...Custom Fabricators, Inc. Case As Ben Lawson, CEO of Custom Fabricators, Inc., drove back to his home in South Indianapolis, he thought about the day. I’ve done a lot of business with Orleans Elevator in Bloomington over the years but just wonder how long this will continue. I have much invested in my manufacturing plant located right next to their plant, but now that United Technologies [the parent company of Orleans] is all into this FreeMarkets Internet purchasing system, I just wonder how long they are going to be interested in keeping me in the supply-chain loop. It’s been a good business over the past few years. I was in the right place at the right time when Orleans got into just-in-time and lean manufacturing in the late 1980s. Initially, I was just making the control panels for the elevators. It was interesting to walk into a new building, get on the elevator, and see my company’s handiwork in that beautiful stainless steel panel that houses the buttons for the floors on the building. I could take a lot of pride in the craftsmanship even though it was largely a technology thing. That new numerically controlled machine tool that I purchased in 1985 made making the holes in those custom panels easy. We are still making beautiful panels. Since that time my company has gotten a lot of other business from Orleans. We now make all kinds of special brackets and panels for the plant. This has been great for us over the years. We have set up a very efficient process...
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...CASE: C U S TOM F A B R I C AT O R S , I N C . — F R O M L E A N MA N U F A C T U R I N G PA R T N E R TO C O N T R A C T MA N U F A C T U R E R As Ben Lawson, CEO of Custom Fabricators, Inc., drove back to his home in South Indianapolis, he thought about the day. I’ve done a lot of business with Orleans Elevator in Bloomington over the years, but just wonder how long this will continue. I have much invested in my manufacturing plant located right next to their plant, but now that United Technologies [the parent company of Orleans] is all into this FreeMarkets Internet purchasing system, I just wonder how long they are going to be interested in keeping me in the supply chain loop. It’s been a good business over the past few years. I was in the right place at the right time when Orleans got into just-in-time and lean manufacturing in the late 1980s. Initially I was just making the control panels for the elevators. It was interesting to walk into a new building, get on the elevator, and see my company’s handiwork in that beautiful stainless steel panel that houses the buttons for the floors on the building. I could take a lot of pride in the craftsmanship even though it was largely a technology thing. That new numerically controlled machine tool that I purchased in 1985 made making the holes in those custom panels easy. We are still making beautiful panels. Since that time, my company has gotten a lot of other business from Orleans. We now make all kinds of special brackets...
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...Marketing Communication and Personal Selling CHIPS AND DIPS ARE HARDLY BIG-TICKET ITEMS. MOST PEOPLE DON’T THINK TWICE ABOUT THE BAG OF CHIPS OR CHEESE SNACKS THAT THEY THROW INTO THEIR SHOPPING CARTS. CONSUMERS JUST KNOW THAT THE FRITO-LAY NAME AND ITS BRANDS MEAN GOOD-QUALITY, GOOD-TASTING SALTY SNACKS. REVENUES AT FRITO-LAY, A SUBSIDIARY OF PEPSICO, GREW BY MORE THAN $600 MILLION—6 PERCENT—IN ONE YEAR ALONE. ANNUAL WORLDWIDE SALES OF FRITO-LAY SNACKS ARE OVER $10 BILLION. IMAGINE SELLING BILLIONS OF DOLLARS IN CHIPS A YEAR! Americans know Frito-Lay brands at sight: Doritos, Fritos, Lay’s, Cheetos, Ruffles, Rold Gold, and Baked Lay’s, to name its most popular. But how did Frito-Lay get where it is today? How has the company developed such astounding sales and loyalty among chip aficionados? Much of it has to do with Frito-Lay’s promotional plan, encompassing advertising, sales promotion, public relations, and personal selling. With a $30 million a year U.S. ad budget, Frito-Lay has plenty of opportunity to get its message of great-tasting snacks across to consumers. Frito-Lay has been a long-time repeat advertiser during the annual Super Bowl telecast, shelling out more than a million dollars for just one ad during the program. The vast audience provided by the Super Bowl telecast has proved to be an excellent launching pad for Frito-Lay’s new brands, such as Baked Lay’s Potato Crisps in 1995 and Lay’s Deli Style Potato Chips in 1998. Baked Lay’s went on to become the...
