Case Study: Alcoa’s Core Values Essay

Ethics is based on a set of moral and ethical values. These values must be absolute – that is, you must take them seriously enough to override any human rationalization, weakness, ego, or personal faults. Alcoa’s ethical work climate is diverse, encourages open communication and learning, and community outreach. Alcoa’s core values are held to a high standard. Standing by these values: Integrity; Environment, Health, and Safety; Customer; Accountability; Excellence; People; and Profitability helps improve the moral of the company, employees, and consumers. By setting these as core values, Alcoa has made a commitment to improving quality of life among employees and community. Alcoa’s company used the ethical criterion of principles. Personal morality, company rules and procedures, and laws and professional codes were a higher priority to Mr. O’Neill. Regardless of the fact that the Mexico manager increase profits and had high marks of quality and satisfaction, Mr. O’Neill took the interest of the company’s value of safety and compliance. Alcoa made sure that employee’s and management had plenty of education and resources that there should have been no room for misunderstand or this kind of misconduct. â€Å"The emphasis on safety had deep meaning to Alcoa’s management team. The company’s management firmly believed that no employees should be forced to work in an environment where their safety and the safety of other employees might be jeopardized. Alcoa’s management supported the ethical principle that no employees should leave work in a worse condition than when they arrived (Lawrence & Weber, 2011). When going down to investigate the allegations himself, showed a great leader that has morals and beliefs that go hand and hand with the core values and ethics of the company. With such serious allegations, it was imperative for management to see what was going on first hand and take action. By sending an open letter to the entire company, Mr. O’Neill showed that there is no room for misperceptions of the core values set, showing that anything less is unrespectable and will not be tolerated.

Acca F7

Answers Fundamentals Level – Skills Module, Paper F7 (INT) Financial Reporting (International) 1 (a) December 2008 Answers Pedantic Consolidated income statement for the year ended 30 September 2008 $’000 98,000 (72,000) ––––––– 26,000 (3,000) (7,600) (500) ––––––– 14,900 (5,400) ––––––– 9,500 ––––––– Revenue (85,000 + (42,000 x 6/12) – 8,000 intra-group sales) Cost of sales (w (i)) Gross profit Distribution costs (2,000 + (2,000 x 6/12)) Administrative expenses (6,000 + (3,200 x 6/12)) Finance costs (300 + (400 x 6/12)) Profit before tax Income tax expense (4,700 + (1,400 x 6/12)) Profit for the year Attributable to:Equity holders of the parent Non-controlling interest (((3,000 x 6/12) – (800 URP + 200 depreciation)) x 40%) (b) 9,300 200 –––à ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œ 9,500 ––––––– Consolidated statement of financial position as at 30 September 2008 Assets Non-current assets Property, plant and equipment (40,600 + 12,600 + 2,000 – 200 depreciation adjustment (w (i))) Goodwill (w (ii)) Current assets (w (iii)) Total assets Equity and liabilities Equity attributable to owners of the parent Equity shares of $1 each ((10, 000 + 1,600) w (ii)) Share premium (w (ii)) Retained earnings (w (iv)) 55,000 4,500 ––––––– 59,500 21,400 ––––––– 80,900 ––––––– 11,600 ,000 35,700 ––––––– 55,300 6,100 ––––––– 61,400 Non-controlling interest (w (v)) Total equity Non-current liabilities 10% loan notes (4,000 + 3,000) 7,000 Current liabilit ies (8,200 + 4,700 – 400 intra-group balance) 12,500 ––––––– 80,900 ––––––– Total equity and liabilities Workings (figures in brackets in $’000) (i) Cost of sales Pedantic Sophistic (32,000 x 6/12) Intra-group sales URP in inventory Additional depreciation (2,000/5 years x 6/12) $’000 63,000 16,000 (8,000) 800 200 ––––––– 72,000 ––––––– The unrealised profit (URP) in inventory is calculated as ($8 million – $5 ·2 million) x 40/140 = $800,000. 1 (ii) Goodwill in Sophistic Investment at cost Shares (4,000 x 60% x 2/3 x $6) Less – Equity shares of Sophistic (4,000 x 60%) – pre-acquisition reserves (5,000 x 60% see below) – fair value adjustment (2,000 x 60%) $’000 (2,400) (3,000) (1,200) –––––– Parent’s goodwill Non-controlling interest’s goodwill (per question) Total goodwill The pre-acquisition reserves are: At 30 September 2008 Earned in the post acquisition period (3,000 x 6/12) Alternative calculation for goodwill in Sophistic Investment at cost (as above) Fair value of non-controlling interest (see below) Cost of the controlling interestLess fair value of net assets at acquisition (4,000 + 5,000 + 2,000) Total goodwill Fair value of non-controlling interest (at acquisition) Share of fair value of net assets (11,000 x 40%) Attributable goodwill per question $’000 9,600 (6,600) –––––– 3,000 1,500 –––––– 4,500 –––––– 6,500 (1,500) –––––– 5,000 –––––– 9,600 5,900 ––––––– 15,500 (11,000) –à ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œ 4,500 ––––––– 4,400 1,500 –––––– 5,900 –––––– The 1 ·6 million shares (4,000 x 60% x 2/3) issued by Pedantic would be recorded as share capital of $1 ·6 million and share premium of $8 million (1,600 x $5). $’000 16,000 6,600 (800) 200 (600) –––––– 21,400 ––––––– (iii) Current assets Pedantic Sophistic