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University of Canberra
University of Canberra
Faculty of Science and Technology
Unit Code and Name (mark the correct one with an “X”):
( ) 9789 – Technology and Engineering Management UG – Bruce
( X ) 9784 – Technology and Engineering Management PG – Bruce
Group Information:
Group Id (Canvas)* Student Id Name Peer Evaluation Score (0-100%)
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Question 1 – Introduction (1 mark)
What advantages, if any, does an IT/software engineer who possesses knowledge of multiple disciplines to have over an IT/software engineer who simply knows how to code? Try to support your arguments with real-life examples from case studies or personal experience.
A software engineer possessing multiple disciplines not only has a better grip on their line of work, but IS also able to produce high quality work, owing to the building of better and more skills. At the same time, one is able to have an open mind, thus being able to think outside the box and increase the number of opportunities available to them (Derwin, 2020). The combination of multiple skills makes it possible for them to be an all-rounded person. Software engineers have an advantage given the skills acquired from their course. Armed with information on HTML, search engines, and how browsers and servers function, a software engineer is also able to play the role of a marketing assistant when opportunity arises or when they need a break from programming. Marketing requires developing marketing strategies for companies. A software engineer with a certificate in sales and marketing performs even better as a marketing manager than one who lacks a certificate in the same, owing to a good understanding of software and marketing, and then marrying the two to produce good results.
Question 2 – Case Studies (2 marks)
Based on the Barclays case study (Tutorial 4, Week 5), what are the advantages and problems of sourcing IT from single suppliers?
The advantages of IT sourcing from single suppliers include: IT function centralization project engagement that was seamless through seamless execution of services with an example of cost reduction, current and future business requirement alignment with information technology, and IT service quality improvement. On top of these, a disaster recovery centre was provided.
The problems of IT sourcing from single suppliers include tedious asset tracking, there are similar problems from incidents experienced, lack of procedures that were auditable, job overruns affecting scheduling, and lack of updating and training of needed insights and skills to perform assignments effectively (McBride, 2009). The other issue is the management of incidents that are generated automatically.
What is the value of service quality questionnaire and performance measures – what should be measured?
The considerations under measurement are user satisfaction to enable improvement of services, strategy realization, governance, reporting capabilities, vendor management and quality assurance.
Question 3 – Strategic Planning (2 marks)
Go through the scenario on slide 8 of the week 3 tutorial (Leadership and Planning) and answer the following question.
A
Prepare the strategic plan for UCChain.
D
C
B
E
F
H
G
A (Vision/Mission) – Bring transparency and innovation to the automotive industry.
B, C, D (Goals)
improve performance of our automotive assets
improve increase vehicle reliability
E, F (Objectives)
a. To produce unalterable, digital assets for the automotives.
To increase transparency through application of decentralization.
a. To increase the number of smart objects that can be used in data collection.
b.To have a better connection among players within the automotive industry (Autovista Group, 2020).
G, H (Strategies)
a. i. Product acquisition from trustworthy suppliers.
ii. Use current technology in the digital assets.
b.i. Ensure data is accessible by all stakeholders.
ii. Ensure data can only be adjusted by the manufacturer only, closing out the rest.
a.i. Lower pricing of effective, smart objects.
ii. Source for cheaper raw materials for the smart objects.
b.i. Engage all stakeholders from the brainstorming/ideation phase.
ii. Develop regulations to limit the chances of distrust among players.
Question 4: Stakeholder Analysis (2 marks)
Go through the scenario on slide 3 of the week 10 tutorial (Managing Design) and answer the following questions.
(1 point) Identify and briefly describe the different stakeholders in the given scenario.
The stakeholders in this scenario are:
The software engineer (UCChain and UCCar) – the UCChain engineer will develop block chain technology that increases transparency of the functioning of the car and decreases the chances of alteration of the smart objects in the car. The UCCar engineer will develop smart technology behind the self-drive idea.
The manufacturer – will be responsible for bringing to life the smart objects capable of the transparency option and the self-drive car as a whole.
The seller/dealer – will conduct the sale of the car to potential customers (Autovista Group, 2020).
The customer – is the user or is the person for whom the car has been designed and manufactured. Their travel needs have been met through the car purchase.
(1 point) Then, in line with customer-centric design, identify the main customer(s) and their needs.
The customers in focus would be those who have not yet attained driving age, those who are exhausted and cannot get behind the wheel thus focusing on safety improvement, the elderly who might have lost the driving function, business professionals who may want a break from driving, and customers who prefer a clean improvement with focus on pollution reduction.
Question 5: Decision Making (1.5 marks)
Go through the scenario on slide 14 of tutorial 3, week 4 (Forecasting and Decision Making) and answer the following question.
What are the expected values for A1, A2 and A3? Which alternative would you choose to develop? Justify your answer (you don’t have to choose based on numbers only!)
