...LONG TERM INVESTMENT DECISION BY A COMPANY The producers of low calorie microwavable food have been expecting a change in price and they want to choose the price strategy which would make their product less elastic and responsive to changes in the prices, then the company should make careful analysis of the entire market situation. The company should look for the substitute goods in the market and their pricing strategy. Higher the number of substitutes are available, higher will be the chance of rise in elasticity of our low calorie microwavable food. The buyers should not have many options to buy from the market. However, if there are only few substitutes available, then the producers may keep the price high in the market of their product. It is also determined by the market power of the producer. Market power is determined by the elasticity of demand of the product. The firm can set higher mark-up over their marginal cost if they know that customers will not shift to another product in case of price increase. Hence, the firm or the producer should consider the cross price elasticity of demand of their product. Another factor to be considered while setting up prices of their product in the market is that of government policies in the economy. Fiscal policy would determine the taxes and other components of aggregate demand. If the firms have set higher taxes, then people would have less disposable income available with them and they would like to spend less on such less calorie...
Words: 1984 - Pages: 8
...G1213229 Company Overview Buah Bagus Sdn. Bhd. (BBSB) is a Selangor, Malaysia based manufacturer and distributor of fruit based cordials. It began operations in 1983 under the leadership of Rosli bin Khaled. Prior to entering the cordial manufacturing business, Rosli was an employee of a firm the manufactured automotive safety belts. He left the firm to search of new challenge, in the course of which he founded BBSB. The firm sells its cordials in three sizes, namely 720ml, 2 liters, and 4.55 liters. The firm largely relies on government tenders with government owned or linked corporations such as FELDA, MARA, PERNAS and RISDA, and geographically serve the states of Pahang, Kelantan, Perak, Terengganu, Selangor and the Klang Valley region. Problem Statement The case study presents us with a situation where the firm has reached maximum production capacity, in the presence of ample market opportunities. At the present BBSB is forced to let these opportunities go as it cannot cater to the market demand. BBSB, and its owner Rosli bin Khaled are now faced with the choice of incurring costs and investing in moving to a new facility to take advantage of the opportunities or not. Additionally, the firm has also to decide where it will relocate its operations, in the Klang Valley or in its home state of Kelantan. SWOT Analysis Strengths 1. Strong growth in sales. BBSB has recorded double to triple digit growth well into five years in its operations. 2. Low costs and high...
Words: 1421 - Pages: 6
...identified two types of isolating mechanisms, competitive and customers-based isolating mechanisms. And examples of normative strategies are provided for each type of isolating mechanisms to facilitate their application. Key words: Competitive advantage, Competitive isolating mechanisms, Customer-based isolating mechanisms INTRODUCTION The concept of isolating mechanisms has been developed in the literature to explain barriers that firms can establish to avoid imitation by competitors (Grant, 2005; Mahoney and Panidan, 1992). Isolating mechanisms can create barriers to impede competitors from imitating resources, capabilities and strategies. Isolating mechanisms are also instrumental in influencing industry dynamics, as they provide competitive barriers to imitation for new strategies, adopted in response to environment changes ( Segars and Grovers, 1995). Through the establishment of isolating mechanisms, the firms can sustain their competitive advantage and performance. Therefore, they are a key for superior performing firms. Mahoney and Pandian(1992) had identified a wide range of isolating mechanisms from the resource-based view, mainstream strategy, organizational economics and the industrial organization literature. Although the authors recognize that there are many organizational...
Words: 2259 - Pages: 10
...Business Ethics Index: 1. Introduction 2. Abstract 3. Key Terms 4. Ethical Implications 5. Course of Action 6. Conclusion 1. Introduction: NBS, Inc is a Software Services and Staffing Solutions firm. Started in 2001 has head offices at Washington, DC and branches Nationwide in United States of America and other parts of world like India and Middle East. Though started as a small firm in the beginning, NBS survived the market competition and made some good progress in past 10 years. Has earned its recognition for a Quality service from various clients includes Government, Banking, financial and other IT sectors. And as a result it’s now become a Multi-Million dollar firm in Ten years. NBS, Inc now serves different client for their Staffing and Software needs includes GE, Freddie Mac, Fannie Mae, Lockheed Martin, FBI, DC WASA just to name a few. NBS, Inc develops Software Applications based on client needs on different platforms includes Cold Fusion, JAVA, .NET and provide QA solutions for applications that are in use by the clients. And NBS also helps these clients Hire IT/Software professionals all over the United States of America through its consulting business. Includes H1 Visa Holders, Green Card Holders, US Citizens with Secret or Top Secret Clearances depending on the client requirements. NBS, Inc apart from Software Services also provide Recruiting/Consulting services and Accounting Services to different clients depending on...
