Management Accounting Essay

Words: 4280
Pages: 18

1. a) What is the rationale of founders of (product) Red?

Their main reason for creating Product Red was to raise awareness and money for the Global Fund by teaming up with the world’s most iconic brands to products that would be sold. A percentage of each product sold would be donated to the Global Fund to help women and children affected by pandemics such HIV/AIDS and malaria. A basket of consumer goods were launched to this effect which included Product Red- American express card, vintage t-shirts, Motorola handsets, converse wear, apple iPod, Emperio Armani and also an edition of the Independent.

The Red manifesto, clearly outlined the core reason as, “we believe that when consumers are offered this choice and the products meet
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Management as agents of shareholders should not collude with interest groups and NGOs which oppose proper business principles, or should at least make sure that shareholders are well informed of such initiatives so as to get their consent or otherwise. Honesty, straight dealing, openness and adherence to ethical standards is of paramount importance on the part of management as shareholders’ agents.

2. What views might shareholders of Gap have of its involvement in (Product) RED?
Positive views: * Social responsibility
It should be noted that in modern business, customers are no longer satisfied if companies simply comply with legal requirements of undertaking their activities; they expect managers to be more proactive in terms of their social responsibility. By initiating Red Gap, it’s a way of giving back to the global community that the business is operating in.

* Good public relations and a favourable corporate image
With assistance given to the Lesotho community through initiating the manufacture of t-shirts in that country as well as HIV testing and treatment, Gap is creating a good public relations with the community and a good image of itself which may result in corporate growth in the long run.

* Increased profitability (more dividends) emanating from positive marketing campaigns
The more the sales,