Expected value A1 = (0.3*-60000) + (0.4*250000) + (0.3*350000) = 187,000
Expected value A2 = (0.3*-400000) + (0.4*300000) + (0.3*930000) = 279,000
Expected value A3 = (0.3*-25000) + (0.4*125000) + (0.3*275000) = 125,000
Considering the numbers and effectiveness of the options available, it is best to pick A2 since it has a higher expected value and with the new API, there may be room for integration of updated existing services into self-driving cars, which can enhance security for the cars. A2 is the best alternative because of not only the high expected value, but also because it considers a new API for the integration of existing services with self-driving cars. UCChain considers this alternative as the best further because the realization of the effectiveness of UCCar will be seen when the new API allows for seamless communication through data exchange and interpretation, which results in a better functioning vehicle. This means that the vehicle will be able to give a warning in case of tampering with assured transparency.
Question 6: Organising (1.5 marks)
Go through the scenario on slide 6 of the week 6 tutorial (Organising and Controlling) and answer the following question.
Based on the information provided in the slide, prepare an organisational chart for UCChain’s Sydney branch, stating what pattern of departmentation you are using and a brief explanation (in two or three sentences) as to why.
The departmentalization pattern used in this case is the functional type. The organization has been broken down in terms of the various functioning areas that the organization focuses on. This pattern makes it possible for the needs of the customers as well as the needs of the organization to be met, without compromising on quality and goals for either. At the same time, it makes it possible for the organization to focus on individual functions and then treating them wholesomely.
Sales & Customer Support
Health care
Growth and Operations
Human Resources
Legal
Global Marketing
Product Research
Block chain solution development
C.E.O.
Question 7 – Controlling (1.5 marks)
The following grid summaries findings about the efficiency of a Company ‘A’ and peer group’s management of liquidity, debt and assets. Evaluate Company ‘A’s financial position in terms of its liquidity, capital structure, asset management efficiency and profitability. Evaluate your assessment and suggest on how the company A is performing against its industry peer group average.
Ratio Company A Peer Group Assessment
Current ratio 2.23 1.18 Company A is more liquid than the peer group.
Acid-test ratio 1.8 1.4 Company A has a better access to cash to meet immediate demands in comparison to the peer group.
Debt-to-assets ratio 53.80% 35% Company A is a bad indicator of debt repayment; the peer group is a good indicator of debt repayment.
Inventory turnover 5.36 7 Company A has high chances of obsolete inventory; the peer group has high chances of stock-outs.
Asset turnover 1.7 1.1 Company A uses its assets in a more efficient way in sales generation; the peer group uses its assets in a less efficient way in sales generation.
Accounts receivable 17.67 14.6 The credit sales of company A have more likelihood of collection in comparison to the peer group’s credit sales.
Profit margin 10.2 7.58 Company A handles its finances better since it realizes more profit in comparison to peer group.
In general, looking at the ratio details in this regard, company A is performing much better than the peer group. It has more cash in hand in comparison to the peer group, but the most general way to describe company A’s good performance is in identifying its better performance in asset turnover in comparison to the peer group’s performance in asset turnover. Company A, therefore, uses its assets in a more efficient and better way, which leads to greater generation of sales.
Question 8 – Non-Financial Controls (2.0 marks)
(1.0 point) In which system(s) from above table could the rating scale from Table 2 (Tut 5, slide 14) be used? And in which systems could it not be used? Justify your answer (one short paragraph is enough).
The rating scale from Table 2 can be used in the pure rating system since it categorizes employees on the basis of their level of performance while considering the performance factors. The other systems that can be used are percentile arranges employees on the basis of performance, as well as modified ranking which deliberately has employees arranged in a manner that clearly shows on their performance levels. The rating scale cannot, however, be used in the forced ranking since this has been done haphazardly and without a clear indication of performance factors being considered.
(1.0 point) Considering all performance rating systems from above table, point out between two and four employees that UCChain should pay special attention to. Justify why they were chosen and point out career strategies/HR actions that should be applied to them.
Abraham has been chosen because he has potential, considering his ability to take initiative; and crashes into buildings, argues with himself, and drinks water meaning he can find other non-conventional ways of getting work done. For his slow timing, he can be given a mentor to help him meet targets, with the motivation of getting rewarded when tasks have been completed in a timely manner. The targets are in form of closing a UCCar deal. Follow-ups with customers can be an encouraging beginning for him. With self-arguing, he can undergo training on how to convert arguments into meaningful conversations with clients to a point of convincing clients to make UCCar purchases. This will help improve his self expression and interaction with clients.
James is another employee to consider. Seeing that he comes up second, has a lot of potential. Talent recruitment to help identify his hidden talents can help James become better at task performance seeing that he would have found his niche. He might turn out to be an impeccable sales person for UCCar, thus ending up being the top car sales person. On top of this, he can undergo training and development to improve on the few areas that may be pulling him back. Once this has been dealt with, James ends up being UCCar’s top sales dealer since he is able to make a case for himself and acquire vehicles for sale, and even end up selling the vehicles at a greater profit margin than expected.
