...CHAPTER 21 UNDERSTANDING THE BUSINESS ENVIRONMENT: THE ECONOMICS OF REGULATION CHAPTER SUMMARY This chapter focuses on the economics of regulation. It starts by discussing why it is important for managers to understand the regulatory process. Three potential reasons for government intervention are presented (defining and enforcing property rights, redressing “market failures,” and redistributing wealth). The primary focus is on the “economic theory of regulation” which posits that regulation is demanded by special interest groups and supplied by self-interested politicians. Rational free riding on the part of voters allows well-organized coalitions to pass regulations that redistribute wealth in their favor. The chapter ends by discussing the managerial implications of this analysis and by presenting a case study World Motors. CHAPTER OUTLINE IMPORTANCE OF REGULATION TO MANAGERS Managerial Application: Europe Relaxes Its Labor Laws ECONOMIC MOTIVES FOR GOVERNMENT INTERVENTION Defining and Enforcing Property Rights Managerial Application: War and Hunger Managerial Application: Multinational Counterfeiting Redressing Market Failures Externalities Managerial Application: Alternative Dispute Resolution Managerial Application: Frivolous Lawsuits Managerial Application: Direct and Indirect Costs of the Food and Drug Administration Public Goods Monopoly Historical Application: Interstate Commerce Commission ...
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...International Journal of Business and Management December, 2008 An Analysis of Business Challenges Faced by Foreign Multinationals Operating the Chinese Market Jianlian Wu International Management, University of Nottingham Ningbo 315100, China E-Mail: zlixcwj1@nottingham.edu.cn, qqnamei@163.com Abstract China’s rapid economic growth has presented numerous opportunities and challenges for foreign firms there. Many large corporations have established a China centre to coordinate and control their operations in the country. As firms have increased their presence in China, their concerns are increasingly focused on implementing successful management practices and strategies. This article describes the challenges and difficulties that multinational companies faced in Chinese market. It analyses roles played by the human resource function in these China, culture differences, social environment and other factors. Keywords: Challenge, Multinationals, Chinese market 1. Introduction Over the last few decades, the process of globalization has created unprecedented opportunities for global business investment and trade. Many multinational companies are attempting to expand their business international by many entry strategies such as joint venture and subsidiary. While China, with over 1.3 billion population and 9.6 million square kilometers (China Popin, 2008) has become a valuable land for foreign multinational companies. They try to enter the Chinese market by using many...
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...International Journal of Business and Management December, 2008 An Analysis of Business Challenges Faced by Foreign Multinationals Operating the Chinese Market Jianlian Wu International Management, University of Nottingham Ningbo 315100, China E-Mail: zlixcwj1@nottingham.edu.cn, qqnamei@163.com Abstract China’s rapid economic growth has presented numerous opportunities and challenges for foreign firms there. Many large corporations have established a China centre to coordinate and control their operations in the country. As firms have increased their presence in China, their concerns are increasingly focused on implementing successful management practices and strategies. This article describes the challenges and difficulties that multinational companies faced in Chinese market. It analyses roles played by the human resource function in these China, culture differences, social environment and other factors. Keywords: Challenge, Multinationals, Chinese market 1. Introduction Over the last few decades, the process of globalization has created unprecedented opportunities for global business investment and trade. Many multinational companies are attempting to expand their business international by many entry strategies such as joint venture and subsidiary. While China, with over 1.3 billion population and 9.6 million square kilometers (China Popin, 2008) has become a valuable land for foreign multinational companies. They try to enter the Chinese market by using many...