URP in inventory Cash in transit Intra-group balance (iv) Retained earnings Pedantic per statement of financial position Sophistic’s post acquisition profit (((3,000 x 6/12) – (800 URP + 200 depreciation)) x 60%) (v) Non-controlling interest (in statement of financial position) Net assets per statement of financial position URP in inventory Net fair value adjustment (2,000 – 200) Share of goodwill (per question) 12 $’000 35,400 300 ––––––– 35,700 ––––––– 10,500 (800) 1,800 ––––––– 11,500 x 40% = 4,600 ––––––– 1,500 –––––– 6,100 –––––– (a) Candel – Statement of comprehensive income for the year ended 30 September 2008 $’000 297,500 (225,400) ––––––––– 72,100 (14,500) (21,900) (1,400) ––––––––– 34,300 (11,600) ––––––––– 22,700 Revenue (300,000 – 2,500) Cost of sales (w (i)) Gross profit Distribution costs Administrative expenses (22,200 – 400 + 100 see note below) Finance costs (200 + 1,200 (w (ii))) Profit before tax (Income tax expense (11,400 + (6,000 – 5,800 deferred tax)) Profit for the year Other comprehensive income Loss on leasehold property revaluation (w (iii)) (4,500) ––––––––– Total comprehensive income for the year 8,200 ––––––––– Note: as it is considered that the outcome of the legal action against Candel is unlikely to succeed (only a 20% chance) it is inappropriate to provide for any damages. The potential damages are an example of a contingent liability which should be disclosed (at $2 million) as a note to the financial statements. The unrecoverable legal costs are a liability (the start of the legal action is a past event) and should be provided for in full. (b) Candel – Statement of changes in equity for the year ended 30 September 2008 Balances at 1 October 2007 Dividend Comprehensive incom eBalances at 30 September 2008 (c) Equity shares $’000 50,000 Revaluation reserve $’000 10,000 ––––––– 50,000 ––––––– (4,500) –––––– 5,500 –––––– Retained earnings $’000 24,500 (6,000) 22,700 ––––––– 41,200 ––––––– Total equity $’000 84,500 (6,000) 18,200 ––––––– 96,700 ––––––– $’000 $’000 Candel – Statement of financial position as at 30 September 2008 Assets Non-current assets (w (iii)) Property, plant and equipment (43,000 + 38,400) Development costs 81,400 14,800 –––––––– 96,200 Current assets Inventory T rade receivables 20,000 43,100 ––––––– Total assets Equity and liabilities: Equity (from (b))Equity shares of 25 cents each Revaluation reserve Retained earnings 63,100 –––––––– 159,300 –––––––– 50,000 5,500 41,200 ––––––– Non-current liabilities Deferred tax 8% redeemable preference shares (20,000 + 400 (w (ii))) Current liabilities Trade payables (23,800 – 400 + 100 – re legal action) Bank overdraft Current tax payable Total equity and liabilities 13 6,000 20,400 ––––––– 23,500 1,300 11,400 ––––––– 46,700 –––––––– 96,700 26,400 36,200 –––––––– 159,300 â⠂¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œÃ¢â‚¬â€œ Workings (figures in brackets in $’000) (i) Cost of sales: Per trial balance Depreciation (w (iii)) – leasehold property – plant and equipmentLoss on disposal of plant (4,000 – 2,500) Amortisation of development costs (w (iii)) Research and development expensed (1,400 + 2,400 (w (iii))) (ii) $’000 204,000 2,500 9,600 1,500 4,000 3,800 –––––––– 225,400 –––––––– The finance cost of $1 ·2 million for the preference shares is based on the effective rate of 12% applied to $20 million issue proceeds of the shares for the six months they have been in issue (20m x 12% x 6/12). The dividend paid of $800,000 is based on the nominal rate of 8%. The additional $400,000 (accrual) is added to the carrying amount of the preference shares in the statement of financial position.As these share s are redeemable they are treated as debt and their dividend is treated as a finance cost. (iii) Non-current assets: Leasehold property Valuation at 1 October 2007 Depreciation for year (20 year life) 50,000 (2,500) –––––––– 47,500 (43,000) –––––––– 4,500 –––––––– Carrying amount at date of revaluation Valuation at 30 September 2008 Revaluation deficit Plant and equipment per trial balance (76,600 – 24,600) Disposal (8,000 – 4,000) Depreciation for year (20%) Carrying amount at 30 September 2008 Capitalised/deferred development costs Carrying amount at 1 October 2007 (20,000 – 6,000) Amortised for year (20,000 x 20%)Capitalised during year (800 x 6 months) Carrying amount at 30 September 2008 $’000 52,000 (4,000) –––––––– 48,000 (9,600 ) –––––––– 38,400 –––––––– 14,000 (4,000) 4,800 –––––––– 14,800 –––––––– Note: development costs can only be treated as an asset from the point where they meet the recognition criteria in IAS 38 Intangible assets. Thus development costs from 1 April to 30 September 2008 of $4 ·8 million (800 x 6 months) can be capitalised. These will not be amortised as the project is still in development. The research costs of $1 ·4 million plus three months’ development costs of $2 ·4 million (800 x 3 months) (i. . those incurred before 1 April 2008) are treated as an expense. 