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Innovation & Management Decision-making Question 1 Macro environment entails forces that exist

Innovation & Management Decision-making

Question 1

Macro environment entails forces that exist externally. The organization has little or no control over the external forces. The external aspects trigger the company to make some changes internally so that it can increase its profitability. According to the case study, men’s shirt industry demonstrated some types of forces that could drive the firms to make some critical changes so that they can continue making the required profits. The most common forces that existed in the case study include suppliers, buyers or customers, technology and competition.

Craig, the vice president of KSG, expounded on the importance of customer or buyer forces in the company. Craig characterized buyers as large and brutal when it comes to pricing. The main idea that the vice president meant was that the company needed to take care of customer loyalty despite all the barriers that the industry is going through in the process. Bargaining power of buyers illustrates the need for the organization to produce quality products at relatively low prices (Wu & Huarng, 2015). The customer forces are the key drivers of prices and quality of the products. However, the case study focused on the financial situation of the industry and the costs that will take care of the customer forces.

Besides, the power of suppliers is another force that seemed to have affected men’s shirt industry. Suppliers have the power to manipulate the prices of the raw materials that they are supplying to a given industry. Suppliers may fight for higher prices so that they can favor themselves for higher profits. Craig mentioned that suppliers were an oligopoly. The suppliers of men’s shirt industry mean that they are few but large. The issue with oligopoly is that suppliers may form collusion so that they can increase the prices. The situation will adversely affect the men’s shirt industry.

The case study also mentioned the existence of technologies and prices wars as part of the forces that affected men’s shirt industry. Industry rivalry involves the existence of competition among firms within the same industry. Price wars demonstrated a vast occurrence of competition in the industry (Wu & Huarng, 2015). On the other hand, technology may be the greatest factor in the industry. However, technology keeps on advancing; hence the industry must advance too.

In my opinion, the forces will affect the Plastiwear opportunity. The utilization of fiber in the creation of men’s shirts will face a massive challenge due to the force of competition. Oligopoly supply will escalate the prices of suppliers hence will negatively affect Plastiwear. Furthermore, the lack of space that lessens the creation of customer loyalty. Therefore, if there is a need for the success of Plastiwear, the company must outstandingly manage the forces.

Question 2

The company may need to take note of the various types of innovation so that it can comprehend where it wants to innovate. Therefore, acknowledging different categories of innovation will tell the company where it can formulate its innovation. According to the case study, the need for the establishment of the GreenPlastics was one of the vital innovations that aimed at improving the environment. There are many types of innovation, for instance, radical, incremental and disruptive. The types of innovation fall under the extent of change.

Radical innovation is associated with the creation of new products or services in an organization. The type of innovation triggers the company to produce different products that did not exist before. Furthermore, it focuses on the creation of the development of significant change. Individuals must not associate the new product with past products since the type of innovation involves change and alteration to produce a novel product (Haneda & Ito, 2018). Ultimately, the impact of innovation is usually significant as compared to other types of innovation. It affects a large number of people and imparts a significant impact on the company.

More so, incremental innovation entails the development of the already produced product. The type of innovation does not provide the creation of the novel product, but it encourages the advancement of existing service of good. According to the innovation expert, the main objective of the incremental innovation is to lessen the cost, adapt and increase customer satisfaction. According to the case study, GreenPlastics seemed to have existed, but the company wants to make some changes hence becoming incremental innovation.

Finally, disruption innovation comes in to shape the new market. Most of the innovation in this category originate from the inferior segments. In a nutshell, the type of innovation is the creation of the new market that will displace the existing market. It disrupts the preceding market by creating a novel market and value.

Question 3

Innovation champions are individuals that promote creativity and innovation in an organization. They are the most critical people in a company since they conduct their research so that they can identify, validate and promote an idea that might be unique or have existed but requires changes (Wu & Huarng, 2015). There are various role and characteristics of innovation champions that make them beneficial in an organization.

The roles and responsibilities of innovation champions illustrate their dedication and passion regarding identification and promotion of innovation in an organization. The first role is to protect and nurture the required resources in a company so that it can generate new ideas. Also, it can use the resources to improve the company other than generating a novel idea. Most of the innovation champions dedicate themselves to utilize available resources so that they can generate new ideas that will be fruitful to the company.

Furthermore, innovation champions find the idea. Their dedication and passion for executing their work lead them to come up with ideas that are of great benefit to the company. Also, they organize the ideas that they have come up with so that they make sure they are well managed for the benefit of the company.

On the other hand, innovation champions do have some features that dictate how they suite their job. They are well networked such that they associate with the outside world. Most of the innovation champions may get some ideas through socialization with different people (Haneda & Ito, 2018). In essence, they do not just stay in the office. Besides, they are open-minded. Innovation champions are open to novel ideas from the outside world and from within the company. More so, they are passionate about creativity and innovation. Most of the innovation champions love what they do hence form the best team to work with, in the department of innovation and creativity.

Question 4

The study of the innovation climate within the company entails the support provided by the management or external community to explore innovative approaches. The innovative climate entails all the aspects that affect the generation of ideas and implementation. The setting within or outside the organization may adversely affect the identification and production of innovative ideas, or it can positively develop the production of innovations (Wu & Huarng, 2015). Therefore, the factors that encompass the innovation climate must be considered in an organization so that it cannot prevent the company from achieving novel ideas. The most important aspects of innovation climate include organizational culture, individuals and community.

Organization culture dictates the nature of the innovations that will be available in an organization. The management may demonstrate some support that can promote innovation within the company. Thus, management support determines the level of innovations that will be available in an organization. An administration that supports its employees will provide available resources and ideas to promote innovation in an organization.

Also, the organization may involve its employees to share a vision and support them to achieve their objectives in life. Shared visions will accelerate the creation of new ideas hence innovation since everyone is not working on their dreams and visions. Information sharing is a critical element that promotes innovation. Integration of department may help information sharing hence increasing the chances of creating new ideas in an n organization. However, the company that does promote information sharing has unfavorable innovation climate.

The economic factors may also affect the innovation climate of an organization. Organizational culture involves the creation and management of resources. If the company increase the availability of resources, then employees will not have any issue in finding a creative way to use the resources (Lendel et al. 2015). Availability of resources is the creation of a favorable innovation climate. Besides, the organization should focus on improving the working environment so that it can make it conducive for its employees. Creation of comfort in the workplace increases the chances of coming up with different innovations that may help the company.

Ultimately, the organization may create a favorable innovation climate through motivation. Numerous forms of inspirations may motivate the employees to take part in innovation and creation of new ideas to benefit the organization. Two types of motivation may make employees work extra hard regarding innovation creation. Both intrinsic and extrinsic motivation may help the employees to come up with novel ideas. The organization may focus on extrinsic motivation, for instance, increasing salaries and wages.

The behavior of individuals may also affect the innovation climate in an organization. Employees may have an attitude to work for the company and like the job they are doing. Job satisfaction and passion in their work make a favorable innovation climate (Basyuk eta l. 2016). Individuals can quickly come up with different ideas and share them since they like what they do and they wish to improve the company. Therefore, job satisfaction that comes from within increase the degree of new ideas in an organization hence up surging innovation having an attitude towards what their jobs will increase the level of information creation and innovation.

Furthermore, individual creativity increases the creation of new ideas. Creative employees may happen naturally or may depend on the experience and skills. At some point, the organization utilizes some strategies and tactics during hiring and selection so that they hire creative candidates that will help in innovation.

