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South West Airlines-Financial Management-Assignment Solution, Exercises of Financial Management

This is assignment solution which is related to Financial Management course. This assignment was assigned by Diwan Parbhakar at Senate of Serampore College (University). It includes: Corporate, Social, Responsibility, Airlines, Governance, Practice, Visions, Ethics, Management, Organisation

Typology: Exercises

2011/2012

Uploaded on 07/06/2012

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The Corporate Social Responsibility Southwest
Airlines
Southwest Airlines has a long-standing history of being a good corporate neighbor. Southwest try to
“Share the Spirit” in all the 68 cities. Since 1971, Southwest has built a reputation for supporting the
needs of our communities, and it’s always nice to be recognized for their achievements.
Southwest Airlines was recently listed on the Top 50 Companies Recognized as Leaders in Corporate
Social Responsibility. The Boston College Center for Corporate Citizenship and Reputation Institute’s
2009 CSR Index captured the public’s perception of more than 200 companies. They were fortunate to
make the list among some other great companies.
“While the overall reputation of the American business sector has been t arnished with a broad brush,
many individual companies still stand as their responsible leaders in the eyes of the public,” said Chris
Piney, director of research and policy at the Boston College Center for Corporate Citizenship. “To build a
reputation as a leader in corporate social responsibility, companies should focus on strong governance
practices, positive working conditions, and a commitment to supporting the needs of communities and the
environment.”
Southwest nearly 35,000 Employees display their Servant’s Hearts daily and it shows! Way to go,
Southwest! To find out more about what we’re doing at Southwest to be a good neighbor.
For the second year in a row, Southwest Airlines ranked among the top 50 US companies on the
Corporate Social Responsibility Index (CSRI). Developed by Boston College Center for Corporate
Citizenship and Reputation Institute, the CSRI ranks companies in seven areas: citizenship, governance,
workplace, leadership and performance, products/services, and innovation. In addition to being among
the top 50 overall, Southwest Airlines ranked among the top 25 in the workplace category. As the only
airline on the list, we’re proud to be in the company of organizations respected for their social
responsibility.
It’s no secret that Southwest Airlines believes in treating our Customers right, creating the Best Place to
Work for our Employees, reducing our environmental footprint, and being a trusted community partner.
So, it certainly is nice to have third-party studies proving it!
The CSRI study shows how companies’ reputations are affected by public perceptions of performance
related to citizenship (the community and the environment), governance (ethics and transparency), and
workplace practices. The 2010 results show that many companies are improving their socially
responsible practices and the public is increasingly more aware and interested in these efforts.
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The Corporate Social Responsibility Southwest

Airlines

Southwest Airlines has a long-standing history of being a good corporate neighbor. Southwest try to

“Share the Spirit” in all the 68 cities. Since 1971, Southwest has built a reputation for supporting the

needs of our communities, and it’s always nice to be recognized for their achievements.

Southwest Airlines was recently listed on the Top 50 Companies Recognized as Leaders in Corporate

Social Responsibility. The Boston College Center for Corporate Citizenship and Reputation Institute’s

2009 CSR Index captured the public’s perception of more than 200 companies. They were fortunate to

make the list among some other great companies.

“While the overall reputation of the American business sector has been tarnished with a broad brush,

many individual companies still stand as their responsible leaders in the eyes of the public,” said Chris

Piney, director of research and policy at the Boston College Center for Corporate Citizenship. “To build a

reputation as a leader in corporate social responsibility, companies should focus on strong governance

practices, positive working conditions, and a commitment to supporting the needs of communities and the

environment.”

Southwest nearly 35,000 Employees display their Servant’s Hearts daily and it shows! Way to go,

Southwest! To find out more about what we’re doing at Southwest to be a good neighbor.

For the second year in a row, Southwest Airlines ranked among the top 50 US companies on the

Corporate Social Responsibility Index (CSRI). Developed by Boston College Center for Corporate

Citizenship and Reputation Institute, the CSRI ranks companies in seven areas: citizenship, governance,

workplace, leadership and performance, products/services, and innovation. In addition to being among

the top 50 overall, Southwest Airlines ranked among the top 25 in the workplace category. As the only

airline on the list, we’re proud to be in the company of organizations respected for their social

responsibility.

