Weeks Material Preparation for Exam - Assignment Example

Business Law: Weeks’ Material Preparation for Exam WEEK ONE Factors that contribute to the prosperity of a country comprise the most important questions for any nation. “So Close and Yet So Different” begins with a contrast between both sides of Nogales, which is partly in Arizona, United States and Mexico (Acemoglu and Robinson 7). The part in Arizona has an average wage of $30,000 with most of the grown-ups being high school graduates. Transportation infrastructure matches those of other leading states. Law enforcement is thorough with the law in this part of Nogales. The average lifespan is 65 years old. In the other half, the average wage is $10,000, and infrastructure is below standard (33). In this part of Nogales, crime rates worse than the northern side because enforcement is not as thorough. This difference is not existent due to environmental or customary factors. Instead, this difference occurs due to political and economic potentials (29). For one to understand this difference, visiting the precolonial era during the 1500s and 1600s is important (13). A government and economy of slavery and withdrawal colonized Mexico as the first settlement. During the 1400s, Mexican Hispanics thrived on an economy bent on slavery and mining and trading gold and silver. This way of living left a legacy of elite-administration and a scarcity of political liberties in Mexico. The 1500s saw the settlement of the English in North America. Here, the English did not observe slavery amongst the Native Americans because of unfavorable population densities even though the settlers attempted for the first two decades (15). The Virginia Company realized that incentives were the only key to achieving colonialism in North America. As a result, The Virginia Company offered land in exchange for labor. This offer set the groundwork for a democratic constitution and legislature for the future United States, which continued to pose challenges for the English administration (37). The following three centuries are vital to gaining an insight of the reason the United States is very wealthy today and the reason Latin America is extremely deprived (28). The United States enjoyed three centuries of political stability where political establishments influence economic establishments, at least to the degree widely making them serve the entire public. Other aspects such as the patent foundation, credit frameworks, and academia offer opportunities for the American public to accumulate the government’s wealth and revel in the benefits of the resources (43). According to Daron Acemoglu and James Robinson, finding out whether the value of natural resources, particularly fossil fuels, may affect political establishments and significant economic factors is a matter of their prevalence or amount available within a given area. With Cameroon in question, Acemoglu and Robinson suggest a “resource curse” as a solution to this scarcity through political affairs (Acemoglu and Robinson 2013). It is only right for one to presume that such solutions only work through politics. Autocratic leaders are more willing to use suppressive measures to prevent democratization or evade the loss of influence through elections. Experimental proof used in cross-sectional differences to approximate impact of resource wealth democracy is not enough. Developing nations lack a decent financial and taxing system thereby depend on leasing out natural resources (Acemoglu and Robinson 2013). WEEK TWO Failure to comply with societies anticipations of proper corporate behavior or to handle stakeholders equally can endanger a company’s ability to compete successfully. As a result, organizations today work with social settings in mind. Constance Bagley assists business executives to gain a better insight of how legislation influences the external and internal setting of their organizations and how this legislation and in reaction to politicization (Bagley 2). Complying with the law is simply the baseline for proper corporate behavior. Just because the law permits some activities, it does not mean that one has to engage in them. Organizational leaders are held accountable for creating their organization’s approaches and should take into account not just what the organization can do but also what it must to do. As a result, adjustments in today’s competitive world entail the marshaling and usage of organizational resources and other operations the value series. This perception introduced the system strategy legislation in organizational administration. Public legislation influences today’s competitive markets and resources available to the private sector (Bagley 9). The limitations of public legislation and organizations’ strategic positions in this competitive world and its resources compel the legally compliant leader to employ a range of legal solutions. The solutions range from the evaluation of opportunities, building the organization’s value plan, and choosing and carrying out operations in the value chain. This solution serves as an active model that sees the law as not just an external power that imposes its influence on leaders and their organizations. Rather, organizations can partake in lobbying, and other political procedures planned to amend the law or the manner in which it is exercised over a given period (Bagley 10). Moreover, transitions in today’s competitive world and organizational resources, together with other activities, will influence the societal framework and might trigger changes in public legislation. Charles Handy investigates the possibility that capitalists could in fact contribute to the collapse of capitalism itself in “What’s a Business For?” To do this, Handy explores the true reasons for setting up businesses in the developed world (Handy 49). Different organizational leaders have faced jail time because of intentional business fraud or malevolent operational activities. However, these individuals can be seen as industry players who were just playing in line with the new rules of the game. The terms of founding