Question 9 – Managing R&D (1.5 marks)
Using the Weighted Moving Average method, and exponential smoothing = 0.30, forecast the sales in 2030. Assume 2020 forecast sales as equal to the actual sales of 2020. Explain which method you prefer and why (one short paragraph for justification)
Year 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Actual 23 28 41 60 54 57 48 50 52 49
Weights 0.05 0.05 0.05 0.05 0.05 0.05 0.1 0.1 0.2 0.3
Weighted Moving Average
F2030=0.05 (23)+0.05(28)+0.05(41)+0.05(60)+0.05(54)+0.05(57)+0.1(48)+0.1(50)+0.2(52)+0.3(49)
F2030=48.05
Exponential Smoothing Calculation
F2030=0.3(49)+0.7(46.2)
F2030=47.04
I prefer using Weighted Moving Average over Exponential Smoothing Calculation because it is simpler and forecasts using data collected overtime not the current data alone.
Almost done
Question 10 – Managing Design (1.5 marks)
Go through the scenario in slide 2 of the week 5 tutorial (Managing Design) and answer the following question.
Write a short recommendation for the design of the UCCar self-driving car. This recommendation should consider the different design criteria (no more than a few words or a very short paragraph per criteria). Only the criteria applicable to this product should be considered.
There are various criteria to consider for the design of the UCCar self-driving car. The most important considerations are the predictive modelling, rules that are hard-coded, smart object discrimination and algorithms that help with obstacle navigation and traffic rule observance on the road. The algorithms in this case are driving corridors algorithm to aid in spaces that are free from collision cases, voronoi diagram algorithm for distance maximization between car and other obstacles, and occupancy grid algorithm for feasibility and risk calculation in consideration of surrounding obstacles. In the laser illuminating detection and ranging (lidar) systems, mechanisms responsible for cooling, temperature and air flow are mounted on the roof of the car. For the safety requirements to be met, a product design that is more robust has to be met. This is made possible through conducting thermal simulation and analysis. The surface area for heat transfer will also be increased for the IC components to thrive in effectiveness of heat transfer (Shukla, 2019). Thermal conduction addition in the car will also help with efficiency in solids.
When looking at the digital design portion of the car’s development, functionality testing is a significant part of a successful result. The car will be validated and verified through testing it when the temperatures are high and when they are low. Design decisions are better made when simulations are accurate. For better accuracy, calibration of the electronic cooling simulation is important. This is done using thermal characterization that is non-destructive. Furthermore, the car has to function in such a way that the safety-critical functions remain handled through use of electronic control units on a two-channel architecture. This integration allows for the safe data exchange and interpretation, thus allowing seamless communication. For effective interoperability, it is important to ensure testing of the software for the quality, performance, functionality and security requirements to be met. On top of this, the power steering to be installed in the car ahs to be electric, reliable and high performing. This is made possible by metal-oxide-semiconductor field-effect transistors (MOSFETS) which have a low loss as well as sensors.
Question 11- Managing Production Operations (1.5 marks)
Go through the break-even chart in slide 2 of the week 11 tutorial (Managing Production Operation & Marketing) and answer the following question.
Present at least two production strategies to avoid or at least delay the high break-even point. Explain why you should do that.
One production strategy is focusing on one target market which allows for the products and services to meet specific, customer needs thus increasing the value to the customer and the profit to the producer/manufacturer. The other important production strategy is increasing the company’s value through building its brand equity (Stark & Stewart, 2012). In the process, better prices result with a positive effect on the profit margins. Value addition can happen through coupling company products with an additional free product to increase the likelihood of customers preferring the company’s products over competitors’ products. This will help lower the break-even point with an increase in profit margins.
Question 12– Marketing (2.0 marks)
Identify the market segments you may plan to target for UCCar’s self-driving car. Prepare a general outline of UCCar’s marketing strategy. You may need to consider and research the following:
How firms use product-based and customer-based marketing strategies
UCCar is the perfect definition of customer-based and product-based marketing being combined. Advertising will happen in real time and in a digital manner, so that the passenger gets to remember their experience on the go. Location targeting will mean that customers on the move get to experience both the physical and digital. The former is experienced as customers are driven around thus giving them more freedom to handle other tasks as opposed to driving, and digitally, any purchases and errands are done by the car so that the car is the new delivery man. The ads that the customers get are personalized according to their preferences thus well aligned to create return customers (Stark, 2016). The customer experience is designed in a manner in which the time that should have been spent driving is now used to keep the customer busy and intentional, while creating a smooth experience for them. Te vehicle then becomes a better trip enhancer for the customer, making it possible for the customer to plan their day better.
Communicating with different market segments
The firm will communicate with different market segments on the basis of the various needs that different customers have. Looking at the consumer needs, UCCar will mostly focus on people with individual lifestyles and living within cities. Greater focus will be placed on the need for car-sharing as opposed to ownership. The firm will ensure that the vehicle is integrated with services that the customers in need of and those that increase free time and flexibility for the customer. Communication will also be on the basis of the legislations in various segments. In segments that allow for autonomous driving, the customers save a lot and get to focus on other parts of their lives. The car will be designed in a way that ensures safety for the customers and other people on the road. Given that UCCar will face competition from other firms, it will be important that the firm collaborates with other companies for the sake of value addition. This will also make it easier for the firm to gain favour in the market (Weiss, Gaenzle, & Romer, 2015). The product will be made available to certain target markets given that the product serves as a service (mobility) and for private transportation, which may mean that there are people who may not be able to afford the product/service. The car will fall within the segments of mobility services, mobile apps, private transportation, infrastructure, and special equipment. Another focus will be mature markets, looking at use. Lastly, UCCar will focus on low-cost as well as the premium market in service provision. The UCCar will be able to service both partial and fully autonomous needs of the target markets.
