Please provide a one to two-page paper on the topic. This work should include an opening paragraph clearly restating the questions (DO Not simply copy the questions). Then apply at least one complete paragraph on each of the topics, followed by a closing or summary paragraph. Cites and structure should comply with APA v6 style.

Alibaba and Global E-Commerce: Should Amazon Be Afraid?

From rural farmers to multimillionaires, millions of people in China are reaping economic opportunities from the growing e-commerce market. One entrepreneur earns $5 million in sales annually from his ladies’ handbag e-commerce business—a far cry from his humble origins. Although his success might be the exception to the norm, many Chinese consumers with similar backgrounds have found jobs working in e-commerce.

“We grew up in a rural area which left us few choices. I never thought about my future or had any belief in it,” the entrepreneur says.

At the center of this is Alibaba, an online marketplace founded by entrepreneur Jack Ma in 1999. Jack Ma conceived of an online portal that could connect Chinese manufacturers with buyers from other countries. He chose the name of Alibaba because it was globally recognized based on the famous character in the collection Arabian Nights. Today this multibillion dollar firm has 500 million registered users. Its sales surpass those of eBay and Amazon combined. Alibaba runs a number of businesses that handle approximately 80 percent of all online shopping in China. Unlike Amazon, it does not own is own merchandise but acts as a portal to bring buyers and sellers together.

This is just the beginning for Alibaba. In 2014 it was listed on the U.S. stock exchange with an initial offering of $25 billion, the largest IPO to date. To emphasize its global intentions, Alibaba opened offices in France, Germany, and Italy. It is also focused on selling more international brands such as Macy’s, Apple, and L’Oreal. In its quest to expand into media, Alibaba entered into licensing agreement with Disney to sell a streaming device that will broadcast movies, television shows, e-books, games, and more.

Although it is listed on the U.S. stock exchange, investing in Alibaba differs from the traditional model due to regulatory and legal barriers. The Chinese government restricts foreign investment in certain areas, meaning that global investors outside of China cannot own shares of Alibaba outright. In reality, investors purchased shares of a shell corporation in the Cayman Islands. Alibaba itself owns all of its non-Chinese assets. Jack Ma has the most power in the company, and some investors are concerned about his tendency to make large decisions or transfer ownership without consulting many other people.

Another issue that Alibaba is coming across as it expands involves counterfeit products. In China counterfeit goods have traditionally been more accepted than in other countries. Its international e-commerce site AliExpress has gained widespread popularity in Russia, the United States, and Brazil, but its rise in popularity has been accompanied by a rise in counterfeit goods sold through the site. Regulators are worried that the site is allowing counterfeits to go straight from Chinese manufacturers to consumers on a global scale. In fact, Kering SA—a French luxury group—filed a lawsuit against Alibaba accusing the firm of knowingly allowing the sale of counterfeit products. Alibaba denies the charges and is working with government bodies to improve counterfeiting controls.

Despite the risks of investing in a firm that they cannot actually own, investors were eager to purchase shares during Alibaba’s initial public offering. China is overtaking the United States as the largest e-commerce market, and the opportunities are too good for many investors to pass up. They believe Alibaba has the potential for massive global growth as it is less capital intensive and therefore more flexible than global rivals such as Amazon.com.

Questions

1. What are some of the barriers Alibaba is facing as it expands globally?
2. Why would the sale of counterfeit products through its sites be damaging to Alibaba?

Please provide a one to two-page paper on the topic. This work should include an opening paragraph clearly restating the questions (DO Not simply copy the questions). Then apply at least one complete paragraph on each of the topics, followed by a closing or summary paragraph. Cites and structure should comply with APA v6 style.

Making the Numbers or Faking the Numbers?

Will sales and profits meet the expectations of investors and Wall Street analysts? Managers at public corporations must answer this important question quarter after quarter, year after year. In an ideal world—one in which there is never an economic crisis, expenses never go up, and customers never buy competing products—the corporation’s price for a share of its stock would soar, and investors would cheer as every financial report showed ever-higher sales revenues, profits, and earnings.

In the real world, however, many uncontrollable and unpredictable factors can affect a corporation’s performance and its stock price. For example, when one of the nation’s largest retailers Macy’s announced lower-than-expected sales in mid-2016, analysts and investors were disappointed and the value of its stock dropped by 15 percent in just one day. Other factors include competitors lowering their prices or introducing superior products, increasing expenses, climbing interest rates, and plummeting consumer buying power. Faced with the prospect of releasing financial results that fall short of Wall Street’s expectations, managers may feel intense pressure to “make the numbers” using a variety of accounting techniques. In some cases, managers may even resort to accounting fraud to increase sales and profits and reduce expenses.

Although recent research indicates that accounting fraud has decreased when compared to the levels of accounting fraud during the last economic crisis, there are still companies that have resorted to questionable and often unethical or illegal accounting procedures to increase sales and reduce expenses. For example, Logitech and two former executives agreed to pay a $7.5 million fine in 2016 to settle Securities and Exchange Commission (SEC) allegations the consumer technology company inflated earnings on its financial statements. Another company—Weatherford International—also agreed to pay a $140 million fine in 2016 to settle SEC allegations it used fraudulent income tax accounting to inflate the oil and gas services company’s income by more than $900 million.

Under the Sarbanes-Oxley Act, a corporation’s top executives now must certify the corporation’s financial reports. Immediately after this legislation became effective, hundreds of companies restated their earnings, a sign that stricter accounting controls were having the intended effect. Now that stricter regulation has been in force for some time, fewer and fewer corporations are announcing restatements. The chief reason for the decline is that corporations and their accounting firms have learned to dig deeper and analyze the process used to produce the figures for financial statements.