and running a business have certainly changed over the past three decades. Investments replaced business ownership, and an organization’s sources are found more and more within the grasp of its main shareholders and not in its premises or equipment. As a result, Handy proposes the need to visit social and legal assumptions regarding the true motive of business (53). The priority today is to maintain the energy generated by the previous model while fixing its flaws. Fixing these floors may involve paying dividends to individuals who contribute their skills and financial resources. The way charity organizations operate is similar to how other organizations determine their success in terms of the effects they have on stakeholders including themselves. Until private organizations begin viewing their operations and goals this way, capitalism will keep on a game for the wealthy, engineered to serve their purposes and agents (55). WEEK THREE An economy built on rentierism is seen widely as an economy where rent plays a vital role (Yates 11). In such an economy, the rent is a person who relies on income acquired from renting. This dependence consist of commercial rent and interest or other financial fees. Chapter one describes these fees as a compensation for owning resources. The Rentier Theory identifies a difference between “earned” and “unearned” compensation (25). This theory also assumes that a rentier economy formulate a particular attitude towards the ownership of natural resources and its relationship with potential, external users. Douglas Yates argues that the economic actions and decisions of a rentier is distinct in the sense that it represents a gap in the job-income connection. Monetary and asset-based rewards for a rentier do not occur because of employment but instead are the outcome of situation or inventions in rent-seeking processes (35). A good example of this rentier causation is Saudi Arabia’s potential of turning into the world’s biggest oil importer by 2030. Bloomberg writers Ayesha Daya and Dana El Baltaji say this potential arises from the usage of petroleum and its derivatives for generation electricity for nearly 50% of the kingdom’s consumption (Daya and Baltaji 2012). While citing a study by Citigroup, writers further contend that using a big portion of the extracted oil domestic makes this potential very likely in contrast to the amount of oil ought to developed nations. Subsidy levels in Saudi Arabia have to be taken into account when investigating the future trends in the distribution of crude oil extracted dramatically (Daya and Baltaji 2012). A second example of the application of the Rentier Theory is the inevitable birth of offshoots of democracy in the Arab Spring in 2013. The most helpful analogy of the rentier causation is the post-Soviet crisis where 12 new countries without previous any experience in democratic processes deaf behind it despite government and strives to form a new one (Traub 2013). Two-thirds of those nations are authoritarian, and the remaining ones are anti-liberal and unstable politically. Safeguarded optimism in the Arab Spring comprises of the acknowledgement that communities greatly hurt by autocratic governance and economic downturns can take a generation to recover (Traub 2013). The role of developed nations such as the United States and the EU in Arab Spring’s and post-Soviet’s potentials and developments perspective can reinforce their self-governing powers. The United States unwillingness to condemn President Mohammed Morsy of Egypt made it simpler for Morsy and other leaders like him to pursue harmful impulses (Traub 2013). The Arab Spring and post-Soviet situations are a reminder that political establishments that determine economic activity and prosperity do not last for long. WEEK FOUR A helpful way of discussing market is viewing it as a coordinating system. The price solution acts as a way for deviating the flow of each resource to its ultimate valued utilization. In the event of a natural calamity, the rise in prices for basic needs and material carries out a vital coordinating role. Conserving these resources only makes them plentiful in one place and scarce in another. Such a price system is objective, which means communities in places where the resources above are plentiful do not have to take measures to help those in communities where their resources are scarce. The economy market is simply a dichotomy of methods resources are distributed. Another solution for the economy market is power in control. Within organizations, the independent and objective coordination of the price system is replaced by a mindful and relational solution. Under this solution, the organizational leader as to measure or assume his or her workers are making enough efforts determine that the organization has ample resources or not. The entire goal of a business is to participate in competition without organizing support for this market solution. In his 1937 article, Ronald H. Coase questions why this goal avoids a system that distributes resources to their ultimate valued use. Coase identifies this logic with the existence of costs integral to implementing this price solution (Coase 389). The article refers to these expenses “transaction costs." Transaction costs are the expenses for determining the appropriate prices, and the cost of negotiating entire agreements that arrange for all plan Bs and getting rid of opportunism (398). When a person starts a business, the individual is betting that he or she can allocate resources inside the respective business. This allocation has to happen with adequate efficiency to allow for cost more affordable than what the market alone could generate. Crises of immense proportions are inclined to generate multiple explanations, and that was the case with Enron (Coffee 3). Nearly all critics had different accounts and solution for the problems caused by Enron. Irrespective of these accounts, Enron remains an extremely peculiar example of ruthless corporate administration that it alone cannot present adequate proof of systematic administration