Global Pharmaceutical Industry

Global Pharmaceutical Industry Introduction The Global Pharmaceutical Industry is one of the multinational industries which gained a high cycle of growth especially in 1960s and the industry is in high risk, regulated and driven by lengthy RD expenditures. The industry can be different in medicinal chemical, biological, ethical, proprietary product and private formula manufactures by their backgrounds and operation sectors and does not cover consumer or animal healthcare. In 2008 total revenue of global pharmaceutical industry was $615.1 billion and expected to reach $734 billion at the end of 2013. United States, Europe and Japan are the largest pharmaceutical market. The report critically analyse the Global Pharmaceutical Industry, importance and growth with the expect of internal and external environment analysis, plausible views of industry in the future and moral values. (Global pharmaceutical). A: identification of the main environmental forces currently affecting the pharmaceutical industry. PESTLE PESTLE analysis used to help organisation to understand in depth that what is the current status of the organisation and the external factors which are effecting. It also helps to the Management to make strategy for the future and overcome the weak areas of the organization. PESTLE is comprises of political, Economical, Social, Technological, Legal and Environmental factors. (Author) Political The both policies (domestic and foreign) of government have a great effect on the industry innovation as compare to the other factors. To get the attentions of firms due to increase the economic importance, government offer special incentives which encourage to the industry to globalisation. For example GSK increase their operations in Singapore due to low taxes and others government support. Same like, United States purchase more than 45% of drugs, the main reason is to allow foreign industry to compete with local which may help to low prices and reduce health budget. (David Floyd, 2008) From 1980 governments focused on pharmaceutical industry to handle the challenges of price control, monopoly and trade. For example in the European countries like Spain, Portugal, France and Italy the pharmaceutical market is cheap and thus these countries are used to ship their products to UK, Germany and Sweden for high price market. In US the price of pharmaceutical goods are high as compared to neighbours country Canada due to the lake of price control. Like in US Lipitor (cloistral medicine) were sold with $3.20 per pill in 2003 as that of $1.89 per pill in Canada. (Sarah Holland Jul 2004 ) Environment Environment movements are real threats for Pharmaceutical industry as these movements focus on green environments and reduce chemicals and carbon which comes from pharmaceutical industries. It is not being possible to ignore these issues as they are supposed to be practiced under United Nation charter for clean and better environment. For example Pfizer is a well reputed British Pharmaceutical company which has aims to save the environment as much as possible from chemicals, waste water which includes active pharmaceutical ingredients mixture of different compounds and carbon which comes from their pharmaceutical industries. Different strategies could be used to reduce carbon and chemical waste from drugs for human environment, like proper consumption ,good way of savages for hospitals waste water like advance waste water treatment technology, private house hold expire drugs, training and education of medical professionals to reduce over prescription, and public education and awareness. These strategies could be help full for save green house environment from drugs. In conclusion if we do focus on three principal strategies to reduce the input of chemicals compounds, carbon, and waste water in to the environment are substitution of complex chemical compounds, advance technical approach, and proper education and training of doctors, retailers and consumers. (Klaus Kà ¼mmerer, 2009) Social The social life, physical activities and level of health of a community affects the pharmaceutical industry. Change in social life and trends mention new direction for the local and national pharmaceutical industry. In the same way age of the individuals deeply change the dimensions of the industry like the citizen of a community aged more than 60 yeas consumes more drugs than the young people. Recently, the industry gets attraction and become more popularafter impact of global diseases e.g. SARS, AIDS, because of media and government attention. (Micheal A. Santoro, Date not available) Technology: Technology plays a vital role in to pharmaceutical industries according to current state of art methods for development and manufacturing of drugs and open new ways of research and invention. The usage of advance technologies automatically impact on social, economic, and environment. Advance technology in pharmaceutical industries help full to accurate characterize chemical compounds, better control on new enhance scientific methods and their optimization. Which decrease extra time, money and efforts and produce more accurate drugs for specific disease, and decrease all hurdles from research to manufacturing efficiently, reliably, and rapidly. (Troy Shinbrot, Benjamin J. Glasser, 2002) Economy Currently the pharmaceutical industry