Ultimately, the community may also play an imperative part in the development of favorable innovation environment. The society makes the organization successful since it may provide essential resources, for instance, human resources (Nambisan et al. 2017). Before selecting candidates from the community, the society may encourage some individuals to join the company so that they can increase innovation. Moreover, the community provides an amble setting that favors the effective operation of the organization.

Question 5

Perceptual blockages are barriers that occur on the person solving the problem that brings unclear perception on either the issue or the data required to solve the challenge. Thus, the decision maker will have challenges in solving the issues in the organization due to unclear perceptions. The obstacles may include stereotyping, limiting the issue and overload of information. Stereotyping makes decision making cumbersome since it influences on the perception of the decision maker hence affecting judgment and overall results. Also, the limitation of the problem is another critical perceptual blockage that makes the decision maker take other issues related to the problem for granted. Lastly, information overload makes decision making process complex and inaccurate. Saturation of data will overload the decision maker with much information that is not useful for solving the problem.

Process blockages do occur during the procedures of problem-solving. The obstruction exists when the decision could not be successful since the produce or the process of operation is not effective (Lendel et al. 2015). The destruction affects the process of solving issues in an organization since it happens at the same time issue is addressed.

Environmental blockages are interruptions that affect concentration. Some of the barriers include phones and natural distractors. According to the case study, environmental blocks seemed to have the most significant blocks that affected decision making. First, Stevens and other members did not have the perfect time to discuss their issues so that they could come up with the solution regarding Plastiwear.

Question 6

Innovation strategies are procedures that drive the organization to improve its technology. The process requires the company to highly invest in research and development so that it can be beneficial to the company. The critical issue regarding innovation is lack of strategy that guides the organization and its innovation (Nambisan et al. 2017). The strategy must be accurate, detained and reinforcing vital policies.

According to the case study, the organization did not have the innovation strategy hence causing a huge problem for the implementation of innovations. The organizations did not identify the key drivers of the innovation, but instead, they talked of the forces that may affect the innovation. Also, Shelley failed to design the innovation tactic. The finance officer just made a random discussion on the hallway. She did not engage a severe discussion with other stakeholders on the design of the innovation strategy.

More so, Shelley did not have a vision of the innovative strategy. Failure to assess the objectives of the strategy led to its failure. On the other hand, the organization did not formulate clear decisions regarding customers and market. Finally, Shelley did not engage other employees of the organization even the most critical department of research and development.

Shelley should a precise direction that will generate clear objectives and goals. Setting up a clear direction of the innovation strategy will speed up the implementation and will guide the initiative. She must focus on establishing open communication (Lendel et al. 2015). Shelley involved Joseph and Craig and neglected other members of management. Involving both management and the employees will dictate the success of the innovation strategy. Therefore, upsurging open communication will promote fruitful innovation strategy adoption.

Tolerating failure sometimes may create rapport between the employees and the management. According to the case study, Shelley told Craig Scoffed that she does not want failure in the utilization of technology. She should have focused on the goals of the innovation so that she does not trigger some fear among the employees over failure and risks. Therefore, tolerating failure and some risks give the employees attitude to work without any fear.


Basyuk, A. S., Anisimov, A. Y., Prokhorova, V. V., Kolomyts, O. N., & Shutilov, F. V. (2016). Administration management in the innovation cluster. International Review of Management and Marketing, 6(6S).

Haneda, S., & Ito, K. (2018). Organizational and human resource management and innovation: Which management practices are linked to product and process innovation? Research Policy, 47(1), 194-208.

Lendel, V., Hittmár, Š., & Siantová, E. (2015). Management of innovation processes in company. Procedia economics and finance, 23, 861-866.

Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital innovation management: Reinventing innovation management research in a digital world. Mis Quarterly, 41(1).

Wu, C. W., & Huarng, K. H. (2015). Global entrepreneurship and innovation in management.

353FIN: International Finance Assignment Introduction Today; the world is a global village,

Create your own emergent reader support activity on phonemic awareness OR for phonics instruction and practice. Pay attention to Writing Assignment Help 353FIN: International Finance Assignment


Today; the world is a global village, as evidenced by an increasing integration from a socio-economic perspective. In this light; International Finance (IF) has emerged as an important field in financial economics as it addresses aspects of the global economy including FDIs, foreign currency exchange rates and stability of global financial. Risk management is an integral part of IF as its helps firms, nationals and even the global economy mitigate on various exposures to risk. This paper covers the exchange rate risks, including different hedging strategies to reduce exposure to the firm.

Q1: Exchange Rate Risk

Exchange rate risks can be characterized as exposures to exchange rate movements with potential for direct loss in the form of transactional currency exchange losses, or indirect loss in the form of deterioration in cash flow positions, balance sheet items, expected net earnings as well as firms’ stock value (Papaioannou, 2006).

It is important for firms to manage their exchange rate risks in order to prevent the associated potential losses as well as preserve the values of their assets, liabilities and stocks. The value of the local firm, with foreign investments or subsidiaries, is directly correlated to the prevailing exchange rate (Álvarez-Díez, et al., 2015). All firms, not just multi-national corporations, should understand the nature of exchange rate risks, and their degree of exposure, in order to mitigate against them accordingly. There are three primary exchange rate risks:

Transactional risks are the most-straight forward as they affect the actual transaction account of a firm including their receivables, trade payables or dividend accounts. For instance; a firm whose payables to a foreign firm are denominated in that foreign currency, an appreciation of the foreign currency with respect to the local currency will see the local firm pay more to settle its liability with the foreign firm.

Translation risks arise from the requisite translations of assets and liabilities held as foreign investments or overseas’ subsidiaries, for consolidation into the local firms financial statements (Goel, et al., 2011). This translation exposure from foreign investments evaluates the potential risk of currency movements on their net assets, either based on the average exchange rate fluctuations over the fiscal year or at the prevailing end-of-fiscal year exchange rates.

Economic risks are the exposures of exchange rate movements on the present value of expected future revenues, operating expenses as well as operating cash flows. Since economic risks are exchange rate exposures on ‘future transactions’ of the firm, they tend to have a higher impact on the competitiveness and value of the local firms (Goel, et al., 2011)

Q2: Different Hedging Strategies

The primary motive for hedging activities is the management and mitigation of the effects of foreign currency exchange rate movements on the local firm’s balance sheet items and operating cash flows (Álvarez-Díez, et al., 2015). In the corporate world; hedging refers to all techniques designed to mitigate, reduce or eliminate some form of risk exposure to the firm. This is mostly achieved by the use of derivatives instruments:

Currency forwards are binding agreements where the local firm commits to buy a foreign currency from a third party at an agreed future date, but at an exchange rate pre-determined today. In essence; these currency forwards are forward contracts with which local firms lock in the future sale or purchase of an underlying asset (the foreign currency) at an agreed price (the exchange rate) today (Hasan, 2015). A local firm can opt to physically take up the foreign currencies when the contract is due in what is characterized as an outright forward, or settle off balances with the foreign firm on a cash basis in what is characterized aa a non-deliverable forwards (Papaioannou, 2006). Local firms engaging in forward contracts observe the interest rate parity- an interest rate differential between spot and forwards rates- as it is indicative of arbitrage opportunities. For instance; certain auto-part supplies might be expensive in the US markets relative to the rest of the world owing to a surge in the local demand, a local US firm can thus opt to purchase the supplies from Europe at a cost of €1.2 million and spot rate of $1.2/€. Selling the same units in the US at $1.5 million represents a $50,000 arbitrage opportunity [($1.5m/ $1.2/€.)- €1.2 m].