3 (a) Equivalent ratios from the financial statements of Merlot (workings in $’000) Return on year end capital employed (ROCE) Pre tax return on equity (ROE) Net asset turnover Gross p rofit margin Operating profit margin Current ratio Closing inventory holding period Trade receivables’ collection period Trade payables’ payment period Gearing Interest cover Dividend cover 20 ·9% 50% 2 ·3 times 12 ·2% 9 ·8% 1 ·3:1 73 days 66 days 77 days 71% 3 ·3 times 1 ·4 times (1,400 + 590)/(2,800 + 3,200 + 500 + 3,000) x 100 ,400/2,800 x 100 20,500/(14,800 – 5,700) 2,500/20,500 x 100 2,000/20,500 x 100 7,300/5,700 3,600/18,000 x 365 3,700/20,500 x 365 3,800/18,000 x 365 (3,200 + 500 + 3,000)/9,500 x 100 2,000/600 1,000/700 As per the question, Merlot’s obligations under finance leases (3,200 + 500) have been treated as debt when calculating the ROCE and gearing ratios. 14 (b) Assessment of the relative performance and financial position of Grappa and Merlot for the year ended 30 September 2008 Introduction This report is based on the draft financial statements supplied and the ratios shown in (a) above.Although covering many aspects of performance and financial position, the report has been approached from the point of view of a prospective acquisition of the entire equity of one of the two companies. Profitability The ROCE of 20 ·9% of Merlot is far superior to the 14 ·8% return achieved by Grappa. ROCE is traditionally seen as a measure of management’s overall efficiency in the use of the finance/assets at its disposal. More detailed analysis reveals that Merlot’s superior performance is due to its efficiency in the use of its net assets; it achieved a net asset turnover of 2 ·3 times compared to only 1 ·2 times for Grappa.Put another way, Merlot makes sales of $2 ·30 per $1 invested in net assets compared to sales of only $1 ·20 per $1 invested for Grappa. The other element contributing to the ROCE is profit margins. In this area Merlot’s overall performance is slightly inferior to that of Grappa, gross profit margins are almost identical, but Grappa’s operating profit ma rgin is 10 ·5% compared to Merlot’s 9 ·8%. In this situation, where one company’s ROCE is superior to another’s it is useful to look behind the figures and consider possible reasons for the superiority other than the obvious one of greater efficiency on Merlot’s part.A major component of the ROCE is normally the carrying amount of the non-current assets. Consideration of these in this case reveals some interesting issues. Merlot does not own its premises whereas Grappa does. Such a situation would not necessarily give a ROCE advantage to either company as the increase in capital employed of a company owning its factory would be compensated by a higher return due to not having a rental expense (and vice versa). If Merlot’s rental cost, as a percentage of the value of the related factory, was less than its overall ROCE, then it would be contributing to its higher ROCE.There is insufficient information to determine this. Another relevant point may be that Merlot’s owned plant is nearing the end of its useful life (carrying amount is only 22% of its cost) and the company seems to be replacing owned plant with leased plant. Again this does not necessarily give Merlot an advantage, but the finance cost of the leased assets at only 7 ·5% is much lower than the overall ROCE (of either company) and therefore this does help to improve Merlot’s ROCE. The other important issue within the composition of the ROCE is the valuation basis of the companies’ non-current assets.From the question, it appears that Grappa’s factory is at current value (there is a property revaluation reserve) and note (ii) of the question indicates the use of historical cost for plant. The use of current value for the factory (as opposed to historical cost) will be adversely impacting on Grappa’s ROCE. Merlot does not suffer this deterioration as it does not own its factory. The ROCE measures the overall efficiency of manage ment; however, as Victular is considering buying the equity of one of the two companies, it would be useful to consider the return on equity (ROE) – as this is what Victular is buying.The ratios calculated are based on pre-tax profits; this takes into account finance costs, but does not cause taxation issues to distort the comparison. Clearly Merlot’s ROE at 50% is far superior to Grappa’s 19 ·1%. Again the issue of the revaluation of Grappa’s factory is making this ratio appear comparatively worse (than it would be if there had not been a revaluation). In these circumstances it would be more meaningful if the ROE was calculated based on the asking price of each company (which has not been disclosed) as this would effectively be the carrying amount of the relevant equity for Victular. GearingFrom the gearing ratio it can be seen that 71% of Merlot’s assets are financed by borrowings (39% is attributable to Merlot’s policy of leasing its pl ant). This is very high in absolute terms and double Grappa’s level of gearing. The effect of gearing means that all of the profit after finance costs is attributable to the equity even though (in Merlot’s case) the equity represents only 29% of the financing of the net assets. Whilst this may seem advantageous to the equity shareholders of Merlot, it does not come without risk. The interest cover of Merlot is only 3 ·3 times whereas that of Grappa is 6 times.Merlot’s low interest cover is a direct consequence of its high gearing and it makes profits vulnerable to relatively small changes in operating activity. For example, small reductions in sales, profit margins or small increases in operating expenses could result in losses and mean that interest charges would not be covered. Another observation is that Grappa has been able to take advantage of the receipt of