failure. The Enron crisis and controversy deliver a model of "gatekeeper failure," which is one that depends on reason and time dependence might conveniently be defensible on “reputational” third parties (10). These third parties consisted of accountants, securities experts, lawyers, and other specialists about their reputational competence to defend information that key shareholders could not easily confirm. Clearly, the 1990s saw the relationship between “gatekeeper” consent and managerial misconduct that in turn contributed to declining probable liability costs (13). At the same time, the probable benefits for Enron increased. This increment along with the predictable outcome that revenue restatements and income management rose. Solving the conditions which "gatekeeper failure" is possible consequently results in prescriptions centered on straightening incentives of gatekeepers with those of key shareholders (29). John C. Coffee, Jr. deduced that Enron is more about the gatekeeper debacle than management failure. “Reputational” resources do not build assets that skilled service organizations will unavoidably accumulate and secure (28). WEEK 6 Improving corporate governance requires a new culture of oversight in which directors devote themselves to the position as a main occupation, and not legal processes. Robert C. Pozen suggests the structure of professional executive posts that react to the three main aspects of unsuccessful decision-making (Pozen 52). In this structure, all directorial panels would be limited to seven individuals. This organizational model reflects the need for the chief executive to represent contemporary businesses while maintaining independence of the board of directors. Financial companies that did not get through the 2007/2008 financial turmoil had extremely large boards of directors. This company had a considerable majority of autonomous executives. The result is engagement in “social loafing,” even though big directorial panels are common in financial companies (53). Social loafing causes such company panels to stop taking personal accountability for the company’s actions. Instead, company boards depend on the Chief Executive and other directors to take the blame or credit. In addition, big boards of directors also prevent consensus development, which is the traditional method of function or operation in organizational boards. Incompetence among directors of financial companies is a perennial challenge (53). Many directors of big firms strive to understand operations appropriately. Today, companies partake in holistic activities, operate in far-flung places with international partners, and work under political and economic surroundings. Autonomous directors occasionally say they have specific understanding of the companies’ operations since the board conducts an annual meeting at one of its subsidiaries instead of the headquarters. Pozen says directors do not have any other choice other than putting in substantially more time into their jobs than they do today to learn about the business, and observe internal progressions and external, influential conditions (54). This way, competent directors would be difficult to come across. Discovering autonomous directors with applicable professional competence would not be easy when the business’ rivals employ the most eligible ones. A proxy report of the 2012 annual summit of investors at Goldman Sachs revealed that their management makes offers determined by board recommendations. This determination includes processes such as the election of directors and optional votes for the authorization of the executive pay and investor proposals (The Goldman Sachs Group Inc. 1). A consequence of this protocol was Goldman Sachs’ the structure, which offered one leader who represents the entire business with a single voice, clearer responsibility, and improved communication between the board and management. Goldman Sachs achieved this new managerial structure forming a Lead Director position that replaced the Presiding Director position and presenting a new $25,000 yearly fee for the Lead Director (2). In 2011, Lucy P. Marcus recommended five steps to change traditional company board of directors into a “rocket fuel” for the whole organization (Marcus 2011). The five steps were familiarizing with the board of directors, management and staff, business, business setting, and the time to call it quits. The article argued that the anonymous directors themselves always determine efficiency and failure within the boardroom (Marcus). Works Cited Acemoglu, Daron and James Robinson. Chapter One: So Close Yet So Different. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Los angeles, CA: Crown Business, 2013. Acemoglu, Daron and James Robinson. Natural Resources and Political Institutions: Democracy. 2013. Why Nations Fail. Web. 20 Mar. 2015. Bagley, Constance E. Business, Law, and Society: The Systems Approach to Law and Management. 2006. Harvard Business Review. Print. 20 Mar. 2015. Coase, Ronald H. The Nature of the Firm. Economica, New Series, 4.16. (1937): 386-405. Coffee, Jr., John C. Understanding Enron: It’s About the Gatekeepers, Stupid. Columbia Law School: The Center for Law and Economic Studies, Working Paper No. 207. Print. Pp. 29. Daya, Ayesha and Dana El Baltaji. Saudi Arabia May Become Oil Importer by 2030, Citigroup Says. 2012. Bloomberg. Web. 20 Mar. 2015. Handy, Charles. What’s a Business For? 2002. Big Picture. Print. 20 Mar. 2015. Marcus, Lucy P. Board Members: Rocket Fuel or Rocks? 2011. Harvard Business Review. Web. 20 Mar. 2015. Pozen, Robert C. The Big Idea: The Case For Professional Boards. 2010. Harvard Business Review. Print. 20 Mar. 2015. The Goldman Sachs Group Inc. Proxy Statement for 2012 Annual Meeting of Shareholders. 2013. Goldman Sachs. Print. 20 Mar. 2015. Traub, James. The Terrible Twos. 2013. Foreign Policy. Web. 20 Mar. 2015. Yates, Douglas Andrew. Chapter I: The Theory of the Rentier State. The Rentier State in Africa: Oil Rent Dependency and Neocolonialism in the Republic of Gabon. Johannesburg, SA: Africa World Press, 1996. Read More