Currency futures are principally similar to currency forwards. Nonetheless; currency futures are exchange-traded formal contracts with specific trade volumes of foreign currencies and payment settlements scheduled on more predictable dates (Papaioannou, 2006). Futures are handled in a formal clearing house which reduces counterparty risks and boost liquidity. Settlement is usually done by offsetting balances hence it is most suitable for local firms engaging in import-export activities with other foreign firms. For instance; if a US exporter to China receives payment in Yuan, the firm will register depressed earning if the Yuan appreciates against the USD. To mitigate against these losses, the US exporter can utilize currency futures to lock in a favourable exchange rate regime.

Currency Swaps are most preferred for long-term engagements that would expose the local firms to prolonged currency risk movements such as in the issuance of a corporate bond. Local firms can thus turn to currency swaps, guided by financial intermediaries like commercial banks, and engage in the buying or selling of a foreign currency (or the foreign denominated corporate bond) but with an agreed offsetting purchase or selling at a stated future date, and exchange rate (Papaioannou, 2006).

For instance; a local firm, say in the US, can issue a corporate bond in Europe, in Euros, to fund its investments in across the region. Assuming a local US firm intends to issue a 10-year €100million bond at 4%, and a foreign French firm wants to issue a 10-year US $80 million at 6%. The two firms can proceed to issue their specific foreign denominated bonds, then engage in a currency swap arrangement to capitalize on comparative advantages of borrowing locally. The foreign firm undertakes to meet the $4 million annual interest obligations of the US firm, in their local Euro currencies. Equally, the US firm will meet the €4.8 million annual interest its local USD currency. This would translate to a currency swap rate of 1.2 (4.8m/4.0m). This would hedge the local US firm against a strengthening Euro, and mitigate on subsequent rise in interest payment obligations. On the downside; currency swaps mitigate on the exchange rate risks but may expose firms to more interest rate risks inherent in the foreign markets.

Currency options are preferred to futures as they offer more flexibility. Though they are exchange-traded like currency future, these options give local firms (foreign currency buyers) the option (right) to purchase or sell a specified amount of foreign currency at an agreed fixed price over a given period of time (to maturity). Unlike futures, options confer an option, not an obligation, to the buyer (Fabozzi & Peterson, 2003).

Options have three prices: Option price –the premium value of the option instrument, strike price- the exchange rate preferred to the option holder, and spot price- prevailing on-the-spot market exchange rates. When the spot rate is below the strike rate then the option holder can exercise their right to buy the call option and vice versa. For instance; oil producing economies can utilize options to hedge against currency fluctuations which negative impact their oil-export revenues. In 2008; the Mexican Government opted to buy put options (with right to sell) to lock in oil prices at US $70 per barrel (exercise price) for an estimated output quantity of 330 million barrels. The government paid a premium of US $1.5 billion as the cost of the put option. Consequently; the Government would in the following year exercise its right to sell if spot prices fell below its exercise price, and mitigate on losses that would have been occasioned by downward fluctuation of oil prices. In the event that oil prices climbed above, $70 per barrel, then the Government would let the option expire and enjoy the higher market rate benefits (Brealey, et al., 2011). In this illustration; the Mexican Government was able to lock in its lowest oil revenue estimates at US $23.1 billion ($70 per barrel ×330mb) at a $1.5 billion premium.

Q3: Operational and Financial Hedging

Hedging mitigates on risks that would otherwise reduce the expected cash flows generated from operating activities –these cash flows are eventually delivered to shareholders (Fite & Pfleiderer, 1995). At best; managing these risks could return some gain to the local firm as a depreciation of the local currency boosts returns from foreign investments.

Operational hedging refers to risk management strategies where local firms re-orient their operational and production activities to reduce exposure to foreign currency risks (Döhring, 2008). Operational hedging strategies may involve the outsourcing of production activities (offshoring) to the foreign market such that local firms can hedge against transactional and economic risks related to exchange rate fluctuations. Other operational hedging strategies include dual-sourcing of inputs and holding safe stocks (Boyabatli & Toktay, 2004). On the downside; operational hedging might increase the exposure to translation risks. For instance; tech giant, Apple Inc.,outsorced its production activities to China to cut back on an unfavorable currency rate position and increase competitiveness. On the other hand; financial hedging is the utilization of financial instruments (derivatives) to mitigate in exchange rate uncertainities.

Local firms can employ both operational and financial hedging strategies as complements towards mitigation of currency risks. Operational hedging utilizes non-financial instruments to shield operating activities from transactional and economic risks, whereas financial hedging covers the translational risk. Similarly; financial hedging techniques can be easily deployed to cover short term exposures, whereas operational hedging can be utilzed to mitigate on long-term exposures given its lengthy process shareholders approval is necessary. Takatoshi, et al., (2013) cited various field studies that have concluded operational and financial hedging strategies can be used by local firms as complementary approaches to risk management. The empirical evidence includes Pantzalis, Simkins, and Laux (2001) field studies on some 220 US MNCs. In the Euro-zone region; it was established that non-financial companies preferred financial hedging or a combination of the two strategies -operational and financial- but never operational hedging alone (Döhring, 2008). The reseacher observed that whereas use of financial instruments (derivatives and currency-invoicing) covered almost all of their currency risk exposure, it was ideal to employ operational hedging strategies to mitigate on the longer-term economic risks associated with fluctuations of the Euro, as well as create some degree of operational flexibility. In Japan; local exporting firms fully utilized available financial hedging options to mitigate on currency risks, but there has been a growing appreciating of operational hedging to adequately cover long-term exposures (Takatoshi, et al., 2013). These operational strategies include the re-organization of local exporting firms through product differentiation and off-shoring of excess capacity – this increases operational flexibility. MNCs operating in India utilized their network nodes to augment and re-orient their operational activities in favourable currency risk regimes (Goel, et al., 2011). In a nutshell; operational and financial hedging should be employed at the same time as complementary strategies, but if a firm was to choose between either of the two strategies then financial hedging should be the obvious choice.

In 1958; Modigliani and Miller suggested that, under perfect market condition, stockholders could diversify their portfolio as a risk management strategy for the firm. The implications were that firm’s risk management strategies did not add any valu to the firm (Takatoshi, et al., 2013). The presence of market imperfections ranging from taxation, to financial distress-related costs and information asymmetries serve to increase the exposure of firms these risks. Hedging against currency risks ensures that the value of net assets from foreign subsidiaries is not eroded by translation risks nor net cash flows from operational activities negatively impacted by transaction risks. Therefore; hedging as risk management tool against exchange rate risks ensures at the very least, preservation of shareholder value by mitigating on value-losses, and at best yield back financial or non-financial gains including increased global competitiveness from operational flexibility.


Currency risks expose firms to potential loss of earnings (translation exposure), value of net assets (transaction exposure) or even market value of the firm (economic exposure), due to unfavourable movements in exchange rates. These risks can be mitigated by a number of strategies including hedging activities such as currency forwards, options and futures, and swap contracts. Hedging activities reduce currency risks by increasing certainty of future transactions. These activities can be operational or financial, through the use of derivatives. Hedging and other risk management strategies can increase the value of the firm by reducing potential losses in earnings or net assets, as well as stabilizing net cash flows for reinvestment


Álvarez-Díez, S., Alfaro-Cid, E. & Fernández-Blanco, M. O., 2015. Hedging foreign exchange rate risk: Multi-currency diversification. European Journal of Management and Business Economics , 25(2016), pp. 2-6.

Boyabatli, O. & Toktay, L. B., 2004. Operational Hedging: A Review with Discussion. Research Collection Lee Kong Chian School Of Business, January, pp. 1-21.

Brealey, R. A., Myers, S. C. & Allen, F., 2011. Principles of Corporate Finance. 10th ed. ed. New York: The McGraw Hill/ Irwin.

