Vietnam The Unending War Essays - Vietnam War, Indochina Wars

Vietnam The Unending War The Vietnam war is the most terrible and senseless war America has ever fought. Never since their own civil war was the world most powerful country divided in such terrible anger. The leading historian on the war in Vietnam George C. Herring poses two very important questions in his essay American and Vietnam the Unending War. These two questions have been boggling the Americans minds since the beginning of the war in Indochina up to today when the US faces similar crises but is afraid to due to something called the Vietnam syndrom something that has plagued the American minds since the cease fire in Vietnam 1975. Why did the united States invest so much blood and treasure in an area so remote and of so little apparent significance, and secondly, why despite its vast power did the United States fail to achieve its objects? Herring approaches these questions from a variety of different sides which somewhat explain the struggle and the pain the misunderstood country had to go through. After WWII most of the countries such as Britain and the Netherlands gave up their colonies in Indochina. France on the other hand decided to regain power and put down the revolutionary nationalistic movement, by force that was plaguing Vietnam. The communist Ho Chi Minh had developed a communist, nationalistic movement against the french in order to be free of colonialism and establish a Marxist state in Vietnam. France at the time and still today is one of Americas strongest allies. Therefore and for many other political reasons, such as the prevention of the spread of communism, made the US aid France and support them with their mission. This was so to say the beginning of a variety of incidents that finally brought the US to war with Vietnam. Of all the nationalistic movements and revolutions in Indochina, the Vietnamese was the only one supported by communism. This was of great concern to the U.S. who feared that the soviet union had their hands in this as a plan of slowly gaining power over the entire east, and eventually the entire world. Herring writes From the outset Americans viewed Ho and the Vietminh as instruments of the Soviet drive for world domination,..... After the fall of china to communism in 1949, the US feared that if then also Vietnam would fall to communism finally the rest of Indochina, which found itself in similar unstable conditions as Vietnam, will fall to communism to. Soviet expansion had reached a point beyond which it must be permitted to go. A so-called domino theory was adopted, where when one falls all will eventually fall. Herring explains: Because of its location on china's southern border and because it appeared in the most imminent danger, Vietnam was considered crucial. If it fell, all of Southeast Asia might be lost, denying the United States access to important raw materials and strategic waterways. After the defeat of France in 1954, the US aided to create a non-Communist, democratic, south Vietnamese state in hope that their financial aid and political assistance would strengthen the population and prevent any further spreading of Communism. The Cold War started taking desperate measures and the U.S. particularly in the Kennedy-Johnson era was very concerned with the security of western Europe. It was the US concern that if they would back out in the worsening Vietnam situation, it would portray a certain weakness to its enemy Russia and could provoke conflicts in western Europe, particularly over Berlin, that could end in a nuclear war. ...if they showed firmness in one area, it would deter the adversary in a another; if they showed weakness the adversary would be tempted to take steps that might leave no option but nuclear war. A further reason Herring portrays is the effect on the political situation at home which could have been quit crucial if Vietnam would have pulled out. Another loss to communism would have devastating outcomes on presidential elections. To prevent loss of votes marked another great aspect of why the Presidential administrations couldn't simply leave Indochina to its destiny. Harring writes ...the assumption shared by administrations from Harry S. Truman to Lyndon B. Johnson that the fall of Vietnam

Recommendation for aTraining Program in McDonalds

Recommendation for aTraining Program in McDonalds This paper will recommend best training practices that can help McDonalds to stay competitive in the Canadian market. The company usually has eleven crew positions within any McDonalds Canada restaurant. The McDonalds Crew Development program has four steps: Prepare, Present, Try and Follow up. This model therefore guides the process through which the company trains its staff.Advertising We will write a custom essay sample on Recommendation for aTraining Program in McDonalds specifically for you for only $16.05 $11/page Learn More The current training practices in McDonalds have various strengths. On the job training helps employees to acquire vital skills that enable them perform their responsibilities more effectively. The training program is linked with organisational objectives and trainees get to understand the company’s culture and practices. Cross -training gives employees an opportunity to be skilled in different areas of the firm’s ope rations. This makes it easy for employees to multi task. They are able to perform different functions effectively and this boosts productivity levels. The 4 step training model used by McDonalds helps it to save valuable time and costs (McDonalds Case Study, 2012). The company’s employees are likely to become demoralised after training because they are highly supervised. These employees may lack confidence in their own abilities because of the extreme supervision they undergo during training. The training approaches that are used by McDonalds do not suit individual traits and talents of each employee. This approach does not offer ways through which individual talents of employees can be harnessed for the greater benefit of the firm. Electronic learning approaches are time consuming and ineffective in helping trainees acquire the necessary knowledge. This proves problematic when a trainer wants to monitor the progress of each trainee (McDonalds Case Study, 2012). The company u pdates its training materials electronically because of the fast-paced nature of its operations. Trainers and learners have access to updated information which they easily obtain from a central source. Employees are trained with the most current information which improves their knowledge and understanding. The company has implemented various strategies to reduce training costs (McDonalds Case Study, 2012). The use of focus groups has opened up channels of communication and employees are able to share their thoughts freely regarding training procedures. This approach helps the firm to structure its training programs in a way that suits employees’ operations so as to achieve better results.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More The company needs to improve its training approaches. The four step model is not suitable for all employees and therefore, more individualis ed training programs should be implemented. Individual talents of employees need to be harnessed and utilised for the benefit of the firm. Employees should be given more time to discover their talents and skills during training for them to become more creative and innovative (Kleynhans, 2006, p.129). Less supervision will increase employees’ morale. The company experiences a high turnover of employees. McDonalds needs to implement policies which offer employees job security and satisfaction to reduce high rates of staff turnover. The training program needs to be specialised to focus on making each worker more knowledgeable in specific areas. The emphasis on cross training can make workers to become less skilled in crucial areas of the firm’s operations. Trainers need to be encouraged to interact more with trainees. This approach will encourage openness and cooperation in the firm (Kleynhans, 2006, p.130). Electronic learning needs to be improved to suit employeesâ€⠄¢ interests, skills and abilities. This approach will improve the level of knowledge employees acquire after training. References Kleynhans, R. (2006). Human resource management. London: Pearson. McDonalds Case Study (2012). Training Practices in McDonalds.

Sharing Content On Social Media More Than Once Slide Deck

Sharing Content On Social Media More Than Once Slide Deck Download slide deck†¦ Sharing your content on social media more than once is one of the best ways to hack your content and bring more traffic to your blog. Its true–just look at this simple chart: Double the traffic. Bam! One of the biggest mistakes we make as bloggers is to give our content the one-tweet treatment. We slave away on our post for hours to only share it with our audience once. This might be costing you traffic. Of course, even if you are already sharing your post more than once – is it really enough? Are your messages as effective as they should be? This week, we are officially releasing this comprehensive (and free) slide deck to tackle these questions head on. In the slides, we outline a step-by-step process for  sharing your post more than once via social media in a way that wont make you look like a spammer or an over-the-top self promoter. It really isnt enough to just promote your content more than once. You need to know how to do it right. Free Slide Deck: How To Share Your Post More Than Once Via Social MediaHow Do I Share Content On Social Media  More Than Once?   The first step in the process really comes down to developing the right type of social sharing schedule. As Ive shared before, the process we use here at looks something like this. Once our blog post goes live, the following sharing schedule immediately takes effect. On publish  Ã¢â‚¬â€œ Social message sent when blog post goes live Same day  Ã¢â‚¬â€œ Initial social messages trickle out to your accounts over the next 2-3 hours. Next day  Ã¢â‚¬â€œ Messages are shared again on the appropriate social channels. Next week  Ã¢â‚¬â€œ Another series of messages are pre-scheduled and sent the following week. Next month  Ã¢â‚¬â€œ Even more social messages are pre-scheduled for the following month. Next _____  Ã¢â‚¬â€œÃ‚  Additional messages can optionally be scheduled for the three-month mark or beyond. Of course, this isnt an exact science. We occasionally (ok, frequently) modify this schedule to suit the content and subject that we are sharing. In fact, we have several evergreen posts that are still shared several times per week, even if it has been months since they were originally published. Another good example of a post that deviated form this schedule was our post about  11 Content Marketing Misconceptions That Make You Sound Dumb. Because this post included 11 different tips that each had their own unique image/cartoon, we spread out the social messages over many weeks, slowly dripping out each unique image. This method of reposting blog content brought us a steady stream of traffic and made it one of the best performing blog posts of the month all because we took the time to properly promote our content on social media. Do This Instead Of Writing Your Next Blog Post Recently, I have started giving writers the permission they need to write less content. That may surprise you. For many years, quantity was king. The more content you could muster, the better. This isnt the case anymore. Now, quality matters, and Google is pretty serious about making people understand that. When it comes to writing your next blog post, put the writing on hold, and spend some time promoting a previous piece of content instead.   To do this, make sure that your social media schedule is well cared for. Are you sharing your content on an even schedule, or are some messages being clumped together? Are your messages unique, or are they just repeating the same old headline and link? Are you missing some big opportunities for reposting blog content? The key is to identify and respond to sharing opportunities that you currently arent taking advantage of, filling in the gaps with great content that you already have in your arsenal. Before you go on creating another piece of content, make sure youve promoted your other stuff well. Before you create another piece of content, make sure that youve promoted the rest of it well.When Sharing Content On Social Media, How Do I Create Something Others Will Share? When reposting our content, not only do we need to share our content more than once, but we need to add some variety to what we are posting as well. It takes very little effort to create a Tweet of Facebook post that uses nothing more than a headline and link. Anyone can do that, and more than likely, youve done it a time or two as well. Try mixing this up. In the slide deck above, we actually outline several new methods that you can use to mix-up your social media content. There are many types of messages that you can choose from. Direct and easy (post title and link) Ask a question (stir up conversation) Cite a fact (from the post itself) Share a quote (like a blockquote) And Intrigue (something special is inside) These simple messages types are easy to learn and remember, and can be quickly adopted by any team. Download the slides, commit them to memory, and make sure to incorporate these types of messages in your social sharing plans. How Do I Optimize My Content For Each Network?

Skill versus Talent Research Paper Example | Topics and Well Written Essays - 1500 words

Skill versus Talent - Research Paper Example When one uses the skill, one begins by taking in knowledge about oneself – one's strength and weaknesses as an individual. According to Niven(2008, pg. 25)â€Å"Talents are recurring feelings, behavior, thought that distinguish a person. They are innate and very difficult to teach†. A person who cannot attain talent has to be trained in order to possess qualities equivalent to it. Unless you are born with talent it is difficult to cultivate it through practice. No job is too simple or complex to require talent. Talents are difficult to teach, unlike skill. A person with talent is indeed an asset to an organization but a person who is trained to gain valuable experience also can contribute a lot to organizations. Skill is required in many fields of human activities like talent. People can be motivated to acquire skill but talent is the gift of nature. The Concept of Skill The skill is a concept about change and a change that is based on learning. Skill is like self-coach ing and is necessary for individuals to advance in the personal and professional field. People who are mastered in skill can invariably become more effective and efficient in their careers. Without skill people can suffer in many areas and acquiring skill can promote their professional and personality status. Skill can be acquired in specific areas and this needs to be done by getting training under a special mentor. Skill can be acquired on communication, sports, writing, creativity, management and so on. Skill can only be possessed by having complete knowledge about a particular subject. Skills have less value compared to knowledge. The concept of skill is extremely important in education, profession, and life. Human skills vary from people to people. Every person possesses a skill in a particular subject. People come with different nature and hence the skills possessed by them also differs. A skill is something which we have learned with an effort from our side like learning to c ook, drive a car, or learn to sew. Acquiring a skill is in the hands of an individual and with his knowledge and expert, he can master any skill he will for.

