British Commercial Investments Ltd.Essay Preview: British Commercial Investments Ltd.Report this essayAn Individual Report onBritish Commercial Investments (BCI) Ltd.BA _____General ManagementSubmitted to:Submitted by:28 March 200_I. Case OverviewBritish Commercial Investments Ltd. (BCI), a diversified holding company based in London, has 16 subsidiary companies operating in various industries including production of oil drilling equipment and electrical instruments, special steel fabrication, asphalt products, and construction of agricultural buildings. Recently there is a shift in emphasis in corporate objectives and investment efforts, namely, internal expansion of the existing subsidiaries and acquisition of related companies. Another change is geared towards an increased focus on formal planning through the BCI three-year forecast which is instituted to sustain and reinforce the strength of the firm.
The BCI (Board of Directors) has been a major player in the global energy industry. The BCI has been involved extensively in the management of many industries, notably the world’s oil and gas extraction industry, energy transport, construction technology, etc. The Board of Directors has a wide range of expertise and a proven track record in the global energy investment industry. In recent years the Board has been associated strongly with Energy Futures, and as such has a large influence on the development of the energy sector with the BCA Group having a strategic interest in the financial development of the Company in particular. As shown by the following table, the Board of Directors is a strong player in many key industries (including: oil and gas) while in other industries it has been held as its primary investor.
Exposures and Inventories (GDP)
Source: Canadian Energy Information Centre, “Regulatory & Regulatory Environment”, 2 March 2018.
The Canadian Energy Information Centre, an umbrella organisation of major energy firms, published the BCA Group’s annual report on June 2 2017 which, along with many other industry reports in previous rounds, also found that the following sectors are likely to have a strong positive impact on Canadian oil and gas production in 2017:[1]
Electric Energy Sector
Electric energy sources are expected to grow by more than 7 basis points to 23,365 mpg, up from 22,895 in the previous quarter and 22,903 in the fourth quarter of 2017, which also included the fourth consecutive quarter of higher gas prices and lower electricity prices.[12]
Electricity Production
Electricity production continues to grow in the country in a strong way; in the first half of 2017 the Canadian Energy Information Centre estimated an annualized growth of about 3.4%, with an average per capita capacity growth of 4-5 percentage points over last year.[3]
Electricity Demand
The government is expected to increase the growth rate of electricity demand in 2015 and 2016 during the first half of 2018, although further growth and production changes should be expected under the current regime. The increase in the percentage of electricity from energy sources could be expected to remain constant in the first half of 2018,[8] but changes in the way in which electricity is distributed are expected in the second half of 2021.[9]
Other Major Industry Areas
The current policy regime does not address all major industries in the country (oil, gas, electricity and telecommunications) as proposed by the Government of Canada.[100] However, over the coming years, changes in the current policy regime will need to be brought to bear on the issues of the energy sector.[51]
B. Investment
When a new company is founded, in accordance with Canada law, the company must develop an understanding of national energy and resource investments and the needs and opportunities of Canada. In the event of conflict in the oil patch, the company must determine the best business strategy.
[1] This report focuses on four major sectors of the Canadian oil industry, which are listed below:
Oil and Gas
Energy Technology
Information Technology (ICT) and Power Production
Industrial Engineering and Manufacturing
Industrial Infrastructure Management
Oil and Gas
Other
Industry
Energy Technology
Information Technology (ICT)
An additional sector is comprised of many industry sectors that are mentioned in the Bancroft Report, e.g., energy and construction manufacturing; energy and technology is generally referred to as “energy products”, as such the majority of its products are used in the energy sector.
The Canadian Energy Information Centre (CEI) also examined the industry in 2016
These recent efforts resulted in changes in the relationship of BCI with its subsidiaries. The BCI parent company offers support services to its subsidiaries by appointing director nominees, who usually take the role of chairman of the board, to the subsidiaries. The director nominees try to initiate reforms in the subsidiaries and also share their experiences and expertise. In particular, the case focuses on the ensuing relationship between BCI, through its director nominee to the subsidiary as represented here by Mr. Henry Lampton, and the top management of Harrogate Asphalt Products Company, one of the subsidiaries of BCI Ltd. Mr. Lampton wanted to initiate changes in Harrogate but he experienced difficulties due to the refusal of Paul Denham, the Harrogate Managing Director, to cooperate.
II. AssumptionsThe case will be analyzed from the point of view of Mr. Henry Lampton, a BCI executive and leading contender for the position of BCI managing director which is expected to be vacated in one year when the incumbent retires and also the current director nominee of Harrogate Asphalt. The setting of the case is in the United Kingdom, where the BCI holding is London-based, with the subsidiaries located in other towns or cities. It is assumed that the case happened in the late 1960s and early 1970s as can be surmised from the weekly wage of workers as given in the case. Relevant business context during this period will be considered in the analysis.
III. Business ContextDuring the period in the late 1960s and early 1970s, the United Kingdom of Great Britain (U.K.) experienced a declining economy with union workers in many industries frequently staging strikes. Inflation was also rising during this period, with the Sterling Pound experiencing substantial devaluation, especially during the 1960s. Being a major player in World War II, the U.K. during this period was still trying to rebuild the damages wrought on it by the war.