Identify customer relationship characteristics
For the success of the firm in launching the UCCar, customer relationship characteristics will need to be nurtured. They include a positive attitude that will help give the customer confidence in their purchase, analytical skills to help a customer understand the autonomy concept in detail, and people orientation for a better understanding of various customers and how to approach them (Businessballs.com, n.d.). Other characteristics are understanding of the bridge between profitability and customer relationship management, and putting the customer first. This will help with convincing customers of their purchase.
Retention of Customers and Customer relationship life cycle.
The customer relationship lifecycle describes the journey travelled by a customer in light of the relationship with a firm. The type and quality of the relationship determines whether or not customers will be retained as repeat customers. Awareness for the UCCar will be done through marketing strategies. These will include paid media advertising to reach more potential customers, direct selling to various target markets, internet marketing co-branding alongside stakeholders in related fields, and point-of-purchasing marketing. Once awareness has been created, acquisition follows so that the firm engages the potential clients without fail. With good cars and services, it is now possible to convert the potential customer to a customer through the creation of trust. To retain the customers, the firm will need to provide customers with the needed support; answer questions respond and send out follow-up emails. This is value addition to the customer (Taylor, n.d.). Advocacy is the last step. With satisfactory service provided to customers, the firm would expect them to recommend the brand to others, thus getting more clients in the process.
How do we decide where to advertise? How will we coordinate Web and traditional advertising? Should we integrate our Internet and non-Internet marketing campaigns?
The decision to advertise is based on the location of the target market, for example, the firm will place billboards on Times Square to capture the attention of its target market. Where the potential customers frequent is the best advertising location. The integration of internet and non-internet marketing campaigns is the best way to advertise to the target market. This ensures that the target market that does not frequent online platforms has its needs met as well as those who tend to frequent them.
How can we use social networks for marketing and advertising? Does the company need a separate social media strategy?
Social networks may be used to reach many potential customers, especially the millennial generation or the youth, generally. They are easily attracted by advertising conducted on the platforms they frequent as well as having these platforms as their main source of information. The company needs a separate social media strategy (Gurd, 2019). This is owing to the fact that the customers here are somewhat different from those who prefer traditional marketing methods, social media is influential on people’s purchasing decisions, have a level playing field with competition, to reach social media influencers who will be able to market the car to the public on social media and for reputation enhancement.
References
Autovista Group. (2020, March 19). Toyota builds up Blockchain abilities. Autovista Group. https://autovistagroup.com/news-and-insights/toyota-builds-blockchain-abilitiesBusinessballs.com. (N.D.). CRM (Customer Relationship Management). Businessballs.com. https://www.businessballs.com/customer/crm-customer-relationship-management/Derwin, J. (2020, January 20). These are the 15 most in-demand skills in Australia right now, according to Linked-In. Business Insider Aus. https://www.businessinsider.com.au/most-in-demand-job-skills-australia-linkedin-2020-1Gurd, J. (2019, February 19). 6 reasons why you need a social media strategy. Smart Insights. https://www.smartinsights.com/social-media-marketing/social-media-strategy/social-media-strategy-planning-essentials-6-reasons-need-social-media-strategy/McBride, N. (2009). Exploring service issues within the IT organisation: Four mini-case studies. International journal of information management, 29(3), 237-243.
Shukla, D. (2019, August 16). Design Considerations for Autonomous Vehicles. Electronicsforu. https://www.electronicsforu.com/market-verticals/automotive/design-considerations-autonomous-vehiclesStark, K. & Stewart, B. (2012, February 1). 3 Ways to Lower Your Break-Even Point – Taking steps to improve profitability can actually help you to increase customer value and build brand equity. Inc.com. https://www.inc.com/karl-and-bill/3-ways-to-lower-your-breakeven-point.htmlStark, L. (2016, February 1). Marketing in the Fast Lane with Self-Driving Cars. Tech Crunch. https://techcrunch.com/2016/01/31/marketing-in-the-fast-lane-with-self-driving-cars/Taylor, K. (N.D.). Customer Relationship Lifecycle. HiTechNectar. https://www.hitechnectar.com/blogs/customer-relationship-lifecycle/Weiss, C., Gaenzle, S., & Romer, M. (2015). How automakers can survive the self-driving era. Kearney. https://www.es.kearney.com/automotive/article?/a/how-automakers-can-survive-the-self-driving-era
REFORM OF LAW ON PARENT COMPANY’S LIABILITY
University Name
By
Student Name
REFORM OF LAW ON PARENT COMPANY’S LIABILITY FOR THE DEBTS OF AN INSOLVENT SUBSIDIARY
Degree Title
Instructor’s Name
Date of Submission
Word Count: 3600
Reform of Law on Parent Company’s Liability For the Debts of an Insolvent Subsidiary
Introduction
Parent companies may organize for subsidiary companies for brand recognition purposes or financial considerations such as tax consolidation by the government. Business law creates a foundation at which the parent company should relate with the subsidiary company, on its operations, management, and stakeholder activities. A parent company may have total power over the subsidiary or allow the subsidiary company to be independent. This entails having its responsibilities differentiated from those of the parent company. Incorporate business law; the liability of the parent company is determined by the dependence or independence of the subsidiary company. The parent company is liable to an insolvent subsidiary if the company was used to conduct the affairs of the parent. However, the liability may extend to directors of the company on circumstances where they are found liable. This law requires a reform to ensure the protection of both the parent company and the creditors.