Döhring, B., 2008. Hedging and Invoicing Strategies to Reduce Exchange Rate Exposure – A Euro-area Perspective, Brussels: Economic and Financial Affairs (Economic Papers 299).

Fabozzi, F. J. & Peterson, P. P., 2003. Financial Management and Analysis. 2nd ed. Hoboken, New Jersey: John Wiley & Sons, Inc.

Fite, D. & Pfleiderer, 1995. Should Firms Use Derivatives to Manage Risk?. In: W. Beaver & G. Parker, eds. Risk Management: Problems and Solutions . London: McGraw Hill, pp. 140-164.

Goel, M., Gupta, S. L. & Goel, L., 2011. An Analysis of Foreign Exchange Exposure Management by MNCs in India. International Journal of Multidisciplinary Research, 1(5), pp. 83-105.

Hasan, K. R., 2015. Hedging Foreign Exchange Risk Exposure by Importer Companies. International Journal of Economics, Finance and Management Sciences, 3(5), pp. 435-439 doi: 10.11648/j.ijefm.20150305.14.

Papaioannou, M., 2006. Exchange Rate Risk Measurement and Management: Issues and Approaches for Firms, Washington DC: International Monetary Fund (WP/06/255).

Takatoshi, I., Satoshi, K., Kiyotaka, S. & Junko, S., 2013. Exchange Rate Exposure and Exchange Rate Risk Management: The case of Japanese exporting firms, Tokyo: RIETI (Discussion Paper Series 13-E-025).


353 FIN : International Finance College Name: Student No.: Table of Contents

353 FIN : International Finance

College Name:

Student No.:

Table of Contents

International Finance: Currency Risks 2

1.0 Introduction 2

2.0 Managing Exchange Rate Risk 2

2.0.1 Transactional risk 3

2.0.2 Translation risks 3

2.0.3 Economic risks 3

2.1 Hedging Strategies in the Reduction of Exchange Rate Risk 3

2.1.1 Currency forwards 3

2.1.2 Currency futures 4

2.1.3 Swap contracts 4

2.1.4 Currency options 5

2.2 Operational and Financial Hedging 6

3.0 Conclusion 7

References 8

International Finance: Currency Risks

1.0 Introduction

Advancement in ICTs and other internet of things technologies, have increased mobility of factors of production across nations as well as trade opportunities. Today; more firms, not just multi-national, are engaged in some form of cross-border trading activities. Operating in the international business environment poses several challenges to the local firms from socio-cultural differences, language barriers to regulatory barriers including tariffs, protectionist policies and political interference. Despite all this; the foreign currency exchange rate risk still remains the greatest concern to local firms given its direct impact on cash flows, net assets, earnings and value of the firm.

2.0 Managing Exchange Rate Risk

Exchange rate risk (ERR) can be characterized as the inherent risk that firms, with some aspects of international operations, are exposed to for holding or dealing in currencies other than their local units especially in an environment where future exchange rates are uncertain (Ross, et al., 2016).

As such, managing these ERRs has become an important part of international trade. The management of ERRs is important to firms for three primary reasons: 1) It allows them to mitigate on the volatility of costs, cash flows and earnings. In unhedged transactions; an exporter who receives payments in foreign currency can realize a reduction in earnings if the local currency appreciates against the foreign unit. 2) It can reduce agency costs when the firm incentivizes the management (agent) to act in the best interest of the shareholders (principal) by implementing certain risk management strategies such as hedging against ERR (Brealey, et al., 2011). 3) It can increase the value of the firm, through capitalization of arbitrage opportunities or from the positive investments that are made possible by the elimination of volatility in net cash flows from operations (Fabozzi & Peterson, 2003). It is imperative that firms identify the different types of ERRs and evaluate the degree of exposure as part of their risk assessment and mitigation efforts. There are three forms of currency risks:

Transactional risk

This is the exposure of local firms to exchange rate fluctuations in their transactional dealings with other foreign firms. The uncertainty of future movements of the exchange rate can result in a transactional loss or gain. For instance; a UK firm importing supplies from China, with payments in Yuan, will record a transaction gain from an appreciation of the Pound as less of it would be required to clear the transaction.

Translation risks

These risks arise from a translation of foreign subsidiaries’ balance sheet items into the local currency (Goel, et al., 2011). The translation of net assets and net earnings from foreign branches are subject to conversion into their local currency equivalent, and as such, a firm can record a gain or loss on these items.

2.0.3 Economic risks

These are exposures on the firm’s future net cash flows from exchange rate fluctuations. These risks are long-term, and can impact the competitiveness, profitability or value of the firm based on their impact on the firm’s future cash flows potential.

2.1 Hedging Strategies in the Reduction of Exchange Rate Risk

Having established the importance of mitigating on ERRs; firms will employ various measures to reduce their exposures-transactional, translational or economic. These mitigation measures range from invoicing in local currency, netting off obligation to reduce amounts exposed to ERR to hedging activities.

Hedging refers to the use of derivatives to reduce exposure to ERRs (Ross, et al., 2016). Derivatives are simply financial instruments whose value is derived from an underlying asset of commodity such as Gold, Stocks or Sugar. The common hedging strategies are:

Currency forwards

These are binding, contractual agreements where the local firm commits to buy or sell an agreed amount of foreign currency in the near future, for an agreed exchange price (forward rate) today. When the agreed future date arrives; the local firm can choose to physically deliver or take up the foreign currencies -outright forward- or settle off cash balances- non-deliverable forwards- with its counterparty to the forward (Papaioannou, 2006). Currency forwards are quite commonplace in business given flexibility, minimal regulatory red-tape and ability to mitigate on transactional exposure to ERR. Assuming a local UK firm wants to import a $1.32 million heavy machinery from the US, but concerns over BREXIT continue to pile downward pressure on the Pound Sterling (GBP). If the spot rate (current exchange rate in the markets) is $1.32/£, then the UK firm can approach its US counterparty and commit to purchase $1.32million at an agreed forward rate of $1.30/£ to facilitate purchase of the heavy machinery. In essence; the UK firm has utilized a currency forward to reduce exposure from a depreciating GBP below the agreed forward rate. Of course, there is still the risk that the GBP could appreciate against the USD which would translate to a transactional loss to the UK firm.

Currency futures

In principle; currency futures are operated in a similar manner as currency forwards, but only in a more structured format. These futures are traded on exchanges such as the Chicago Mercantile Exchange (CME) or London International Financial Futures and Options Exchange (LIFFE) (Ross, et al., 2016). Firms trading in futures, buy or sell specified volumes of foreign currency complete with specified regular settlement dates (Papaioannou, 2006). These makes futures less flexible in comparison to forwards, but the former has more liquidity and reduced counterparty risks since settlements are handled in a clearing house.

Unlike currency forwards; currency futures afford firms more predictability in their prices as these are marked daily, and settlement can be done on any particular date up to the date of contract maturity. For instance; a US importer who purchases two Swiss Franc futures worth SFr 250,000 (2×125,000) from the CME, commits to buy the foreign currency in June (maturity date) at a stated settle price (USD selling price) of $1.05/SFr. The US firm therefore locks in the dollar cost at 262,500 for buying 250,000 in Swiss Francs up to end of June thus reducing the cost volatilities that could be brought about by unfavourable exchange rate movements

Swap contracts

These are agreements by counterparty firms, local and foreign, to engage in the exchange of cash flows over a period of time. There are three main forms of swap contracts –credit default swaps, interest rate swaps and currency swaps (Ross, et al., 2016). Currency swaps are commitments to exchange a set of payments in local currency for another in foreign currency. In interest-rate swaps; the set of payments involved are the interest obligations from issued debts (Mishkin, 2004).