is less affected as compare to other manufacturing industries and until 2011 the industry is ideal for foreign direct investment growth. (World investment prospect survey, 2009). Despite this, in 2002 slow economy growth put the pressure on the EU market and restricts it to 8%. The global pharmaceutical industry is effecting due to interest, taxes, inflation and exchange rates which are included in the economic factors of global pharmaceutical industry. Change in the foreign currency rates makes affects on the exports and imports of drugs. High interest rates discourage investment the industry for firms and stake holders. Research and Development is a lengthy procedure which have also economically effect on the industry. Mergers and diversification allows the industry to enter in new market or develop new drugs. In 1996 two big companies, Swiss giants Ciba and Sandoz, merged one company called Novartis and attempted to cut RD costs (James H. Tagg art, 1993) Legal Undoubtedly pharmaceutical industry is a highly regulated and patent law. Pricing policies and product liability laws on pharmaceutical innovation are highly affected. The innovation of pharmaceutical is also affected because of regulation. Which cause delaying the market launch of new products and process through lengthy approval time. In United States the greater restrictions of regulation is evidence to delay in the local market of demanding new drugs. In 1989, 18 of the 23 new drugs introduced and approved for marketing in other countries while in US received their first marketing. (Stevens, Mark, 2009) Furthermore the World Trade Organisation introduced new rules for copyright protection which later overcome the problem of fake production and allowed some relaxation of exporting the Aids drugs to Africa. In 1995, with mutual understanding many countries made different changes in their â€Å"National Laws Governing† IPR which directly impact on pharmaceutical industry. (James, H, 1993) SWOT Swot analysis in pharmaceutical industry provide a crystal clear scenario about on coming threats to this industry , scope of pharmaceutical industry its opportunities , advantages and provide summary analysis of strategic planning model and weakness areas including draw backs ,hurdles related to this industry. Threats The infrastructure of pharmaceutical industries is very different compare to other major Industries. Pharmaceutical approaching techniques state way comes in to open market environment. The influences of government in shape of pricing and legislation individual consumers and whole sellers free choice directly interact with this industry. The most of new drugs approvals and launches has decreased in the past decade, making it hard to make awesome income with these government strategies to decrease health care expenditures gives more threats in pharmaceutical industry. Over the next few years the pharmaceutical industries could be face Series downturn about of patent expiry. Drugs which are contributing 17 to pharmaceutical sales in 2008 lose patent Protection between now and 2012. (K. George Mooney, 2001) Weakness There are multiple examples of weakness associated with pharmaceutical industries. Some are highlights below, for example association of funding and results. Pharmaceutical company funding of clinical trials is strictly linked with published results favouring those companies interests. This is an important issue which should be solved and is major weakness of Pharmaceutical industry. Another weakness in pharmaceutical industry is shortage of supply and demand of men power in industry and output from universities. There is need to collaboration and partnership between pharmaceutical industries, education institutes, and government to deal with the shortfall the challenge comes from balancing education in basic science with training in the emerging areas of science and technology. (R. Barker, M. Darnbrough, 2007) Strengths The pharmaceutical industry is one of the most productive and profitable industrial sectors. Therefore, effective intellectual property protections play a vital role to maintain innovation and research for products development. Study shows that USA UK pharmaceutical industry is one of the most power and successful industry sectors in the world. The main reasons behind is commitment in to RD sector. Thats in turn give sustainable and competitive advantage for more promising growth in industry and its development. Intellectual property protection is a basic strength for the success of the pharmaceutical industry. The pharmaceutical industry is so dependent on the patent protection, because only through strict enforceable patent protection drug companies can generate sufficient revenues. However patent protection is beneficial to inventions in the pharmaceutical industry. (Yu-Shan Chen, Ke-Chiun Chang, 2009) Opportunities Regardless of threats there is vast majority of opportunities with the help of different alliances, pharmaceutical industry can bring amazing resources and capabilities to compete threats and weakness which is now a days industry is trying to coping. New partnerships brings industry in to new market , deal with better trading , better economy opportunities , reducing cost ,and help to develop new inventions and research to compete market . One of the most important reasons for making external alliances is state of