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MBA504 Accounting And Financial Management
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MBA504 Accounting And Financial Management
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Course Code: MBA504
University: Charles Sturt University
MyAssignmentHelp.com is not sponsored or endorsed by this college or university
Country: Australia
Question:
Hendrik du Toit (CEO Investec Asset Management) outlines the international context of financial asset management. Assuming that Hendrik is correct in his assessment for the world economy into the future, what are the 4 main impacts of this financial context on infrastructure asset management.Note: The expectation for your activities are as follows: View you tube video included in reference below; https://www.youtube.com/watch?v=tWoQLa7oAxEPrepare draft paper by testing out your thoughts with your peers on the discussion.Answer the question:
“what are the 4 main impacts of this financial context on infrastructure asset management”.
Answer:
Introduction
In March 2009, many people lost their homes and total life savings. The number of losses and trauma gain the attention of people worldwide (Bruhn 2015). Since then, power has been shifting from west to east and operations are transforming to digital. These two power shifts are extremely important. They are straightened by aging populations, the slow economy in the west, huge dates and demographic entitlements. Quality and democracy are important. In the west entitlement is institutionalized, but the developing world lacks entitlements (Du Toit 2013).
The following section determines the four main impacts of this financial context on infrastructure asset management.
The four main impacts of the financial context on infrastructure asset management
Infrastructure asset management (IAM) is a systemic approach to managing infrastructure assets. It has many benefits, including customer satisfaction, risk management, sustainability, governance and accountability. In order to ensure the best asset performance, IAM should be functionally approached. Moreover, managers should ensure the achievement of the maximum return on asset, safety, consider the environmental requirements and maintain the total cost of ownership optimized (Too & Tay 2008).
According to Du Toit (2013), there are four main impacts of the financial context on infrastructure asset management, as follows:
1-The massive impact of economic development on the environment
The environmental management is regulated nowadays. The mismanagement of the environment has to be properly penalized. The internationalization of the environmental externalities provides an ideal example. For instance, the BP spill in the Gulf and Mexico impacted all of the stakeholders worldwide and the asset value (du Toit & Niklasson 2017).
The future infrastructure investments should be aligned with the realities of the climate change. This includes the investments in energy and transportation that represent the largest invested sectors. The national planning of infrastructure should be significantly improved to maintain infrastructure sustainability. It has to take in consideration the goal of Paris Climate Agreement aiming to limit the climate change to 2 degrees Celsius down from the pre-industrial levels. The private sector investment should be increased in the environment-friendly infrastructure (du Toit, Shah & Wilson 2017).
2- Inequality of income and poverty
Almost all of the governments realize the importance of the infrastructure. It is essential to achieve sustainability and eliminate poverty and inequality (Stewart 2017). In order to do this, the level of investment in infrastructure requires long-term planning at the national and regional levels. The private investors have to be able to invest in infrastructure projects to revive the global economy. They also have to depend on the new technology to decrease costs and enhance the structural transformation. The new infrastructure projects have to be aligned with the effort aiming to limit the global warming. The integration of these three factors represents a great collaboration between the public and private sector from the project and institutional levels (du Toit, Shah & Wilson 2017).
3- The future of capitalism
As no country can flourish in isolation, they should be able to absorb foreign ideas. The investments have to be aligned with the role of the governments and regulators. This integrity is important to allocate the capital responsibility and maintains security (du Toit & Niklasson 2017).
The sustainable infrastructure is expected to act as a key supporter of the structural transformation of the global economy. The developing countries are catching up with the advanced economy because of the technology advance and the demographic transition characterized by shifting from agriculture economies to manufacturing and service economies (du Toit, Shah & Wilson 2017) .
Although globalization enforced countries to cooperate together to gain mutual benefits, its benefits are not equally distributed, within the same country or around the world. Rectifying the direction of globalization could lead to international development and growth. The governments should take the first step to unlock the benefits for developing countries (Vella 2017).
4- Review of the existing social contracts
Business is expected to provide the best solutions to the societal problems. This could be achieved through the assessment of social, environmental and governance performance (Arjaliès & Bansal 2018). The asset manager should be accountable, responsible, consistent, open and ethical in managing the asset. He has to concern the investment level, the costs and benefits and the most effective ways of managing and maintaining the asset. An evaluation of options should take place concerning the costs and benefits of the asset associated risk. Decision making should be transparent and accountable. The asset managers must operate physical assets in the most cost-effective way. This could be achieved by adopting a more integrated, holistic and structured process (Too & Tay 2008).
The scale of population aging and decline is alarming. It takes place in Europe and East Asia. Countries as Germany, Italy, Spain, Japan and South Korea population indicators are warning. These demographic factors have a negative impact on the development and financing. Also, the resource distribution and the aggregate productivity growth have major impacts on age cohorts. Although the trend of population decline occurred before the global financial crisis in 2008, it has resulted in an increasing problem of the labor movement from less developed to more developed regions. Moreover, about 100 million workers are going to retire over the coming 20 years. This trend is accompanied by high youth unemployment rates in many countries accompanied by weak finance from the public sector side (Carbonaro et al. 2018).
Conclusions
Infrastructure asset management (IAM) has many benefits, including customer satisfaction, risk management, sustainability, governance and accountability. The future infrastructure investments should be aligned with the realities of the climate change. This includes the investments in energy and transportation that represent the largest invested sectors.
In order to achieve sustainability and eliminate poverty and inequality, the level of investment in infrastructure requires long-term planning at the national and regional levels. Rectifying the direction of globalization could lead to international development and growth. The governments should take the first step to unlock the benefits for developing countries.
References
Arjaliès, D & Bansal, P 2018, ‘Beyond numbers: How investment managers accommodate societal issues in financial decisions’, Organization Studies, vol 39, no. 5-6, pp. 691–719.
Bruhn, A 2015, ‘Personal and social impacts of significant financial loss’, Australian Journal of Management, vol 40, no. 3, pp. 459–477.
Carbonaro, G, Leanza, E, McCann, P & Medda, F 2018, ‘Demographic decline, population aging and modern financial approaches to urban policy’, International Regional Science Review, vol 41, no. 2, pp. 210-232.
Du Toit, H 2013, Capitalism five years after the financial crisis: Perspectives of an institutional investor, viewed 31 July 2018,
du Toit, H & Niklasson, T 2017, ‘Will a better future be what we leave behind?’, How can we put tomorrow before today?, vol 5, no. 1, pp. 25-29.
du Toit, H, Shah, A & Wilson, M 2017, ‘Business commission on sustainable development’, The Business and Sustainable Development Commission, London.
Stewart, J 2017, ‘Stepping into bigger shoes: The changing role of multilateral banks’, Insight: The global infrastructure Magazine, no. 9, pp. 35-37.
Too, E & Tay, L 2008, ‘Infrastructure asset management (IAM): Evolution and evaluation’, Bond University, Australia.
Vella, J 2017, ‘Securing the benefits of globalization: Asia’s dilemma’, Insight: The global infrastructure Magazine, no. 7, pp. 16-17.
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