Words: 2526 - Pages: 11
...The Resource Based View – Jay Barney A firm’s competitive advantage lies in its resources. It exams the link between a firms resource ans sustained competitive advantage. To sustain a competitive advantage it requires that these resources heterogeneous and immobile. The key point of the theory is to identify the firm’s resources and see if it is VRIN (Value, Rarity, In-imitable and Non substitutable) and then protect them. Formal planning is highly imitable and thus cannot be a source of sustained competitive advantage. An argument for heterogeneity is the first mover advantage where the firm may gain access to good distribution channels; develop good reputations before competitors come. Likewise theyre are barriers to entry. How to apply the resource based view: Definitons: It resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge etc. controlled by a firm that will help its efficiency. This will be broken down into human, physical and organization resources. A sustained competitive advantage when it is implementing a value creating strategy not simulteously being implemented by any current or potential competitor and when these other firms are unable to duplicate the benefit of this strategy. Not on calendar time. Critique * Priem and Butlers critique to 1991 paper states it is tautological (it is true in all possible interpretations). That’s its primary assertions are true by definition, and, thus not subject...
Words: 315 - Pages: 2
...Competitive advantage is gained when a firm acquires attributes that allow it to perform at a higher level than others in the same industry. Sustainable, competitive advantages are advantages that are not easily copied and, thus, can be maintained over a long period of time. The competition must not be able to do it right away or it is not sustainable. In other words a sustainable competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources or access to highly trained and skilled personnel human resources. It is an advantage (over the competition), and must have some life; the competition must not be able to do it right away, or it is not sustainable. It is an advantage that is not easily copied and, thus, can be maintained over a long period of time. Competitive advantage is a key determinant of superior performance, and ensures survival and prominent placing in the market. Superior performance is the ultimate, desired goal of a firm; competitive advantage becomes the foundation. It gives firms the ability to stay ahead of present or potential competition and ensure market leadership. In 1991, Jay Barney established four criteria that determine a firm's competitive capabilities in the marketplace. These four criteria for judging a firm's resources are: 1. Are they valuable? (Do they enable a firm to devise strategies that improve...
Words: 954 - Pages: 4
...accounting practice for many years and has become more popular over the past 30 years. In addition, Basu (1997) and Sterling (1970) made statements that lead us to believe that conservatism’s influence on accounting practice has been long and significant. Sterling (1970) argued that conservatism is the most influential principle of valuation in accounting agreeing with Basu (1997) who argued that it has influenced the accounting practice for at least 500 years. Professor Ross L Watts wrote two papers on the conservatism in financial accounting. Paper I sought to examine alternative explanations for conservatism in accounting and their implications for accounting regulators while Paper II is aimed at looking at the empirical evidence on conservatism, its consistency with alternative explanations and opportunities for future research. The paper under review is Paper I and the objectives of this paper are to discuss the explanations for conservatism and draw implications for regulation and standard setting. In this paper, it can be seen that Watts tries to develop a general contracting explanation for conservatism that holds with the existing debt contract dividend constraint explanation (Watts 1993), predicts that other contracts employed within the firm will also generate conservatism and argues that even without contracting considerations, an information perspective produces conservatism...