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...Wissenschafts schwerpunktes: Globalisierung der Weltwirtschaft, Bd. 28, September 2003. Bremen This article discusses the failure of Swissair by analyzing the financials of the company prior to the year 2001 when the company became grounded. It begins by giving the company’s profile and its history from establishment in 1931. The paper highlights the company’s successes and gives a table that shows the gradual increase in the number of fleet, employees, revenue, cities served, and the break-even load factor from 1931 to 2000. The paper goes ahead to explain the reasons why the company failed to consider the alliance strategy that was commonly used by similar companies as well as elaborating other principal causes of failure such as government interference and uncritical media coverage, A five year financial review of the company is provided beginning 1996 to the year 2000 showing how the operating revenue increased while the EBIT and profits decreased and finally led to losses. Mileski, J., & Nwabueze, U. (2008). The Challenge of effective governance: a case study of Swissair. Journal of Corporate Governance, 8, 5, 583-594 This article begins by giving a brief history of Swissair Company making note of its initial successes and good management practices. It then explores the best managerial practices that are crucial for the success of any business, laying emphasis on the precepts of effective corporate governance and their impact on businesses. The paper then explores...
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...Business Failure in Enron and The Organizational Behavior Theories That Explain the Company’s Failure Name: Institutional Affiliation Enron Corporation was one of the world’s top electricity corporations that underwent a financial indignity, which involved Enron and its bookkeeping company. The scandal comprised of the detection of unbalanced accounting techniques, which occurred through the 1990s. This resulted in Enron filing for insolvency in December of 2001 (Thomas, 2002). The aim of this paper is to define how organizational behavior theories could have anticipated or illuminated Enron’s failures. Organizational behavior, is described as an area of study that explores the influence that groups, individuals, and structure have on performance inside the organizations for the aim of applying such information toward refining an organizations efficiency; precisely organizational behavior concentrates on how to increase output; decrease absenteeism, turnover and unusual workplace conduct; and raise organizational loyalty behavior and job fulfillment (Robbins & Judge, 2007). The key players of any business are senior management, board of directors, in-house auditors and external auditors. In case of Enron, all the stakeholders were unsuccessful in playing their parts. Enron failure was mainly because of Enron’s managerial team trying to make an enterprise which would raise riches amongst their owners. Nevertheless, when it was exposed that Enron’s stock prices were less...
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...Re: Need for internal managerial accountant Dear Chief Executive Officer, This is a memo that will state the reasons why and benefits of hiring another managerial accountant. As we all know, the significance of a trustworthy accounting department is essential in any business. Accounting is specifically the most important department of a business for the simple fact that it deals with the company’s money statuses. This includes where a business can and can’t go financially and what it has and has not accomplished in terms of financial objectives. It is essential that a business have a strong internal accounting system because it can mean monetary success or failure. An internal accounting system includes the maintenance of the company’s finances in terms of short as well as long-term goals, strategy formulation for revenue, operational direction and control of the company’s finances, and the organization of resources and assets aligned with the desired budget within the company. All of these duties will be separated and given specifically to the new internal accounting manager. It is desired that a position be made specifically for these duties because of the importance in the company’s finances. One can not get too overwhelmed with other aspects and/or factors within the company to make mistakes or over or under budget the company. There should be a main focus so there are no unanalyzed risks involved. (Wild and Shaw, 2012). Hiring another managerial accountant specifically...
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...Chapter 1 * An IS Framework for Business Professionals. The IS knowledge that a business manager or professional needs to know is illustrated in Figure 1.2 and covered in this chapter and text. This includes (1) foundation concepts: fundamental behavioral, technical, business, and managerial concepts like system components and functions, or competitive strategies; (2) information technologies: concepts, developments, or management issues regarding hardware, software, data management, networks, and other technologies; (3) business applications: major uses of IT for business processes, operations, decision making, and strategic/competitive advantage; (4) development processes: how end users and IS specialists develop and implement business/IT solutions to problems and opportunities arising in business; and (5) management challenges: how to effectively and ethically manage the IS function and IT resources to achieve top performance and business value in support of the business strategies of the enterprise. * Business Roles of Information Systems. Information systems perform three vital roles in business firms. Business applications of IS support an organization’s business processes and operations, business decision making, and strategic competitive advantage. Major application categories of information systems include operations support systems, such as transaction processing systems, process control systems, and enterprise collaboration systems, and management support systems...