Behind AIG's Fall Case Study Example | Topics and Well Written Essays - 500 words

Behind AIG's Fall - Case Study Example This collapse also triggered skepticism about use of computer driven models. Warren Buffet had warned earlier about the potential risk involved with using such models. AIG either misled its investors or was really in the dark about the potential risk when in during a meeting last December, it assured the investors that this model gave AIG "a very high level of comfort." The problem with the model was that while it took historical data into account to assess potential of default, it would not consider the risk of future collateral calls or write-downs, which has destroyed AIG. The firm also suffered because it had not protected itself through hedging which resulted in exposure to very large collateral calls. AIG has already paid around $8 billion to $9 billion to Goldman Sachs Group in collateral because it was one of the trading partners. Such payments will continue even after the bailout. Gorton had always been passionate about mathematics and joined AIG in 1990. He was paid $250 per hour or around $200,000 a year for his model. He would collect data to assess and forecast losses of various assets including home loans and corporate bonds. AIG came to depend on his models excessively. Since Mr. Gorton never considered write downs or collateral payments to partners, his plan was faulty. He was only focusing on covering actual default.

Police History Essay Example for Free

Police History Essay Starting In 1829, Sir Robert Peel began developing his theory of policing. These nine principles are as relevant today as they were in the 1800s. Peel established the Metropolitan Police when he served as Home Secretary of England. Since Sir Robert Peel introduced his principles of policing in the early 1800s, our country has continued to follow his ideas of effective policing. Community policing is based on Peels concept of prevention. According to one of Peel’s principals, the real key for policing is The police are the people and the people are the police. Peel believed that prevention of crime could be accomplished without intruding into the lives of citizens. Sir Robert Peels first principle was that, â€Å"The basic mission for which the police exist is to prevent crime and disorder† (Westminster Police Department, 2012) In our diverse society, it is necessary for police to understand the different cultures that make up the communities that they patrol. If police can relate to and understand the different cultures of the community, they will be able to successfully gain public approval. I believe this is important for his second two principals. â€Å"The ability of the police to perform their duties is dependent upon public approval of police actions. † Also, â€Å"Police must secure the willing co-operation of the public in voluntary observance of the law to be able to secure and maintain the respect of the public†. (Westminster Police Department, 2012) Peel also felt strongly about the idea of the use of force as well. In two other principals Peel stated â€Å"The degree of co-operation of the public that can be secured diminishes proportionately to the necessity of the use of physical force† and that â€Å"Police use physical force to the extent necessary to secure observance of the law or to restore order only when the exercise of persuasion, advice, and warning is found to be insufficient. (Westminster Police Department, 2012) Excessive force has been a public concern and the first sign of community mistrust in the police. It can take years to gain the trust of a community and one incident to lose that trust. By providing adequate training on the use of force and having the publics trust and respect can ensure that force is only used to the extent necessary. When individuals have little or no respect towards the police, they are most likely to ignore the requests or demands of officers. This can lead to the officer having to use force in order to gain control of a situation. Peel felt that â€Å"The test of police efficiency is the absence of crime and disorder, not the visible evidence of police action in dealing with it. (Westminster Police Department, 2012) When police are faced with dispersing large crowds, it is necessary for the public to have the respect to follow police orders. When individuals lack trust and respect for the police, riots may occur, which can also lead to arrests, serious injuries, and even death. Sir Robert Peels principles and Community Policing go hand in hand and share the same concepts and goals in policing. One of the distinct similarities between Peels approach and Community Policing is that prevention of crimes is the number one priority. I believe that Peel felt morals played an important role in effective policing. It is important that police officers think things through and have the best interests in mind before making decisions. Peel’s principals â€Å"Police seek and preserve public favour not by catering to public opinion but by constantly demonstrating absolute impartial service to the law†, and â€Å"Police should always direct their action strictly towards their functions and never appear to usurp the powers of the judiciary† (Westminster Police Department, 2012) Are important and should be demonstrated to earn the trust of the people in the long run and to uphold the law. The relationship between the U. S. overnment and police organizations across the United States can be analyzed in several ways. I believe that because the police organizations and the government have a close relationship in several ways. Not only are police organizations expected to follow rules from their own departments, they also must follow standard federal guidelines as well. There are federal, state and, local levels of police organizations. The federal government roles are similar to that of local and state; however there are a few differences. The FBI (Federal Bureau of Investigation) and the Department of Homeland Security are examples. Employees of these organizations are by law, allowed to make an arrest in any county or state. Unlike local or state police organizations, these officers do not provide basic protection services or simple criminal investigations unless the local or state agency cannot control the situation (say for example a serial killer). There are some problems with the way our government controls certain things with the other agencies. For example our government ran U. S. military is being used for domestic law enforcement. Also, the federal government is taking over the training, financing and delegation of local police. This could cause many issues, removing the police from local control may not be the smartest move. The concern is arising that the federalized police have increasingly turned to violent tactics and assaults on people who have not committed any crimes. When issues like this arise, it can cause problems within local or state organizations when it comes to police procedures and the way policing is being done. If the organizations don’t feel as though they are in control, or that their problems or concerns are not being addressed properly, this may affect the quality of law enforcement. It could also cause communication issues and lapses. There is the other possibility, that some people may have the opinion that things are better with more outside control. Policing may have to change in many ways to adapt to the change in control. Conclusion In conclusion I think there can be both pros and cons to the relationship between the U. S. government and the police organizations. I also believe that Sir Robert Peel had a major effect on the policing of his time, our current police procedures, and community policing.

Imperialism Essay -- essays research papers fc

Imperialism Imperialism Throughout time more powerful countries have extended their influence over weaker countries and then colonized those countries to expand their own power. Imperialism causes the stronger countries to grow and become nations or even empires. There are many examples throughout European history of nations enveloping weaker countries and increasing their own wealth and power to form strong nation-states and even empires. Through imperialism one culture is invading another culture and most of the time the European colonialists are not thinking about the effects this invasion might have on the natives of that land. Problems caused by imperialism have prevailed to this day. Imperialism caused a breakdown of the previous cultures and lifestyles that the natives had followed. The European imperialism caused many of the now prevalent ethnic rivalries that can be found in northern India, parts of Asia, and parts of Africa. "Africa and much of the developing world have been strug gling for nearly half a century to come to terms with grinding ethnic and tribal rivalries that remain, in a way, one of the most enduring legacies of their colonial past." In many cases of European imperialism, the European colonialists would pick a favored minority in one of their colonies to govern their colony locally and with this priority came assurance of the best jobs and favored treatment. This caused a sort of rivalry between that minority and the majority of natives who were not given this priority. Resentment towards these favored minorities grows and after the country achieves independence the popular resentment can turn to violence. An example of this is the Sikhs in India. The Sikhs created the powerful state of Punjab in 1800, which became a threat to British-controlled India and after two years of war Britain annexed the Punjab in 1849. The Sikhs were loyal to the British. In return for that loyalty, during the Sepoy Mutiny the British gave them preferential la nd grants. Throughout British rule, the Sikhs gained wealth and a great reputation as soldiers and policemen. After independence, they lost all of their special privileges and found their state divided between India and Pakistan. This followed with a bitter war against the Muslims in 1965, which forced the Sikhs to migrate from their homeland of Punjab to India. This followed a year ... ...o the level of nation-state and higher, because along with the exploitation of their culture and people, the Europeans also brought the means to advance to an industrial society. With those abilities they can still flourish in the future. Bibliography Works Consulted Davenport, Prof. TRH. South African Communication Services. â€Å"South Africa: History.† Available [Online] http://www.facts.com/cd/C01001.htm Copyright 1995. â€Å"History of Troubles† World BookTM Multimedia Encyclopedia. Available [Online] http://www.worldbook.com/fun/bth/html/hist.htm Copyright 1998. â€Å"Ireland (History)† The Concise Columbia Electronic Encyclopedia, Third Edition. Available [Online] http://www.encyclopedia .com/articles/06458.html Copyright 1998. â€Å"South Africa- can a country overcome its history?† available [Online] http://www.learner.org/exhibits/southafrica/ Copyright 1998. Ulack, Richard. â€Å"Malaysia† Encarta [CD-Rom] updated: July 1997. Winchester, N. Brian; O’Meara, Patrick. â€Å"Republic of South Africa† Encarta [CD-Rom] updated: August, 1998. Lapping, Brian. Apartheid: A History. Braziller, New York: 1987. Lemon, Anthony. â€Å"Sikhs and Sikhism† Encarta [CD-Rom] updated: July 1998. Word Count: 1456

Freedom of speech from the perspective of mass media, to what extend it has been practiced in Malaysia? Essay