Parent Company Liability
A company is recognized as a parent company when it owns 50% of the stock of another company. The other company then becomes the subsidiary company and may be fully or partially dependent on the public company. Partly owned is where the parent company owns at least 50% of the shares, but the control does not rely on one side. When a subsidiary is wholly owned, the parent company has total ownership of the stock, which is 100% of the shares. However, ownership is not related to the physical property of the company. The tangible property is only mentioned if it has been included in the tax decisions of the company by holding some amount of stock that consists of the physical property. The subsidiary may be a separate legal entity having its concerns on taxes, regulations, and liabilities. It has its independent operations, but the parent company consolidates the financials as it is part of it.
Relationship Between Parent and Subsidiary Company
Subsidiary companies are mostly independent in that they do not rely entirely on the parent company. However, independence is also laid down by the parent company as it may form regulations or draft articles of incorporations and provisions to solidify the control. The subsidiary company then runs based on the drafted constitution and requirements and may have to consult whenever a decision involves contrary action. It has its managers and makes decisions based on its interests and not of the parent company. However, the parent company has the power to replace directors if the decisions made through them are not satisfactory. But after replacement or appointment, the directors independently work towards the success of the subsidiary company and not the parent company. Issues of taxes to the government is consolidated and is the obligation of the parent company to pay for it.
Parent Company Liability Over Insolvent Subsidiary
Corporations set subsidiaries to protect themselves legally. Therefore, the parent is not responsible for any criminal or negligence acts. It is a requirement in the company law that a company has a separate legal identity separate from that of the shareholders. This law led to a reform in the corporate law reform act 1992, section 588v, that a parent company should be liable to the debts of a subsidiary company. The law means that in cases where the subsidiary company owes the creditors and is incapable of settling the debts, the parent company should come in to cover the indebtedness. The liability of the parent company over the subsidiary is unlimited; hence the shareholders may also be affected. When a subsidiary becomes insolvent, it is unable to pay the debts owed, and its property may be taken and liquidated to cover the liabilities. The law has been critiqued since the subsidiary performs its operations independent of the parent company hence should also be able to pay for its obligations without relying on the parent company. The law protects the creditors as they would receive their payments but deems unfair to the parent company.
Effect of the Law
In 1980, corporate groups in the UK conducted debates to address the problems of creditors, which required intervention by the legislation of corporate law. The insolvency law was reviewed, and an alteration suggestion made to make parent companies liable for the debts of its subsidiary companies. An analysis of the alteration found that it would create a difference between corporate and individual shareholders, as the corporate ones would be the ones liable. This decision would make it difficult for shareholders to embark on new ventures due to the fear of being accountable for debts they have less information about. The law then limits a firm from expanding due to fear of the shareholders as they have to be consulted before the decisions of expansion occur. Therefore, the debate on making the parent company liable to the debts proved futile to the development of the business sector, with individual companies stagnating in the current situations.
Corporate law reform act section 588v provides scenarios where a parent company is expected to be liable to the debts of the subsidiary company. First, the existing parent corporation should have been the parent company at the time the subsidiary incurred the debt. Secondly, the company is insolvent, and its insolvency can be proved. Thirdly, the directors of the corporation should be aware of the reason for the bankruptcy of the subsidiary company. The presence of these factors makes the parent company have full responsibility for the debts of the company. The liability is irrespective of the reason for the credit. The shareholders of a subsidiary company are limitedly liable to the obligations of a company; hence creditors can only access payment to the amount owed by the company but not the personal properties of the shareholders. Thus, when all the company’s stock and assets have been liquidated and still not enough to cover the debts, the parent company has to be involved in finishing up the remaining balance.
Corporate law is designed to protect creditors against bad debts. However, as Ramsay critiques, the creditors should have their designed contracts from protection with the subsidiary company without involving the parent company. This is because there would be a conflict of interest between the shareholders and the creditors. Shareholders would wish to continue with investments to earn more dividends while the creditors want for their money back hence the conflict of what to first prioritize. The amount needed by the creditors may be the same or more of the investment cost, thus affecting all other operations and plans of the parent company. Due to these conflicts, a shareholder may decide to incur more debt hence the adverse effect on the parent company than the subsidiary company. However, the parent company may have been named as a guarantor in the subsidiary company. Therefore, in this case, the parent company willingly decided to guarantee the repayment of the debt, hence must comply.