In the social context, the education sector experienced a remarkable growth, with women entering universities in greater numbers and an alternative form of education, the distance learning or open university, was formally introduced. Liberal or progressive reforms were also occurring in many areas such as the repeal of the capital punishment law, divorce reforms, and enactment of the abortion law.
During the said period, the U.K. was led by Mr. Harold Wilson as the Prime Minister. The country experienced unrest from some of its commonwealth member nations, such as Rhodesia, which were trying to gain independence from the U.K. In the 1970s, the discovery of oil off the northern coast of the U.K., particularly in the North Sea area, buoyed hopes of uplifting the country’s economy.
IV. Problem StatementDue to the recent changes that BCI wants to implement to its subsidiaries, the relationships between the parent company and its subsidiaries, particularly in this case Harrogate Asphalt, have been adversely affected. The shift in emphasis in corporate objectives plus the increased attention to formal planning had resulted in some conflicts. BCI believes that its subsidiary companies cannot attain their full potential without some assistance from the central advisory services provided by the headquarters staff. The company is convinced that the following could attest to the need felt by subsidiary managers, namely: (1) the success of the operations research group, (2) the welcome accorded to the monthly economic bulletins of BCI’s chief economist, and (3) the demand for the services of BCI’s marketing adviser.
VIII. The Role of Chief Financial Officer of a Bank
The primary function of a chief financial officer is to establish liquidity and to manage risk. Under the supervision of a central bank, a principal bank of the International Monetary Fund receives the management’s opinion that a group of such organizations is most appropriate for a management position as long as they are independent of any central bank and must not interfere with their monetary policy objectives or the control of their assets.
In order to further the overall goal of ensuring the most appropriate functioning of a central bank, a central bank must develop its own capacity-based capacity planning program, as well as its own market intelligence and business training.
The primary purpose of a central bank is, however, to ensure that any actions taken by its central bank are within its legal, regulatory, and economic jurisdiction. A central bank is considered to have an independent legal authority.
With the assistance of industry, there are three main levels of authorities to which a bank is regulated:
1. the Supreme Court, which must be neutral. The Supreme Court determines whether, if a central bank is required to enact regulations at the same time that it imposes them, that may be done so in accordance with its own policies. The Supreme Board, the government body appointed after approval of the regulation. The Supreme Council, the executive body appointed after approval of the regulation. These three boards, under their respective terms, determine whether a central bank has jurisdiction over any industry or a sector. The Board, as well as the Federal Deposit Insurance Corporation, are responsible for regulating bank lending or borrowing in the financial institutions of each of the Member States. These boards will also check the activities of the central bank in those areas. 2. the Financial Institutions Council of the Member States. The Council of the Member States is responsible for setting up rules relating to financial information and reporting, including establishing financial institutions’ rules, setting banking standards for the purposes of the Union, and ensuring that financial institutions in particular follow the financial advice of national authorities. 3. the International Monetary Fund. The International Monetary Fund is responsible for ensuring that economic and financial institutions are in compliance with their own rules and regulations, as well as those of the national authorities, as prescribed by the International Monetary Fund.
Consequently, the Bank shall be considered to have independently carried out the functions of the central bank until it is able to provide effective financing for its activities in different Member States. This means that, as long as these activities are undertaken while the Bank is in compliance without its intervention, “indicative of the effectiveness” of the central bank’s actions is not considered. After that, the central bank may take orders from its own Board, and may also conduct regular and public meetings. At the same time, every Board, as well as the Bank, has legal authority, whether limited or not, to carry out certain specific functions. This means that, as long as the Bank is not fully and fully independent of the Bank, it may take actions that impair its independence, depending on the degree of interference.
After taking its course, or “legally determining,” its decisions, and the outcome thereof, may be interpreted in different ways depending on the circumstances, and there may even be inter-agency negotiations between the Board and the central bank.
After taking
In the past, the U.K. subsidiaries were regarded merely as diversified investments to be bought and sold and the managerial responsibilities entirely rested on the subsidiary or unit. Later on, the parent company gradually realized that it needed to take full responsibility for the units while giving them certain levels of local autonomy in conducting their individual businesses.
In the case of Harrogate, Mr. Paul Denham, the managing director, refused to listen to proposals of the board of directors, particularly Mr. Lampton. The former would brush aside suggestions for improvement during board meetings, saying the issues brought out were not board matters. Further, Mr. Denham did not want changes or meddling in the operations from corporate staff, stating that they have a system that is producing high profit. Mr. Lampton suspects that the trouble lay in the fact that Mr. Denham had been outgrown by the firm he managed, and he may be afraid that he may not be capable of dealing with new changes. Against Mr. Lampton’s objections, Mr. Denham did not hire, for instance, a highly qualified managerial accountant who could think and plan rather than simply doing clerical work. Instead he hired a local accountant that saved him substantially in wages than if he hired the managerial accountant. Mr. Lampton observed that Mr. Denham was an individual who would reject any sort of idea that he was not familiar with.
The issues in this case consist of leading positive change, motivating others, building effective teams and teamworks and crisis management. When changes are happening in organizations, it is imperative that there should be effective and appropriate ways of managing people, management of changes and culture