the art technologies for new products, invention and research which individual companies couldnt handle and develop by their selves from internal resources. (William W. McCutchen Jr., Paul M. Swamidass, 2004). B: Scenario planning for Global pharmaceutical industry Scenario planning methods used for nature and impact of the most certain and important driving forces our world; it is a process that encourages knowledge exchange and mutual understanding of the central issues for the future of the business. The demand is increasing for new drugs as the population rises and their medical support need increases. The process of the pharmaceutical industry can vary but the end result must be an action plan for each scenario with the following: o Environmental scan o Scenario options o Financial projections o Action plan describing how the scenario would be implemented Features of Scenario planning and effects. Advantages.  · Multiple scenarios and diverse outcomes.  · It includes various input source and helps in discussing with all the participants. Disadvantages  · Doesnt quantify the value of possible actions and lack structuring futures.  · Non rational procedures for determining the future. Over the next few years, patent expirations will represent lost revenue of between $25 billion and $50 billion which will spur strategic alliances between RD and generic companies. The industry, experts say, will see a move to specialty products to fill unmet needs and a shift from a treatment and/or cure approach to prevention while pressure to bring product costs down will likely determine which products prevail in the marketplace. (Caribbean Business, MARCH 19. 2009) Relationship Management and transportation: It is very important to ensure that there is transparency along the entire value chain and especially in the Pharmaceutical industry as it has become a Global industry. It is also very important to maintain the customer trust and also managing the good relations with the entire stakeholder. C. Identification of implication of changing business environment on pharmaceutical firms â€Å"Drug discovery companies are experiencing many important transformations, which have contributed to the uncertainty of their competitive business environment. The uncertainty is underlined by the abundance of players within the industry.† (Chaudry Dacin 1997, p. 696). Focus and Cost: Pharmaceutical industry should review all their processes to stay competitive. A strong focus on Business and on core business activities. it is the need to have strong focus of developing processes which can be suitable for using across multiple manufacturing sites. Following are the some of the points which are interlinked and have an impact of decision making process, business practices and behaviour patterns.  · Slower and more bureaucratic regulatory procedures:  · Demographic development leads to pressures for medical cost containment:  · Regional integration:  · New directions for organizing health care:  · Rise of patient as consumer:  · Introduction of new innovative technologies:  · Shorter effective product patent life:  · Centralization in drug licensing decisions D: Prevalence of ‘ethical stance in the pharmaceutical industry and its strategic implications. In 1958 the shortage of polio vaccine and negligence in the law of Cutter pharmaceutical were main ethical challenges. Meanwhile the issues of marketing practices, pricing and clinical study has grown up to till date (Offit, 2005). Physicians prescription changes the drug sales efforts and marketing of drug companies. (Katz 2003, Blumenthal 2004 As studied has shown that the drug safety and pricing were the two main ethical issues increased during 2004-2005 and observed with 114 times of drug safety which was followed by 89 times of pricing. According to the (USA today, 2005) report, 27.6 % price of 115 brand were increased in four years which raised the question regarding public perception towards waste advertisement and cost of RD. Even in United State, pharmaceutical firms were involved in pricing and marketing crimes and had to pay more than one billion dollars fine in 2003 The legalisation of importation and reimportation can be factor of drug price was another issue identified many times in Canada. Through reimportation the prescription cost can be cut for patients and helpful to control the healthcare budgets. (Flaherty and Gilbert, 2003). Reference: Chaudry, Peggy Dacin, Peter (1997): â€Å"Strategic Planning in a Regulated Trade Bloc: The Pharmaceutical Industry in the European Union.†, European Management Journal, 15:6, 686-697. Blumenthal, D. (2004), Doctors and drug companies, New England Journal of Medicine, Vol. 351 No.18, pp.1885-90. European Journal of Pharmaceutical Sciences, Challenges faced by thepharmaceutical industry, K. George Mooney Volume 12, Issue 4, February 2001, Pages 353-359 Global pharmaceuticals, Datamonitor publication, 2008, [accessed online] available at: www.datamonitor.com Healy, D. (2003), In the grip of the python: conflicts at the university-industry interface, Science and Engineering Ethics, Vol. 9 No.1, pp.59-71 James, H. (1993), ‘The world pharmaceutical industry 4th edition. Chapman and Hall, London, UK Bà ¡tiz-Lazo, B. and Holland, S (June 2001) Strategy and structure of the pharmaceutical industry, Open University Katz, D., Caplan, A.L., Merz, J.F. (2003), All