Assuming Tesco PLC (UK) wants to invest in France, and Carrefour (French firm) wants to expand its operations into UK. Tesco PLC can issue a 5-year €12million commercial paper at 2.5%. On the other hand; Carrefour issues a 5-Year £15million 3.5% bond. To mitigate on negative currency movements that would increase their interest obligations, the two firms can engage in an interest rate swap where Tesco assumes the payment of Carrefour’s annual interest obligations of €525,000 (3.5%×15M) in the UK, and in exchange, Carrefour meets Tesco’s quarterly interest payments of £300,000 (2.5%×12M). In essence; Tesco will be meeting her actual interest obligation of £300,000 using €525,000, translating to a swap rate of €1.75/£. Similarly; at the end of five years; Tesco will settle the principle due for Carrefour in the UK and vice versa.

Currency options

Similar to future, currency options are traded in the exchanges at spot market rate- spot price. But unlike futures or forwards, currency options confer a right/ option, not obligation, to buy or sell a specified amount of foreign currency at an agreed fixed price (exercise/ strike price) over a given period till maturity (Mishkin, 2004). The right to buy or sell, conferred to the option buyer, carries a value that the buyer pays for as a premium (option price). Call options confer the right to buy whereas put options confer the right to sell, fixed amounts of foreign currency at stated exercise rates (Ross, et al., 2016).

Assuming Airbus (France) wants to hedge against rising jet fuel prices, denoted in USD ($1.25/€) and currently trading at $62.50 per barrel in the international markets. Airbus could purchase a 90-day call option for 500,000 barrels of oil at an exercise rate of $1.20/€, but at an option cost of €28million (a premium of 1,958,333). If the dollar strengthens, further pushing oil prices upwards and appreciating against the Euro to $1.00/€, then Airbus can exercise its call option and buy 500,000 barrels of oil at €28M instead of the current market rate of €35,000,000. Therefore, by exercising the call option, Airbus will have hedged against ERRs to a tune of €7million.

2.2 Operational and Financial Hedging

Export-oriented firms can utilize the principles of hedging to cushion their operational and production activities against foreign currency risks in what is characterized as an operational hedging strategy (Brealey, et al., 2011). Operational hedging allows for the diversification of ERRs through a range of non-financial techniques from offshoring of production to outsourcing of non-core operational expenses to the export markets. This represents an exposure trade-off as the transaction and economic risks are significantly reduced, but translation risks are increased (Döhring, 2008). In contrast; financial hedging is the utilization of financial instruments (derivatives) such as currency forwards, futures, swaps or foreign currency borrowings to mitigate on the ERRs. Financial hedging is most appropriate to address all the three exposures to currency risks, as short term derivatives –forwards and futures- are utilized to hedge against transaction and translational risks whereas currency swaps hedge against economic risks.

In light of this Treanor and others, in their analytical paper on the US airline industry, established that operational hedging could be implemented as a primary risk management strategy, and finanical hedging being introduced in a complementary manner to fine-tune of the risk management framework (Treanor, et al., 2013). In similar complementary use; Döhring (2008) observed that firms could deploy financial hedges to cover short term currency risk exposures as they are more flexible, whereas operational hedges which involve the geographical diversification of operational activites could be rolled out against more longer-term exposures currency risks. In circumstances where only one form of hedging can be pursued; financial hedging will be most favored over operational hedging given the higher sunk costs for the later, as well as flexibility and effectiveness of the former in reducing ERRs. However; under normal market conditions; the two forms of hedging outgh to be applied as complements with operational hedging covering long-term exposures whereas finacial hedging covers shorter-term ERRs.

Classical finance theorists (Modigliani & Miller, 1958) postulated that under perfect market conditions, risk management measures by the firm had no correlation to its value, as shareholders were better placed to diversify their portfolios and mitigate on risks themselves. However; the existence of corporate taxes, financial distress and agency costs, makes a case for the need of risk management. Hedging activitis can add value to the firm by shielding the primary drivers of firm value –cash flows, revenues and net earnings- from adverse events (Treanor, et al., 2013).

Currency future can reduce the volatility of cash flows associated with exchange rate movements, thus availing more funds to the firm to invest in projects that would yield a positive return and increase firm value (Chod, et al., 2010). Similarly; Call options can be used to stabilize revenues from foreign subsidiaries, and enhance the amount that is finally delivered to shareholders as dividend.

3.0 Conclusion

Firms with exposed to ERRs when their operations includes some elements of international activity, from sourcing of inputs to markets. The ERRs are based on their area of impact – transactional, translational risk in accounting for subsidiaries and economic risks associated with long term exposures which erode firm’s competitivemness. The hedging strategies involving use of currency forwards, future and options can be employed to mitigate on short term ERR exposures. Currency and interest rate swaps are best applied in addressing long-term economic exposures. Exchange rate movements increase the uncertainity on value of future transactions, and as such firms cannot allocate their resources optimally thus impairing productivity and potential earnings. By utilizing operational and financial hedging activites on a complementary basis, firms are able to mitigate on potential value losses from transactional and translational exposures. Stability and certainity of future cash flows also boosts firms’ competitiveness in their operating environment.


Brealey, R. A., Myers, S. C. & Allen, F., 2011. Principles of Corporate Finance. 10th ed. ed. New York: The McGraw Hill/ Irwin.

Chod, J., Rudi, N. & Mieghem, J. A. V., 2010. Operational Flexibility and Financial Hedging: Complements or Substitutes?. Management Science, 56(6), pp. 1030-1044 doi: 10.1287/mnsc.1090.1137.

Döhring, B., 2008. Hedging and Invoicing Strategies to Reduce Exchange Rate Exposure – A Euro-area Perspective, Brussels: Economic and Financial Affairs (Economic Papers 299).

Fabozzi, F. J. & Peterson, P. P., 2003. Financial Management and Analysis. 2nd ed. Hoboken, New Jersey: John Wiley & Sons, Inc.

Goel, M., Gupta, S. L. & Goel, L., 2011. An Analysis of Foreign Exchange Exposure Management by MNCs in India. International Journal of Multidisciplinary Research, 1(5), pp. 83-105.

Mishkin, F. S., 2004. The Economics of Money, Banking and Financial Markets. 7th ed. ed. Boston: Pearson Inc..

Modigliani, F. & Miller, M. H., 1958. The Cost of Capital, Corporation Finance and Theory of Investment. American Economic Review, 48(3), pp. 261-296.

Papaioannou, M., 2006. Exchange Rate Risk Measurement and Management: Issues and Approaches for Firms, Washington DC: International Monetary Fund (WP/06/255).

Ross, S. A., Westerfield, R. W., Jaffe, J. & Jordan, B. D., 2016. Corporate Finance. 11th ed. ed. New York: McGraw-Hill Education.

Treanor, S. D., Carter, D. A., Rogers, D. A. & Simkins, B. J., 2013. Operational and Financial Hedging: Friend or Foe? Evidence from the U.S. Airline Industry. Journal of Accounting and Finance , 13(6), pp. 64-86.