The involvement of the parent company goes against the principle of separate corporate entities. The parent company is a separate entity from the subsidiary company. The law requiring a parent company to be liable to the debts of the subsidiary is contrary to the principle of independent existence. This may result in evasion of the payment of liabilities by the subsidiary as it is fully aware that the parent company should cover its debts. The law encourages crimes such as to defraud and ignorant actions of directors of the company. Also, a subsidiary company managing director may be entirely reliant on the decisions of the parent company, making it hard for them to brainstorm a challenge and find the solutions independently. Communication with the parent company on the issues affecting the company may also be a challenge as the company assumes that the parent company is managing all the problems of the subsidiary. Therefore, the effects of the law on companies may be fatal than the benefit it has on creditors. Debts get paid to the creditors, but the subsidiary and the parent companies may collapse because of the massive liabilities and unplanned costs of the subsidiary company. This is a risk that the parent company has to take due to the law stipulated.
Need For a Reform
Obligating the parent company to pay for the debts of a subsidiary company goes against the principle of a company that it is a separate legal entity, and its shareholders are only liable to the extent of their shareholding. The law obligates the settlement of debt irrespective of the shareholders’ plans of expansion or amount of dividends. For example, using Lewis Holdings limited vs. Steel and Tube Holdings Limited, Lewis leased property to a subsidiary of Steel called Stube. Steel handled the decisions regarding the property and the payment. During the liquidation of Stube, Lewis went to court with proof of debt. The court used section 271 of Companies act 1993 to obligate Steel to the payment of the obligation to Stube as it was the parent company and had compromised the independence of the subsidiary company. Therefore, the freedom of the subsidiary company must be kept. As it performs its operations self-reliant, it should also allocate funds for risks and, as such, be able to cover its debts. The parent company should not be liable for the debts of the subsidiary company.
The obligation of parent company law to pay a subsidiary company’s debts has led to an increase in crime and civil cases in the companies. There is a dissatisfaction with the protection of the parent company from frauds conducted by the subsidiary company. Directors in the subsidiary companies may defraud a creditor for their benefits and not for the company. Such a scenario will make the parent company pay for debts that have not benefited the subsidiary company nor the parent company. This decision leads to losses in the parent company, but a positive impact on the personal lives of the directors after receiving the cash. The law also needs to include the personal liability of the directors in the subsidiary company. For example, if a subsidiary company becomes insolvent, the court should first prove that the business is bankrupt because of failure in normal operations, and there is no defrauding that has occurred. Defraud of creditors should change the liability of the directors to unlimited, in that they have to cater for a part of the debt before the parent company becomes responsible. Such a law would reduce abuse of the protection of limited liability by subsidiary company directors.
Besides, the directors oversee all the operations of the subsidiary company; therefore, they know the source or reason for insolvency. The insolvency act should also apply to directors of a subsidiary company. Section 214 of the insolvency act addresses the issues of wrongful trading that the director is aware of and has led to the bankruptcy of the company. Therefore, a director should be liable first, if, after knowledge of the company’s insolvency, he still prioritized shareholders over creditors. Giving the shareholders a priority over creditors uses more of the company’s finances without reducing the debts already incurred. Secondly, if the director disposed of the company’s assets at a price lower than the market value or for free, he should be liable to the liabilities of the company. Thirdly, if there is an overdrawn director’s loan, it should first be settled to reduce the amount of the loan. Lastly, if any funds have been obtained through fraudulent means, the director should be made liable. These laws in the insolvency act of companies could also be included when relating to subsidiary companies, to make the directors responsible and accountable for a company’s fate.
Section 588X of the corporate reform act provides a defense for the parent company on the liability of the subsidiary. It permits the parent company to provide reasonable proof of suspecting subsidiary insolvency, either due to the director’s illness or that the company took all reasonable measures to prevent the company from having a considerable liability. A parent company may be free from incurring subsidiary debt on the stated grounds. However, the subsidiary company is independent, and the parent company does not involve itself so much in the operations of the company; hence may fail to be aware of the risks when not communicated to in time. Article 588X may work well for group companies whose operations are intertwined and assets consolidated. It is complicated for a parent company to get knowledge of the risks; hence the section does not protect parent companies. Therefore, an article on the protection of the parent company is appropriate, especially in cases where it does not know the risks of a subsidiary company. This decision can be made by providing proof to the court of the unconscious debts of the subsidiary company.
The law in section 588V of the corporate reform act is limited in scope as it provides a partial solution to a parent company’s unaccountability to the debt of its subsidiary company. It fails to protect tort or criminal offenses. This means that there is a likelihood of the parent company to paying debts incurred due to criminal offenses or tort. Tort claimants can easily contract to protect themselves from undesirable behaviors hence could not be recognized by the court. This act does not protect the parent company under such circumstances. Also, it gives a lot of evasion methods, through which a company is excluded from debt responsibility. A subsidiary company may use these evasion strategies by organizing situations to avoid the relationship between the parent and subsidiary to evade payment duties. Therefore, the aim of protecting creditors may fail to apply through this law.