It’s no secret that Southwest Airlines believes in treating our Customers right, creating the Best Place to

Work for our Employees, reducing our environmental footprint, and being a trusted community partner.

So, it certainly is nice to have third-party studies proving it!

The CSRI study shows how companies’ reputations are affected by public perceptions of performance

related to citizenship (the community and the environment), governance (ethics and transparency), and

workplace practices. The 2010 results show that many companies are improving their socially

responsible practices and the public is increasingly more aware and interested in these efforts.

Q NO.

Best Corporate Governance Practice

In this section we present our Five Golden Rules of best corporate governance practice - key concepts in embracing good corporate governance and best practices in business. Embracing these principles will mean the company’s culture and therefore public image will shine out as an example of an open, well and fairly run organisation.

The public image of a corporation will quite accurately reflect the culture of that body. It follows, then, that good corporate governance has to be in the bones and bloodstream of the organisation since this in turn will be reflected in the culture. To carry the analogy further, in the same way that healthy blood and bones are reflected in the naturally healthy look of a person, so an organisation whose internal functions are healthy will naturally look so from an external perspective. Our Golden Rules of best corporate governance practice are like a health manual for your organisation and come with a practical diagnosis and treatment programme which we set out in our good corporate governance implementation section.

Corporate cultures and vision

When Bill Hewlett and I put together the initial plans for our business enterprise in 1937 ... (we decided) that we wanted to direct our efforts towards making important technical contributions to the advancement of science, industry and human welfare.

The above quotation expresses the early aspirations of two entrepreneurs when they started their business. The principles these two men espoused at the beginning became part of the ethos of the business they founded and persist to this day.

Similarly, Ernest Butten shortly after he founded the management consultancy Personnel Administration in 1943, issued a document which he called the P.A. Charter. The clear vision behind this document shines through, and was to drive the business forward through his

As we have iterated, this section of the website lays out and explains our view of best corporate governance practice and the holistic approach by which we believe an organisation can ensure that a state of good corporate governance exists, or is brought into being if its existence is uncertain. It takes the view that there is an over-riding moral dimension to running a business and that the standard of governance will depend on the moral complexion of the operation. Hence the approach developed is based on the belief that:

the business morality or ethic must permeate the entire operation from top to bottom and embrace all stakeholders best corporate governance practice is an integral part of good management practice also permeating the entire operation, and not an esoteric specialism addressed by lawyers, auditors and sociologists

The principles of this approach are therefore framed in relation to the conventional way of looking at how a business should be properly run.

Our Five Golden Rules of best corporate governance practice are:

  1. Ethics : a clearly ethical basis to the business
  2. Align Business Goals : appropriate goals, arrived at through the creation of a suitable stakeholder decision making model
  3. Strategic management : an effective strategy process which incorporates stakeholder value
  4. Organisation : an organisation suitably structured to effect good corporate governance
  5. Reporting : reporting systems structured to provide transparency and accountability

This approach recognises that the interests of different stakeholders carry different weight, but it does not, by any means, suggest that those with a major interest matter and the rest don’t. On the contrary, best corporate governance practice dictates that all stakeholders should be treated with equal concern and respect. For obvious reasons, although the methodology we will propose involves taking major stakeholders into greater account when formulating strategy, it is designed to generate all round support because of the fact that every stakeholder, no matter how small, is given the opportunity to express a view, through the continuous monitoring ofstakeholder perceptions. It is key to the approach that organisations truly respect the minority interests. Like the spirit of the US constitution, the approach can be said to embrace liberty, equality and community, but like the US economy, it aspires to produce the most powerful and effective result in the world.

Best corporate governance practice = best management practice

The regulatory approach to the subject would regard governance as something on its own, to do with ensuring a balance between the various interested parties in a company’s affairs, or more particularly a way of making sure that the chairman or chief executive is under control, producing transparency in reporting or curbing over-generous remuneration packages. This indeed is what the Cadbury recommendations and the subsequent reports and code are all about. However, as we express in the rest of this website, we regard this as much too limited a view of governance, and hence of best corporate governance practice.