gifts large and small: toward an understanding of the ethics of pharmaceutical industry gift-offering, American Journal of Bioethics, Vol. 3 No.3, pp.39-46. Offit, P.A. (2005), The Cutter Incident: How Americas First Polio Vaccine Led to the Growing Vaccine Crisis, Yale University Press, New Haven, CT, The Journal of High Technology Management Research, Volume 15, Issue 2, August 2004, Pages 197-214, William W. McCutchen Jr., Paul M. Swamidass MISG Secretariat (2002), Pharmaceutical Industry Competitiveness Task Force: â€Å"One Year On† Report, Ministerial Industry Strategy Group, London, available at: www.doh.gov.uk /pictf/ pictfonevearon.htm Floyd, D, (2002), Investment Decisions in Eastern Europe, Floyd, D, (2002), Investment Decisions in Eastern Europe, European Business Review, Vol 12, No 2. Yu-Shan Chen, Ke-Chiun Chang .The relationship between a firms patent quality and its market value — The case of US pharmaceutical industry Technological Forecasting and Social Change, In Press, Corrected Proof, Available online 16 July 2009 R. Barker, M. Darnbrough . The Role of the Pharmaceutical Industry Comprehensive Medicinal Chemistry II, 2007, Chapter 1.14, Pages 527-552 Micheal A. Santoro, Charting a sustainable path for the Twenty-First Centaury pharmaceutical Industry, Cambridge Univeristy Press, Pages 1 Stevens, Mark , Legal and regulatory updates. Gasson, Tony 2009, Vol. 80 Issue 5, p31-32, 2p, Ebsco publications.

Plato/Education Essay

Having knowledge is important in every society, whether it be a totalitarian society, or a democratic society. In Plato’s Republic, Socrates and his interlocutors discuss how to educate children. Is it right to keep them censored, or should they be allowed to study all and every subject(s). The education of children is very important because they are the future of the society. They are the possible rulers, philosophers, guardians, and so on. So, it is important to shape them wisely. This concept is no different than what shapes our society today. It is well known that one of the many qualifications of a good leader is that who can improve the country’s educational system. Why? , because the youth are our future leaders and teachers. A parent would rather pick a private school over a public school, and a job interviewer would look more highly on a private school graduate over a public school graduate. You can say that education is important in today’s society, as well as Plato’s society. The youth can be educated in many different ways, either by keeping them in the shadows, or exposing them to the light. this means that the future of the society can be either ruled by a person who is oblivious to the society’s past, or by a person who has been fully exposed to the society’s history. If a person is censored from education, then they love their life as a perfect world. this is best described when Socrates says that a Guardian should be a person who â€Å"must be gentle to their own people and harsh to the enemy. † (375b-c). Socrates wants to educate these Guardians to be noble, righteous, and tentative to their every word, like a robot. He wants to educate them by making them obedient. He also believes that repressing their knowledge of music/narratives, and physical strength will make them grow into smarter adults. Socrates believes that a censored society is a better one. He believes that the city will prosper if it is concealed and trained. He says that people are most limber in their youth. So, he goes on to show that music/stories, and physical training are all things that are stressed in the youth of children. Music begins with stories or tales. â€Å"We won’t admit stories into our cities- whether allegory or not.†, this shows that he wants to cut down the telling of tales because he says that children absorb these tales in a literal sense rather than a hypothetical one. He says â€Å"You know, don’t you, that the beginning of any process is most important, especially for anything young and tender. It is at this time that it is most malleable and takes on any pattern one wishes to impress on it. â€Å". (377b) It’s not that he wishes to rid off all stories, but just censor them so that they all depict a good message, and show no violence or hate. Also, he believes that only moderate melodies are acceptable. (399d) Socrates goes on to say that music and poetry are important, but should only be taught when a person is old enough to tell the difference between right and wrong. After his discussion about music and narratives, he goes on to discuss the physical body, and how it affects one’s mind. â€Å"†¦ a fit body doesn’t by its own virtue make the soul good, but does the opposite. † (403d) This is exemplifies that being having a good soul will make a good body, and that a healthy body leads to a good intellect. This was achieved by gymnastics at the time. So, all in all, a good education can consist of gymnastics and good music. But, isn’t society today based on telling the whole truth and learning everything possible? Our society in the Unites States is democratic, which means that we choose our leaders. To do this, we have to be well-educated in our county’s history. So, in every school music, English, history, and math are required for every student to learn. This is because the government wants people to be well-educated so that they can understand what goes on in society. That