Misconduct of Royal Bank of Scotland

The royal Bank of Scotland used to be a famous Scottish institution, a bank with a prudent reputation. However, in October 2008, less than a ten years after Fred Goodwin replace succeed as chief executive, happens collapse only within few hours. RBS later lost their biggest profit in UK corporate history - 24 billion pounds - which damaged the bank's reputation for financial prudence and Scotland's image as a global financial centre.

This is a national catastrophe for all the people, according to a survey that RBS which force UK on the edge f destruction still have 100 billion pounds of funds “black hole”, cause the huge holes is crime and illegal activities which in the field of “big five” , part includes: improper sales of payment protection and insurance of financial products ; to deceive investors and let them inject 12 billion pounds before the financial crisis in 2008; to manipulate the foreign exchange market whose daily amount of 3 trillion pounds.

Even in the face of the bankruptcy and British government to spend 45.5 billion pounds a year after the rescue, the Royal Bank of Scotland as not been successful transformation, this makes British public disappointed. the British paid a heavy price that they cannot reward from that 45.5 billion bailout money no matter what happens.

Inside the bank, this is chocking because of the illegal action of the government and regulators allowed Bankers. In the context of the allegations, the RBS seems will face huge fines in the next few years. these fines are derived from the results of the financial crisis triggered aeries of changes due to misconduct.

To be Honest, the early years of foreign exchange regulation is very loose so that lead to a lot of inappropriate behavior in the industry, Now these behaviors are slowly dug out and banned, but also because they violate the industry regulators given the "customer first" guidelines, therefore they are fined. now I understand that we learn Business Ethics this module is necessary to remind ourselves in the future work do not do something contrary to morality.  

Lehman Brother‘s failure

By watching the last days of Lehman Brothers, the film is about the “last days of Lehman Brothers” for three days from Friday, September 12 to Sunday, September 14, 2008. The main story is that US treasury Secretary Hank Paulson called several of America’s largest investment bank CEOs to come up with an idea to save Lehman Brothers in three days. While the Lehman Brothers CEO Dick Fuld was dying to try to keep the bank, however, Lehman Brothers was unable to escape the fate of collapse.

Facing the company’s risk in 2007 and 2008, this is really bad enough that Fuld and his flattering colleagues face repeated warnings, but always been blinded by his arrogance eyes. The reason for the outbreak of the crisis is the Wall Street investment bankers every day rash behavior. But we will find it very strange, why the Fed and the Ministry of Finance does not save Lehman Brothers, when Lehman Brothers was in a crisis, due to their company had too much junk assets, no giants wanted to take acquisition, and also Barclays were cancelled because of the UK’s board resolution institution. Investment bank is not owned by the Federal Reserve, Lehman Brothers cannot get the Fed’s direct funds. Although the Fed has provided that, in exceptional circumstances, if there is proof that a bank is unable to find borrowers, the Fed can help the bank register capital, but in advance is the bank to have sufficient assets to mortgage, it is clear that Lehman's garbage assets do not meet this requirement.

On 2008 September 14, Sunday evening, Lehman Brothers filed for bankruptcy, the one who hundred and fifty years of history of Wall Street investment bank collapsed , which is widely regarded as the turning point of financial tsunami in 2008, this is the biggest bankruptcy in US history, caused a great panic and the international monetary market freeze.

In the final, when always conceit of Dick Fuld finally accept the irrevocable reality, makes me think of what ishikawa tetsuya said in “ How I under Caused the credit crunch” : the real victim is not me, but who was not involved in the gamble but ordinary being who not fear suffer.      

Inside Job

The documentary starts with Iceland’s financial crisis, the film invited a lot of celebrities in the financial sector, among them are Wall Street bank executives, Federal Reserve members and other US financial regulators and so on. With an approachable attitude expounds the cause and effect of financial crisis to audience.

From the financial engineering point of view, how the crisis form? The United States before the financial crisis to take a "multiple long" regulatory system, multiple refers to the federal and the states are entitled to financial supervision, financial institution regulatory functions. This kind of specialized division of labor and multiple regulatory mechanisms in the United States has been the object of many countries to follow. The system in liberal dominated American do support the great prosperity in the United States, but there is no denying that the system does make US economic order extremely out of control.

‘inside job’ is put forward under the condition of lack of regulation, greedy Wall Street designed a money encirclement game one by one, and eventually led to the crisis. But greed is not illegal, the nature of capitalism cause Wall Street always be greedy.

The real culprit, it is the separation of powers and responsibilities. Another means the insurance of decision and debt capital providers were divided by Wall Street. Banks determinate whether loans to individuals. And then Wall Street put these debts sold to investment banks. Investment banks resolve the debt, enhance and sold to individual investors.

Second culprit is the issue of pricing mechanism, also refers to the model has assume error. The pricing in the first step would be wrong, in fact, the biggest beneficiaries are those who have no money to buy a house, can loan money to buy a house of the poor, and low interest rates and the society as a whole, the biggest loss are investors in the last. But buyers are all Americans, and investors have a lot other foreign people, so, for the United States, Wall Street did a good thing.

Another thing, the problem of bank executive compensation. Compensation includes salary and bonus and link up with enterprise operating performance. The legislature has no evidence to limit an industry practitioner to pay, because it is based on their high profits. What they should do is limit illegal business behavior, as well as conflicts of interest which could lead to crisis.

Churchill proposed that there no eternal friends, only permanent interests. The words are appropriate in this documentary, everything is in order to maximize the pursuit of personal interest. Finally, there seem be not much significance to say economic problems which stand on the moral side. No matter what human nature is good or evil, when desire swelling should tighten our own heart.

   

KFC’S Future

In modern society that develops with fast speed, everything seems has quick rhythmicity. In UK, fast food is a big business, such as for business man, KFC should be one of the chosen targets of fast food for lunch.

Kentucky Fried Chicken(KFC) is a fast food restaurant chain that specializes in fired chicken and distributed in global with annual turnover of 23 billion business, it’s the world second largest restaurant chain after McDonald’s. KFC aims to spread in every town of UK, such as in Newcastle there is at least one store in city centre and other stores in remote areas. In customer’s eyes, people have different opinion in KFC, some people like it, some people not. In my opinion, like it because tastes of fried chicken make me happy especially with soft drink, on the other side, people dislike it may because unhealthy problem and may affect body weight.

KFC plans to make changes because there is a potential competition among brands, at least in UK food market if they didn’t change they may face to death, therefore, evolving with customer’s expectations is quite important to avoid falling behind.

The video demonstrates that the inspectors could check any stores around UK, he is not satisfied with performance, he seems be restrict and serious-minded when examining which makes me surprised. And then that store quickly under correction, when inspector came back three weeks later, they got 81+ moves up 33 which is much better, it shows that KFC could have the ability to make whole performances better if they earnest working.

A new product called Barbecue Pulled Chicken comes out, the product’s main topic aims to be a health and low calorie idea, it experiences several links and agreed to launch in final. the first trail place is in Scotland, however, the first coming out day seems not good, customers not would like to try the new product in store, even though I met the situation, I will not be easy to try it what is a never known tastes, people have their own habits on prefer products. To my way of thinking, the new product has less promotion to let customers know what it is, it is not enough to see the pictures on posters, customers couldn’t feel the attractiveness to change their mind, so stand on the side of marketing, it should reinforce on propagandize. Luckily, good products deserve to be sole well, once have a try on the barbecue pulled chicken, people will like it, it’s good result for all staffs of KFC and it’s a good future to them.