Because accounting rules are open to interpretation, managers sometimes find themselves facing ethical dilemmas when a corporation feels pressure to live up to Wall Street’s expectations. Consider the hypothetical situation at Commodore Appliances, a fictional company that sells to Home Depot, Lowe’s, and other major retail chains. Margaret, the vice president of sales, has told Rob, a district manager, that the company’s sales are down 10 percent in the current quarter. She points out that sales in Rob’s district are down 20 percent and states that higher-level managers want him to improve this month’s figures using “book and hold,” which means recording future sales transactions in the current period.

Rob hesitates, saying that he needs more time to get sales momentum going. He thinks “book and hold” is not a good business practice, even if it is legal. Margaret hints that Rob will lose his job if his sales figures don’t look better and stresses that he will need the book-and-hold approach for one month only. Rob realizes that if he doesn’t go along, he won’t be working at Commodore for very much longer.

Meeting with Kevin, one of Commodore’s auditors, Rob learns that book-and-hold meets GAAPs. Kevin emphasizes that customers must be willing to take title to the goods before they’re delivered or billed. Any book-and-hold sales must be real, backed by documentation such as emails to and from buyers, and the transactions must be completed in the near future.

Rob is at a crossroads: His sales figures must be higher if Commodore is to achieve its performance targets, yet he doesn’t know exactly when (or if) he actually would complete any book-and-hold sales he might report this month. He doesn’t want to mislead anyone, but he also doesn’t want to lose his job or put other people’s jobs in jeopardy by refusing to do what he is being asked to do. Rob is confident that he can improve his district’s sales over the long term. However, Commodore’s executives are pressuring Rob to make the sales figures look better right now. What should he do?

Questions

1. What are the ethical and legal implications of using accounting practices such as the book-and-hold technique to accelerate revenues and inflate corporate earnings?
2. Why would Commodore’s auditor insist that Rob document any sales booked under the book-and-hold technique?
3. If you were in Rob’s situation, would you agree to use the book-and-hold technique this month to accelerate revenues? Justify your decision.
4. Imagine that Commodore has taken out a multimillion-dollar loan that must be repaid next year. How might the lender react if it learned that Commodore was using the book-and-hold method to make revenues look higher than they really are?

Please provide a one to two-page paper on the topic. This work should include an opening paragraph clearly restating the questions (DO Not simply copy the questions). Then apply at least one complete paragraph on each of the topics, followed by a closing or summary paragraph. Cites and structure should comply with APA v6 style. 

Theo Chocolate Makes a Sweet Difference

“I want to build a model that other companies can look at and emulate. A model that’s based on strong ethics and financial success,” Joe Whinney, founder of Theo Chocolate, says when describing his company.

Seattle-based Theo Chocolate uses the cocoa bean to make the world a better place. The company has become known for its organic, Fair Trade bean-to-bar chocolate. Theo takes cocoa beans and manages the entire process to turn them into high-quality chocolate. The concept for Theo Chocolate came two decades ago when Whinney was traveling through Central America and Africa. He witnessed farmers being exploited by multinational companies and wanted to develop a firm that would sell a high-quality product and benefit the farmers that supplied the ingredients. In 2006, Whinney and his ex-wife Debra Music, who is now chief marketing officer, founded Theo Chocolate. They later relocated to Seattle and built a factory that began producing chocolate in 2006.

Originally, Theo wanted to develop flavors it was excited about, such as coconut curry. However, Whinney and Music realized that they also needed to listen to the consumer and develop more traditional flavors such as chocolate and mint. Their attention to consumer needs is not only ethical but also is an important part of a successful marketing strategy.

The firm decided it wanted to do everything it could to ensure the quality and integrity of its products. This is why it not only sources Fair Trade products but also oversees the production of the chocolate from bean to bar. Its ability to oversee the entire process allows it to control for any disruptions that might compromise the chocolate’s integrity.

“Just being organic and Fair Trade isn’t enough. You will spark consumers’ interest because of our certifications and the integrity of our product, but if it doesn’t taste good, if people don’t enjoy it, then it really doesn’t matter,” Whinney says. “So we put as much or more of an emphasis on quality because without that, then nothing else really matters.”

Today the firm employs 100 people and produces a successful line of chocolate bars, confections, caramels, and specialty items. Although the chocolate bars are priced higher than competitors, consumers know that they are supporting fair trade and organic practices that benefit the farmers. One of Theo’s greatest marketing tools is the tours it provides to visitors of its facilities. From the beginning, Theo’s founders wanted to educate consumers about Fair Trade and tell the story behind its chocolate to give consumers an appreciation for the work that goes into it and the farmers who supply the beans.

These stories have become even more important with an initiative Theo has embarked upon to help farmers from the Democratic Republic of the Congo (DRC). Theo has launched a line of chocolate bars from the DRC. These bars cost a little bit extra at $5 a bar, but the extra money goes toward improving the farmers’ lives. Whinney pays the farmers in the DRC from whom he sources chocolate two to three times the market rate.

In addition to purchasing cocoa and paying farmers higher wages, the partnership has also provided education to 2,000 farmers on how to improve cocoa crop yields. Whinney is committed to developing trust and mutually beneficial relationships among suppliers, companies, and consumers.

Theo Chocolate embodies all four levels of social responsibility as it is profitable, obeys relevant laws, acts ethically, and engages in philanthropic activities. Although some believe that a company should focus on profits over community relations or stakeholder well-being, Theo Chocolate demonstrates that a firm can create positive change and be profitable at the same time.

Questions

1. How has Theo Chocolate incorporated its model of philanthropy and social responsibility into a successful business concept?
2. What advantages does Theo Chocolate have by sourcing cocoa from the Congo, even though the chocolates ends up costing consumers more?