government grants; Merlot has not. This may be due to Grappa purchasing its plant (which may then be eligible for grants) whereas Merlot leases its plant.It may be that the lessor has received any grants available on the purchase of the plant and passed some of this benefit on to Merlot via lower lease finance costs (at 7 ·5% per annum, this is considerably lower than Merlot has to pay on its 10% loan notes). Liquidity Both companies have relatively low liquid ratios of 1 ·2 and 1 ·3 for Grappa and Merlot respectively, although at least Grappa has $600,000 in the bank whereas Merlot has a $1 ·2 million overdraft. In this respect Merlot’s policy of high dividend payouts (leading to a low dividend cover and low retained earnings) is very questionable.Looking in more depth, both companies have similar inventory days; Merlot collects its receivables one week earlier than Grappa (perhaps its credit control procedures are more active due to its large overdraft), and of notable difference is that Grappa receives (or takes) a lot longer credit period from its suppliers (1 08 days compared to 77 days). This may be a reflection of Grappa being able to negotiate better credit terms because it has a higher credit rating. Summary Although both companies may operate in a similar industry and have similar profits after tax, they would represent very different purchases.Merlot’s sales revenues are over 70% more than those of Grappa, it is financed by high levels of debt, it rents rather than owns property and it chooses to lease rather than buy its replacement plant. Also its remaining owned plant is nearing the end of its life. Its replacement will either require a cash injection if it is to be purchased (Merlot’s overdraft of 15 $1 ·2 million already requires serious attention) or create even higher levels of gearing if it continues its policy of leasing. In short although Merlot’s overall return seems more attractive than that of Grappa, it would represent a much more risky investment.Ultimately the investment decision may be determ ined by Victular’s attitude to risk, possible synergies with its existing business activities, and not least, by the asking price for each investment (which has not been disclosed to us). (c) The generally recognised potential problems of using ratios for comparison purposes are: – – – – – – inconsistent definitions of ratios financial statements may have been deliberately manipulated (creative accounting) different companies may adopt different accounting policies (e. g. use of historical costs compared to current values) different managerial policies (e. . different companies offer customers different payment terms) statement of financial position figures may not be representative of average values throughout the year (this can be caused by seasonal trading or a large acquisition of non-current assets near the year end) the impact of price changes over time/distortion caused by inflation When deciding whether to purchase a company, Victular should consider the following additional useful information: – – – – – 4 in this case the analysis has been made on the draft financial statements; these may be unreliable or change when being finalised.Audited financial statements would add credibility and reliance to the analysis (assuming they receive an unmodified Auditors’ Report). forward looking information such as profit and financial position forecasts, capital expenditure and cash budgets and the level of orders on the books. the current (fair) values of assets being acquired. the level of risk within a business. Highly profitable companies may also be highly risky, whereas a less profitable company may have more stable ‘quality’ earnings not least would be the expected price to acquire a company.It may be that a poorer performing business may be a more attractive purchase because it is relatively cheaper and may offer more opportunity for improving efficienci es and profit growth. (a) A liability is a present obligation of an entity arising from past events, the settlement of which is expected to result in an outflow of economic benefits (normally cash). Provisions are defined as liabilities of uncertain timing or amount, i. e. they are normally estimates. In essence provisions should be recognised if they meet the definition of a liability.Equally they should not be recognised if they do not meet the definition. A statement of financial position would not give a ‘fair representation’ if it did not include all of an entity’s liabilities (or if it did include, as liabilities, items that were not liabilities). These definitions benefit the reliability of financial statements by preventing profits from being ‘smoothed’ by making a provision to reduce profit in years when they are high and releasing those provisions to increase profit in years when they are low.It also means that the statement of financial po sition cannot avoid the immediate recognition of long-term liabilities (such as environmental provisions) on the basis that those liabilities have not matured. (b) (i) Future costs associated with the acquisition/construction and use of non-current assets, such as the environmental costs in this case, should be treated as a liability as soon as they become unavoidable. For Promoil this would be at the same time as the platform is acquired and brought into use. The provision is for the present value of