CORPORATE SOCIAL RESPONSIBILITY MANAGEMENT PRACTICES Executive summary This essay paper discusses how


Executive summary

This essay paper discusses how different companies/organizations use Corporate Social Responsibility practices in their operations as a way of boosting their market competitiveness. To explore the use of CSR practices in organizations, the paper focuses on the six characteristics of Corporate Social Responsibility. These characteristics include; embracement of values and practices, beyond philanthropy, defining stakeholder’s orientation, customer satisfaction, voluntary services.In regard to the CSR characteristics, the paper shows how Nissan Company has used CSR practices and how it should improve in their methods of CSR application. In order to bring a clear understanding on the use of CSR practices, three theories/models have been explored. These theories were developed in some years back by people who wanted to understand the importance of using CSR practices within and outside an organizational setup. The three theories discussed include; Stakeholders’ Theory, Business Ethics Theory and the Shareholder Value Theory. The paper then relates these theories to Nissan Company as a way of evaluating what the Company has been able to achieve in terms of CSR use and what the company needs to do as the theories propose. Various strategic approaches used by the Nissan Company are also discussed to evaluate the extent to which the Company has been able to fulfill community responses by embracing CSR practices.Lastly, the paper gives various recommendations on the use of a more sustainable CSR strategy so as to boost Nissan Company productivity and competitiveness by taking other stakeholders interests first.

Table of Contents

Executive summary 2

Introduction 4

Characteristics of Corporate Social Responsibility 5

Voluntary services 5

Managing the Externalities 6

Customer Satisfaction 6

Multiple stakeholder orientation 7

Beyond philanthropy 7

Practices and values 8

Corporate Social Responsibility theories/models 8

Business ethics theory 8

Shareholder value theory 9

The stakeholder’s theory 9

Nissan Corporate Social Responsibility Strategic approaches 10

Recommendations on how the Nissan Company can adopt a better CSR strategy 11

Conclusion 12

References 14


Corporate Social Responsibility is a way for Companies/organizations to be responsible by addressing all the environmental and social effects of the operations of their business (Muller, 2006). Use of management practices of superior quality in various Business areas such as updating operations, employee performance monitoring, target setting and incentives establishment has been found to determine the extent of a Company’s CSR practices (Koh, 2015). The practices include various issues related to the concerns of stakeholders such as environmental performance, diversity and employee relations. Therefore, there is a link between an organization’s quality management practices and Corporate Social Responsibility activities which is more related to stakeholders’ interests (Ebel & Picone, 1995). Company’s management practices therefore influence the use of CSR in two ways; first through supporting of the Company’s top management and secondly, through corporate outcomes quality.The corporate outcomes do not only include financial outcomes but also comprise of outcomes that are desired by all the Company’s stakeholders, who include employees, regulators and financial markets (Ziek, 2011). For example; sharing of a Company’s bonuses is a good CSR practice.

A Company whose management is driven by stakeholder interests instead of shareholder interests needs buying of all the Company’s leaders (McWilliams & Siegel, 2001). This leads to pro-stakeholders policies and practices that are socially good instead of lip service. For example, the attitudes of leaders of a Company will ultimately determine pro-employee actions and ethical conduct of the Company. This essay explores the characteristics of CSR and the various theories/models that explain the use of CSR activities in boosting organization’s competitiveness and productivity. It also discusses the various strategic approaches used by the Nissan Company as a way of fulfilling its community responsibilities.

Characteristics of Corporate Social Responsibility

Voluntary services

Volunteering in community activities makes the employees of a Company feel good and also strengthens the Company (McWilliams & Siegel, 2001). The voluntary services are important in any CSR program and are essential in improving Company’s corporate culture in several ways. This is because such services show what the Company stands for, encourage employees’ teamwork, improve employee retention/attraction and enhances the corporate brand image of a Company (Muller, 2006). All these factors are essential in helping a Company’s bottom line and also serve the community. By instilling the Company’s values, voluntary services help to strengthen the Company since the employees become aware of the Company’s mission and appreciate the Company’s involvement in community work (Koh, 2015). This fosters motivation within the workplace since the employees are proud of work with impact-minded Company. Satisfaction of the employees also leads to attract or retain the employees.

A research by Cone Communications found out that about 74% of employees are satisfied by their jobs after they are given an opportunity to give back to the community (Snider, Hill & Martin, 2003). An example of a Company that incorporates volunteering services in their CSR program is the Telecoms Industry. The Company supports youths from disadvantaged families by training them. In 2016 and 2017, around 750 Telecom employees participated in volunteering services that targeted youths who were at risk of dropping out of school (Crowther & Seifi, 2018). The Company also recruited some of them. Goldcorp Inc., which is a mining Company sponsors local community special events and supports education and health initiatives.

Managing the Externalities

The management of externalities by Companies has had little concern until the Brundland Report was published (Muller, 2006). After this report on the importance of managing the externalities, corporate leaders from developing and developed countries started including environment protection into their CSR programs as part of decision-making process. Most Companies have now devised ways of preventing environmental pollution or minimizing the impacts. For example; In Canada, various mining companies have adopted different corporate social responsibility strategies (Snider, Hill & Martin, 2003). The Companies participate in converting land sites into mines and these have a negative impact to the aboriginal communities that surround the sites. Due to this, many mining companies of Canadian origin engage in CSR programs with the local communities in order to minimize the adverse effects, for example; Comeco Corporation (Muller, 2006). Nissan Company should adopt this in various ways such as reducing air pollution as a result of vehicle emissions by making vehicles which burn fuel completely.

Customer Satisfaction

Customer Satisfaction refers to the degree into which there is a match between the customer’s/consumer’s expectations of a Company’s product and the real performance of the specific product (Brammer, Jackson & marten, 2012. The customer’s expectations are created based on the information received from family, opinion leaders, friends, past experience and research on the product (Koh, 2015). The customer’s satisfaction is a crucial measure of the capacity of a Company to effectively meet the customer’s needs. The satisfaction also helps in demonstrating a Company’s worth and its effectiveness to the stakeholders hence maintaining their support.For example, Unilever Company implements systematic strategy that is aimed at fulfilling its CSR program (Snider, Hill & Martin, 2003). The strategy facilitates the company’s citizenship ideals such as satisfying the interests and expectations of consumers/customers. The company puts consumers over all other stakeholders and this maintains business sustainability. This corporate strategy addresses various interests of consumers, employees, investors, suppliers and communities. Nissan Company should ensure that there is customer satisfaction by training its employees on the expected customer service techniques and methods (Ziek, 2011).

Multiple stakeholder orientation

The major objective of stakeholder management is to assist in identifying stakeholder orientations on the bases of three attributes that define their legitimacy, power, urgency and claim (Koh, 2015). Defining stakeholder orientations is essential in the prioritization and identification of stakeholders by adopting a step by step method starting with preparations, internal stakeholder leadership team appointment for marketing, proper communication among other activities (Tang, Hull & Rothenberg, 2012). Corporate social responsibility involves consideration of a range impacts and interests among various stakeholders.This theory is yet to work properly in Nissan Company.

Beyond philanthropy

Corporate Social Responsibility is all about philanthropy in many parts of the world. This means that a company voluntarily carries out a specific responsibility towards the public without any external force (McWilliams & Siegel, 2001). Currently, CSR is mandatory backed by laws and regulations and is shifting to strategic CSR or instrumentality from altruistic nature. The CSR has turned from being only in altruistic nature to more than being just philanthropy and development projects within a community (Koh, 2015). The CSR has impacts on HR management, profitability, logistic support and marketing that are important functions in business organization (Ebel & Picone, 1995). The CSR is more than being philanthropic because of its capacity to be strategic or instrumental in meeting the stakeholder expectation and helping in the achievement of company’s objectives. Therefore, CSR has to be regulated and carried out as a normal business task.

Practices and values

In many countries, CSR programs also include set of values which underpin Company’s practices, namely, philosophy (Ziek, 2011). Such perspective is evident corporate social responsibility initiatives of collectivistic or communication societies that value cultural and traditional practices in their local communities (Crowther & Aras, 2102). The CSR practices are affected or influenced by the values of managers. This is because the managers formulate the policies governing the CSR in the organization and hence their personal attitude affects their behavior as it is part of their individual character (Ziek, 2011).