Shareholder and director’s interests are contrasting; hence the law may create a conflict between them. Directors aim to settle the debt to protect their brand or company’s reputation in public and also because of the fear of losing the creditors. Shareholders, too, may have a fear of lacking capital in the future through the drop of the creditors. However, the anxiety will only occur if the company operates as a going concern. Contrarily, if a corporation is a periodical, the law of taking responsibility of subsidiary debt may not apply as both the shareholders and the directors are aware that the company will be dissolved within a short period. Also, as much as the shareholders may want to take action regarding the debt, the law prevents them due to separation of ownership and control, thus have no control over management hence increasing the conflict between them and the managers. To avoid the disputes between the shareholders and directors, the law needs t to be more specific and including all the parties involved in the process of payment.
The law may jeopardize the independence of subsidiary companies on debts since parent companies would wish to be more careful about its operations. This entails more efficiency strategies such as monitoring the operations of the subsidiary company, including its managerial actions. A parent company may decide to use its directors to manage the subsidiary firms to know all the operations and debt incurred by the company. Monitoring creates a good leverage when defending themselves in court, to have proof of debt borrowed and its action on knowledge of insolvency. The full power over the subsidiary company ensures that the parent company makes all the actions and decisions of the company. These choices include liability sources, amounts, and interest to be incurred during repayment. Measures to create protection for creditors through contracts or after purchasing may also be included. Therefore, it is easier to know when a company is incurring a lot of losses; hence strategies are developed to prevent insolvency from occurring.
Solution Strategies
Principles guiding the liability of parent companies and providing protection for the parent company and as well protecting creditors may be applied should be included in the law. For example, in the United States, the principle of equitable subordination in the united states bankruptcy law which allows the court to give the order of debt obligation to a parent company; only it is just and fair. Equitability is confirmed through a research done by the court on the parties and nature of the liability. Research on the relationship between the parent company and the subsidiary is conducted to understand the source of debt. This principle prevents the parent company from being accountable for losses that occur due to fraud or director misconduct. Also, in most European countries, piercing the corporate veil principle is applied in solving liability debt issues. This is whereby the court ignores the limited liability of shareholders and directors and make everyone liable for debts. This method ensures every party is responsible and accountable to avoid bankruptcy or insolvency of the company.
Parent companies have given the subsidiary companies the right to be independent. However, the company can participate in the activities of the subsidiary company. If proven to participate in the management of the subsidiary company actively, the parent company is acting as a shadow director of the subsidiary company. Therefore, any debts incurred by the subsidiary during insolvency must extend to the parent company; hence the debt has to be covered by the company. Also, the assets of the subsidiary company are included in the settlement of the creditors. When piercing the corporate veil strategy is applied, the lack of independence of the subsidiary relates to the management by the parent company. The autonomy of a subsidiary company gives leverage to the parent company not to be liable to its debts. Independence should stretch to cover the payments of debts and any other liabilities independently incurred by the company. Hence, parent companies need to allow its subsidiary companies to be self-sustaining and self-reliant and so be accountable for its obligations.
Reform on the law could include the protection of all the parties and equitable actions imposed by the court. The parent company should not always be liable for all pending debts incurred by a subsidiary company. The court needs to investigate the directors of the company and know the reasons for acquisition of the liability. Also, the reasons for solvency is essential. When a reform is undertaken to address these factors, the bill will be considering the protection of both the creditor and the parent company. Also, the directors of the subsidiary companies would be more accountable for their actions as the law also involves them. As a company is gong insolvent, a director will have to communicate with the parent company and find solutions before it collapses. Every action conducted by the subsidiary company will try to consider the effects on the financial state of the company and its benefit to prevent the accumulation of more debts that may lead to personal liability to the obligations of the company. This act will ensure the creditors get from bad debts and that they also support the company financially in the future when in need of more funds.
Conclusion
A parent company is a company that owns 50% of the stock of a company. The company by which the parent owns the shares is the subsidiary company. A parent company has power over the subsidiary but allows it to be independent and have its operations. Due to the control and ownership of half of the subsidiary shares, the law requires the parent company to take the liability of an insolvent subsidiary company’s debts. This law needs a reform as it only addresses the settlement of the mortgage without considering the reasons for the accumulation and bankruptcy of the subsidiary company. Changes involving the directors, creditors, and ideas for insolvency before settlement. Also, applying strategies such as equitable subordination ensures all parties are responsible and account for their actions. The existing laws create conflict between shareholders and directors and even creditors and parent company. Besides, to avoid such conflicts and unjust liability of debts, the parent company may decide to have close monitoring of the subsidiary company. This act will ensure that the parent company will have complete knowledge of the activities and operations of the company to be able to defend itself and evade the liability. A reform is appropriate to avoid the challenges affecting both subsidiary and parent companies.
Bibliography
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Universal Health Care Coverage
Universal Health Care Coverage
Tiara Nicholas
Health care Perform Innovation
November 4,2018
Universal Health
Universal health care coverage for the American population is critical to all; it provides coverage for every American living in the United States. Not only does it provide coverage, it also ensures that those whom are ill and have chronic illnesses are receiving the proper treatment needed for them to remain healthy and not worry about things related to health insurance and the prices of medications. Many are worried that if the United States should adopt the general Universal Health care coverage like the overseas countries has done, that it would cause a financial burden on the taxpayers but this is not necessarily true. In many of those countries, the cost of the program is tracked through the countries’ yearly taxes. Yes, the government will have complete control over the program. However, I feel that is safer than unaffordable coverage.