is the reason for newspapers, to keep the society informed. This is different from what Socrates believes to be the best way to educate children. We believe that knowledge is at its best when everyone is educated with everything, and Socrates believes that knowledge is at its best when it is cleaned up and censored. So, what is the best way to be educated? Is it to censor society into a â€Å"perfect† one, or is it to teach everything wholly and hope that great wisdom derives from this? Socrates’ idea about society is much different from what society has evolved into. What would become of today’s society if the music and poetry of Socrates’ time was censored into disappearing? I think that people should be taught everything in their youth, because improvement can only be made from mistakes, and also, a perfect society would be a boring one. NEW PAPER Blair KhokerPhilosophy 101 Education? How? Having knowledge is important in every society. In Plato’s Republic, Socrates and his interlocutors discuss how to educate children. Is it right censor what they learn, or should they be allowed to study all and every subject(s). In today’s society the term ‘children are our future† is said a lot. It is important to shape the children of our society wisely, and the educate them well. A parent would rather pick a private school over a public school, and a job interviewer would look more highly on a private school graduate over a public school graduate. You can say that education is important in today’s society, as well as Plato’s society. The youth can be educated in many different ways, either by keeping them in the shadows, or exposing them to the light. this means that the future of the society can be either ruled by a person who is oblivious to the society’s past, or by a person who has been fully exposed to the society’s history. If a person’s education is censored, then they love their life as a perfect world, because they don’t see the big picture. All they see is what others let them see. This is best described when Socrates says that a Guardian should be a person who â€Å"must be gentle to their own people and harsh to the enemy. † (375b-c). Socrates wants to educate these Guardians to be noble, righteous, and attentive to their every word, like a robot. He wants to educate them by making them obedient. He also believes that repressing their knowledge of music/narratives, and physical strength will make them grow into more just adults. Socrates believes that a censored society is a better one. He believes that the city will prosper if it is concealed and trained. He says that people are most limber in their youth. So, he goes on to show that music/stories, and physical training are all things that are stressed in the youth of children. Music begins with stories or tales. â€Å"We won’t admit stories into our cities- whether allegory or not. â€Å", this shows that he wants to cut down the telling of tales because he says that children absorb these tales in a literal sense rather than a hypothetical one. He says â€Å"You know, don’t you, that the beginning of any process is most important, especially for anything young and tender. It is at this time that it is most malleable and takes on any pattern one wishes to impress on it. â€Å". (377b) He wants to censor children from hate and violence . Also, he believes that only moderate melodies are acceptable, because they are calmer and won’t bring about radical behavior. Socrates goes on to say that music and poetry are important, but should only be taught when a person is old enough to tell the difference between right and wrong. After his discussion about music and narratives, he goes on to discuss the physical body, and how it affects one’s mind. â€Å"†¦ a fit body doesn’t by its own virtue make the soul good, but does the opposite. † (403d) This is exemplifies that having a good soul will make a good body, and that a healthy body leads to a good intellect. This was achieved by gymnastics at the time. So, all in all, a good education can consist of gymnastics and good music. But, isn’t society today based on telling the whole truth and learning everything possible? Our society in the Unites States is democratic, which means that we choose our leaders. To do this, we have to be well-educated of our county. So, in every school music, English, history, and math are required for every student to learn. This is because the government wants to educate people about their country, so that they can understand what goes on in society. That is the reason for newspapers, to keep the society informed. This is different from what Socrates believes to be the best way to educate children. We believe that knowledge is at its best when everyone is educated with everything, and Socrates believes that knowledge is at its best when it is cleaned up and censored. So, what is the best way to be educated? Is it to censor society into a â€Å"perfect† one, or is it to teach everything wholly and hope that great wisdom derives from this? Socrates’ idea about society is much different from what society has evolved into. What would become of today’s society if the music and poetry of Socrates’ time was censored into disappearing? I think that people should be taught everything in their youth, because improvement can only be made from mistakes, and also, a perfect society would be a boring one. Word Count: 790.

