Open Systems Theory (OD) Analysis for Deckers Outdoor Corporation Research Paper

Open Systems Theory (OD) Analysis for Deckers Outdoor Corporation - Research Paper Example Through various planning, management and management, the firm has become popular across the US and other global parts. However, the company has recently encountered several challenges, forcing the company to incur various losses. Therefore, this manuscript will mull over these challenges and thereby discuss various organization diagnostic models that the firm can employ in resolving these challenges. Brief Overview of Deckers Outdoor Corporation The firm set off in 1973, with Doug Otto running it during its inception in Goleta, California. During its inception, the firm used to manufacture sandals. However, the company has grown to international level, distributing its products to diverse kinds of retailers. These include departmental stores and outlet stores among others (Latimer, 2012). Besides, the firm makes direct sales to its customers. The firm has independent distributors across Europe, Canada, Latin America, as well as Asia. It has also formed a union with Stella Internation al Holdings for the sale of UGG brand in China. The firm manufactures well-designed trendy shoes that sell across leading countries worldwide. Challenges facing the firm Counterfeit is a significant challenge that the firm is experiencing. China is the key source of these products. These counterfeits have significantly affected the UGG brand. Survey shows that the authorities impounded nearly 600 000 products, while the firm litigated over 2000 websites that sold falsified Deckers products (Latimer, 2012). These products were of low quality as contrasted to Deckers products, and thereby cheaper. This posed a considerable threat in the high profit realization of the firm, as well as company’s image. Besides, the country faces brand name controversies with various firms in Australia and Europe. These firms claim to have the sole ownership of the UGG brand. As such, there have been various court proceedings over the ownership of the brand, particularly in Australia where Uggs-n- Rugs sold their footwear item under this brand (Latimer, 2012). However, the firm still sells shoes to Australia under the brand. Additionally, various reviewers argue that the brand shoes have significant effects on animals. These critics claim that they contribute significantly towards the extinction of some animals (Latimer, 2012). As a result, they campaign against the purchase of these products, thereby compelling the firm into severe revenue loss. Organizational Diagnosis (OD) has become basic in enhancing an organization’s success. In an endeavor to improve the organizational effectiveness, it is essential to establish its current performance level thus devising apt strategies sufficient for the modification process. The concept of diagnosis in organizations applies similarly to the medical diagnosis, whereby the doctor tests the patient, gathers all the useful information prior to prescribing the best medication for the ailment. In a similar style, the management team assembles all the critical information, conducts an analysis, before devising the most suitable intervention for the organization to undertake. The current literature on organizational performance has depicted numerous benefits of performing the OD. Some of these entail the detection of all problems present in the organization, therefore, devising suitable strategies. Identification of such information is necessary in enhancing the company’s efficiency in its performance. Force Field Analysis The first model, Force

Corporate finance Assignment Example | Topics and Well Written Essays - 1500 words

Corporate finance - Assignment Example Blume (1993) had suggested that CAPM provides a model of equilibrium risk/return relationship. The CAPM also denotes that there exists a linear relationship between expected return and non-diversifiable systematic risk which is denoted as beta. This linear relationship is denoted as security market line (SML). In SML, the systematic risk of a share is compared with the risk and return of the market as well as the risk free rate of return for estimating the expected return of a particular share (Arnold, 2008; Pike and Neale, 1999). Figure 1 Source: (Ogilvie, 2008) CAPM defines risk as an extent to which the return of the portfolio of shares or a single share has a covariance with the return in the market. If it is assumed that CAPM correctly defines the capital market, then the risk/return relationship can be established for an efficient market strategy. The CAPM equation represents this relationship and expected return is seen to be a function of the following equation: R = Rf + ? (R m – Rf) Where: R = Expected return on the portfolio or share. Rf = Risk-free rate of return. ? = Beta. It signifies the volatility of the portfolio or the share relative to the market portfolio. Rm = Expected return on the market portfolio. Rm – Rf = Market risk premium (Harrington, 2001; Jones, 1998). Parameters of CAPM The risk-free rate of return: It signifies the return on the asset that has no risk. This indicates that it neither has covariance nor variance with the return on the market. In reality, it is difficult to find an asset of this kind and doubts prevail regarding the actual existence. Various proxies like, treasury bills and government bonds, are used in this stead. However, these proxies are also subjected to inflation and uncertainty and cannot be considered as entirely risk-free (Harrington 2001; Watson and Head, 1998). Return on the market: For CAPM, one of the most important implications is the existence of optimally efficient market portfolio. In t heoretical approach, the market portfolio consists of risky assets that are diversified among the portfolios available. Once this portfolio is held, it is not possible to diversify the risk any further. The market return is the return on the market portfolio, including all the risky assets. Unlike risk-free rate, the market return is difficult to estimate. It is approximated by using the indices of the stock exchange as the proxy for the market. However, issues exist regarding the selection of index to be used as proxy. Beta: It is the measure of non-diversifiable risk and relative measure of risk. It is the risk estimation relative to the market portfolios. In simple words, it measures the price volatility of the share or a portfolio of shares and also, how the expected return of the portfolio or the share will react in consideration to the movement of return in the market portfolio (Moyer, McGuigan and Kretlow 2001; Jones 1998). Hence, beta is the measure for the difference betwee n the return of the various portfolios of share or shares (Ward, 2000; Jones, 1998). Application of Capital Asset Pricing Model in Corporate Decision making CAPM argues that total risk is measured by