Providing healthcare coverage is very significant in this day and time. I have witnessed so many go without coverage because they are not able to afford it. With Universal health coverage, American taxpayers will pay the fees via taxes. There will not be any limits placed on the services that Universal Health Coverage will make available to the United States population. I have discovered where some insurance companies turn patients down for coverage due to them having a pre-existing condition. That will not happen to our enrollees in the Universal Health Care coverage plan. Coverage will be provided regardless of their medical illness or ability to pay. I believe this is what makes Universal Health Care coverage different from other health care insurance coverage.
I have looked around and the only thing that comes even near to Universal Health care coverage is the Obama care, which still leaves many unable to pay the premiums. However, I would suggest that we create a plan to put into place for those that may be homeless who have no means of income to obtain their care free of charge. This is where design thinking comes into play with my project. Reasons are that I can solve some of the issues at the door, with me having a plan in place for things like this. Many Americans are struggling and the first thing that they drop is their health care coverage. Universal health care coverage will eliminate that type of problem. With the government, paying a portion of the coverage costs and the patient paying his or her percentage the program should be a success.
With systems thinking, you have to be able to understand the bigger picture of thinking. By exercising this you’re looking at how many Americans there are with no health care coverage and have mental illness and other medical related illness that are not being properly treated. Universal Health care coverage will eliminate many of these issues. Every facet of Universal Health Care coverage will be broken down into their respective elements in order for them to work properly. There will be many different levels to implement Universal Health Care coverage to ensure that every level is completed. The team would consider doing a trial run to determine what worked and what did not work. Information taken from the trial run can be used to make the proper changes to the program. This is why we would sustain a team put together by myself, to work on the different stages and different processes so we can have a smooth transition to making sure everybody is on the same accord entirely.
Exactly like the Affordable care act, there should be incentives given to those participating in the carrying out of Universal health care coverage. There should be tax credits for the fellowships who will be a vital stakeholder in this coverage. The Affordable Care Act does give the taxpayers a tax credit. The government using taxpayer dollars is going to be the only issue when it occurs. Tax credits have a greater benefit to a taxpayer. The only other option for the taxpayers will be for each of them to be able to afford the credit for their medications and durable medical supplies. Those can be rather costly for patients at times. Universal health care coverage is to give that coverage to those who do not receive any coverage, via their employment, self-employment etc. I do feel that there are going to be many stipulations put into place to sample and provide the coverage to all the American population.
Once we figure out what the stipulations will be, it will give me a better idea on how to approach this. With this task, I had to keep in mind that project management is necessary in this project. It allows me to plan my project systematically and allows me to look at the need for Universal Health Care coverage and establish a determination about things like the fiscal restraints, integration and opportunities as well as the growing population. This is why project management is very significant; it also breaks down and gives me insight as to what age population needs the most care. As if for instance, senior citizens are the fastest growing age group in the United States, by rolling Out of the Universal health care coverage, it gives me the information I need to look into implementing a senior-friendly emergency facility at a local hospital in my region. With this in mind I can hire a better team of health care builders and providers to help bring this idea to life and to facilitate with the efforts to make sure we are making it family friendly.
The creative design/ innovation for my project, the thought that went into this project and how it could alter the face of healthcare, as we know it was my goal. It allowed me to envision myself as the customer. Which allowed me to experience things from the consumer’s viewpoint and not as the creator of the Universal Health care coverage. With the creative design, it has permitted me to look at many different creative ways to create my project to be one of the best out there. I accepted the chance to design my project from the beginning to the end. I had to think of myself as a hammer and start looking for spots that were in need of fixing immediately in the health care world. Being able to view the different side of things, one thing stood out the most during this time. It was the second guessing as to “Why didn’t I consider that” it’s like a bulb went off in my head , for me to create a step by step guidebook for those who are not computer savvy so that they can sign up for Universal Health care . Alternatively, creating local employment opportunities to hire locals in my area to help with the enrolling of the member’s, all those things played a part in the conception of this project.
Questions
1. Will these next set of courses better prepare me with the proper tools to create my project and see it roll out live
2.Is it possible to do a trial run on the project just to see it in live motion?
3. Will we be able to handle the crowds in all 50 states who needs health care coverage
Expectations
Some expectations I have is watching this project come together and one day be a part of history. What I expect from this class is to have the proper tools and knowledge to see it created and rolled out live. Seeing something born is just amazing when you are bringing your ideas to life. The course will teach me a little something to add to my project. In health care finance, which is my next class, I would like to learn how I can be better prepared to deal with my budget that Congress will give me or how can I spend my funds wisely and not fall short. It prepares me to understand the money side of things. Now for health care law, this will enable me to learn more about the laws and policies of creating Universal health care coverage and help to add to those laws in the future. It is good to have the knowledge from the different courses. This project will give me the proper tools and knowledge to be successful in implementing Universal health coverage for the American population.
Reference page
https://www.healthcare.gov/https://www.commonwealthfund.org/publications/fund-reports/2014/jan/implementing-affordable-care-act-state-stateshttp://harvardpublichealthreview.org/universal-health-care-the-affordable-dream/