Introduction Mass media are means of communications (as newspapers, radio, or television) that is designed to reach the mass of the people1. Besides playing the role to inform individual with news, the media together with a sound legal system and an independent judiciary is part of a triumvirate that is essential for a well-functioning democracy2. In a democratic system of government, mass media is performing a number of essential functions. First, they serve on information or surveillance function. Second, they serve an agenda-setting and interpretation function. Third, they help us to create and maintain connections with various groups in society. Fourth, they help us to socialize and to educate us. Fifth, they persuade us to buy certain items or accept certain ideas. Sixth, they entertain us. Freedom is the power or right to act, speak or think freely. We are now living a media culture and its influence is become very pervasive. The number of hours we spend on the media is mind-boggling. Although the freedom of the media should not be in toto, yet the degree of the freedom of the media will affect the function of the media. Citizens of countries that are democratic see media freedom as a right, not a privilege. Nevertheless, there is no mention of freedom of the press or freedom of the electronic media in our Constitution. However, freedom of media to exercise its role and functions in society has been enshrined as a fundamental human right by way of recognition for the right to freedom of speech, expression and opinion.3 Pre-independence In 1930-1940, there are nearly 80 newspaper and magazines published in the Malay State, such as Utusan Melayu, Saudara, Warta Malaya and Majlis. In Warta Malaya, it published article that talk about the social and economic problems faced by the Malay. However, it did not ask for the British to be chased out. The newspaper, Majlis, discussed the political issues. Majlis not only brings to the awakening and fights for Malays right, their office became the place for the nationalist to meet up and exchange their thoughts. In the newspapers Saudara, there was a column named ‘Persaudaraan Sahabat Pena’ where the Malay readers exchanged their point of view. British was worried on the development of this column and therefore took the step to  overseen those who involved in the said column. In view of the number of publications that existed during the time and the situation whereby those newspapers are free to discussed any issues, and the fact that the newspapers has played a vital role in the movement towards independence, we can conclude that under the administration of British, the media was enjoying the freedom of speech. The law on the freedom of speech became clearer during the time prior to independence. Certain law has been introduced to the Malay State. One of the laws which governed the freedom of speech at that time was the Sedition Act 1948. Section 4 of the Act makes it an offence to make, prepare, or to conspire, to do a seditions act, to utter seditious words, and to propagate or import any seditious publications. Section 3 provides that a seditious tendency is one which tends to (a) bring hatred or contempt to the government or excite disaffection against any Ruler or government, (b) excite the countrymen to revolt, (c) bring into hatred or contempt or excites disaffection against administration of justice, (d) raise discontent or disaffection among the countrymen, or (e) promote feelings of ill-will and hostility amongst the inhabitants of the country. Besides, there were two ordinances specifically deal with the printed media at that time, i.e. Printing Press Act 1948 (Ord 12 of 1948) and Control of Imported Publications Act 1958 (Ord 14 of 1955). The former deal with the publisher in the Malay State while the later governing the printed material from other country. Those laws were limiting freedom of speech of the media at the British colonial the light of the freedom of speech only shine at the colonial since 1956, when an attempt to draft a Federal Constitution started. The recommendations were submitted by Reid Commission in 1956-1957 Reports. In the report, there were two paragraphs provides under the title ‘Fundamental Rights’ 161. A Federal Constitution defines and guarantees the right of the Federation and the states; it is usual and in our opinion right that it should also define and guarantee certain fundamental individual right which  are generally regarded as essential conditions for a free and democratic way of life. The rights which are recommend should be defined and guaranteed are all firmly established now throughout Malaysia and it may seen unnecessary to give them special protection in the Constitution. But we found in certain quarters vague apprehension about the future. We believe such apprehensions to be unfound, but there can be no objection to guaranteeing these rights subject to limited exceptions in conditions of emergency and we recommend that this should be done†¦.. 162. our recommendations afford means of redress, readily available to any individual, against unlawful infringements of personal liberty in any of its aspects†¦ we further recommend (Art 10) that freedom of speech and expression should be guaranteed to all citizens subject to restrictions in the interest of security, public order or morality or in relation to incitement, defamation or contempt of court†¦ For the Malaysian citizen, the objectives of those who framed the Federal Constitution were but little affected by the epidemic of human rights in the Western world4. It has been observed that the commission’s recommendation on the freedom of speech has been vague, particularly on the importance of the rights. The commission only devoted two paragraphs. The reason why it was so was clear in the paragraph itself. The draft Article 10 in our Constitution was as follow: 10 (1) every citizen shall have the right to freedom of speech and expression, subject to any reasonable restriction imposed by federal law in the interest of the security of the Federation, friendly relations with other countries, public order, or morality, or in relation to contempt of court, defamation, or incitement to any offence. Mr. Justice Abdul Hamid on his note of dissent stated that â€Å"the word ‘reasonable’ wherever it occurs before the word ‘restrictions’ in the three sub-clauses of Article 10 should be omitted. Right to freedom of speech, assembly, and association has been guaranteed subject to restrictions which may be imposed in the interest of security of the country, public order and morality. If the Legislature imposes any restrictions in the interest of the aforesaid matters, considering those restrictions to be reasonable, that legislation should not be challengeable in a court of law on the ground that the restrictions are not reasonable. The Legislature alone should be the judge of what is  reasonable under the circumstances. If the word ‘reasonable’ is allowed to stand, every legislation on this subject will be challengeable in court on the ground that the restrictions imposed by the legislature are not reasonable. This will in many cases give rise to conflict between the views of Legislature and the views of the court on the reasonableness of the restrictions. To avoid a situation like that it is better to make the Legislature the judge of the reasonableness of the restrictions. If this is not done the legislatures of the country will not be sure of the state of the law which they will enact. There will always be fear that the court may hold the restrictions imposed by it to be unreasonable. The laws would be lacking in certainty.† Later, when the Constitution comes into force, the Article 10 provides that: (1) subject to clause (2): (a) Every citizen has the right to freedom of speech and expression; (2) Parliament may by law impose: – (a) on the rights conferred by paragraph (a) of clause (1), such restrictions as it deems necessary or expedient in the interest of the security of the Federation, friendly relations with other countries, public order or morality and restrictions designed to protect the privileges of Parliament or of any legislative Assembly or to provide against contempt of courts, defamation, or incitement to any offence; There are one case regarding to press reported prior to independence i.e. Public Prosecutor v. The Straits Times Press Ltd5 In this case, upon the application of the Public Prosecutor, the Respondents, who are the proprietors of the Straits Times Press Ltd, were alleged contempt in publishing a report of the trial of Tan Seng Ann of the Straits Times dated 5 August 1948. The report appeared which, it is now admitted, was misleading and inaccurate in that it gave the impression, contrary to the facts, that the first step in the proceedings in that case was a voluntary confession by Tan Seng Ann that he was in possession of a fire-arm and that his arrest was made solely as the result of such voluntary confession in the issue. The Notice of Motion having set out the terms of the letter complained of went on to allege inter alia that the criminal case referred to in the letter was sub judice when the letter was published in that an appeal was pending; that the terms of the letter did not constitute a fair or accurate account of the trial nor fair comment  thereon; and that its publication tended to prejudice the fair disposal of the proceedings and tended to bring into contempt the administration of justice by that Court. Spenser-Wilkinson J held that: â€Å"†¦I would hesitate to follow too closely the decisions of English Courts on this subject without first considering whether the relevant conditions in England and this country are at all similar. Quite apart from the present emergency in this country, I do not think it could be suggested that the development of the Press, the general standard of education or the composition of the general public in the two countries are at all comparable and it may, therefore, be necessary to take a stricter view here of matters which pertain to the dignity of the Courts and the impartial administration of justice than would be taken at the present time in England.† Newly Independence (1957-1980) At this period, Art 10 Federal Constitution has been amended twice. The first amendment was on 19636 where the words ‘Clause (2) and (3)’ had been substituted for the words ‘clause (2)’ of clause (1) with effect from 16 September 1963.and the words ‘or any part thereof’ were added to the Art10(2)(a). Further, clause (3) which provides that: â€Å"Restrictions on the right to form a associations conferred by paragraph (c) of clause (1) may also be imposed by any law relating to labour or education.† The second amendment was made on 19717 after considering the trouble of May 1969. This time, Clause (4) was added with effect from 10 March 1971. Article 10(4) provides that Parliament may pass laws prohibiting the questioning of four sensitive matters: right to citizenship under Part III of the Constitution; status of the Malay language; position and privileges of the Malays and the native of Sabah and Sarawak; and prerogatives of the Malay Sultans and the Ruling Chiefs of Negeri Sembilan. The constitutional changes enable Parliament to amend the Sedition Act of 1948 in order to add a new definition of ‘seditious tendency’8. The amended sections were: Section 3 (1) A seditious tendency is a tendency (f) To question any matter, right, status, position, privilege, sovereignty or prerogative established or protected by the provisions of Part III of the Federal Constitution or Article 152, 153 or 181 of the Federal Constitution Section 2 â€Å"seditious† when applied to or used in respect of any act, speech, words, publication or other thing qualifies the act, speech, words, publication or other thing as one having a seditious tendency; Official Secrets Act 1972 is a new law that be introduced at that time. This is the most important statute on government secrecy. The gist of the law is that ‘official secrets’ cannot be received, retained, released or used without prior authorization.9 The Act is drafted in the widest possible terms and is not limited in its operation to spies, saboteurs, traitors and mercenaries. The term ‘official secret’ is not defined in the Act. The courts have given the term the broadest possible definition, and on the generally accepted construction any communication pertaining to the Executive would constitute an offence.10 The right to free speech can be further eclipsed by the special provisions of Art 149 and 150 relating to subversion and emergency. Art 149 authorises legislative action designed to stop or prevent subversion, organized violence and crimes prejudicial to the public. Art 150 permits any legislative action required by reason of emergency. The grounds enumerated above permitting curtailment of free speech are so broad and comprehensive that in 49 years no Act of parliament even been found by the courts to have violated the Constitution. Besides printed media, television was introduced in Malaysia in 1963. The television was under the control of the Department of Broadcasting (RTM). What is apparent is that television and more generally broadcasting in Malaysia was form its inception closely aligned to the government. Both the RTM channel were established via decisions made by the then Alliance coalition government. Because of the circumstances at that time, there was no any specifics rule to govern the broadcasting. One of the cases that being heard at that time was Melan bin Abdullah v Public Prosecutor.11 The fact of the case was that On 6 April 1971 the Utusan Melaya newspaper published a report of a talk given by given by Inche Musa Hitam, a prominent Malay leader and member of Parliament, at the National Education Congress held in the Dewan Bahasa dan Pustaka, Kuala Lumpur.. In the report was an editorial sub-heading, which in the English translation reads: â€Å"Abolish Tamil or Chinese medium schools in this country.† The first appellant was the editor-in-chief of the Utusan Melayu,  and the second appellant the author of the sub-heading inserted in the report. Sanction for their prosecution was given under s 5(1) of the Sedition Act 1948, and they were tried in due course in the special sessions court on a charge of publishing a seditious publication in contravention of s 4(1)(C) of the Sedition Act, punishable under the same section. The learned special president held the publication to be seditious, that the first appellant â€Å"was responsible for all publication in the Utusan Melayu†, that the second appellant was the author of the impugned subheading, and that consequently they were both guilty. They were convicted and fined the sum of $500 and $1,000 respectively, in default one month and two months’ imprisonment, both appellant appealed. CJ Ong, on hearing of the appeal accepted the first appellant evidence that he had organised seminars and discussions, relating in particular to the â€Å"sensitive issues† and had instructed his staff on the relevant law as he understood it. He had sponsored a talk to journalists given on this subject in February 1971 by the Attorney General as well as the Solicitor-General. Therefore, the first respondent appeal was allowed. But the court dismissed the second respondent appeal. Another case is Public Prosecutor v Straits Times (Malaya) Bhd.12 The Public Prosecutor applied in this case for leave to issue a writ or writs of attachment for contempt of court on the respondents for publication of articles in The Straits Times. The grounds upon which relief was sought was that â€Å"the publications of the said articles contain matters which are tendentious and constitute contempt of court, because they are prejudicing and embarrassing the applicant in the exercise of his statutory functions and also prejudicing a fair trial concerning the circumstances of the death of one Robert Lee.† Abdul Hamid J held that: ‘I do not think that it is reasonable to construe these words as having any special meaning. There is no dispute that the reports do reveal that there had been an assault, a commotion and firing of a shot and that allegedly, a police officer was involved. But these facts are not challenged. As regards the previous episode encountered by Robert Lee there is nothing to show that this was not true. Further it is not uncommon for newspapers to publish matters concerning scholastic achievement of and other good deeds rendered by a person on his death particularly if  the dead person enjoys a certain standing in the community or he is in one way or another related to any prominent personality. For that reason it is unreasonable to isolate certain passages from the reports and construe them unfavourably or to impute improper motive on the publisher. What may appear to be an embarrassment or prejudicial if that part is read in isolation may not be so if the reports are read as a whole taking into account the circumstances surrounding such publication particularly if it relates to a matter which will promote public sensation or a matter of unusual occurrence.