Obesity Is Not a Personal Problem

Obesity is Not a Personal Problem As the obesity wave crashes over the United States, more Americans are paying out of pocket to flourish the $33 billion commercial diet industry (Spake 283). As American’s waistbands continue to expand, they immerse themselves in one of the largest, most scandalous consumer markets: the weight loss industry. Amanda Spake, author of â€Å"Rethinking Weight†, addresses the question as to who should cover the overall cost of weight loss programs. Spake challenges that insurance companies should pay for the expenses that obese people encounter. This, she states, is due to the fact that obesity is a biological â€Å"disease† and it should be treated and paid for like any other critical illness (283). In this article, Spake does not present the importance of physical activity, only discussing unsuccessful dieting experiences and bad genetic makeup. Although Spake briefly suggests that exercising is an advantage to those who are obese, she puts the solitary blame for obesity on the genetic aspect. From 1986 to 2000, the number of people who are severely obese–which is identified by having a body mass index of 40 or more–has quadrupled, from about 1 in 200 adults to 1 in every 50. This startling statistic has caused more people to be aware of this rising occurrence that has swept over the United States. Obesity has medical professionals worrying; not only are the numbers of overweight people continuing to rise but weight-related medical costs are soaring. Healthcare costs for illnesses due to obesity have now exceeded those related to both smoking and alcoholism. The obesity epidemic is a big contributor to skyrocketing health care costs in the United States, partly due to the weight-related diseases that come hand-in-hand with obesity. Ailments such as type II diabetes, heart disease, hypertension, and high cholesterol are closely connected to obesity and an alarming 80 percent of obese adults suffer from one of these life-threatening diseases (Spake 283). Many research foundations are now connecting obesity to a person’s genetic makeup, calling it a biological development that an individual cannot control. Spake suggests that insurance companies should cover the costs of obesity as it is a genetically and biologically determined disease thus the individual does not have the ability to lose weight on their own. As a result, researchers suggest that including the treatment of obesity in health care plans might bring science and sanity to the anarchy of weight loss (Spake 286). Many researchers do not identify obesity as a disease in fear that unhealthy weight-loss programs will someday be considered acceptable treatment and ultimately mandated to be covered by insurance. Although Spake validates her assertions by backing up her words with credible opinions and statistics, she weakens her argument by not addressing the importance of physical activity. Maria Pfisterer is an obese mother who Spake claims has tried every weight-loss strategy imaginable. However, nowhere does it say that in addition to the drugs and â€Å"quick-weight-loss fads† Pfisterer had attempted to include an exercise regime. She claimed that all of the programs she tried resulted in a few pounds lost and quite a few more gained; always returning to the same 197 to 202 pound range. Being overweight is the result of one thing: eating more food than one burns (Spake 285). Nowhere in the article does Spake suggest that physical activity is a effective, healthy and inexpensive way to lose weight, choosing to put forth the idea that weight loss comes only from high-priced dieting programs. In her article, Spake claims that genetics are the sole factor for obesity in America. There are many other factors mentioned in the article that play into someone’s weight including the food they eat, their level of physical activity, and societal factors such as advertising. Also, Spake quotes Arthur Frank, director of George Washington University’s Weight Management Program, â€Å"So saying to an obese person who wants to lose weight, ‘All you have to do is eat less,’ is like saying to a person suffering from asthma, ‘All you have to do is breathe better’† (284). Obesity and asthma are two very different things therefore should not be compared. An individual who is overweight can take control of their weight-gain by taking more personal responsibility and making healthier choices. However, asthma is an inflammatory disorder that can strike at any time which causes an individual to wheeze or gasp for air where an individual cannot control its effects. Not everyone agrees that obesity should be considered a disease, some stating that the obesity epidemic can be