Is Corporate Social Responsibility Responsible?

The concept of corporate social responsibility deserves to be challenged. It seems that political correctness has obfuscated the important business points. It is absolutely correct to expect that corporations should be “responsible” by creating quality products and marketing them in an ethical manner, in compliance with laws and regulations and with financials represented in an honest, transparent way to shareholders. However, the notion that the corporation should apply its assets for social purposes, rather than for the profit of its owners, the shareholders, is irresponsible.

The corporation’s goal is to act on behalf of its owners. The company’s owners--its shareholders--can certainly donate their own assets to charities that promote causes they believe in. They can buy hybrid cars to cut back on fossil fuel consumption or support organizations that train the hard-core unemployed. But it would be irresponsible for the management and directors of a company, whose stock these investors purchased, to deploy corporate assets for social causes. Read more

The Cockroach Theory !!

"Cockroach Theory" --You hear about cockroaches, you see them, but do you really know the theory related to them?

The 'Cockroach Theory' is a market theory that means that "Bad news tends to be released in bunches" in the same way as seeing one cockroach is usually evidence that there are many more lurking unseen.For example, Bad news from one company in a sector may indicate worsening conditions in the sector, which will therefore mean more bad news can be expected from other companies in the sector. In other words, the fact that one comapny (one cockroach) faced financial problems indicated that many other similar businesses were likely to face the same issues.

Similarly, in the credit market, “once a few problems emerge, investors assume there are many more to come,” the FTN analysts write. “Investors have to be sensitive to credit because nothing else will destroy earnings and capital given leverage inherent in bank balance sheets….”

The name "cockroach" is used for this theory because cockroaches travel in large groups and usually are not looked upon kindly.

Trade Cycle--

Trade cycle is a cyclical process. The trade cycle refers to the ups and down in the level of economic activity which extend over to a period of several years. The trade cycle come in the capitalistic economies. J.M. Keynes says, "A trade cycle is composed of periods of good trade characterized by rising prices and low unemployment percentage, with periods of bad trade characterized by following prices and high unemployment percentages." This shows how economic growth can fluctuate within different phases, for example:

i) Prosperity or boom (which is high growth causing inflation)
ii) Peak (top of trade cycle)
iii) Downturn or Recession ( fall in economic growth)
iv) Recovery (upturn of economic growth)

A trade cycle is composed of periods of good trade a characterized by rising prices and low un-employment percentage. The average length of trade cycle is a little more over eight years. The course of a trade cycle is generally traced through its various phases. Each of the phases is characterized by different economic conditions. In each phase the business face the different situation and pas through different experience.