† The application was therefore dismissed. Malaysia under Tun Dr. Mahathir (1981-2002) Over this period, more laws are introduced and come into force to govern the media. In 1984, Printing Presses and Publications Act came into force on the 1st of September 1984 as a consolidating Act, and in turn repealed the Printing Presses Act 1948 and the Control of Imported Publications Act 1958. The Act is designed ‘to regulate the use of printing, presses and the printing, importation, production, reproduction, publishing and distribution of publications and for matters connected there with’. Through such control, the government uses it power to determine what it is the public has a right to know, or exactly what form freedom of speech should take13. This is an Act designed clearly to ensure that the press does not get out of line, imposes both a system of licensing and censorship14. Section 3 of the Act makes it mandatory to obtain a license to own a printing press. The Minister has absolute discretion on giving, refusing, and revoking a license15. Further, judicial review of the Minister’s discretion is not allowed16 and the Minister is not required to give the parties a prior hearing 17. The period of the license is 12 months or shorter period as minister specifies18. This means that all publishers in this country must suffer the pangs of uncertainty about whether their permit will be renewed for the following year. There is less control of what may be written in foreign publications, controls have been exercised through deliberate delay in distribution and sometimes outright ban on their sale where officials deemed reports to be offensive or inaccurate19. In 1988, another law governing the media came into force on 1st August i.e. The Broadcasting Act 1988. The preamble to the Act states: ‘An act to provide for the control of  broadcasting services and for matters connected therewith’. The Act is both stringent and inflexible. It bestows enormous powers on the government to determine the type of television made available to the Malaysian public. In the midst of the supposed ‘deregulation’ of broadcasting, the Act now gives the Minister of Information virtually total powers to determine who will and who will not broadcast and the nature of the broadcast material. Under the Act, any potential broadcaster would need to apply for a licence from the minister beforehand. Later, the Act was amended on October 1996. By the amendment, this already-stringent piece of legislation were aimed at taking into account the introduction of new services, such as cable and satellite television, satellite radio, pay TV and video-on demand. Due to the drastic development in the electronic media, the Legislature has to repeal the old Telecommunication Act 1950 and the Broadcasting Act 1988 and introduced a new law which is the Communications and Multimedia Act 1998. The Act’s breakthrough was to bring together the previously disparate industries of broadcasting, telecommunications and internet services combined under legislation and more importantly, one regulator the Communications and Multimedia commission.20 The Communication and Multimedia Act brings to the creation of Communication and Multimedia Commission Act 1998. the Communication and Multimedia Commission performing several functions including advising the Minister all matters concerning the national policy objectives for communication and multimedia activities and implementing and enforcing the provisions of the communications and multimedia law. Interestingly, Information Malaysia 1980-81 and Information Malaysia 1985 revealed that between 1981 and 1985 alone, the number of titles of local newspapers, magazines, and journals in circulation increased from 56 to 10221. However, the increase in number cannot be the proof supporting the allegation that during that time, the media was enjoying freedom of speech. There are some facts that we should not forget. In 1987, during the Operasi Lalang, a number of newspapers were closed by the government22. Later, Harakah being categorizes as publications of political parties meant for party members and there is law forbids the publication being openly sold to the public. Besides, Barisan Nasional owned and controlled major Malaysian media organization. Further, prior to Dato Seri Anwar’s sacking, expulsion, and detention, the editor of Utusan Malaysia and Berita Harian, and the  director of operations of TV3 were forced to resign because they were allied to Anwar. In 1990, there was a case of Aliran Kesedaran23 In this case, the respondents had applied for a permit under s 6(1) of the Printing Presses and Publications Act 1984 to print and publish in Bahasa Malaysia a magazine under the name and style of Seruan Aliran. The application was refused by the Minister of Home Affairs. The respondents applied for an order of certiorari to remove into the High Court for the purpose of quashing the decision of the Minister and for an order of mandamus directing the Minister to hear and determine the application for the permit according to law. The High Court made an order quashing the decision of the Minister and ordered that the Minister shall hear and determine according to law the application for the permit. The appellant appealed. The court allowing the appeal and held that; ‘Section 12(2) of the Printing Presses and Publications Act 1984 gives the Minister of Home Affairs ‘absolute discretion to refuse an application for a license or permit’. So unless it can be clearly established that the Minister for Home Affairs had in any way exercised his discretion wrongfully, unfairly, dishonestly or in bad faith, the High Court cannot question the discretion of the Minister.† One of the significant cases during this period was the case of Irene Fernandez. The facts were that in 1995, Tenaganita released a report documenting beatings, sexual violence against detainees by prison guards, and inadequate food and water in Malaysia’s immigration detention camp. Irene Fernandez was arrested and charged with malicious publication of false news under the Printing Presses and Publications Act. Magistrate Juliana Mohamed found Irene guilty and was sentence to one year imprison. Current Situation (2003-2006) Between these periods of time, there is no any new law designed to control the media. However, recently, Government has released the Media Council Bill (2006) which seeks to ameliorate some of the worst excess of the Printing Presses and Publications Act in regard to the local media. On page 4 of the Bill, it was stated: â€Å"An Act to establish the Malaysian Press Council for the purpose of preserving, promoting and protecting the freedom of the Press, of maintaining and improving the ethical and professional journalistic standards of newspapers, press publications and news/press  agencies in Malaysia.† Nevertheless, there is fear in public that this piece of legislation will create another unnecessary public body with wide powers to curb press freedom despite its apparent duty to uphold that right. It might also act as a censorship board, only dealing with complaints against the press organisations and journalists and not against denial of freedom of expression by other entities such as ministers or organisations whose actions effectively suppress the right of freedom of expression. Besides, bear in mind that all the laws governing the media before this are still firmly in place and the main stream media also continue to be owned by interests directly or indirectly tied to the main component parties of the BN, especially UMNO and MCA. Some incidents happened during this time of period, showing to us that despite of the changes of the head of the Government, the media are not freer compared to the years before. The government shut down the Sarawak tribune for the editors made a mistake of reprinting caricatures of Prophet Muhammad following Muslim protests of a Danish paper that first published them. Another incident was that the Minister of Information, Datuk Zainuddin had sought the sacking of top NST editor at a meeting of UMNO’s information bureau because he was unhappy with the way the NST had played up certain issues such as the religious rights of minorities and the government’s policy on bumiputras.24 The government also delays in reviewing the publishing permit of the Oriental Daily and censor certain news that the government were not comfortable with. Moreover, the debate on Ninth Malaysia Plan was given wide publicity in the media, but it was the official view and rationale for the Plan that enjoyed one-sided coverage. The leader of the opposition who spoke foe six hours on the Plan did not get any substantive coverage.25 Another issue was that Tun Dr. Mahathir had called a press conference to express his deep disappointment after Datuk Seri Abdullah dismissed the ‘crooked bridge’ project. However, the mainstream media hardly covered it. Conclusions The freedom of the media has seen become more restrictive from the time prior to independence until now. At the early day, the British Colonial has a freer media compare to the media after independence. This might be because of the British regarded the individual freedom as up most important. When came to the early day after independence, the laws being designed were more restricted. However, this was understandable as the situation at that time, where Malaysia was in an Emergency. Unmindful speech might cause riot to the nation. Therefore, the government had to take step to prevent this. In 1970-1985, there was more cases on freedom of speech, after the stand of the courts are clear in these issues, there was lesser cases. During the time frame from 1981 to 2002, many laws were designed and many existing laws were amended. Tun Dr. Mahathir tried to justify this by saying that: ‘the truth is that there is no absolute press freedom anywhere in the world, be it in a liberal democratic country or in countries governed by dictators.†26 He further claimed that journalists and foreigners read a few newspapers which support the government and immediately concluded that there is no press freedom in Malaysia. This was in conjunction with his view points that: â€Å"Malaysian newspapers are free. But this freedom does not mean freedom to criticize the government alone. It also means freedom to support the government.†27 Further in Tun Dr. Mahathir speech at the national union of Journalists dinner on 15th June 1990, he stated that: ‘According to an old English proverb, power corrupt and absolute power tends to corrupt absolutely. If there are restrictions on press freedom, especially pertaining to reports on violence, sex and obscenity, then they are imposed because no one should be given absolute power. This is to prevent the possibility of ‘absolute corruption’. This constraint no way suggests there is no press freedom in Malaysia. Government leaders in this country have no absolute power. The people can change the government while the courts can reverse government decisions. Therefore, newspapers in Malaysia must accept these restrictions. This is done in the national interest and not aimed at destroying press  freedom†. It is true that freedom of the media has to be limited but over limiting will only result to a closed society. Looking at the current situation, many are thinking that the new government would promote media freedom in view of the government transparency policy. However, one should bear in mind that since Datuk Seri Abdullah took over the government until today, it was only three years passed. It is unfair to judge him at this moment. Whether or not there is free media under Datuk Seri Abdullah, we shall wait and see. Comparing to our nearest neighbor, Singapore, media in Malaysia enjoy more freedom. Singapore as a police state, the press is mobilized to explain and support the policies of the Singapore government, as an aid to development rather than assuming a counter-checking posture. In Chee Siok Chin case28, the Singapore court held that: â€Å"it bears emphasis that the phrase ‘necessary or expedient’ confers on Parliament an extremely wide discretionary power and remit that permits a multifarious and multifaceted approach towards achieving any of the purposes specified in Art 14(2) of the constitution. In contrast to the Indian Constitution, there can be no questioning of whether the Legislations are ‘reasonable’. The court’s sole task, when a constitutional challenge is advanced, is to ascertain whether an impugned law is within the purview of any of the permissible restrictions.† As for electronic media, the media Corporation of Singapore, an evolution from a series of government owned broadcast Corporations, dominances the broadcasting media. The PAP government guards the broadcast turf with rigour, grudgingly allowing foreigner broadcasters to operate for commercial and public relations reasons but legislating them off local politics. Today, Malaysian society has an economic level of existence which provides for basic needs, health facilities, adequate housing and equal opportunities to education. Therefore, there is no reason why freedom of speech and free media should be restricted. Values of freedom of expression, exposure to  critical thinking and the importance of a civil society should be emphasizes. After 49 years of independence, Malaysian should not only concern with earning a livelihood and basic quality of life issues. Society shall have desire to acquire knowledge especially in social concerns such as freedom of speech. Bibliography: 1. â€Å"A Case of the Media Freedom: Report of the SUHAKAM†, Workshop on Freedom of the Media at Kuala Lumpur, Aug. 1, 2002. (Kuala Lumpur: Suruhanjaya Hak Asasi Manusia Malaysia, 2003). 2. Abdul Aziz Bari, ‘Freedom of Speech and Expression in Malaysia After Forty Years’, (1998) 27.3 INSAF 149-161. 3. Abraham, C.E.R., â€Å"Freedom of Speech for Whom? The Malaysian Case†, (1998) 27.3 INSAF 1-8. 4. Asian Human Rights Commission, homepage, 10 Sept. 2006 5. Asian Human Rights Commission, homepage, 10 Sept. 2006 6. Broadcasting Act 1988 (Act 338). 7. Centre for Independent Journalism, 10 Sept. 2006 8. Communications and Multimedia Act 1998 (Act 588). 9. Communication and Multimedia Commission Act 1998. (Act 599). 10. Constitution (Amendment) Act 1971 (Act A30). 11. Control of Imported Publications Act 1958 (Ord 14 of 1955) 12. Cyrus V. Das, â€Å"Press Freedom & Contempt of Court†, (1986) 19.3 INSAF 61. 13. Faruqi, Shad Saleem, â€Å"Access to Information†, [1993] 4 Malaysia Current Law Journal xxiii. 14. —, â€Å"Curbing Excesses of Free Speech†, Sunday Star, 10 Feb, 2002, Focus. 15. —, â€Å"Cyber Challenge to Freedom of Speech†, Sunday Star, 27 Jan, 2002, Focus. 16. —,†Keeping A Tight Lid on Official Secrets†, Sunday Star, 17 Feb, 2002, Focus. 17. —, â€Å"Life-blood of Free Society†, Sunday Star, 20 Jan, 2002, Focus. 18. —, â€Å"Pifalls for the Unwary Media†, Sunday Star, 3 March, 2002, Focus. 19. —, â€Å"Principles That Govern Free Speech†, Sunday Star, 3 Feb, 2002, Focus. 20. Federal Constitution. 21. â€Å"Freedom of the Press? A Quick Look At the Borneo Mail Affair and the Question: How Free Is the Local Press?†. 1994 (June) Malaysian Law News, 36-37. 22. Hashim Makaruddin, ed., Ensiklopedia Dr. Mahathir Bin Mohamed: Perdana Menteri Malaysia, (Cairo: Dar al-Kitab al-Masri, 2005). 23. Hickling, R.H., Hickling’s Malaysian Public Law, (Petalng Jaya: Longman, 2003). 24. â€Å"I Know How The People Feel†, (1986) 19.4 INSAF 18. 25. Kanesalingam, A., â€Å"Democracy and the Law†, (1998) 27.4 INSAF 105-115. 26. Mahathir Mohamed, â€Å"Freedom of the Press: Malaysian Perspective†, 1990 (Aug) Malaysian Law News, 521-522. 27. Malaysia Act 1963 (No.26/63). 28. Merriam-Webster Online Dictionary 3 Sept. 2006 29. Mohamad Ariff Yusuf, â€Å"Freedom of the Press in Malaysia†, 10th Law Asia Conference, (Kuala Lumpur, June 21 – July 4, 1987). 30. Mustafa K. Anuar, Anil Netto, â€Å"Malaysian Ready for Press Freedom†, 5 Sept. 2006, 31. —, Joint Coordination, Charter 2000, Aliran Online, 6 Sept. 2006 32. Officials Secrets Act 1972 (Act 88) 33. Officials Secrets (Amendment) Act 1983 34. Officials Secrets (Amendment) Act 1986 35. Padmanabha Rau, â€Å"Federal Constitutional Law in Malaysia & Singapore†, 2nd ed., (Singapore: Butterworths Asia, 1997). 36. â€Å"Press Council Bill A Farce†, Aliran Online, 5 Sept. 2006 37. Printing Press Act 1948 (Ord 12 of 1948) 38. Printing Presses and Publications Act 1984 (Act301). 39. Printing Presses and Publications (Amendment) Act 1987 (Act684) 40. Reme Ahmad, â€Å"Malaysia Former Media Bosses Duel Over Press Issues†, Asia Media News 22 Feb. 2006, 9 Sept. 2006 41. Ruslan Zainuddin, Fauziah Soffie, â€Å"Sejarah Malaysia† (Selangor: Penerbit Fajar Bakti, 2001). 42. .Salleh Buang, â€Å"The Broadcasting Act 1988†, 1994 (April) Malaysian Law News, 5&14. 43. Shafruddin Hashim, â€Å"The Constitution and the Federal Idea in Peninsular Malaysia†, (1984) Journal of Malaysia and Comparative Law, 139-178. 44. Sheridan, L.A. & Groves, Harry E., â€Å"The Constitution of Malaysia†, 5th ed., (Singapore: Malaysian Law Journal, 2004). 45. Sedition Act 1948 (Revised – 1969) (Act 15). 46. Sopiee, Mohamed Nordin, â€Å"Freedom of the Press†, 10th Law Asia Conference, (Kuala Lumpur: June 29 – July 4, 1987). 47. Tan, Kevin & Thio Li-Ann, â€Å"Constitutional Law in Malaysia & Singapore†, 2nd ed., (Singapore:  Butterworths Asia, 1997). 48. â€Å"The Officials Secrets (Amendment) Bill 1986: Why Are They Taking Away Our Rights?† 1986, 19.4 INSAF 1. 49. Tun Mohamed Suffian, ed., â€Å"The Constitution of Malaysia: Its Development: 1957-1977†, (Kuala Lumpur: Oxford University Press, 1978). 50. Wong, Kok Keong, â€Å"Propagandists for the BN (Part 1)†, 2004 Vol. 24 No. 5 Aliran Monthly, 14-17. 51. —, â€Å"Propagandists for the BN (Part 2)†, 2004 Vol. 24 No. 6 Aliran Monthly, 13-17. 52. —, â€Å"Freer Media Under PM Abdullah?†, Aliran Online 3 Sept. 2006 53. Zaharom Naim, Mustafa K Anuar, â€Å"Ownership and Control of the Malaysia Media†, World Association for Christian Communication, homepage, 10 Sept. 2006 54. Zalina Abdul Halim, â€Å"Media Law†, 2000 Survey of Malaysian Law, 411-439. 55. —, â€Å"The media System and Co-operative Regulatory Systems in the Media Sector of Malaysia†, Hans-Bredow-Institut, 2 Sept. 2006