overturned by individuals taking more personal accountability for their wellbeing and opting to make healthier lifestyle choices (Spake 283). In an alarmed attempt to make readers believe that obesity should be considered a disease and insurance companies should cover the cost of the individual’s expenses, Spake fails to provide enough evidence to support her claim. She maintains that overweight people have a genetic flaw that causes them to be susceptible to weight gain. Physical exercise, which is seldom mentioned in Spake’s article, is an important weight loss tool that helps to burn the extra calories an individual’s body does not burn on its own. Spake portrays a defective argument that invalidates her main purpose. People with health insurance should look to see what is covered and seek healthier, less-expensive alternatives to fix the things that are not included. Regardless of what â€Å"Rethinking Weight† suggests, overweight individuals have an equal opportunity to replace their existing lifestyle with healthier habits. Works Cited Spake, Amanda. â€Å"Rethinking Wight. † Writing and Reading for ACP Composition. Eds. Thomas E. Leahey and Christine R. Farris. Upper Saddle River: Prentice Hall, 2009. 282-88. Print.

The Detection Of Earning Manipulation - 1445 Words

Professor Messod Beneish created the Beneish M-score Model in 1999 in his research entitled The Detection of Earning Manipulation. He identified that earnings management is important for financial statement users to assess current economic performance, to predict future profitability, and to determine firm value (Jansen et al, 2012) Beneish tested 74 companies and all COMPUSTAT firms matched by two-digit SIC for period of 1982-1992 and he use 8 variables model in the mathematical model. The evidence indicates that probability of manipulation increases with: 1. Unusual increases in receivables 2. Deteriorating gross margins 3. Decreasing asset quality (as defined later) 4. Sales growth 5. Increasing accruals The M-score†¦show more content†¦Figure four illustrates four main steps that can be used to detect fraud or earning manipulation in the company’s financial data. Figure 4 Beniesh Model main four steps 2.2.5 Benford’s Law definition At the end of the nineteenth century Simon Newcomb stumbled upon what we now call Benford’s law. But in 1937, Frank Benford succinctly pronounced that a certain distribution law applies to numerical data in general, but particularly to random data with regard to leading digits. In 1881, astronomer and mathematician, Simon Newcomb, published the first known article describing what has become known as Benford’s law in the American Journal of Mathematics. He noticed that books of logarithmic tables with low digits were considerably more dog-eared; but log tables dealing with higher digits were progressively less worn. He inferred from this pattern that fellow scientists used books with tables of lower digits far more often than they used books concerning logarithms whose first digit started with seven, eight, and nine. In the 1930s Benford clarified this phenomenon. To put it simply, because of the effect of compounding, there are greater frequencies of numbers where the first digit is one, then fewer frequencies of numbers with first digit two, then three, and so on. Consider this example of the number 1.0000 grown at a rate of 10%: Table 2. 1 Benfords Law digit Growth Rate 10% Number First Digit Frequency Relative Frequency 1.0000Show MoreRelatedResearching Topics Of Interest Is A Key Starting Point For The Research Effort1538 Words   |  7 Pagespotential topic areas of interest for my doctoral level research. Earnings Management: An Examination of Ethical Implications, Fraud, and the Related Impacts to Stakeholder Interests The first topic area involves an observation of how managers and accountants currently utilize loopholes in FASB accounting standards to present better earnings results to investors, creditors, and regulatory authorities. Many business professionals support earnings management as routine practices that stay within authoritativeRead MoreA History Of Earnings Management1624 Words   |  7 PagesA History of Earnings Management, Financial Scandals, and the Resulting Legislations At the turn of the 21st century, America found itself wrought with multiple financial scandals. The poor decisions of just a few executives resulted in thousands of people out of a job, pension funds wiped away, and houses going back to the bank. While earnings management was certainly not a new concept nor was the resulting fraud, the high number of scandals within a short period of time brought it front and centerRead MoreThe Distribution Of Annual Net Income Scaled By The Market Value At