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...SUMMER 2007 V O L . 4 8 N O. 4 Arvind Sahay How to Reap Higher Profits With Dynamic Pricing Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the article appears as originally published. REPRINT NUMBER 48415 pricing How to Reap Higher Profits With Dynamic Pricing S un Microsystems Inc. chairman Scott McNealy forecast that “With recent advances in wireless and information technology, even our cars could … call for bids whenever the fuel tank runs low, displaying a list of results from nearby gas stations right on the dashboard.”1 It sounds far-fetched. But dynamic pricing — where prices respond to supply and demand pressures in real time or near-real time — is making inroads in many different sectors, including apparel, automobiles, consumer electronics, personal services (such as haircuts), telecommunications and second-hand goods. The advent of the Internet led to cost transparency, decreased search costs and ease of price comparison. Some observers concluded that as a result, prices would decrease and equalize across different channels, and that fixed prices would continue to be the norm.2 However, price dispersion continues to be widespread and dynamic pricing is entering new sectors. EBay Inc. used auctions to sell more than $20 billion worth of goods in 2005. Ford Motor Co. sold more than $50 billion worth of automobiles in North America with demand-based DP in 2003...
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...SUMMER 2007 V O L . 4 8 N O. 4 SMR254 Arvind Sahay How to Reap Higher Profits With Dynamic Pricing Please note that gray areas reflect artwork that has been intentionally removed. The substantive content of the This document article appears as originally published.is authorized for use only by Neelu Bhullar at MANAGEMENT DEVELOPMENT INSTITUTE until REPRINT July 2013. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860. NUMBER 48415 pricing How to Reap Higher Profits With DynamicPricing un Microsystems Inc. chairman Scott McNealy forecast that “With recent advances in wireless and information technology, even our cars could … call for bids whenever the fuel tank runs low, displaying a list of results from nearby gas stations right on the dashboard.”1 It sounds far-fetched. But dynamic pricing — where prices respond to supply and demand pressures in real time or near-real time — is making inroads in many different sectors, including apparel, automobiles, consumer electronics, personal services (such as haircuts), telecommunications and second-hand goods. The advent of the Internet led to cost transparency, decreased search costs and ease of price comparison. Some observers concluded that as a result, prices would decrease and equalize across different channels, and that fixed prices would continue to be the norm.2 However, price dispersion continues to be widespread and dynamic pricing is entering...
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...1. Consider the Global Sourcing Initiative from an overall perspective. How effective has the effort been so far? Is AES applying a truly strategic approach? Phase I of the global sourcing initiative has been successful so far. Naqvi reported that the cost savings from Phase I implementation are somewhere in the 7%-10% range. Phase I efforts focused on only 16 of the 36 identified categories, and included building the global sourcing team, designing the program, conducting spending analysis, and establishing a procurement function and internal controls. The success of the whole initiative will depend upon the successful completion of phases II and III, and whether or not the global sourcing team is able to achieve its goal of reducing annual external purchases by $150 million. AES is certainly moving towards a strategic approach by focusing on centralization. While the global nature of AES’s business and the presence of suppliers worldwide makes the transformation to a centralized structure difficult, it is definitely a step in the right direction. The decentralization approach early on allowed AES to grow rapidly and capitalize on regional developmental opportunities, however, recent loses, and price and currency pressure in major markets, such as Brazil, has forced AES to think about reducing cost by employing reduced capital expenditure, controlled business developmental spending, exits from nonperforming businesses, and a centralized organization structure that makes...
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...Economy Systems Handling A Crisis When disaster strikes, it leaves many citizens in disarray. Man-made disasters can sometimes be prevented beforehand, but natural disasters happen and it is out of our control. The most important thing we can do in the event of a disaster is to be prepared to respond. It definitely helps to have an economic system that is able to be the most effective when the effects of a disaster becomes a problem. These effects such as unsanitary resources, homelessness, job loss, crime, and the change in supply and demand for many essential needs become impactful but the right economy system can get things going sometimes even better than how they were before. The best system for handling a crisis such as a natural disaster is that of a mixed-economy. This allows for proper government intervention to help the affected people, and the economic freedom of businesses to keep the economy moving in a positive direction. There are three major economic systems in today’s world. The difference between each lies in the relationship of the amount of control the government has and how much freedom the individuals have on the factors of production. Free-market (or capitalist) economy allows private ownership and individuals choice over what and what not to produce and sell with little Government intervention. A planned (or command) economy in the opposite, in which the government controls most factors of production, make production plans beforehand and...