The Grafton Group Project

Student Names: Stephen Bray B00037534 Johnny GeraghtyB00020240 Alan LennonB00020051 Emmet Toft B00015911 [pic] Module Name:Strategic Management 2 Lecturer:Mr Liam Bolger Submission Date:29th April, 2010 Word Count:10,413 Table of Contents Background of the company:2 History of the company:3 The Environment7 PESTEL analysis7 Political7 Economic7 Sociocultural8 Ireland population by Age 20069 Technology10 Environment10 Legal10 Key drivers for change10 The Industry11 Porters Five Forces analysis11 Substitute products/services12 Bargaining power of buyers12 Bargaining power of suppliers12 Rivalry/Competition13 Opportunities and Threats14 Opportunities identified15 Threats identified16 Financial Information Analysis17 Analysis of Financial Reports18 Liquidity Ratios18 Profitability Ratios20 Net Profit Margin per Segment20 Earnings per share (EPS)21 Analysis:23 Liquidity:23 Profitability:24 Debt:24 Return on Investment:24 Borrowings:25 problems with accessing credit. 25 Share Price26 Source http:investor/graftongroupplc. com27 Liquidity: Excellent27 Financial Strength:Excellent27 Profitability: Fair27 Growth: 027 Source www. corporateinformation. com27 Outlook for the Future28 Rationalisation measures:29 Plans for 2010:29 Opportunities 2010:29 Group Strengths30 Weaknesses31 Strategic Capability31 Critical Success factors for customers (a sample of but not limited to):33 Corporate Governance35 Grafton Group’s Compliance with the Combined Code36 The Board – who reports to whom? 37 Directors’ Independence and Board Balance38 Performance of the Board39 Corporate Social Responsibility – CSR and Ethics39 Shareholder and Stakeholder Expectations and Influences41 Culture of Organisations and Grafton Group43 Strategic Direction and Corporate level strategy44 Corporate Parent44 The corporate parent as a Synergy manager45 Strategic Drift46 International Strategy48 Table Pre-Merger48 Table Post-Merger50 Traditional reasons for Merger failure51 Through a possible merger Grafton may:52 Strategic Directions53 Market Consolidation54 Market Diversity (Related)55 International strategy – Travis Perkins and Grafton merger? 56 Bibliography59 Plagiarism Disclaimer:60 Background of the company: Grafton Group plc is an independent, profit growth oriented company with operations primarily in the UK and also in Ireland. The Group has strong national and regional positions in the merchanting, DIY retailing and mortar markets. The Group aims to achieve above average returns for shareholders. Grafton’s strategy is to build on strong positions in businesses serving the UK and Irish construction sectors, to develop in related markets, and to grow in businesses with which it is familiar. In Great Britain, Grafton is the fourth largest merchanting business trading from 430 locations comprising 219 Builders Merchanting branches trading principally under the Buildbase and Jackson brands and 211 Plumbers Merchanting branches trading mainly under the Plumbase brand. EuroMix is the market leader in the UK dry mortar market where it trades from a network of nine manufacturing plants in England and Scotland. In Northern Ireland, MacNaughton Blair is one of the leading builder’s merchants in the province where it trades from 20 locations. In the Republic of Ireland, the Group is the largest builders and plumber’s merchanting business trading nationally from 62 branches under the Chadwicks and Heiton Buckley brands. The Group is the market leader in DIY retailing in the Republic of Ireland, trading nationally from 41 stores and is also engaged in the manufacture of mortar, plastics and windows in the Republic of Ireland. Today, in Ireland, Grafton is the largest builders and plumbers merchants and the clear market leader in DIY retailing. In the UK the Group’s merchanting operation is the 4th largest in the market. 2005 turnover was â‚ ¬2. 6 billion and Profit after Tax amounted to â‚ ¬166 million. History of the company: Grafton’s origins date back to 1902 and since then the Chadwick family have played a central role in the development of the business. 1909 William Thomas Chadwick establishes his first business called Chadwicks (Dublin) Limited to supply builders merchants and major building contractors with Irish and imported cement and plaster. Today Chadwicks is the 2nd largest builders and plumbers merchanting brand in Ireland, trading from 31 branches nationally. 1930 William Chadwick acquires control of a small firm engaged in the manufacture of concrete blocks and roof tiles, which his company was supplying with cement. In 1931 Concrete Products of Ireland was registered as a private limited company. Today it is called CPI Limited and is a leading manufacturer of dry mortar in the Irish market. William Chadwick, the Group’s founder, dies at the end of the Second World War, leaving the business to his two sons – Terence and Finton Chadwick. 1965 Concrete Products of Ireland becomes a public company and purchases Chadwicks (Dublin) Limited from the Chadwick family. At the same time Marley Limited increases its holding to 51%. Marley’s relationship with Concrete Products of Ireland dates back to the end of the Second World War when Marley acquired a minority shareholding. 985 Mr. Michael Chadwick is appointed Executive Chairman. 1987 Marley plc decides to concentrate on the manufacture of building materials and as a consequence sold its controlling shareholding in the Group. The Marley shareholding was placed with institutional investors and the Group’s management. The Group opens its first DIY retailing store in the Irish market. 1988 The Group changes i ts name to Grafton Group plc and makes its first UK acquisition, a small heating and plumbing business which gives the Group familiarity with the large UK merchanting market. 990 The Group acquires MacNaughton Blair a long-established and well-known Belfast-based builders merchants. Also during the year Grafton acquires Joseph Kelly & Son (1994) Limited in Dublin, a builders merchanting business which was to become very well placed to serve the needs of the building trade in the centre of Dublin. 1994 The Group’s expands significantly in the UK with the acquisition of Bradley’s and Lumley & Hunt plumbing and heating operations. Total sales in Britain and Northern Ireland increase by 53%, representing 21% of Group turnover. 995 Grafton acquires P. P. S. Mortars – a silo mortar plant based in Glasgow. This business adopts the EuroMix silo mortar business model and technology, which has been successfully developed by CPI, the Group’s Irish concrete products business. Today EuroMix is the leading UK mortar manufacturer with eight plants. 1996 The Group continues its strategic development in the UK with its first acquisition of a builder’s merchanting business – R. J. Johnson, based in Oxford. 1997 The Group continues to acquire in the UK adding a further 14 locations through six small but significant acquisitions and achieves critical mass in its UK operations. This is the Group’s tenth year as an independent public company; a decade of considerable achievement in which sales increased 18% annually and earnings per share grew at an annualised rate of 29%. 1998 UK builders’ merchanting operations expand substantially with the acquisition of British Dredging plc, the first time an Irish company acquires a listed UK plc. This business operates a total of 23 locations incorporating 17 builders’ merchants and six plumber’s merchants. The builder’s merchanting operation is integrated under the Buildbase brand, which was established in 1997 as the trading name for the Group’s UK builder’s merchanting operation. During that year the Group makes another six acquisitions adding a further 19 locations, including the London based Deben Builders Merchants business with 10 branches and A R Hendricks Limited, a heavy side builders merchant trading from five branches. 1999 The Group continues its bolt-on acquisition programme adding a 16 more locations, through eight acquisitions in the UK. Throughout the nineties the Group continues with the expansion of its Irish merchanting and DIY retailing operations and consolidates its position as market leader in both sectors. 2000/2001 During these years, the Group continues apace with its bolt-on acquisition strategy. A total of 24 acquisitions were made during the period, many single branch operations that add value through infilling the Group’s overall network of locations in the UK. 002 This is a record year with a total of 15 acquisitions adding a further 39 branches to the UK merchanting network. These acquisitions included five small chains: Lakes in Derby, BMB in Barnsley, and PDM in Edinburgh, Aizlewoods in Rotherham and JKS Heating and Plumbing Supplies in Manchester. 2003 The Group undertakes its largest ever acquisition thus far – Jackson Building Centres in England adding 18 branches – and makes another significant acquisition with Plumbline, Scotland’s largest independent plumbers merchants with 17 locations. Overall it was a busy year with a further seven bolt-on acquisitions completed, giving a total of nine acquisitions for 2003. Grafton now has 137 plumbers’ merchanting branches trading under the Plumbase brand and 139 builders’ merchanting branches trading principally under the Buildbase and Jackson brands. 2004 The Group completes its 100th acquisition since 1998, averaging more than one per month. A total of 19 acquisitions are completed during the year, another record year for development. Grafton reaches agreement to acquire Heiton Group plc, subject to regulatory approval. 005 In January Grafton completes the acquisition of Heiton Group plc. This business includes, inter alia, the No. 1 builder’s merchanting operation and the No. 2 DIY retailing brand in Ireland and is a good strategic fit with Grafton’s existing operations and consolidates its position as the leading player in the Irish market. Overall Heiton has over 50 trading locations (six in the UK), an average of 1,900 employees and a turnover in excess of â‚ ¬500 million. We can see from this chronological list of their history that Grafton Group expanded greatly from the mid 90’s to 2005. Their growth in the UK market was surged on the back of an economic building boom in Ireland. They now have a much greater market and consumer base to compete in but also face a vastly changed environment. The Environment PESTEL analysis Political †¢ Taxation policy – corporation tax remains at 12. 5% in Ireland. Grafton Group is resident in the state and is liable to Corporation Tax on its worldwide profits. The corporation tax rate in the UK is 21% which is a huge source of competitive advantage for Grafton versus its UK competitors. Government stability – the current Irish government is in place till 2012. The UK is in the build up to a general election which could see a change in the current government and policies. †¢ Government policies towards â€Å"green† initiatives – grant towards homeowners to improve insulation, grants for solar panels and etc. Economic †¢ The UK and Irish economies are in recession leading to a sharp fall in dem and. Consumer confidence has fallen and housing related spending has reduced. †¢ The number of house completions in Ireland is 17,000 units in 2009 which is a fifth of the output during its peak in 2006. Ireland’s stock of empty homes surged 30pc to 345,000 houses in the three years through 2009 as the decade-long property boom collapsed. †¢ Sterling exchange rate weaknesses could lead to lower reported Group earnings on translation of the results of the UK business into euro at the average rate of exchange for the year. †¢ Low Interest rates – the cost of loan repayments is low and for the foreseeable future they should remain constant. †¢ The availability of credit and money is very strict and very few banks are willing to give loans to cash strapped businesses. Unemployment rate in Ireland has increased dramatically, Jan 2008 4. 8% versus Jan 2010 13. 4%. Unemployment rate in the UK has increased but not as dramatic, Jan 2008 5% versus Jan 2010 8 %. Sociocultural †¢ Declining employment and incomes for individuals. †¢ Higher personal taxes – introduction of income levy, the doubling of health and PRSI levies. †¢ A nation of savers, People are now saving more than before and consumer spending has decreased as a result. †¢ An increasing age demographic in Ireland who will require a home in the future. Ireland population by Age 2006 | |Age Group | |Males | |Females | |Persons | | | |0-14 | |443,044 | |421,405 | |864,449 | | | |15-24 | |321,007 | |311,725 | |632,732 | | | |25-44 | |681,988 | |663,885 | |1,345,873 | | | |45-64 | |468,037 | |460,831 | |928,868 | | | |65 years and over | |207,095 | 260,831 | |467,926 | | | |Total | |2,121,171 | |2,118,677 | |4,239,848 | | | | | | | | | |UK population grows to 61. million | | | | | |[pic] | | | | | | | |Technology | |Improvements in technology have led to better supply chain and logistics management. | |Bar-coding of products has impro ved inventory management. |Environment | |Organisations need to be socially responsible with their business activities; negative publicity can have a detrimental effect on| |consumer’s perception. | |A growing consumer awareness of greener behaviour and products associated with having a better impact on the environment. | |Legal | |Health and safety regulations have increased the demand for health and safety products and packaging. | | |Key drivers for change | |These are environmental factors that are likely to have a high impact on the success or failure of an organisation. There is a | |huge level of uncertainty in the current environment but an area we have identified as key is the energy efficient sector. The | |government have introduced policies and measures to address climate change. This initiative has arisen from a UN conference on | |energy for development, which is demanding countries to change their ways for the improvement towards a greener global | |environme nt. There will be a greater demand from consumers to meet those measures and therefore Grafton must satisfy this growing| |demand with energy saving products. | | | | | | | | |The Industry | |Porters Five Forces analysis | |Potential competitors | There is the potential for new entrants in the form of small independent hardware suppliers which are strategically located to entice consumers, ex. A small hardware shop beside the local shopping centre. As we can see from the below graphic many of their outlets are strategically located in and around the big cities as there is a much greater consumer base, ex. Dublin, London, Birmingham. [pic] There is a huge capital requirement required to compete with the Grafton group brands within Ireland and their closest competitors are B&Q (20% market share) and Hombase (17% market share). The location of DIY retailing outlets is interesting as during the boom many of our local towns have seen the emergence of industrial retail parks. In Navan 4 years ago Woodies located in a newly developed retail park just off the N3, before that there was Chadwick’s and a number of small independent outlets in the town. Grafton group have 63% of market share in Ireland, as a result the power of competitive response is very strong in Ireland. However in the UK they are fourth with 10% of market share with Travis Perkins (15%), Jewson (18%) and Wolseley (19%) and as a result their competitive position is much more demanding as they have 3 competitors who are in stronger market position. Substitute products/services We believe the only substitute threat is hire companies, they offer equipment and tools to consumers on a rental basis i. e. per hr, day, week and etc. In the current climate price is a key factor in peoples decisions, therefore consumers may opt to hire equipment for tasks rather than spending vast amounts on equipment that might only be used infrequently. Bargaining power of buyers Grafton’s consumers are powerful because, †¢ Buyers can switch suppliers at no cost. †¢ Buyers purchase from multiple sellers at once, they opt for suppliers conveniently located to the project. Buyers are shopping round for the best value. Bargaining power of suppliers The Grafton procurement process has improved f urther with new internal appointments to lead heavy side and light side purchasing. There was an increased focus on reducing the supplier base and developing closer alliances with key suppliers. This has resulted in greater leverage being achieved from the Group's purchasing scale and improved purchasing terms. The volume of products sourced directly through the warehouse facility in Shanghai continued to increase providing a new sourcing option for the Group's businesses to procure quality products at competitive prices. We can see from the above that the power rests with Grafton; suppliers are keen to meet the demands of their customer as they have a strong foothold in both the UK and Irish marketplace. Rivalry/Competition In Ireland their competitive position is very strong and through consolidation and job cuts they will be better placed than most building supply firms especially the many small independents that are under serious financial strain as the economic property boom which they depended on is long gone. Many independents face closure and Grafton group and its brands will be best placed to take advantage when the economy recovers over the coming years. Competitive rivals are organisations with similar products and services aimed at the same customer groups. When we look at one of Grafton’s brands Woodies DIY and their offerings, we see that they are competing with many different retailers. They offer a product range which caters for all your interior and exterior requirements, ex. Bag of cement, paint, timber, kettles, toasters, lighting, TVs, etc. They compete in a very fragmented industry but what many people don’t realise is Grafton is the parent company and all these separate brands from the consumers perspective competing with one another doesn’t matter as all profits go into the one organisation. Grafton is competing with any organisation who offers interior and exterior household products, ex. B&Q, Homebase (part of Home retail group), Argos (part of Home retail group), Power City, Harvey Norman, etc. From our experiences with Woodies they differentiate themselves from the competition as they offer a complete range of products from their store which means you can get all your needs in the one store. However if you look at the UK operating margin history it was roughly 6/7% over the past ten years versus Irish operating margin history of 11-13%. This means that competition is much stronger in the UK and they must price more competitively in the UK. Opportunities and Threats We can see from the below graphic that their decision to expand its operations in the mid 90s to the UK has been extremely successful with 68% of their turnover coming from the UK. Grafton must now look to the UK with a population of 61 million versus Ireland 4. 2 million as their primary source for turnover and opportunity. [pic] Turnover breakdown Ireland Merchanting |370,167 |19% | |DIY Retailing |247,784 |12% | |Manufacturing |19,891 |1% | |Total |637,842 |32% | In the UK their operation consists mainly of b uilders and plumbers merchanting. THE MARKET ATTRACTIVENESS – BUSINESS POSITION MATRIX (GE and McKinsey Company Model) |HIGH MARKET ATTRACTIVENESS |MEDIUM MARKET ATTRACTIVENESS |LOW MARKET ATTRACTIVENESS | |HIGH BUSINESS | | | | |POSITION | | | | |MEDIUM BUSINESS | | | | |POSITION | | | | |LOW BUSINESS POSITION| | | | Invest Grow = Green Selective Investment = Yellow Harvest/Divest = Red The G. E. Matrix is an extremely useful tool to assist an organisation in exploring its Business Position based on its competitive position and the attractiveness of the markets under the organisation’s consideration Opportunities identified †¢ Demographics – In Ireland 1. 5 million are under the age of 24 and in the UK roughly 15 million are under the age of 30. These people will require a home over the next 5 – 10 yrs and therefore there will be a demand for housing and renovations to suit individual tastes. †¢ Worldwide government energy initiatives – consumers are encouraged to buy more energy efficient products. †¢ Cost reduction – with demand in decline it important that Grafton mange their costs, ex. Supplier costs, staffing, acquisitions etc. Competitors – independents are finding the financial strain to difficult and are been forced to close their operations. Economic recovery will see Grafton best placed in the market. †¢ Markets – economists both here and abroad are saying there is a bottoming out of the recession. This should bring about a stable market place. †¢ Debtors – if debtors are managed tightly it can have a significant effect on cash flow and bad debts can be reduced to a minimum. †¢ Credit – if debtors aren’t paying on time then Grafton need to look at extending credit terms with their suppliers. We think this very possible as the power is very much with Grafton and not the suppliers. Threats identified We believe the biggest threat to Grafton Group is the level of spending available for construction related projects. The demand for building materials continues to fall in Ireland and signs of improvement are slowly beginning to show in the UK. â€Å"The construction industry has now declined for the 34th month in a row, but the rate of contraction is slowing, according to the latest Ulster Bank Purchasing Managers' Index. † â€Å"Though it's great to see the UK construction sector turn the corner after two years of relentless contraction, it's still very early days,† said David Noble, chief executive officer at the Chartered Institute of Purchasing and Supply. There is now a reliance on the public sector for new work and if they don’t provide the funding for new projects then construction suppliers could be in for a difficult few years. Private investment is very unlikely in the current environment with consumer confidence very low and economic conditions unstable. Financial Information Analysis 2009 2008 Revenueâ‚ ¬1. 98bn â‚ ¬2. 67bn Adjusted operating profitâ‚ ¬26. 2m â‚ ¬118. 6m Operating profit per income statement â‚ ¬4. 9m â‚ ¬99. 2m Profit before tax â‚ ¬13. 6m â‚ ¬64. 1m Free cash flow 171m â‚ ¬212m EBITDA â‚ ¬74. 1m â‚ ¬172. 9m Adjusted earnings per share5. 4c 32. 2c Basic earnings per share 5. 8c 25. 1c Dividend/share purchase 5. 0c 15. 0c Net debt â‚ ¬322m â‚ ¬435m Gearing 35% 50% Analysis of Financial Reports The following is an analysis of the financial reports of Grafton Group plc. We will try to illustrate the current financial situation the group is in compared to previous years and also attempt to analysis the outlook for the future. Grafton’s presence in the construction and raw materials market means they have been very much affected by the economic downturn, in particular the significant slowdown in the construction market and the housing market in both the UK and Ireland. I will use liquidity, profitability, debt and other ratios deemed appropriate as tools to help analyse and diagnose the financial health of the group. I will use a year on year comparison in order to determine the direction in which the group is going and identify any trends. Liquidity Ratios Current Ratio (current assets : current liabilities) 20082009 920,482: â‚ ¬601,987â‚ ¬891,364 : â‚ ¬550,793 1. 53: 11. 62:1 Acid Test Ratio (Current assets less stock : current liabilities) 20082009 â‚ ¬920482 -â‚ ¬331124 : â‚ ¬601987â‚ ¬891364-â‚ ¬265748 : â‚ ¬550 793 1 : 0. 981. 14 : 1 Cash at Bank and Short term deposits (at end of year) 20082009 â‚ ¬301,984â‚ ¬224,834 Profitability Ratios Net Profit Margin (â‚ ¬000’s) 20082009 â‚ ¬64116 / â‚ ¬2672984â‚ ¬13580 / 1979766 2. 4%0. 68% Net Profit Margin per Segment Merchanting 20082009 â‚ ¬2284,484 / â‚ ¬121,921â‚ ¬1686,933 / â‚ ¬39305 5. 33 %2. 33 % Retailing 20082009 â‚ ¬303,071 / â‚ ¬11,790â‚ ¬247,784 / â‚ ¬3274 3. 89 %1. 3 % Manufacturing 20082009 â‚ ¬95621 / (â‚ ¬3159)â‚ ¬50985 / (â‚ ¬5060) -3. 3%-9. 9% Earnings per share (EPS) 20082009 32. 2c5. 4c Gearing 20082009 50%35% New borrowings v old borrowings 20082009 â‚ ¬91. 944 : â‚ ¬579,333â‚ ¬73679 : â‚ ¬536789 1 : 6. 31 : 7. 29 Short term v Long Term finance 20082009 â‚ ¬119,874 : â‚ ¬579,332 â‚ ¬103174 : â‚ ¬536,789 1 : 4. 831 : 5. 2 Analysis: Liquidity: The group has improved its current ratio year on year from 2008 to 2009, this is mainly due to a decrease in current liabilities. This is an encouraging trend for the group. The acid test ratio also shows improvement from 2008 to 2009, this is both a reflection of the improved current ratio and also the work done to try and reduce inventory holding, and reduce cash flow tied up therein and other associated costs. Cash flow was enhanced greatly by tighter management of inventory, debtors, disposal of assets (sale of freehold land, exhibiting the importance of having a strong portfolio of assets) The cash at bank and on short term deposit has been increased year on year from 2008 to 2009 by approximately 34% this is quite encouraging especially in the current environment (and not due to borrowings), as the adage goes â€Å"profit is food, cash is oxygen†. It is fair to say the group has slightly improved its liquidity situation and is more able to meet its outgoings as they fall due. Against the economic backdrop it is quite a good performance and evidence the group are handling the downturn well in a strategic sense. Profitability: Profitability is the biggest challenge facing Grafton due to the economic downturn and slowdown in the construction and housing markets. Net profit fell dramatically from 2008 to 2009 from â‚ ¬64 million to â‚ ¬13. 5 million, this was quite dramatic. Despite being worrying it was not unexpected, with the focus for the year on debt and cost reduction (and reducing capital expenditure and working capital). Merchanting, Retailing and Manufacturing all dropped considerably in profit terms. Margins were also decreased across all operations. Merchanting still remains the highest source of revenue for Grafton (%85 of group turnover in 2008 and 2009, suggesting strong competencies here). The loss in manufacturing outweighs the profit made in retailing, it is the profit made in the merchanting division that the real profit pool for Grafton. (divesting in manufacturing division may need to be considered, bar where synergies exist with other divisions, i. e. mortar manufacturing) As a result earnings per share have fallen dramatically from 32. 2c to 5. 4c, Debt: Through measures taken during the year to reduce gearing, Grafton were able to reduce an already modest gearing of 41 % in 2008 to 35 % in 2009. This is an excellent achievement in the circumstances (and exhibits a strong leadership in Strategic choices, direction, and fit). The net debt was reduced by â‚ ¬113. 1 from â‚ ¬435. 6 million in 2008 to â‚ ¬322. 5million in 2009. The groups current bank facilities are subject to a minimum net assets requirement (â‚ ¬301,984 cash at bank end2009, up from â‚ ¬224,834 end 2008, leaving the Group in a strong cash position). Return on Investment: Return on investment is down considerably from 2008 to 2009 10. 12% to 2. 19%, as profits dipped quite considerably resulting in the dramatic slump. Again this is worrying but not unexpected as the Group were attempting rationalization and consolidation (strong market share results exhibit some success in this regard) Borrowings: The ratio of new to old finance borrowings and ratio of short term to long term finance borrowing both improve year on year (1:6. 3 to 1:7. 29 and 1:4. 83 to 1:5. 2 respectively). Again this shows strong evidence of reducing debt and decreased borrowing. It is fair to say that Grafton is currently In a very challenging operating environment with the downturn In markets seriously affecting their profitability, dividends, and returns. But the Group finds themselves in an improved liquidity position, as well as considerably reducing their gearing, they also greatly increased their cash at bank negating greatly problems with accessing credit. Share Price Irish Stock Exchange Date: 29/04/2010 | Currency: EUR | Code: GRF_u. I |Current Price |3. 52 |Day High |3. 55 |Bid |3. 50 | |Last Closing Price |3. 50 |Day Low |3. 47 |Ask |3. 4 | |Change |0. 02 |Day Open |3. 47 |Year High |3. 59 | |   |   |Volume |28,045 |Year Low |2. 