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2 pages/≈550 words
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Other
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Literature & Language
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English (U.S.)
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Questions and Case (Essay Sample)

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Please No APA or Source - Answer the questions and number them 1 and 2 are separate - Please No APA Or Source 1. Question Number 1 Please discuss whether businesses similar to Enron should encourage employees to buy stock in their own companies. Why should they or why should they not encourage employees to buy stock in one of the family of companies involved? What are some of the risks involved in permitting (or encouraging) such practices? Remember that there are other companies that are conglomerates that still exist, such as General Electric. Should GE encourage employees to buy stock? This can be a short response 2. Question Number 2 Please discuss who is harmed by insider trading. What benefits and/or drawbacks are there to insider trading based on the articles in the textbook and your own knowledge and experience? This can be a short response Case give you thought on the case Jim, now in his fourth year with Magellan Corporation, was made a plant manager three months ago after completing the company\'s Management Training Program. From all indications, Jim was a rising star among his fellow plant managers. Magellan owns six (6) pulp-processing plants that produce various grades of paper from fast-growing, genetically altered trees. Jim\'s plant, the smallest and oldest, is located in upstate New York, near a small town. It employs between 150 and 175 workers, mostly from the nearby town. In fact, the plant boasts about employees whose fathers and grandfathers have also worked there. Magellan\'s policy is to give each manager a free hand in dealing with employees, the community, and the plant itself. Its main measure of performance is the bottom line, and the employees are keenly aware of this fact. Like all pulp-processing plants, Magellan is located near a river. Because of the plant\'s age, much of its equipment is outdated. Consequently, it takes more time and money to produce paper at Jim\'s plant than at Magellan\'s newer plants. Magellan has a long-standing policy of breaking in new managers at this plant to see if they can manage a work force and a mill efficiently and effectively. The tradition is that a manager who does well with the upstate New York plant will be transferred to a larger, more modern one. As a result, the plant\'s workers have had to deal with many managers and have become hardened and insensitive to change. In addition, most of the workers are older and more experienced than their managers, including Jim. In his brief tenure as plant manager, Jim learned much from his workers about the business. Jim\'s secretary, Ramona, made sure that reports were prepared correctly, that bills were paid, and that Jim learned how to perform his tasks. Ramona had been with the plant for so long that she had become a permanent fixture. Jim\'s three foremen were all in their late 40s and kept things running smoothly. Jim\'s wife, Elaine, was having a difficult time adjusting to upstate New York. Speaking with other managers\' wives, she learned that the \"prison sentence,\" as she called it, typically lasted no longer than two years. She had a large calendar in the kitchen and crossed off each day they were there. One morning as Jim came into the office, Ramona didn\'t seem her usual stoic self. \"What\'s up?\" Jim asked her. \"You need to call the EPA,\" she replied. \"It\'s not really important. Ralph Hoad said he wanted you to call him.\" When Jim made the call, Ralph told him the mill\'s waste disposal into the river exceeded Environmental Protection Agency (EPA) guidelines, and he would stop by next week to discuss the situation. Jim hung up the phone and asked Ramona for the water sample results for the last six months from upstream, from downstream, and at the plant. After inspecting the data and comparing them with EPA standards, he found no violations of any kind. He then ordered more tests to verify the original data. The next day Jim compared the previous day\'s tests with the last six months\' worth of data and still found no significant differences and no EPA violations. As he continued to look at the data, however, something stood out on the printouts that he hadn\'t noticed before. All the tests had been done on the first or second shifts. Jim called the foremen of the two shifts to his office and asked if they knew what was going on. Both men were extremely evasive in their answers and referred him to the third-shift foreman. When Jim phoned him, he, too, was evasive and said not to worry - that Ralph would explain it to him. FYI: You can assume The EPA guy has been accepting bribes to ignore the violations, and it has been going on for a long time. Let\'s get your thoughts on the case source..
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1. The main reason why employees are at times encouraged to buy stocks on their own companies normally happens in times of falling stock prices. This aids in curtailing the slide of the scrip prices. However, it is not a compulsory exercise for all employees, it happens to those who have surplus cash, and no expenditure plans in the future. As the company’s shares grow, employees exercise various choices such as the earnings per share becoming diluted. This tactic is very effective since it creates more value in the stock. The shareholders will therefore have some benefits instead of a taxable dividend in the case where such issues arise.
This is an effective strategy but it may prove unsuccessful in case the shares are too expensive. However, this strategy brings upon a positive image to the company. It brings upon a confirmation to the public that this is a good investment and the negative effects are minimal. For the companies that are conglomerates, the employees should still be encouraged to buy stock since its effectiveness goes beyond reproach. When a company has bad news to report, the news of buybacks is timely and they soften the news of the decreasing value. It softens the blow and the price impact is neutral to positive.
This is the case even with the large corporations. This technique brings confidence among the public since no one would invest in a company he/she does not believe in. This is a brilliant idea but it should not be more than 15%. This has been co...
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