The Beginning Of The Year1618 Words   |  7 Pagesexpected levels, showing evidence of earnings management. Dechow et al. (2000) focus on firms with positive earnings and firms with zero forecast error to evaluate whether firms manipulate accruals and special items to beat the zero earnings benchmark. However, the result fails to establish a significant difference between the level of discretionary accruals and working capital accruals in firms that achieve the target and those that fall short. The earning distribution method is based on the assumptionRead MorePURPOSE OF THE ARTICLE The authors wrote this article to study the relative effects of threats of1200 Words   |  5 Pagescurrently serving in an executive or supervisory capacity in an accounting or financial related field and 40 were serving in a Controller, CFO, or CEO capacity. Nonetheless Controllers, CFOs and CEOs are the primary force behind financial manipulation and earnings management. Each scenario consisted of a scheme where a manager misstated supplies expense and was eligible to receive a bonus as a result. For the existence or non-existence, each of these laws was stated as being present (yes) or absentRead MoreFinancial Statement Fraud And Corporate Financial Fraud1310 Words   |  6 Pagesprotect third parties interests. The auditors’ core responsibility is to confirm that financial statements are prepared fairly in accordance with U.S. GAAP. Therefore, auditors should comprehend real-world techniques to identify financial statement manipulation. Purpose of Research and Research Question The purpose of this research is to analyze the cause-effect relationships between the auditor’s role and fraudulent reporting. The primary research questions are: 1. What are the common schemes of financialRead MoreA Brief Analysis Of The Real Earnings Management ( Rem ) And Off Balance Sheet Financing ( Obsf )2406 Words   |  10 PagesA brief analysis between the Real Earnings Management (REM) and Off-balance Sheet Financing (OBSF) Introduction According to the paragraph 9 of AASB 101, the purpose of financial statements is to provide information referred to the financial position, financial performance and cash flows of an entity which is valuable to a wide variety of users in making economic decisions. Nevertheless, real earnings management (REM) and off-balance sheet financing (OBSF) have a negative impact on financial statementsRead MoreThe Earnings Management Issue of WorldCom Case Study Report2077 Words   |  9 PagesThe Main Issue: Earnings Management 1.1 Definition of Earnings Management A commonly acknowledged definition of earning management by Healy and Wahlen (1999) demonstrates that managers implement personal judgement in financial reporting and transactions to manipulate financial reports for misleading some investors about a company’s financial performance or influencing contractual outcomes that reply on the numbers. Based on several researches, Lawrence (2009) concludes that earnings management generallyRead MoreExecutive Compensation and the Dramatic Increase in Corporate Accounting Scandals969 Words   |  4 Pagesstatement filed in 1997, Enron wrote that â€Å"base salaries are targeted at the median of competitor group that includes peer group companies†¦and general industry companies similar in size to Enron. Employees had incentives to achieve high revenues and earnings targets because of the shares of stock they held† (Thibodeau Freier, 2009). Executive pay has been under the microscope. Shareholders’ interests are represented by a board of directors. However, critics of executive pay have argued thatRead More71021713 Words   |  7 PagesQ1 a) The earnings (net income) are considered as the most critical financial figure in the financial statements as it indicates the profitability of the company. All benefits for shareholders including both the capital gains and dividends are closely related with the earnings. In other words, the performance of the company and the management can be largely evaluated by the earnings figure. Due to the importance of earnings, it is not surprising the management is keen to improve the figure viaRead MoreFinancial Statement Fraud : A Perfect Fraud Storm1304 Words   |  6 Pagesdirection of what earnings would actually be for a company. The fraud in many companies was tailored to the expectations that was listed on the street for the company. Moreover, for too many cases the expectations set by analysts were unrealistic and in no way sustainable by the company. (Albrecht et al., 2012, p. 361-362). The pressures of high levels of debt fueled the fraud storm that much more. Covenants and loans that have been obtained were at risk of being violated if earnings did not the companies