30 | Source http:investor/graftongroupplc. com The latest share price info as at 29/4/10 is encouraging as it shows strong recovery from a year low of 2. 30 to 3. 52 (a year high of 3. 59 has been achieved. The highest share price achieved was nearly 23 in early 2007 which illustrates the decline in the industry, and p uts the company’s current performance into context. The Corporate information. om Wright quality ratings rates Grafton’s investment quality as BBD0 which translates as: Liquidity:Excellent Financial Strength:Excellent Profitability:Fair Growth:0 Source www. corporateinformation. com Outlook for the Future The UK economy has moved out of recession in late 2009 which is encouraging news for Grafton as 68% of its turnover comes from this source. The amount of new house sales and builds are on the increase from a very low level starting which is very encouraging as the merchanting division is Grafton’s real profit pool. The Merchanting market has remained structurally sound despite the downturn and can expect a growth rate above normal trends that Grafton are well positioned to take advantage of. The Irish economy remains in recession but is expected to return to growth by the middle of the year boosted by global growth and improved export conditions. A weak employment situation, low consumer confidence and tight credit conditions make the market conditions in Ireland even more challenging, coupled with the massive drop in new house builds as housing over supply is still a problem. Further rationalisation measures and/or closures in the Irish operations should be considered. Group turnover stabilised from H1 2009 to H2 2009 which is encouraging. The cost reductions and integration benefits in the Merchanting divisions improved profitability in H2 2009. The rationalisation achieved and the increased activity expected form the UK new Housing market means that Grafton are well placed to take advantage of the recovering markets this year. Rationalisation measures: †¢ Employee base reduced in both Ireland and UK †¢ Cost reduction initiatives progressed with significant results †¢ 18 locations consolidated or closed and 10 new locations added †¢ Credit terms from suppliers renegotiated †¢ Improved inventory management †¢ Debtors managed tightly with significant cash generation †¢ Costs rationalized by â‚ ¬80 million in 2009 Plans for 2010: †¢ Further rationalisation costs will be incurred in 2010 Wider product range yielding margin growth †¢ Emphasis on overhead control and working capital management †¢ Attempt to obtain full benefits of integration Opportunities 2010: †¢ Reduced cost base †¢ Market share gains †¢ Competitors failing †¢ Irish Construction close to b ottoming out †¢ Signs of recovery in markets †¢ Positive Demographics †¢ Government Renewable energy initiatives Group Strengths †¢ Highly cash generative streamlined businesses †¢ Significant cash deposits ensures liquidity †¢ No P Banking Covenants -protection from exchange fluctuations now in banking agreements †¢ Strong balance sheet –modest gearing 35% †¢ No material refinancing required before 2011 68% of turnover in UK (increased mortgage lending, & housing sector activity in UK) †¢ Prominent market positions in the UK and Ireland –market share circa 10% and 20% respectively (satisfactory market share performance) †¢ Motivated management teams †¢ Proven strategic record, past experience of managing down cycles †¢ Spread risk †¢ Economies of scope amongst SBU’s †¢ Synergies across SBU’s †¢ Vertical integration achieving efficiencies in merchanting division †¢ Benefits de rived from lower cost base, integration, scale related and Procurement efficiencies †¢ Trading stabilised in second half of 2009 †¢ Trading outlook beginning to improve following period of significant uncertainty †¢ Tight financial control across group Weaknesses †¢ Poor performance in Ireland operations †¢ General economic downturn †¢ Housing market collapse †¢ Sharp Industry downturn Slowdown in Irish construction & housing industry (brought group turnover down 26% to 1. 98bn †¢ Very slow new housing Market in Ireland †¢ Consumer confidence in Ireland hitting retail sales †¢ Continued contraction expected in Irish economy †¢ Manufacturing operations making a loss †¢ Over reliance on Merchanting operations Strategic Capability â€Å"The ability to perform at the level required to survive and prosper. It is underpinned by the resources and competences of the organisation† Johnson, Scholes & Whittington It is clear that Grafton have the threshold competences to meet customer’s minimum requirements, and also the threshold competences to provide the same as they continue to exist (and are in a decent position to go forward). But what are Grafton’s core competencies, (activities and processes that are difficult for competition to imitate), what are their unique resources (difficult for competition to imitate or obtain). And what are the critical success factors for Grafton’s customers (the product features especially valued by customers and therefore the company must excel at). As 85% of Grafton’s turnover comes from their merchanting division this is where we will focus. Some of Grafton’s Brands, Sbu’s and subsidiaries in Merchanting include: Ireland: Heiton Buckley Chadwicks Cork Builders providers Telfords Heiton steel UK: Buildbase Jackson Building Centres Macnaughton Blair Selco Builders Warehouses Plumbase (plumbing) CPI Euromix (mortar) Critical Success factors for customers (a sample of but not limited to): Quality service and products Reliable products services Speed of service National Distribution Online ordering / catalogue. Product knowledge and advice available Simple pricing Self service capabilities â€Å"One stop shop† capabilities Wide selection / availability of products hire services Prompt & accurate delivery of products/services Strong partnership team working capabilities Trade deals/initiatives (bulk buying, relationship development) Unique resources (a sample of but not limited to): Wide network of branches Vertically integrated operations Very experienced management team Backed by strong corporate parent Financial resources (over 300 million in cash) Experience of managing previous downturns Strong Brand equity, profile and Goodwill Ability to leverage position as largest mortar manufacturer National Distribution Network (Civil & Lintels) Core Competences (a sample of but not limited to): Corporate parenting Synergy managing Proven vertical integration abilities Cross SBU linkages Co-ordination of multiple and diverse activities Excellent Financial management First class customer service Mortar manufacturing (no 1 in market) Strong Management at SBU level Strong Value chain Strong Value network Strategic Marketing Autonomy at SBU level Market Development Product development and category management National and local distribution competences The above are some examples of the critical success factors Grafton Group need to excel at for customers, and some of the unique resources and core competences that help them to meet those CSF’s. By building those resources and capabilities that help Grafton deliver value for its customers and help obtain competitive advantage. Corporate Governance What is Corporate Governance? â€Å"Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society. † (Sir Adrian Cadbury, UK, Commission Report: Corporate Governance 1992) Ireland’s recent history of corporate governance has been highlighted with the governments bank NAMA, National Asset Management Agency. Builders, bankers and the senior public servants who failed to regulate these sectors are perceived to be getting off scot-free from the crisis they caused. â€Å"Sean Barrett – Irish Times 2nd September 2009 / Page 14 Brian Lenihan has taken action that is costing taxpayers billions of euro that would have not have be en required if Corporate Governance and common sense regulation was adhered to. The bank regulators, a supposed independent body, did not adhere to procedures and turned a â€Å"blind eye† to what was practiced over the last 20 years. â€Å"The state ownership policy should fully recognise the state-owned enterprises’ responsibilities towards stakeholders and request that they report on their relations with stakeholders. Guidelines on Corporate Governance of State-Owned Enterprises, Page 37 (2005) Making the right decisions with all the information without compromising the integrity of the organisation. [pic] Corporate Cartoons, Grinning Plannet Grafton Group’s Compliance with the Combined Code The Board is committed to maintaining high standards of Corporate Governance. The Board is accountable to the Company’s shareholders and this statement describes how it applies the principles of good governance set out in the 2006 FRC Combined Code on Corporate Go vernance which is appended to the Listing Rules of the Irish and London Stock Exchanges. The Board – who reports to whom? The Board of Directors is made up of nine members at 31 December 2008 comprising the Executive Chairman, three other executive Directors and five non-executive Directors. Mr. Anthony Collins, Deputy Chairman, is Senior Independent Director. The Board believes that it has the skills, knowledge and experience required by the scale, geographic spread and complexity of the Group’s operations. The Board routinely meets seven times a year and additionally as required by time critical business needs. There is also contact with the Board between meetings as required in order to progress the Group’s business. The Board takes the major decisions while allowing management sufficient scope to run the business within a centralised reporting framework. The Board has a formal schedule of matters specifically reserved for its decision. This covers the key areas of the Group’s business including financial statements, budgets, acquisitions, major items of capital expenditure and the strategic development of the Group. The Board’s responsibilities also include ensuring that appropriate management, development and succession plans are in place; reviewing the environmental and health and safety performance of the Group; approving the appointment of Directors and the Company Secretary; approving policies relating to Directors’ remuneration and severance and ensuring that satisfactory dialogue takes place with shareholders. The Directors have access to the advice and services of the Company Secretary who is responsible for advising the Board through the Chairman on governance matters. The Company’s Articles of Association and Schedule of Matters reserved for the Board for decision provide that the appointment or removal of the Company Secretary is a matter for the full Board. Directors have full and timely access to all relevant information in a form appropriate to enable them to discharge their duties. Reports and papers are circulated to Directors in preparation for Board and committee meetings. The non-executive Directors, together with the executive Directors, also receive monthly management accounts, various reports and other information to enable them to review the performance of the Group on an ongoing basis. The Board continues to hold the view that there are compelling commercial benefits to the Group and its shareholders in combining the roles of Chairman and Chief Executive and the holding of the combined roles by Mr. Michael Chadwick. The combination of the roles is balanced from a governance point of view by the strong input of the five independent non-executive Directors on the Board and the Board’s committee structure. Directors’ Independence and Board Balance It is Board policy that the Board should include a balance of executive and non-executive Directors such that no individual or small group of individuals can dominate the Board’s decision making. Five non-executive Directors, Mr. Anthony E. Collins, Ms. Gillian Bowler, Mr. Richard W. Jewson, Mr. Roderick Ryan and Mr. Peter S. Wood are considered by the Board to be independent of management and free from any relationship which could materially interfere with the exercise of their independent judgement. The Board has therefore determined all five Directors to be independent. Mr. Collins was appointed to the Board in 1988 and both Ms. Bowler and Mr. Jewson were appointed to the Board in 1995. The length of their service on the Board exceeds nine years and the 2006 FRC Combined Code provides that an explanation be made to shareholders concerning their continued independence. The Board considers that the integrity and independence of these Directors is beyond doubt. All three Directors are financially independent of the Company and have other significant commercial and professional commitments. The Company’s Articles of Association provide that one third of the Directors retire by rotation each year and that each Director seek re-election at the Annual General Meeting every three years. New Directors are subject to election by shareholders at the next Annual General Meeting following their appointment. It is Board Policy that non-executive Directors are normally appointed for an initial period of three years, which is then reviewed. It is also Board Policy that a non-executive Director who has served on the Board for more than nine years will retire annually and will offer him/ her for re-election in any case where it is proposed to exceed nine years. The overall composition and balance of the Board is kept under review. To allow corporate governance to drop in standards allows too many possible problems arise. Directors making short term decisions for their own benefit cannot be tolerated and without strong non-Executive Directors organisations have suffered. E. g. Enron, Independent News and Media. Performance of the Board Grafton Group’s long standing non Executive Directors have been re-elected at many AGMs which proves the confidence of their value to shareholders. At the beginning of the year their share price of building up to their financial report for 2010. When we were given Grafton Group as our project the share price was â‚ ¬2. 70, week of April 12 it is trading at â‚ ¬3. 