Words: 1353 - Pages: 6
...Arvin English 110 22 Sep 2014 Meet the Firm As a junior but a “freshmen” here in the United States, I exposed myself to most of the activities happened in my school every day. Tried to get myself familiar with the US culture. I tried every method to join the club or other interests group in order to help me survive in the United States. Most of them turned out to be meaningless, since I am from a different culture that I can barely understand what they were laughing at. However, there is one activity that is so useful for me to learn how to survive in the US culture as a business student, that is the annual career fair “meet the firm”. The first time I heard about this activity is from my accounting teacher. She paused when she was giving us a class. “By the way, here’s a very important event that I want all of you to remember!” she said, with her finger pointing on her head and eyes turned rounded. “Meet the firm! Tomorrow at 5 pm! You would not want to miss this chance! And I want to see every one of you in the event.” She pointed everyone in the class firmly with her finger and shouted. I took her word and showed up at Trabant with my suit. Although I was a little bit earlier, there was already full of well-dressed people. They looked smart with a small suitcase or a nice file folder carried on their hands while I brought nothing with...
Words: 776 - Pages: 4
...The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in a small firm. Evaluate the statement in 3000 word. INTRODUCTION Studying business international is good because it gives us an opportunity to know about other’s nation laws in order to import or to export products between two countries that have achieved their consensus to do business between them. International business includes all commercial transactions, either private or government sector, investments, sales, transport, and logistics that happen between two or more countries that are beyond their political boundaries. Generally, private company makes a deal with businesses from other countries to achieve target profits. And for government, the main reason they do this is because of their diplomatic relationship and also to gain profits. International business also can mean that it refers to all of the business transactions such as services, natural resources of the country, and goods or products. As for students, they will learn and practice on how to serve people in international markets. When they are entering working environment, they will find out that most of people that they need to serve is people that come from several races and countries. Students also studying about the culture of another country, their lifestyle, what they do in their daily business routines. The strategies on how to take...
Words: 3349 - Pages: 14
...be successfully established in the global market. The central theory introduced in this article is developed based on a comprehensive framework of the entry modes choices. These modes of choices would determine the success factor of the international business strategy, and to choose these choices there are several important factors to be considered. These factors include situational firm factors, foreign environment review, and moderating factors that would directly influence the firm’s desired mode of choice. Referring to Appendix A is the mode choice of framework by Driscoll that depicts the whole concept discussed. To briefly illustrate, the firm would need to evaluate the two situational factors that would directly affect its desired level of different modes of characteristics. Subsequent from the selected desired modes, the firm would also need to determine the potential moderating influences, which would affect the desired mode. Thus, reassessment based on the moderators would take place to determine the most effective modes of entry. By selecting the right mode of entry, the firm would incorporate an effective business strategy for its international business plans. The article written by Driscoll is set to present an argument for the development of a comprehensive framework for understanding the mode of entry choices. In the article, she illustrated about the different modes of entry to international markets, analyzed on the different characteristics of the entry...
Words: 2266 - Pages: 10
...resources necessary to run the business, high buyer power because customers can basically find an equal service from any firm in the industry, low substitution threat from other means of shipping transportation, and low threat of new entrants due to the high initial capital outlay and need of management experience. In this analysis, we will delve deeper into each of the dynamics within Porter’s 5 Forces to form an opinion of why the industry is attractive to be in and then discuss how competition greatly increased during 1988-1989. In the air express industry, where customers can ship their packages over long distances via airplane, there is high rivalry because the firms competing in the industry all do the same service. Since there is little differentiation between firms, each firm must battle for customers by either providing better or new services, integrating new competencies into their business processes, or doing business at a low price to create bigger economies to scale which will then cut down operating costs. Firms who want to compete provide aggressive products like next day delivery; integrate new business practices like owning and operating a fleet of jets with company employees; or undercut the competition in viscous price wars. Thus, rivalry with the industry is high. Supplier power is medium to high in the air express industry because firms in the air express industry require precious resources and rely on the...
Words: 1272 - Pages: 6
...KINETIC AND POSITIONAL By: Ma, Hao; Business Horizons, Jan/Feb2000, Vol. 43 Issue 1, p53, 12p, 1 diagram Competitive advantage is considered the basis for superior company performance. To perform at such a level consistently, a firm often has to nurture an evolving system of competitive advantages to carry it through competition and over time. What are the various possible types of such advantages? How can a firm systematically analyze the multiple advantages it could possess and use them to achieve and maintain superior performance? Building on research in strategic management, answers to these questions and others can contribute to managers' knowledge about the nature and content of competitive advantage. Such knowledge can help managers nurture and renew their firms' advantages more effectively through time. The Dichotomy of Positional and Kinetic Advantages The essence of competitive advantage can be interpreted as the asymmetry or differential among firms along any comparable dimension that allows one firm to compete better than its rivals. Simply put, a competitive advantage can be one of two types: ° positional--a status-defining position that leads to better company performance; or ° kinetic--an action-oriented ability that allows a firm to function more effectively and efficiently. Positional advantage often derives from ownership or access-based sources. Specifically, it comes from a company's unique endowment of resources, market positions, established accesses...