Corporate Social Responsibility theories/models

Business ethics theory

This theory is based on moral duty and broader social duty of the business towards the society (Mazurkiewicz, 2004). The theory makes justification of CSR practices on three different ethical issues. Such issues include: Emerging and changing social responsiveness and the social expectations towards a certain social challenge, intrinsic and external ethical values that are always triggered by Kantian ethics and then denoted as some universal and normative principles like fairness, social justice and human rights; and corporate citizenship which refers to the corporation of someone in a certain society as a better citizen so as to contribute to the social well-being (Tang, Hull & Rothenberg, 2012). This theory views corporate social responsibility more as philanthropic and ethical responsibilities than economic and legal. Nissan Company has helped in building houses to many people in many parts such as the North America (Muller, 2006). This has to some point boosted their business as many people have increased trust on their services and products.

Shareholder value theory

This theory was denoted by someone known Nobel Laureate Friedman in 1970 and it argues that business profits are only developed by business’s social responsibility while adhering to the legal practices (McWilliams & Siegel, 2001). Some Neoclassical economists assert that the aim of business is to do business that has positive contribution to the economy and society. According to this theory, managers of CSR are the corporation owners with a fiduciary duty of serving the shareholders’ interests and concerns (Koh, 2015).The Nissan Company has tried to put the interest of their shareholders by ensuring that the Company makes profit while at the same time broadening its market share. For example through quality improvement which in turn has developed customers trust hence much profit which is the aim of all shareholders (Ebel & Picone, 1995). The Company still needs to do more of car design.

The stakeholder’s theory

The theory states that there has been an increase in stakeholder pressure groups since 1960s’ and therefore the force exerted on business due to stakeholder development must not be ignored or underestimated (Brammer, Jackson & Marten, 2012). Business ought to be pragmatic and ethical and it assumes more interest of stakeholders than shareholders interest. Nissan Company has to some extend respected the interests of stakeholders but more need to be done more so on reducing emissions.

Nissan Corporate Social Responsibility Strategic approaches

Nissan Motor Company engages in manufacturing and selling of vehicles, automotive products and other related marine equipment. The company’s Sales financing department provides sales financing and leasing support activities (Muller, 2006). The Company carries out its vehicle manufacturing activities in about 20 countries globally. Its services and products are offered in over 160 countries and regions across the world (Ziek, 2011).The Company sells about 60 models under various brands which include Nissan, Datsun and Infiniti. Its geographic operations are found in various countries such as Europe, Asia, North America and other countries (Koh, 2015).

Nissan Company has adopted a CSR program that aims at protecting the environment in order to make the world a better place for living even for future generations. The Company works to achieve this by ensuring that cars, environment and people can co-exist well (Ebel & Picone, 1995) The Company therefore strives to produce vehicles that are environment friendly throughout its manufacturing process. This is achieved by ensuring that the car design meets their customer’s interests, the selling prices are reasonable and the recycling of old and damaged vehicles is carried out to protect the environment (Muller, 2006). The Company also carries out research programs on “green technologies” such as clean diesels, efficient and reliable combustion engines. The company’s CSR strategy also looks into ways of reducing vehicle emissions by introduction of fuel cell vehicle and electric cars (McWilliams & Siegel, 2001). The Nissan Company proposed strategy is guided by its corporate vision that aims at enriching the lives of people. The Company therefore commits itself in providing unique and quality services and innovative products to all stakeholders. The Company also seeks to give solutions to the society by providing quality and friendly products that meet the customers’ expectations.

In its sustainability strategy, the Company has developed a steering committee globally that is chaired by the chief officer in charge of the program (Snider, Hill & Martin, 2003). The committee deals with various issues such as environmental, inclusion and diversity, traffic safety, among other issues. The committee reports to the Company’s executive body which then makes decisions on future initiatives and policies.

The Nissan Company has also participated in various voluntary services in many communities. Studies show that the Company has donated more than $15.5 million to facilitate habitat in North America since 2005 to 2018 (Crowther & Seifi, 2018). In 2018, the Company also built habitats in other areas such as Arizona, Colorado, California, Georgia, Michigan and Mississippi (Crowther & Seifi, 2018). The habitat volunteering service began in 2005 in an attempt to assist recovery efforts after Rita and Katrina hurricanes damaged the Gulf coast area. During this time, the Company donated 50 vehicles and their employees assisted in homebuilding (Muller, 2006).

Recommendations on how the Nissan Company can adopt a better CSR strategy

Although the Nissan motor Company has embraced CSR program, there is yet a lot that needs to be done to ensure sustainability in its strategies. The Company should address the issue of environmental pollution with a lot of seriousness by developing environmental midterm action plans and long term plans. The Company should, apart from reducing its vehicle gas emissions, provide solutions to environmental problems brought about by climate change, water scarcity, air pollution and resource dependency. The company should also look for ways of increasing the recycling process by ensuring that the materials they use in making the vehicles are recyclable.

To address social concerns, the Company should put the interests of all stakeholders above theirs. By respecting the stakeholders’ interests the Company will automatically develop since people’s trust on the Company will increase. Its employees will also not want to quite the job and many other job seekers will want to work with the Company.

The Company should also find ways of reducing traffic accidents caused by their vehicles. This can be achieved by designing vehicles that are of quality with no any kind of malfunction. Also the Company can participate in driving training programs as a way of reducing accidents caused bypoor driving and lack of knowledge. The Company should also embrace diversity and inclusion by employing people with different backgrounds in factors such as nationality, gender, race, ethnicity and age. This will increase the Companies potential as people will like to be associated with a Company the cares for all. The Company should also value customer’s voice as their top priority. Through this the Company will be able to produce products and services of highest quality that meets the customers’ interests.


For any Company to grow, it must adopt an effective CSR program strategy that takes care of all the stakeholders’ interests. Many Companies are working towards achieving this by incorporating various CSR programs in the sustainability plan. The programs help in keeping Companies accountable and ethical by addressing issues that affect the society as a result of industrial activities or outside forces. By respecting the stakeholder’s theory, many stakeholders’ social, economic and environmental issues are addressed. Nissan Company has a CSR program the respects stakeholders, shareholders and the environment but more need to be done in order to come up with a better CSR strategy.


Brammer, S., Jackson, G. and Matten, D., 2012. Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-economic review, 10(1), pp.3-28.

Crowther, D. and Aras, G. eds., 2012. Global perspectives on corporate governance and CSR. Gower Publishing, Ltd.

Ebel, W.J. and Picone, J., 1995, January. Human speech recognition performance on the 1994 csr spoke 10 corpus. In Proceedings of the Spoken Language Systems Technology Workshop (pp. 53-59).

Koh, Y., 2015. CSR at Japanese companies as seen in changes in administrative departments. J. Econ. Bus. Manag, 3(11), pp.1054-1060.

McWilliams, A. and Siegel, D., 2001. Corporate social responsibility: A theory of the firm perspective. Academy of management review, 26(1), pp.117-127.

Muller, A., 2006. Global versus local CSR strategies. European Management Journal, 24(2-3), pp.189-198.

Snider, J., Hill, R.P. and Martin, D., 2003. Corporate social responsibility in the 21st century: A view from the world’s most successful firms. Journal of Business ethics, 48(2), pp.175- 187.

Ziek, P., 2011. CEO CSR communication competency. International Leadership Journal, 3(2), pp.3-22.