40/share, an increase of 25%. Their board are doing a good job and have processes in place that do not allow any maverick activities. They tick all the boxes of operating independently of management. Insider dealing is not evident, â€Å"interlocking† does not exist similar to Jim Flavin, member of both Fyffes and DCC. The CEO of Woodies and Atlantic Homecare is Ray Coleman. Some would argue the same CEO of both could lead to conflict but as both have different strategies it make business sense for this to be the case. Corporate Social Responsibility – CSR and Ethics â€Å"The Grafton Group recognises the importance of conducting its business in a socially responsible manner. This is demonstrated in the way we deal with our employees, customers, suppliers and the communities in which we do business. The Group considers that corporate social responsibility is an integral element of good business management. Grafton Group Website â€Å"Business only contributes fully to a society if it is efficient, profitable and socially responsible† – Cannon (1992, p. 33) â€Å"Few trends would so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as they possibly can†- Milton Friedman (1962) Grafton Group’s CSR is centred on the following areas. ? The Environment – Reduction of waste that impacts on environment, affiliation to Irish and UK environmental specialists. e. g. Biffpack in UK ? Health and Safety – Adherence to best practice for employees, customers and visitors to their stores Human Resources – Acknowledge the importance of employees to achieve success, reward them accordingly and become number one choice of employment in their field ? Community – Recognise the responsibility to the communities in which they are located, support local charities e. g. donated tools and equipment to Goal following Haiti earthquake in 2009 Grafton Group, we feel, is what all corporations do – tick the box of CSR! Very few Financial Reports had any reference to CSR until l ast 10-20 years. To make them stand out on CSR issues as Ben and Jerry’s Ice Cream or The Body Shop do, they would have to incorporate it into their overall business strategy. Would this give them a competitive advantage over their business rival? Would CSR promotion become part of their strategy? Our view is that a company in the industry it serves will be dictated by their consumers as to how important CSR really is. In Grafton Group’s case this will not happen. Their stance on CSR is Laissez Faire to Enlightened Self-Interest. The emphasis is mainly on their shareholder short term orientation i. e. highest profit as possible and adhere to the law at all time. They may worry about how they are perceived such as pension fund investors. They are definitely not a Shaper of Society where they influence society in a better light and not always driven by super profit making e. g. Paul Newman food investment and Niall Mellon Trust. Shareholder and Stakeholder Expectations and Influences The difference in both shareholder and stakeholder expectations is determined largely on the performance of The Grafton Group, history of performance, market in which it trades, promises made and promises previously delivered on. Since they began trading Grafton Group has consistently made profit and grown which has given shareholders a return on their investment. The collapse of the building trade in Ireland and UK has meant a large fall in share price but due to the market’s performance no shareholder could have expected anything else. Bob de Wit and Ron Meyer, 1998 describes the value perspective of shareholders and stakeholders and how, if any, interlink. In summary the difference is that shareholder’s perspectives have an ends, i. e. make a profit and value of company increases. Stakeholder’s perspectives have and ends and a means where profit is a want but not at the cost of something that would be considered unethical. The power that a board such as Grafton Group must withstand can determine whether shareholders or stakeholders have more of an influence on decisions than is healthy. â€Å"Power is the ability of individuals or groups to persuade, induce, or coerce others into following certain course of action. † Johnson, Scholes and Whittington, P160 If an organisation succumbs to the power of an outside influence their control is diluted. Some people within organisations, by right, have more power than other, e. g. the formal power a CEO enjoys. ? Legitimate Power: Power of the position, CEO ? Reward Power: e. g. Manager deciding who gets overtime Coercive Power: who decides on who gets the bad jobs to perform e. g. â€Å" if you do not do this you will not get the other†, bullying style ? Expert Power: This is more a personal power that a knowledge based professional may exercise ? Referent Power: This explains the influential power someone can exhort through charisma or personality traits e. g. Richard Branson of Virgin Group Johnson, Scholes and Whittington, P161 It is interesting that the brand power Woodies and Atlantic Homecare enjoy in the home DIY market sector is a symbol of power for both shareholders and stakeholders. Stakeholder mapping is an interesting way to determine the power and level of interest certain groups have in organisations. | |LEVEL of INTEREST | |LOW HIGH | | |A |B | |LOW |Minimal Effort |Keep Informed | |POWER | | | |HIGH | | | | |C |D | | |Keep Satisfied |Key Players | The level of interest within Grafton group lies mainly with employees, shareholders and Board of Directors. The Key Players are the Board of Directors and Shareholders as they have a vote as to who by and how the company is run. Stakeholders such as government are low in power and would have a low level of interest. Some of the manufacturing Grafton Group are involved in may require them to be socially responsible to the community in which they are located and must keep them informed of any changes that may affect them. They would have a high level of interest but a low form of power. Culture of Organisations and Grafton Group The culture of organisations is largely shaped by the founding fathers. For example Lever Bros. Ltd has a long tradition with social responsibility before it was known as CSR. William Heskeath Lever first established Port Sunlight village to improve the living conditions and well-being of employees of the Port Sunlight Soap factory. This created a culture of CSR which is maintained today. Similarly with the Grafton Group, CEO Michael Chadwick, has been with Grafton Group since he was 23 years of age. The culture of the company is largely a result of his business philosophies and strategies. We asked for an interview but we were declined, we asked for a list of questions to be answered if we sent them to his secretary and this too was declined so it is difficult to get an insight into his business philosophy. The Grafton Group do not apologise for being shareholder oriented in terms of profits in the form of dividends or company value increase. They have not allowed themselves be affected by the current economic climate and do not show any forms of strategic drift. Strategic drift is where organisational strategies develop incrementally on the basis of cultural influences and do not keep up pace with the changing environment in which they trade. Grafton have reacted to the downturn of their business and do not wait for changes to be made as reactionary. Henry Mintzberg has noted that â€Å"strategy is a pattern in a stream of decisions†. If decisions are made as a reaction to their environment it can be too late. Grafton Group’s Board of Directors is long serving and successful, due to this fact they have created a culture of expectancy for shareholders and for themselves to delivery. This behaviour filters through to line managers and front of customer staff (boundary spanners) to achieve success. The success of the past and alignment to environmental change has created a winning culture. They have created a theme around their strategy and have not deviated from it. They operate in Ireland and the UK in markets they understand and do not expand outside these industries. This helps succession planning for managers moving from business units to gain more experience keeping within the core competencies of the Grafton Group. Strategic Direction and Corporate level strategy Strategic Vision is a detailed future oriented vision of the strategic direction that a company is planning to take going forward, that takes into account the competences and capabilities that it both has and needs to achieve to achieve its vision. â€Å" A strategic vision is a road-map of a company’s future, providing specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create† (Thompson & Strickland 2001, P6). According to Johnson, Scholes and Whittington 2008, the â€Å"Exploring Corporate strategy model is made up of the corporate culture, business ethics, CSR, the strategic position, the strategy in action and strategic choices. Strategic choices encompasses some of the following areas of an organisation †¢ Business Level Choices †¢ International Choices †¢ Evaluation †¢ Innovation †¢ Corporate Level Choices Corporate Parent As we know the Grafton group encompasses many different brands, which is their cash generating and highly profitable business units. Throughout Grafton’s history they have managed to acquire many related business all in an effort to strengthen the group as a whole. Through this vertical integration Grafton have offered themselves many advantages and increased their competitive strength. Grafton’s strategic development has continued to grow with major acquisitions made both in Ireland and the UK such as 1990 – Macnaughton Blair, a Belfast based builders merchant †¢ 1994 – Bradleys and Lumley & Hunt plumbing and heating †¢ 1995 – P. P. S Mortars, silo plant based in Glasgow †¢ 1998 – British Dredging. Grafton were the first ever Irish company to acquire a British plc †¢ 2000-2002 – A total of 39 acquisitions were made, building the groups strength further in Ireland and the UK †¢ 2003 – Jackson Building Centres in England adding 18 branches and plumbline, Scotland’s largest independent plumber merchants. †¢ 2004 – The Grafton group officially makes its 100th acquisition †¢ 2005 – Grafton acquires Heiton Buckley. (www. graftonplc. com) As we can see here, Grafton has had a very strong acquisition based strategy to vertically integrate with all the suppliers and related business in an effort to grow in strength and position and to make themselves a real presence in the Irish and UK markets. However it’s all well and good to acquire all these other business, but what is the point in having them unless you can use them to your advantage. This is Grafton’s role and responsibility as the now corporate parent to all these acquisitions, to turn them from simply business units into strategic business units that will benefit the group as a whole and strategically fit. The corporate parent as a Synergy manager A corporate Parent identifying factors are a large corporate office with a main emphasis on facilitating cooperation across its SBU’s with a continued focus on cost reduction, scale related benefits, closer integration, branch consolidation and brand synergies. As a corporate parent to its SBU’s, Grafton group seeks to enhance value across its business units by managing and instilling synergies across its business units. The backward, forward and horizontal integration of its suppliers of raw materials and competitors has afforded Grafton a strategic advantage. In order to promote synergy management across its strategic business units, Grafton group tries to create the synergies by thinking holistically and viewing the SBU’s as interlinked with a common purpose between such as; ? DIY retailing – Woodies and Atlantic Homecare ? Manufacturing – CPI Euromix, MFP and Wright windows Merchanting – Heiton Buckley, Chadwicks, Cork builders providers and Telford The main point to remember is that the business units should benefit from the corporate parent by the co-operation between them that’s afforded by the corporate centre Grafton Group. A more streamlined UK merchanting business incorporating the Buildbase, Plumbase and Jacksons brands and specialist merchanting businesses is enabling a deeper integration of the overall business. The new structure will result in significant synergies beyond the rationalisation measures already implemented. These arise particularly in procurement, accounting and other central services. A single management team is now in place for all brands operating from a single head office location. Costs continue to be more aligned with sales and the management team works closely with the Group Chief Operating Officer in driving cost reduction, branch consolidation and brand synergies while leveraging scale-related benefits. With regard to synergy management the following questions should be answered: ? Is there common purpose between business units – YES ? Does parent try to achieve co-operation between business units – YES ? Provide central services and resources – YES In 2009 one of Grafton’s management priorities was â€Å"To unlock latent synergies in downturn†. (Grafton Financial results 2009 PP) Strategic Drift This is the tendency for strategies to develop incrementally on the basis of historical and cultural influences but fail to keep pace with a changing environment. (Liam Bolger, lecture notes 2009). Strategic drift is certainly not something that Grafton can be accused of as they react quickly to the economical downturn to keep themselves competitive, especially within the domestic market of Ireland where there core strength lies. Grafton Group has reduced their overall debt from â‚ ¬584 million (2005) down to â‚ ¬322 million (2009). The majority of this occurred in the last 2 years with a reduction of â‚ ¬228 million or 41% (Grafton Group plc final results 2009) Employee base reduced in both Ireland and UK Cost reduction initiatives progressed with significant results †¢ 18 locations consolidated /closed and 10 new locations added †¢ Credit terms from suppliers renegotiated †¢ Debtors managed tightly with significant cash generation †¢ Costs rationalised in 2009 by â‚ ¬80 million Further plans to manage through 2010: †¢ Further rationalisation costs to be incur