Words: 8624 - Pages: 35
...demand on the market. The second most cost-competitive unit will do the same so long as the addition of its capacity and the first unit’s capacity isn’t sufficient to meet total demand. This will continue until total demand is satisfied. The units whose production costs are higher and which are not needed to meet total demand will either be idle or shut down (or not built if they don’t exist). Take the instance of the paper industry. We assume total demand for paper will be equal to 75,000 tonnes. There are three firms interested by this market: Alpha, Bravo and Romeo. Each one has production units whose costs per tweety and whose capacity are illustrated in the table below. Firm Production Unit Cost per tonne Capacity Alpha Alpha 1 700 40,000 Alpha 2 850 25,000 Bravo Bravo 1 750 25,000 Bravo 2 1200 100,000 Romeo Romeo 1 1000 10,000 1. Which units will produce in this market? Be precise and illustrate with a drawing. 2. What will be the market price for the tonne of paper? Show graphically the profits that each unit (Alpha 1, Alpha 2, Bravo 1, ...) will be making. 3. Bravo is wondering if it should increase the capacity of Bravo 1. What would be the consequences of such a decision? Illustrate this with a new drawing. 4. Alpha is reconsidering its position on the market and its strategy of maintaining two units (Alpha 1 and Alpha 2) open. What advantages could the firm draw from closing down Alpha...
Words: 295 - Pages: 2
...Man 4633 ASSIGNMENT 3 1.Define arbitrage factor costs Arbitrage factor costs are costs that an MNE incurs when there is the inability for a firm to encourage for issues to be resolved without the need of arbitration. When arbitration is needed, a firm loses precious time and possibly funds to be able to settle a dispute among the different business units with a conflict. This may result in the loss of competitive advantage and/or the loss of actual funds. 2. “Today’s challenge is to build transnational organizations that can sense an emerging consumer trend in one country, link it to a new technology or capability it has in another, develop a creative new product or service in a third, then diffuse that innovation rapidly around the world”. With this in mind, identify a company who has demonstrated this ability including a brief description of each step they took. Boeing is a perfect example of a company that was able to link technology and capabilities from national suppliers which they call “partners”, and to decentralize their manufacturing functionality to develop the new 747 dreamliner. Boeing first began by identifying key geographical “partners” that had the resources and functional capability to manufacture specific sections of the airplane. After doing so, they decentralized their manufacturing capability and handed the responsibility to these “partners”. Finally, what Boeing was left with was a strategically dispersed manufacturing plant across the globe...
Words: 3761 - Pages: 16
...Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology Author(s): Bruce Kogut and Udo Zander Source: Organization Science, Vol. 3, No. 3, Focused Issue: Management of Technology (Aug., 1992), pp. 383-397 Summary: Carlos Ip Introduction: Why firms exist? A prevailing view is that firms serve to keep in check transaction costs from self-interested motivations of individuals. Authors said that firms do better than markets in sharing and trasnfer of knowledge of individuals and groups within an organization. Knowledge is held by individuals, but is also expressed in regularities by which members cooperate in a social community (i.e. group, organization, network). • Suggesting that firms learn new skills by recombining their current capabilties. • Growth occurs by building on social relationship existed in a firm. • Cumulative knowledge of the firm provides options to expand in new but uncertain markets in the future. Paradox identified: firm growth efforts by replication of its technology enhances potential for imitation. Authors view the central competitive dimension of what firms know how to do is to create and transfer knowledge efficiently within an organization content, • Suggest that organizations are social communities in which individual and social expertise is transformed into economically useful products and services by the application of a set of higher-order organizing princples. • Firms exist because they provide a social...
Words: 1842 - Pages: 8