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...FE341: Microeconomics Homework 1 Due August 30 th ANSWER KEY Please indicate the students that you worked on this homework assignment with, if any. 1. From the textbook page 18: Questions for Review #2 Which of the following two statements involves positive economic analysis and which normative? How do the two kinds of analysis differ? a. Gasoline rationing (allocating to each individual a maximum amount of gasoline that can be purchased each year) is poor social policy because it interferes with the workings of the competitive market system. Positive economic analysis describes what is. Normative economics describes what ought to be. Statement (a) merges both types of analysis. First, statement (a) makes a positive statement that “ rationing interferes with the workings of the competitive market system.” know from economic analysis that a constraint placed on supply will We change the market equilibrium. Second, statement (a) makes the normative statement that gasoline rationing “ is poor social policy.” b. Gasoline rationing is a policy under which more people are made worse off than are made better off. Statement (b) is positive because it states what the effect of gasoline rationing is without making a value judgment about the desirability of the rationing policy. 2. From the textbook page 18: Questions for Review #6 The price of long-distance telephone service fell from 40 cents per minute in 1996 to 22 cents per minute in 1999, a 45-percent (18 cents/40 cents) decrease....
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...ADMAP REVIEW OF THE MOVIE – INSIDE JOB Rohan Rambhia | PGP-10-155 Inside Job is an exemplary recount of how administrator’s role when exploited to form risky administrative strategies by means of faulty processes lead to a crisis of the stature of the recession of 2008. It is a comprehensive documentary which narrates the history of the collapse, not only going into great, informative depth about the risk-based strategies that put the global economy on the line, but looks back to the rise of the financial industry. The biggest question which the documentary arouses is that knowing what happened, why are the miscreants not being punished? As the director, Charles Ferguson, himself stated while receiving the Oscar, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that's wrong.”1 Lets us first look at the prelude (context) of this financial crisis: ADMAP REVIEW OF THE MOVIE – INSIDE JOB The Clinton era (1990s) worked as a bridge between the Wall Street and the government. More and more Wall Street CEOs gained access to the government, taking up administrative positions like 2 • Robert Rubin On Wall Street: Chairman and COO of Goldman Sachs For the Government: Secretary of Treasury under Bill Clinton Laura Tyson On Wall Street: Board director of Stanley Morgan For the government: Chair of the US President's Council of Economic Advisers during...
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...Global Marketing 7e Warren J Keegan & Mark C Green Chapter 02 The Global Economic Environment Presentation adapted by Alfred Lowey-Ball For (International) Marketing management course Fall semester 2014 UBI-BA2 Brussels Chapter 02 Outline (The Global Economic Environment) 2-0 2-1 2-2 2-3 2-4 2-5 2-6 Introduction The world economy—an overview Economic Growth stars Classification of countries by income Market opportunities in DCs World population trends Dealing with currency risks 2 2-0 Introduction • The level of economic development in the target country is a major determinant of global market potential and opportunities • Globalization and forms of freemarket capitalism prevail almost everywhere today • Since the 2008 financial crisis, however, much uncertainty has crept in. 2-3 2-1 The World Economy—An Overview • The world economy has changed profoundly since WWII: in the western world, trade boomed and GDP rose constantly at a 2-3% rate… • Globalization (economic integration) was estimated to be 10%; today it is 50% (by some measures) and still rising • Global companies have arisen to respond to global market demands and opportunities, global competitors have displaced local ones 2-4 Growth of world GDP Figure 1.1 Growth of Real World GDP, 1975–2005 500 – 450 – 400 – 350 – Volume 300 – 250 – World GDP ~$70 Trillion today World population 7,1 Billion 200 – 150 – 100 – 1975 1980 1985 1990 1995 World GDP 2000 2005 ...
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...Chapter 2 The Basics of Supply and Demand Questions for Review 1. Suppose that unusually hot weather causes the demand curve for ice cream to shift to the right. Why will the price of ice cream rise to a new market-clearing level? Suppose the supply of ice cream is completely inelastic in the short run, so the supply curve is vertical as shown below. The initial equilibrium is at price P1. The unusually hot weather causes the demand curve for ice cream to shift from D1 to D2, creating short-run excess demand (i.e., a temporary shortage) at the current price. Consumers will bid against each other for the ice cream, putting upward pressure on the price, and ice cream sellers will react by raising price. The price of ice cream will rise until the quantity demanded and the quantity supplied are equal, which occurs at price P2. Copyright © 2013 Pearson Education. Inc. Publishing as Prentice Hall. Chapter 2 The Basics of Supply and Demand 2. Use supply and demand curves to illustrate how each of the following events would affect the price of butter and the quantity of butter bought and sold: a. An increase in the price of margarine. Butter and margarine are substitute goods for most people. Therefore, an increase in the price of margarine will cause people to increase their consumption of butter, thereby shifting the demand curve for butter out from D1 to D2 in Figure 2.2.a. This shift in demand causes the equilibrium price of butter to rise from...