Mazurkiewicz, P., 2004. Corporate environmental responsibility: Is a common CSR framework possible. World Bank, 2, pp.1-18.

Tang, Z., Hull, C.E. and Rothenberg, S., 2012. How corporate social responsibility engagement strategy moderates the CSR–financial performance relationship. Journal of Management Studies, 49(7), pp.1274-1303.

Crowther, D. and Seifi, S. eds., 2018. Redefining Corporate Social Responsibility.Emerald Group Publishing.

Name, school, major, grade, telephone, English level, score Which parts do Essay

Name, school, major, grade, telephone, English level, score

Which parts do Essay generally consist of?

Essays consist of three major parts, which include: The Introduction, the body, and the conclusion.

Which parts of the Report are generally composed?

A report is mostly composed of the Abstract, the Introduction, the Literature Review, the research methodology, the results (findings), discussion, and the conclusion.

What are the requirements for fonts and line spacing in general Essay and Report?

The main requirements for the fonts and the line spacing in general essay and report are font 12, spacing 2.0. The two use the Times New Roman style.

If an Essay article asks for a leader, in the introduction, if you write the following text, point out a problem.

I will talk about leadership in this essay.

The above sentence is wrongly structured, since, when writing an essay, one should not use the first person, and thus, the use of “I” is wrong. Instead, the writer should state that “This essay will address issues related to leadership……”

Is Essay’s Introduction divided into several parts? Generally, what aspects of the problem should be clearly written?

The introduction of an essay should not be divided into different parts, but rather, it should be one continuous paragraph. However, the introduction should be able to address issues such as: what the essay shall be addressed, the questions to be answered, and even the general body of the essay.

Did not abbreviate into didn’t appear in the text? Is the more complicated the sentence is written, the longer it is better? Can I use interrogative sentences in the paragraphs and at the beginning of the article?

It is not good to have abbreviations in the essay, and thus, all words should be written in full, such as the word, “I did not” should not be written as “I didn’t”. One can, however, use the interrogative sentences in the paragraphs and at the beginning of the article, especially when the article is meant to raise the curiosity of the reader, and even capture their attention.

What is the percentage of words in introduction and conclusion that account for about the total number of words?

The introduction should carry 10% of the total number of word in an essay. The conclusion should also carry a total of 10% of the total words given in an essay.

What is the difference between Introduction and conclusion in Essay?

The introduction of an essay addresses the issues which shall be covered in the essay, giving an explanation of how various parts shall be addressed, and even the various sections of the essay.

The conclusion on the other side is a summary of the various issues which have been addressed in the essay. The conclusion will ensure that it gives a stand, on any discussion which was raised in the essay, and give small, ad specific details regarding the main issues addressed in the essay.

What is the main content of the Executive Summary in Report?

The main content of Executive Summary in a Report comprises of the purpose of the work, the methods used to do the research, the main findings and conclusions reached as a result of your research, and finally the part of any recommendations for future actions.

The introduction of Report can be written in two paragraphs? What is the main purpose of introduction in the Report?

The introduction of a Report cannot be written in two paragraphs, since it only has to be one paragraph, addressing the various issues to be discussed in the essay. The main purpose of introduction in the Report is to address and explain the rationale for undertaking the work reported on, discussing the issues in question, addressing why the background study is important to the report. The introduction is also important since it gives a clear understanding of the various questions being asked, and how they shall be tackled.

Rephrase the following sentence in English (4 points)

Human resource management is more important today in this age of technology, downsizing, and entrepreneurship.

In the modern day, characterized by the age of downsizing, entrepreneurship, and technology, the human resource management plays a more important role.

How are the References list sorted, do you need to number it?

The reference list is usually sorted based on the alphabetical order. Once the reference lit has been made, the whole list is selected and subjected to the sorting process, which then arranges them from A to Z. (). The reference list, however, does not need to be numbered, since after arranging them in the alphabetical order, they are then subjected to the hanging command, as shown in the diagram below.

Can English materials be quoted directly? Will direct citation be judged as plagiarism?

English materials cannot be quoted directly since that would be regarded as plagiarism. However, if direct speech marks are used and the quoted materials inserted into the speech marks and italicized, then it cannot be regarded as plagiarism. A direct citation cannot be judged as plagiarism, since the citation cannot be alerted in any way.

What are the two most commonly used reference formats? The number of words required for the job does not include which?

The two most commonly used reference formats are the MLA (Modern Language Association) and the APA (American Psychological Association). The number of words required for the job does not include the table of contents, the cover page, the references, and the appendix.

Can a citation be marked only at the end of the text? Is the delivery date based on the date on the customer’s order form or the date on the assignment?

Yes: a citation is marked only at the end of the text, and not makes it plagiarism. The delivery date is usually based on the date on the assignment when it was returned.

Where does the literature come from (books, journals, online)?

Literature comes from various sources, depending on what one uses. It can be obtained from books, journals, and online materials, among others.

If the customer has no special instructions, how many documents do you need for a 1000-character job? If it is a literature review, how many documents do you need for a 1000-character job?

In case the customer has no special instructions, for a 1000-character job, then the required number of citations which would be used is between ten and twelve (10 and 12). However, if the job is a literature review, for a 1000-character job, then the number of references used would be between fifteen and twenty (15 and 20).

If there is no special requirement, can you quote Chinese literature or materials? What time does the document generally require reference after the time?

In case there is no special requirement, the Chinese literature or materials can be used as references, so long as they meet the requirements for the job, and they are written in the language being used in the study. If the text is being written in English, then the Chinese literature or materials would only fit if they are written in English. Referencing depends on the type of a document one is writing. If one is writing an essay, then the referencing should be done where a major idea is being discussed. However, if the document is a dissertation, then it requires referencing, almost at the end of every one or two sentences.

Write out which of the following foreigner names is the last name, which is the name and how to write the name when writing the reference at the end of the text? (4 points per line, 20 points total)



First Name

The format of the name when writing the reference at the end of the text

Marnie Robinson



Robinson, Marnie. ( for MLA)

Robinson, M., (for APA)

Archie B Carroll


Archie B

Carroll, Archie B (for MLA)

Carroll, A. B., (for APA)

Ann K. Buchholtz


Ann K.

Buchholtz, Ann K. (for MLA)

Buchholtz, A.K., (for APA)

Jim ,Green



Green, Jim (For MLA)

Green, Ji., (For APA)

MR Pincus


Pincus (for MLA)

Pincus (for APA)

21, write the following Journal Harvard reference


Article title

Marketing in Hypermedia Computer-Mediated Environments: Conceptual Foundations


Donna L. Hoffman & Thomas P. Novak

Journal title

Journal of Marketing

Bibliographic details

1996, vol 60; number 3, pages 50-68


American Marketing Association

Country of publication









To buy the full text of this article you pay:
£4.80 copyright fee + service charge (from £8.60) + VAT, if applicable

Reference format in the text

(Hoffman & Novak, 1996, 55).

the end of the References format

Hoffman, D.L., and Novak, T.P., 1996. Marketing in Hypermedia Computer-Mediated Environments: Conceptual Foundations. Journal of Marketing. Volume 60. Number 3. Pp. 50-68.


Article title

Relationship Marketing of Services – Growing Interest, Emerging Perspectives


Leonard L. Berry

Journal title

Journal- Academy of Marketing Science

Bibliographic details

1995, vol 23; number 4, pages 236-245


Jai Press Inc

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Reference format in the text

(Berry, 1995, 239).

The end of the References format

Berry, L.L., 1995. Relationship Marketing of Services – Growing Interest, Emerging Perspectives. Journal- Academy of Marketing Science. Volume 23, Number 4, pp. 236-245.