The essence of success in business is:

 having a clear and achievable goal  having a feasible strategy to achieve it  creating an organisation appropriate to deliver  having in place a reporting system to guide progress.

There are very many websites and publications advising on how to do this, and of course, this is what is described as good management.

Best corporate governance practice is about achieving the stakeholders’ goal, and delivering success in an ethical way. Hence it follows that it must entail a holistic application of good management.

To demonstrate the totality, and the need for a holistic approach, we present below an illustration showing the pressures on a large organisation.

The Pressures on a Company

It is important that a wide perspective is taken when considering corporate governance because we cannot emphasise too strongly our belief that good management practices, as described in the rest of this section of the website, will deliver good corporate governance. Compliance with checklists of regulations and codes, in the setting of bad management or a lack of commitment to good management, will NOT deliver good corporate governance. The longer term consequences of this externally-applied regulatory approach will be a

Q NO.

Public opinion in the West since the arrest of Yukos’ Chief Executive in

October 2003 has been consistently against the Russian Government

particularly Putin who was the President then and is now the Prime Minister.

The prospect of Putin returning to the Presidency after the next poll has added

to the stridency of his detractors. The admiration for Yukos’ adoption of

international standards on corporate governance still weighs with the

supporters of the convicted CEO, who continues to be seen as a victim of

political persecution directed against his efforts towards “Civilised

Capitalism”. This paper delves into various aspects of Yukos’ management

and seeks to examine the possible role of irregularities vis-à-vis the political

ambitions of the chief executive in the dismemberment of the Russia’s top

company. There are parallels as well as dissimilarities among Yukos, Satyam

and Samsung although pursuit of irregularities is a common factor. However,

the South Korean Chaebol is placed differently in that punishments for

corporate irregularities are in the form of charity, community service and

support for the welfare initiatives of the Government. In India itself, Satyam is

a rare instance where nearly everyone is agreed on hanging the dishonoured

CEO by the nearest post and to make an example of him. Yet, business-related

frauds and aberrations get either soft treatment or allowed to go unnoticed.

This paper also takes a close look at the US record of corporate misconduct,

the Enron scandal as well as the massive deception by leading financial

players and negligent regulation boarding on collusion that added up to the

meltdown.

Assisted by Ms. Vijayasri, Research Associate and Mr. Vikash Anand, Research Assistant

www.IndianJournals.com

Members Copy, Not for Commercial Sale

Downloaded From IP - 115.248.73.67 on dated 29-Nov- 2010

130 Prof. K.S. Ramachandran

By way of an Introduction

Any meaningful discussion on corporate performance will be less than complete

In Satyam’s case and in respect of Raju, since January 7, 2009 when the latter

made his confession and the Government superseded the Board of Directors of

Satyam Computers and constituted an independent board, the company itself has

regained its strength. Satyam has not suffered, according to an official assessment,

despite widespread fears of its emasculation when a massive fraud surfaced. The

company had receivables worth Rs. 2,000 crore in the first quarter of 2009 from new

as well as existing clients. The rate of receivables was put at $140-150 million

monthly. It is now confirmed that very few of the company’s 50,000 plus employees

have exited. If some major clients have terminated their contracts, others have come

in. Significantly, in January alone, the company added 15 new clients. There are still

over 600 clients, which include big customers like General Electric, Cisco Systems,

and Qantas Airways. We can all see why Satyam has not only survived the test but

also emerged only with some scars. This is a tribute to the resilience of the Indian

economy, even allowing for the sagacity demonstrated by the Indian Government in

constituting an independent board and in letting it run the show. As of now, the

company has climbed down from fourth to fifth in terms of revenue generated in the

Indian IT sector, losing its earlier rank to HCL Technologies, which, though, has

suffered greatly because of massive forex losses during the first quarter of 2009. The

situation was until Tech Mahindra won the bid for takeover of Satyam on the basis of

an acquisition of 51 percent of shares at a cost of Rs. 2,990 crore. With this

acquisition, Tech Mahindra will move up to the fourth rank from seventh.]

http://www.mimts.org/JK%20Journal%20of%20Management%20&%20Technology/3-

Corporate%20Governance%20-%20Crime%20&%20Punishment.pdf