the expected costs and this same amount is treated as part of the cost of the asset.The provision is ‘unwound’ by charging a finance cost to the income statement each year and increasing the provision by the finance cost. Annual depreciation of the asset effectively allocates the (discounted) environmental costs over the life of the asset. Income statement for the year ended 30 September 2008 Depreciation (see below) Finance costs ($6 ·9 million x 8%) Statement of financ ial position as at 30 September 2008 Non-current assets Cost ($30 million + $6 ·9 million ($15 million x 0 ·46)) Depreciation (over 10 years) Non-current liabilities Environmental provision ($6 ·9 million x 1 ·08) (ii) $’000 3,690 552 36,900 (3,690) –––––– 33,210 ––––––– 7,452 If there was no legal requirement to incur the environmental costs, then Promoil should not provide for them as they do not meet the definition of a liability. Thus the oil platform would be recorded at $30 million with $3 million depreciation and there would be no finance costs. However, if Promoil has a published policy that it will voluntarily incur environmental clean up costs of this type (or if this may be implied by its past practice), then this would be evidence of a ‘constructive’ obligation under IAS 37 and the required treatment of the costs would be the same as in part (i) above. 6 5 Year ended/as at: Income statement Depreciation (see workings) Maintenance (60,000/3 years) Discount received (840,000 x 5%) Staff training Statement of financial position (see below) Property, plant and equipment Cost Accumulated depreciation Carrying amount Workings Manufacturer’s base price Less trade discount (20%) Base cost Freight charges Electrical installation cost Pre-production testing Initial capitalised cost 30 September 2006 30 September 2007 30 September 2008 $ $ $ 180,000 270,000 119,000 20,000 20,000 20,000 (42,000) 40,000 –––––––– –––––––– –––––––– 198,000 290,000 139,000 ––––––– –––––––– –––––––– 920,000 (180,000) ––â €“––––– 740,000 –––––––– 920,000 (450,000) –––––––– 470,000 –––––––– 670,000 (119,000) –––––––– 551,000 –––––––– $ 1,050,000 (210,000) –––––––––– 840,000 30,000 28,000 22,000 –––––––––– 920,000 –––––––––– The depreciable amount is $900,000 (920,000 – 20,000 residual value) and, based on an estimated machine life of 6,000 hours, this gives depreciation of $150 per machine hour. Therefore depreciation for the year ended 30 September 2006 is $180,000 ($150 x 1 ,200 hours) and for the year ended 30 September 2007 is $270,000 ($150 x 1,800 hours).Note: early settlement discount, staff training in use of machine and maintenance are all revenue items and cannot be part of capitalised costs. Carrying amount at 1 October 2007 Subsequent expenditure Revised ‘cost’ 470,000 200,000 –––––––– 670,000 –––––––– The revised depreciable amount is $630,000 (670,000 – 40,000 residual value) and with a revised remaining life of 4,500 hours, this gives a depreciation charge of $140 per machine hour. Therefore depreciation for the year ended 30 September 2008 is $119,000 ($140 x 850 hours). 17Fundamentals Level – Skills Module, Paper F7 (INT) Financial Reporting (International) December 2008 Marking Scheme This marking scheme is given as a guide in the context of the suggested answers. Scope is given to markers to award m arks for alternative approaches to a question, including relevant comment, and where well-reasoned conclusions are provided. This is particularly the case for written answers where there may be more than one acceptable solution. Marks 1 (a) (b) Income statement: revenue cost of sales distribution costs administrative expenses inance costs income tax non-controlling interest 11/2 3 1/ 2 1 1/ 2 1/ 2 2 9 Statement of financial position: property, plant and equipment goodwill current assets equity shares share premium retained earnings non-controlling interest 10% loan notes current liabilities Total for question 2 (a) (b) (c) Statement of comprehensive income: revenue cost of sales distribution costs administrative expenses finance costs income tax other comprehensive income 2 5 11/2 1 1 2 2 1/ 2 1 16 25 1 5 1/ 2 11/2 11/2 11/2 1 12 Statement of changes in equity: rought forward figures dividends comprehensive income 1 1 1 3 Statement of financial position: property, plant and equipmen t deferred development costs inventory trade receivables deferred tax preference shares trade payables overdraft current tax payable Total for question 19 2 2 1/ 2 1/ 2 1 1 11/2 1/ 2 1 10 25 3 (a) (b) 1 mark per valid comment up to (c) Marks 8 Merlot’s ratios 1 mark per relevant point 12 Total for question 4 5 25 (a) 1 mark per relevant point 5 (b) (i) explanation of treatment depreciation finance cost non-current asset provision 2 1 2 1 7 (ii) figures for asset and depreciation if not a constructive obligation what may cause a constructive obligation subsequent treatment if it is a constructive obligation Total for question 5 1 1 1 3 15 Total for question 2 1 1 3 1 1 1 10 initial capitalised cost upgrade improves efficiency and life (therefore capitalise) revised carrying amount at 1 October 2007 annual depreciation (1 mark each year) maintenance costs charged at $20,000 each year discount received (in income statement) staff training (not capitalised and charged to income) 20

Analysis of the Regional Integrated Multi-Hazard Early Warning