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...An example of South South cooperation: The ALBA-TCP Agreement The Bolivarian Alliance for People of Our America and the People’s Trade Treaty Case Study in International Negotiations Faculdade de Economia Universidade de Coimbra Irene Padovese Summary 1.Introduction………………………………………………………………………………............ 2. Pre-negotiations and historical context………………………………………………………. 3.The Negotiation process………………………………………………………………………. a. Negotiations I…………………………………………………………………………….. b. Negotiations II……………………………………………………………………………. 4. Summitry and multilateralism………………………………………………………………… 5. Impasse on Negotiation: The case of Honduras………………………………………....... 6. Asymmetries and Behaviour: Hugo Chavèz………………………………………………… 7. Conclusion……………………………………………………………………………………… 8. Bibliography……………………………………………………………………………………………… Introduction 1. Definition ALBA defines itself as "the Latin American option that fights for the autodetermination and sovereignty of people of its regions", especially, against of what they define "all the imperialistic politics of United States of America". (Alianza Bolivariana para nuestros pueblos de America, 2004) In other words, it is an integration platform that focuses on solidarity, complementarity, justice and cooperation between countries of Latin America that want to achieve together the level of "integral development through its own alternative way, in the middle of the increasing...
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...Module VI E-Business and E-Commerce E-Business Model – – – – – – – The Storefront Model The Auction Model The Portal Model The Name-Your-Price Model The Comparison Pricing Model The Demand Sensitive Pricing model The B2B Exchange Model The storefront Model • Storefront model enables merchants to sell products on the Web – Transaction processing, security, online payment, information storage • E-commerce allows companies to conduct business 24-by-7, all day everyday, worldwide • An e-commerce storefront should include: – Online catalog of products – Order processing – Secure payment – Timely order fulfillment The Auction Model • Online auction sites – Act as forums through which Internet users can log-on and assume the role of either bidder or seller – Collect a commission on every successful auction – Sellers post items they wish to sell and wait for buyers to bid • Reserve price – The minimum price a seller will accept in a given auction • Reverse auctions – Allow the buyer to set a price as sellers compete to match or even beat it The Portal Model • Portal sites – Give visitors the chance to find almost everything they are looking for in one place • Horizontal portals – Portals that aggregate information on a broad range of topics – Yahoo!, AltaVista, Google • Vertical portals – Portals that offer more specific information within a single area of interest – WebMD, IMDB • • Comparison pricing model – Web sites using shopping technology to find the lowest price for a given...
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...Class: 1 Type: Lecture Introduction Nobody will dispute the fact that operations are becoming increasingly international or even global in nature. Less clear, though, is what this actually means for operations. Drivers of globalization include increased competitiveness through offshore manufacturing and increased sales by expanding into new markets, but the associated opportunities and challenges are totally different and highly industry-dependent. Clearly, the issues facing a hi-tech firm are different than those facing a global consulting firm, software is a different ballgame than textile, etc. "Global operations" can refer to, among others, global sourcing, to having manufacturing or service or R&D facilities world-wide, or to supplying global markets, each of which have very different ramifications: Global sourcing Global manufacturing Global distribution . dealing with foreign . facility location . local content regulations suppliers . coordinating networks . managing global . managing international of plants distribution logistics . coordinating networks . managing risk . managing risk of R&D facilities . operations in other countries Page intentionally left blank. Class: 2a Type: Lecture Supply Chain Management & Service The goal in this part is to introduce the two main sections of the course, international...
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...Journal of Business Ethics (2009) 85:147–156 DOI 10.1007/s10551-008-9934-6 Ó Springer 2008 What’s Wrong with Executive Compensation? Jared D. Harris ABSTRACT. I broadly explore the question by examining several common criticisms of CEO pay through both philosophical and empirical lenses. While some criticisms appear to be unfounded, the analysis shows not only that current compensation practices are problematic both from the standpoint of distributive justice and fairness, but also that incentive pay ultimately exacerbates the very agency problem it is purported to solve. KEY WORDS: executive compensation, distributive justice, pay disparity, incentive alignment Introduction Few academic theories have been adopted as widely as the application of agency theory (Jensen and Meckling, 1976) to the structure of executive pay in modern corporations. After prominent suggestions that the inherent conflict of interest that exists between stockholders and corporate managers – or ‘agency problem’ – could be mitigated through the structure of managerial incentives (e.g., Jensen and Murphy, 1990a), the prevalence and size of stock option grants to senior executives have expanded increasingly and substantially (Hall and Murphy, Jared D. Harris, Assistant Professor teaches both Ethics and Strategy courses in Darden’s MBA program, and a doctoral seminar on corporate governance and ethics. His research centers on the interplay between ethics and strategy, with a particular focus...
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