gain by trading in those at the cost of other players. The cap which will different for different industry will be decided by the government body and would look towards bringing complete change in the outlook of things (Ravari, 2011). This would also tend to develop the required fundamentals through which business process will be developed and determined and will bring about a change in the manner working is done Fourthly, the government of Abu Dhabi is aiming towards developing Masdar city into a model town where the different functionalities will be derived. This will thereby look towards having more and more reforms which will be aimed at controlling pollution. The overall impact of such a decision would be that the business has to look at identifying the different fundamentals and will have to carry out business based on different jurisdiction which will hamper the manner in which business decisions are taken Analysis of result and identification of different alternatives The different aspect and areas would lead towards improving the overall mechanism through which work is carried out but would also lead towards ensuring that the business gains efficiency. On the other hand the imposition of carbon tax would mean that the overall cost would increase as the cost associated with trading of carbons along with fines and different taxes would have an impact on the manner business performance is carried out (Carbon Tax, 2011). This would mean that the cost would outweigh the profits and the business won’t be a profitable one as expected. This would also entail into one where the different dimensions would not provide the same value and would thereby have an impact on the manner different activities are carried out. This thereby makes the operational cost to be very high and is as aspect which need not be considered due to additional cost for the business. The implication for the business would be that the cost of carrying activity will be high in comparison to the different gains which the business is expected to receive. This means that the business would lose instead of gaining and is an aspect which should not be considered as the impact it will have on the business is very high. The other implication for the business would be that the brand image would be impacted because the society will doubt the ethical standards of the business regarding the manner in which different decisions are taken for carrying out business. This would mean that the overall effectiveness of the business would be deeply impacted and would transform into one where the future working potential will be impacted Develop the Conclusion The report thereby shows that carrying out activities in Masdar city would not be a profitable one due to increasing concerns with relation to rising carbon emission and pollution. The overall impact would be such that the brand image would be impacted and the business won’t be in a position to carry out the different activities. This will hamper the long term progress and is an aspect which needs to be considered and avoided so that the business takes decisions based on clear and better dimensions. Communicate the Result The enterprise needs to weigh the cost associated with carrying out business in Masdar city and will include the environmental cost associated with carrying business. Weighing the cost against the different benefits which the business will be able to get should determine whether setting up a business would be profitable. The overall phenomenon should be determined based on the ground realities and determining the manner in which the overall development and future prospect of the business will be based. References ADPC. 2008.Masdar & Abu Dhabi Port Company Sign Agreement on Carbon Capture& Greenhouse Gas Emission Reduction at Khalifa Port & Industrial Zone. Retrieved from http://www.adpc.ae/en/news/media-centre/press-releases/masdar-and-abu-dhabi-ports-company-adpc-sign-agreement-on-carbon-capture-and-greenhouse-gas-emission.html Carbon. 2008. Govt to announce carbon tax compensation. Retreived from www.businessspectator.com.au/bs.nsf/Article/Govt-to-announce-carbon-tax-compensation-report-pd20110413-FUS3M?OpenDocument&src=mp Climate. 2011. Climate Change & Imposition of Carbon Tax. Retrieved from thecomplex.weebly.com/uploads/5/9/6/0/5960329/climate_change_and_the_imposition_of_a_carbon_tax_v2.doc Carbon Tax. 2011. No Carbon tax, Retrieved from http://www.perthnow.com.au/business/news/no-carbon-tax-subsidy-for-verve-barnett/story-e6frg2qu-1226049829378 Ravari, A. 2011. AASB Staff Paper: Financial Reporting Implications of the Carbon Tax for Government. Australian Accounting Standard Borad. Retrieved from http://www.aasb.gov.au/admin/file/content102/c3/Government_Financial_Reporting_Carbon_Tax.pdf IAS 37. 2014. IAS 37. Retrieved on December 30, 2014 from http://www.iasplus.com/en/standards/ias/ias37 Read More