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...Written Assignment 1 The purpose of this report is to shed light on the importance of managerial strategic communication approach to business’s success. And to demonstrate this approach’s use, some real business world examples are cited where business managers or leaders misused factors involved in the strategic approach and consequently failed to achieve their desired goals. Managerial communication is increasingly critical to business’s success particularly in today’s competitive and diverse business environment. In critical situations, it is even more crucial that the communication process be approached strategically in order to minimize managerial errors. With competition as fierce as it is nowadays, there is little room left for error and guesswork and effective communication may mean the difference between success and failure. But what does managerial strategic approach entail and should be viewed? Strategic managerial communication approach may be viewed as an onion-like model representing the three integrated yet distinct layers of the communication process. The first and outermost layer includes climate and culture in which communication takes place. The communication strategy must be consistent with the context of national and organizational cultures. The second layer involves the sender, receiver and purpose of the message. The third message includes the message, channel environment, and time of communication. So just as in an onion, the strategy...
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...Mitya, 09/14/2015 Managerial decision-making process. Bias. I was a product manager in my German-Polish company in 2009. The company was supplying building materials to the Polish market. Due to non-satisfactory financial results caused by the financial crisis in 2008 I was instructed by my General Director to increase the sales volume of my product portfolio up to 50% by the end of 2010. The product set consisted of aluminum composite panels, building aluminum profiles, and polycarbonate panels. I made a decision to relocate production lines of aluminum profiles from Germany to Poland by using one of our partners’ plants. My decision was based on the largest aluminum trade margin that allowed me to pursue a more flexible pricing policy. As a consequence, it could lead to increased levels of demand at the local market. At the same time simplicity and low cost of tech manufacturing process made this solution less financially risky in case of my managerial decision failure. My product portfolio did not have another alternative that would help me to increase my turnover index up 50% within 1 year. Therefore, I had no other alternatives except for moving the production line to the local Polish market. Plus, it could provide me with factually reduced cost per unit, cost of logistics and, as a consequence, an increase in sales. Back then I followed the exact rational model of decision making process. I conducted a thorough marketing research project. In 2009, I visited all our 20 branches...
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...Takeovers and mergers are complex transactions where many things can go wrong and therefore affect the success or failure of the deal. Integration planning is an important part of the takeover process, although there are other potentially significant factors that affect whether a takeover is successful which also need to be considered. (knowledge/ evaluation) Integration planning refers to a process in which the buying business (the acquirer) identifies how it will run the takeover target once the transfer of ownership has been completed. Integration involves many functional challenges such as how to manage customer reaction to the takeover, handle uncertainty amongst employees and integrate potentially different computer systems. Key strategic issues also arise – for example decisions over the future of competing brands, key business locations and the senior management structure. (application) Integration planning normally takes place before the transaction is completed with the aim of ensuring that the acquirer has a clear idea of the integration issues and a realistic action plan of how these issues can be addressed. It can be seen therefore that good integration planning can reduce the risks involved. (knowledge/ analysis) One reason why integration planning is important (evaluation) in determining the success of a takeover is that the process of integration is closely tied in with the need to achieve synergies. Synergies include cost savings and additional revenues...
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...decisions about a business. Management is the way of something is handled, careful treatment, supervising skills, or those in charge of a business or a group. Manager a person who controls the activities, business dealings and other aspects of the career of an entertaines. Manager is a person responsible for supervising and motivating people. *What are the task, roles, skills of the manager* Management Task #1: Coaching One of the most important management task is coaching. Managers must be the persons who will show to their subordinate or team members the right direction where the organization will need to go. They are simply instructors and trainers. Management Task #3: Change Agent The whole change process must be planned and managed if you want to bring desired results. Managers in the same time must ensure that the company will continue with the current level of success and prepare to implement change that will bring future success. Management Task #4: Forecasting the Future Forecasting is another managerial task that will provide a picture of how the future will look like from the business perspective. This managerial task is very important, because if we have the better picture for the future, we can better prepare ourselves for that future. Management Task #5: Motivating Employees One of the management tasks is to optimise motivational processes and maximise employee’s working performances. So, create and spread motivation is another managerial task. Management...