An intergovernmental and national institution named as The Regional Integrated Multi-Hazard Early Warning System for Africa and Asia (RIMES) has managed and owned by member of states for the purpose of application and generation for the early warning information. The RIMES has been evolved from the combined efforts of Asia and Africa, after 2004 Indian Ocean Tsunami. RIMES have established to generate the early warning information for identification of hazards and are responsive with trans-boundary hazards. On 30 th April 2009 RIMES has come to existence and 1 st July 2009 its gets registered with UN United Nation. In Thailand Pathumthani the Asian Institute of technology, the RIMES activities are operated as regional early warning center (warning, 2011). To building capacity and providing actionable information related to waning to forewarned, resilient and forearmed communities They are working with the concept of provides maximum benefits at the minimum cost, RIMES works to address both low frequency hazards and high-impact like tsunamis and high frequency hazards and low-impact like extreme weather event . They are utilizing their technological facilities in an optimum way and providing the state of members to support decision information at wider basis. The all the members of the states are urge to provide lower cost for the establishment of the individual early warning system for low frequency hazards and high-impact (Warning, 2011). They are working to meet the information that is need by the different users; they are integrating risk information at different time scale so that the diverse user’s early information warning need meet. They are working to generate the tangible benefits that will be demonstrated by identifying new promising technologies and research products to do pilot testing for powerful operations. The key services that have delivered by RIMES are discussed as follows: To the National Tsunami Warning Centers of States Members RIMES are delivering following services: To the National Hydrological Research and Development and Weather Climate RIMES are delivering following services: Localized and customized generation means that the short-term weather information and server weather generate for the contingency plan and for logistic plan medium-term on formation generated and for long-term planning and   management resources, seasonal climate outlook generated (Anny, 2016). The climate variability and change analysis of risk could be generated by them and identification of   management related risk would be made for the adaption of various options The decision support tool would be developed on timely basis and development for the new risk information product would be generated The Following services are provided by the RIMES to the local and national level institute For providing the regional benefits the observations are being maintained and established and stations are being monitored (Robin, 2016). They are providing proper training to scientist The tool that they are used includes risk assessment and interpretation and translation of early warning. In decision making process the application of risk information being tailored The early warning system is also done by RIMES on need basis The SWOT analysis of RIMES will be discussed under this heading so that the organizational behavior framework could conduct The strength of RIMES includes that it is a collaborative efforts of Africa and Asia to generate early warning to save from any sort of hazards. The members from all the states are ready to serve at any cost. The best scientists are working with in the premises of RIMES to deliver their best services to generate the warning that could be save people from high and low impact of hazards (Kurittal, 2000) The RIMES weaknesses are that the scientists are on some basis are not be able to generate the results that are useful because the provision of generating warning might be not corrected although they are working with high quality techs products (Pinder, 2013). The main opportunities of RIMES are that they members of state from the nations are working to provide more tech full resources and they are working to bring advancement in the risk assessment products so that the provision of delivering results will became more authentic and valuable and are useful for them to keep them save from any sort of difficulties (Kuyngus, 2000) As they are working on the global scale they are facing many of the threats from their competitive firms that they might steal their technologies that will be biggest threats to them as they are aiming to work to provide best quality provision The function that is made to achieve the organizational set goals are composed of two or more than two people is defined as the social system that forms an organization. The organization is a place where two or more persons works to gather for the accomplishment of organizational set goals. The way in which an organization structured and organization plays its fundamental role for accomplishment and achievement of organization and individual both. The play a role that is based on the efficacy and efficiency for organization success and satisfaction that is intended to both of an individual and organization (Miner, 2015). The Concept of OB is developed in to identify the behavior of each and every individual and how its affect the organization and individual behavior. The