Finance and Accounting Essay Example | Topics and Well Written Essays - 1000 words - 1

Finance and Accounting - Essay Example A survey conducted by International Swaps and Derivatives Association (ISDA) revealed that out of 500 corporations, around 94% of the companies used derivative tool and they efficiently succeeded in hedging risks (International Derivatives and Swaps Association, 2009). It is seemingly clear that derivatives have economic and financial benefits for business which means they have resulted in making global financial markets safer. However, with the emergence of derivatives for financial speculations has brought this instrument under heavy criticism for making financial sector more risky and has been criticised for financial crisis. So, derivative have some benefits and risks too. The first most advantage of derivatives is the restructuring of risks by which movement in assets prices, interest rates and default of creditor can be hedged. They help in speculating the movement in the value of assets when they do not even own the assets. Secondly derivatives allows businesses to accomplish in controlling the external factors efficiently. Derivative instrument has been criticised for being used only for speculations. Derivatives contracts reduce the risk of one party while increases risk of the underlying assets for other party; this allows both parties to speculate the value of the principal assets irrespective of the fact parties are interested in the contract or not. Derivative instruments have efficient and effective economic and financial advantages which are required for the development of businesses and trade to hedge risks but it depends on the usage of this instrument which can pretence risks. Derivatives were criticised for lack of transparency in the OTC derivatives market under which standings of firms, their movement in asset prices and interest rates are not adequately transparent to the regulatory authorities and to other business companies (Financial Services Authority and HM Treasury, 2009). Sometimes business firms in the market are unaware of the mar ket standings of other companies which adds to more risks as monitoring of risks is weak and unwillingness for trade and hence the market liquidity may reduce. Derivatives contracts are affected by both operational risks and systematic risks. It is argued that operational risks can be improved by physical clearance of underlying assets and by addressing valuation differences. (Managed Funds Association, 2009) On the other hand systematic risks are caused by default of major stakeholders of derivatives market. It is usually referred to as â€Å"domino effect† (Investment Management Association, 2011). Derivatives of credit default swaps have the ultimate vulnerability to risks because they are more problematic in assess the value of underlying assets. Former Chairman of Federal Reserve, USA stated in a conference that â€Å"Although the benefits and costs of derivatives remain the subject of spirited debate, the performance of the economy and the financial system in recent ye ars suggests that those benefits have materially exceeded the costs† (Greenspan, 2003). (Part-2) Hedge funds are targeted to generate higher absolute returns for different type of investments. Hedge funds use highly advanced strategies for investment which comprise leveraged, short, long, and derivative positions designed for sophisticated investors. As hedge funds targets for higher returns that makes them more volatile and riskier besides profit compensate the risks at the end (SHORTMAN, 2010). Hedge funds are more liberal with respect to regulations and regulatory framework which makes them more flexible to use dynamic, vigorous and vibrant investment strategies with the combination of long, short and derivatives

Human resource management ( HRM in spain) Essay

Human resource management ( HRM in spain) - Essay Example For instance, Anglo-Saxons consider management ability depending on interpersonal skills, while the French consider the most intellectual individuals as the best managers. On the other hand, Germans argue that good management is a function of formal authority (Valle, Martin, and Romero, 2001:249). In this regard therefore, it is evident that organizations all over the world are adopting global practices, but in many cases, they do so in nation-specific ways. Based on the General Motors case study in Spain, this paper seeks to provide a report on the international human resource management in Spain. The report covers the institutional context that influence human resource practices in that country, essentially focusing on the laws, employer organizations, trade unions, training an education system, and other relevant issues (Ferner, Quintanilla, and Varul, M.Z. 2001:116). Moreover, the report covers the current human resource management trend in the country based on relevant case stud ies. Overview of Spain Based on Hofstede analysis, Spain ranks high in uncertainty avoidance and low in masculinity score. This results from the Spaniards feelings concerning career security, rules, and regulation. The Spanish history in relation to human resource management traces back to the second half of the twentieth century. It is not after the death of General Franco and the subsequent collapse of his regime did the economy of Spain come into focus. The Spaniards looked upon their leader to lead then to democracy and the European Union. In those times, only a fraction of the labor market had employment. According to statistics, the levels of unemployment reached record highs in 1965, skyrocketing to about 38.5% (Perllow and Weeks, 2002:347). In the 80’s however, the levels reduced by about 5% to stand at 33.5%. Comparing these levels to other European states, Spain had the lowest level of employed women, accounting for only 18% of the entire women population in the cou ntry. Italy had an average of 25% and between 30% and 40% in northern Europe. PESTLE Analysis of Spain Political Spain adapts a kingdom type of state. The country has a constitutional monarchy primarily based on parliament democracy. Moreover, power is highly decentralized, with autonomous communities having a high legislative level. Furthermore, the country enjoys a fiscal and executive autonomy. After the restoration of political democracy in 1975 following the death of General Franco, the country has generally displayed stable leadership and democracy (Combs and Luthans, 2007:111). Economical The Spanish economy was already recording significant recovery by 2004 from the financial crisis, recording a 2.4% growth. This was 2% higher than the previous year and 7% higher than the recorded levels in 2002. According to statistics, the highest unemployment record in recent times was that of 2000, but dropped to about 10.8% in 2004. Additionally, overall employment rate grew by 1.6%, wi th unemployment levels dropping by 3.5%. Spain seeks to promote employment in line with the European Union Directives. Nonetheless, the European Union directive merely present a framework for guiding human resource practices, but does not offer maximum protection to the equality and rights of employees in the work place (Lam, Chen and Schaubroeck, 2002:907). The local legislation that currently exist act as the