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...built on innovative products and processes and World Class Manufacturing. We strive to be the employer choice, an ethical and responsible corporate citizen and a superior long-term investment for our shareholders.[1] Here, this report will discuss some of the management strategies, and their control systems and processes that assist Magna deal with problems, improvements, and future growth of the organization. A “strategy specifies how an organization can create value for its customers while differentiating itself from its competitors”[2] In Magna’s Board Charter document, displays Magna’s Corporate Strategy, it displays the Strategic Planning Process that will be adopted. At the corporate and automotive system group levels, the business plans and strategies will be presented by the Executive Management and automotive systems group management for discussion. Regarding the strategic planning for the Corporation, including identification of future trends, opportunities and...
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...Assignment no: 509 Answer Managerial economics refers to the application of economic theory and the tools of analysis of decision science to examine how an organization can achieve it aims or objectives most efficiently. Importance of managerial economics Managerial Decision Problems Economic theory Microeconomics Macroeconomics Decision Sciences Mathematical Economics Econometrics MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems OPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMS Managerial Decision Problems Economic theory Microeconomics Macroeconomics Decision Sciences Mathematical Economics Econometrics MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems OPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMS Managerial enables the use of economic logic and principles to aid management decision-making. Managers are decision-makers and economics should be relevant to give practical guidance in arriving at right decisions. Every manager has to take important decisions about using his limited resources like land, capital, labour, finance etc. to get the maximum returns, therefore, managerial economics, concentrates on those practical aspects of micro-economics which help in decision-making. Managerial economics focuses on the most profitable use of scarce resources rather than on the achievement of equilibrium prices...
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...Managerial Economics : Definition, Nature, Scope Managerial economics is a discipline which deals with the application of economic theory to business management. It deals with the use of economic concepts and principles of business decision making. Formerly it was known as “Business Economics” but the term has now been discarded in favour of Managerial Economics. Managerial Economics may be defined as the study of economic theories, logic and methodology which are generally applied to seek solution to the practical problems of business. Managerial Economics is thus constituted of that part of economic knowledge or economic theories which is used as a tool of analysing business problems for rational business decisions. Managerial Economics is often called as Business Economics or Economic for Firms. Definition of Managerial Economics: “Managerial Economics is economics applied in decision making. It is a special branch of economics bridging the gap between abstract theory and managerial practice.” – Haynes, Mote and Paul. “Business Economics consists of the use of economic modes of thought to analyse business situations.” - McNair and Meriam “Business Economics (Managerial Economics) is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by management.” - Spencerand Seegelman. “Managerial economics is concerned with application of economic concepts and economic analysis to the problems of formulating...
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.... Accuracy: Effective controls generate accurate data and information. Accurate information is essential for effective managerial decisions. Inaccurate controls would divert management efforts and energies on problems that do not exist or have a low priority and would fail to alert managers to serious problems that do require attention. 2. Timeliness: There are many problems that require immediate attention. If information about such problems does not reach management in a timely manner, then such information may become useless and damage may occur. Accordingly controls must ensure that information reaches the decision makers when they need it so that a meaningful response can follow. 3. Flexibility: The business and economic environment is highly dynamic in nature. Technological changes occur very fast. A rigid control system would not be suitable for a changing environment. These changes highlight the need for flexibility in planning as well as in control. Strategic planning must allow for adjustments for unanticipated threats and opportunities. Similarly, managers must make modifications in controlling methods, techniques and systems as they become necessary. An effective control system is one that can be updated quickly as the need arises. 4. Acceptability: Controls should be such that all people who are affected by it are able to understand them fully and accept them. A control system that is difficult to understand can cause unnecessary mistakes and frustration and...
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