organizational behavior is concept that needs to focus on all perspective to find out its impact on the performance of employees and organization. The concept of OB is developed with purpose to study the human behavior that what basically human mind perceived in order to understand that how effective his thinking for the organization performance (Wagner, 2014). The theories of organizational behavior try to elucidate on the specific behavior of people and to identify environment of organization to find out the factors that affects the individual performance, to identify the level of commitment towards the achievement of goals, to identify the influences of managerial style and leadership style for formulating the overall performance of organization and most importantly to identify the interaction between employers and employees. Thus it has found that the impact of organizational theories found significant to the performance of the organization and these all factors are important to consider for the performance evaluation of organization. The organizations are focusing to use these theories so that the productive of the firm will increase in effective and efficient manner (Durbin, 2013). In the selected organization RIMES are looking significantly into the matters of having a good organization performance those results in better productivity within effective and efficient manner.   The two main theories that are used by RIMES in order to make their performance effective and productive and these two main concepts are planning and organizing. The first main concept that is needed to focus is planning is a very major step organization should have a very enrich concern regarding the planning because a careful planning would lead it to its destination. This planning provides a baseline to achieve the goal it is required to have a careful planning for every start to move towards achieving the goals. The goals are being divided into different task and each task need to be monitor time to time and for this organization should survey and communicate to each other for the better understanding (Greenberg, 2013) It is very important to monitor each task with an open eye; supervisor and upper   management should have to monitor each task for better performance than it is very important to evaluate the results and this result will help an organization to make decision where the need improvements and for this they need to communicate the result within the organization. The organizations performance not only depends on productivity, effectiveness of market, profitability, and customer satisfaction but also depends on employee morals so the performance   management is very necessary step in the organization which is highly influential for employee’s satisfaction then to the organization performance thus the RIMES are focusing on the core of their heart to carefully design their planning activities so that the stated long term goals could be achieved by formulating short term and midterm goals. The planning is the most important factor to look up because of the base is wrong than the results will not effective (Bolnio, 2013). The second perspective defines about the organizing the activities in an easiest way to accomplish the goals in more effective manner. The organizing task according to the set plan is fundamental to obtain effective and efficient result. Further the organizational structure is very important to focus. The design structure should be impairment in the sense that organizing will be beneficial for the firms (Wegite, 2013). The organization structure of RIMES is based on the leadership style design. The organization structure is designed in a way to be convenient for interaction between different firms in countries and headquarters.   The proper linked is required to maintain among countries and headquarters so that the overall objectives could be achieved in effective and efficient manner. RIMES are focusing to maintain the coordinating activities more profound so that the problem could be resolve and miscommunication gap could be minimized. RIMES has faced difficulties while maintain the coordinating activities between different countries and headquarters, they are developing strategies on early basis to get rid of this miscommunication issue so that the effective result generate which is the sign of efficient and effective productivity (Papio, 2016). RIMES are working with full efforts to organize its organizational structure in way that follows leadership style that is beneficial to them in order to eradicate the communication gap so that the communication between firms will become easier to interact with several issues so that the generated problems could overcome. RIMES have developed different strategies that are playing their effective role in order to remove the miscommunication gap (Benner, 2013). In this context the applied leadership theory and style that is focused by the RIMES is discussed. The author of the study stated that the leadership styles are fundamental to the organization performance that needs to be focused very sharply. The leadership is generic skills that are implemented in by leader to work as a team that is beneficial and supportive to organizational culture to maintain the performance. The leadership style is supportive to the performance of organization that working in a team would generate the effective performance. The author of the study stated that the leaders are the one who leads people and don’t emphasize on ordering them to do work, the leader work cohesiveness and guide each and every individual of organization in order to have better performance and they encourage to work as a team rather than to be alone (piner, 2013). The leadership style is defines by two main function of phases that are transitional phase of leadership and transformational phase of leadership. The phase of leadership that are based on the composition of team that defines mission and establish expectations with stated goals, plan and structure, develop the team and train them and provide feedback these all activities done under the active phase. These functions are evolve in monitoring of the team and set boundaries and solves problem with in the limited provide resources and second style of leadership style phase is transformational phase, this is the phase in which leadership style is based on the activities to enhance coordination between groups and its members in order to generate the effective and efficient result and they are working under the leadership style to resolve the conflict that arises due to the misconception and mismanagement. And another type of leadership style is also existing that is known as the laissez-fai re leadership style that emphasize in the learning of members of groups in order to have the efficient and effective results (Marion 2014). The RIMES leadership style is based on the all of the above leadership phases they have transformational leader in their organization that are emphasizing on the composition of team that defines mission and establish expectations with stated goals, plan and structure, develop the team and train them and provide feedback and the evolve the monitoring process in order to have an effective results. The RIMES also follows the transformational leadership style in which the leaders are emphasizing on activities to enhance coordination between groups and its members in order to generate the effective and efficient result and they are working under the leadership style to resolve the conflict that arises due to the misconception and mismanagement so that the better result could be generated and on some extent the RIMES are also focusing on the emphasizing of   laissez-faire leadership style that emphasize in the learning of members of groups in order to have the efficient and effective res ults for RIMES (walker, 2015). The management approaches that has been implemented by RIMES are stated as follows They are following this approach because the intend to make decision on the basis of team work they provide complete freedom to all of their groups members to participate in decision making process so that the effective result could be generated (Hock, 2016). They are following this approach that has been applied to the countries offices representatives. This type of leadership style is based on the process to follow rules and process and top structure of the organization usually make decision in premises of RIMES. They are following this approach and is usually applied on personal securities and accountant of RIMES that they have complete right to make their own decision to complete each task. It may on some extent make frustration for employees as well (Famdaze, 2014). The RIMES are focusing on this approach and providing their employees a learning sharing environment and they have right to make their own decision and prefer to work in a team (Corea, 2015). It has been analyzed in the end that the RIMES have proper planning system and well maintained organization structure in which all are playing their role in effective and efficient manner to generate the better performance in the firm they are focusing on the emphasizing of leadership style to have a complete command over employees so that the best possible result could made that is useful for the organization, RIMES is working to maintain their coordination will all the countries to have direct linked with the organization so that all types of problems that has been faced due to the communication gap could be resolve at early basis. Their leadership style is quite impressive and maintainable It has been concluded at the end that the report is based on the introduction of RIMES and their services and activities are present and SWOT analysis of RIMES is mention that is revealing about the performance of RIMES. The framework of organizational behavior in which the theories of organizational behavior has been discussed and two main concept of planning and organizing is discussed which is based on the premises of RIMES perspective that what are their planning style and concept and according to the them the planning is most important step that is the base of the organization performance and then the organization structure of RIMES has been discussed that is designed in way to cover the communication gap. Then the leadership style and phases are discussed in the other section of report that is defining that the RIMES emphasizes on all three forms of leadership style that is transactional leadership, transformational leadership, and laissez-faire leadership style that are playin g vital role for generating effective performance. Warning, R. I. M. H. E. (2011). 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