...Property Right Security in Russian Deprivatization Martin Fiemawhle Spring Hill College 1. What impact will the prospect of deprivatization have on investments by managers of privatized firms? The prospect of deprivatization of firms may cause managers to react in a negative way. Investments by managers of privatized firms are usually very well planned and risk averse because of the fear of losing all their assets. Privatization “provides stronger incentive for individuals to make productive decisions” (Zimmerman, Brickley & Smith, Pg. 61). Deprivatization will cause these managers to most likely have less regard as to how investments are made in the long term. Investments will most likely not be planned out and instead be made on impulse for an instant gain without any thought on how it will affect the firm in the future. With the backing of the government’s funds that are assured, managers will not have any incentive to make the best possible decisions to help the firms. Managers are under no type of pressure to perform or create new ideas that will drive innovation and an easier way of running business because of the safety cloud formed by the government backed firms. Managers are also going to lose the power to make certain decisions in the market that they once had. This limits the efficiency of managers to be able to react to a constantly changing market. “Free market economies allow business owners to innovate new ideas, develop new products and offer new services...
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...Managerial decision analysis Property right security in Russian deprivation Edwin Cruz Saint Leo University 1 Introduction Over 70,000 Russian-state owned enterprises were privatized in 1992. A substantial number of the private buyers were from the United States and Western Europe. The reason that drove this “government” decision was to move from a centrally planned economy to a market system. A weakening economy in the late 1990s made the government move back towards state owned enterprise. Prospects of deprivatization have on investment by managers of privatized firms The prospect of deprivatization of private enterprise will likely impact the privatized managers. The fear of losing their position will likely alter their behavior, and affect the manner in which they make decisions or choices. It is possible that “unhappy” managers may be; less productive. Effects of deprivatization on foreign investments in Russia Foreign investors may be hesitant to invest in Russia because deprivatization will revert back all property rights to the state, and in central planning government decides how to use its resources. Property rights therefore are not assigned to a specific person, nor can those rights be transferred; they are not alienable. This...
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...Property Right Security in Russian Deprivatization Saint Leo University Property Right Security in Russian Deprivatization The impact that the prospects of deprivatization have on investment by managers of privatized firms is that these managers will come to a realization that additional investments are prone to more risks in respect to the potential payback. In this situation, the time frame for returns on investments is shortened immensely. The uncertainty stems from the longer time frame, which results in managers hesitating from entering as a private firm. If this notion of deprivatization is upholded upon organizations, the owners will potentially lose any gains they may possess. The effect that deprivatization will have on foreign investments in Russia is that foreign financiers will comprehend the political risks of deprivatization in Russia is vital to the success of many organizations. They will be tentative to make capital investments in Russian businesses because there will be no security that there will be any return, regardless of how prosperous the prospect may seem to be. Deprivatization would primarily be for foreign private business owners considering they can take their profits and send them back to their home countries. For the most part, the Russian economy would behoove having some deprivatization influenced businesses and industries. From an overall standpoint and point of view, Russia has benefited with the movement of a free market but consequently...
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...economy from a centrally planned economy to a market system using as an example the Property Right Security in Russia. To do that this student will assess the impact of deprivatization on managers and its impact in foreign investment in the country. Moreover, this student will provide a comment regarding the long-term effects of deprivatization, winners, and losers of these actions, as well as the effects of this deprivatization on politics. The case study explains how since 1992 many Russian corporations are now privatized and owned by foreign capital and investors. These privatizations caused a downturn in the economy, which forced the Russian government to reevaluate the privatization rules and to reverse some of these agreements. Although the government pledged that only illegals privatizations will be affected by this measurement, the reality is that because of the unclear rules, any pretext can be use against any corporation where the Russian government could have a renew interest. Because mangers need to be aware of not only the current events within their organizations but also aware of the environment, including the political environment, they will need to understand that there is an increase in risk factor of loss for all current and future investments of the organization. Since all these changes in the ruling of privatization are promoted and sometimes enforced by the Russian government, managers need to recognize that uncertainty will play an increasingly important...
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...Analyzing Managerial Decisions: Interwest Healthcare Corp. 1. What are the potential sources of the problems? Interwest seems to be suffering from what a lot of organizations suffer from it comes to the tug of war on what is most important to conduct business. On one side the hospital people think Singh does not care as much about patient care as they do, and on the other Singh thinks that the hospital people are not doing their jobs right in regards to the reports of patient care. The main potential source of the problem is the opportunity cost of each group. Who values what more? The hospital staff most likely thinks that spending more time entering records into the systems will take away from them providing adequate care to the patient, which they value more. Singh meanwhile values correct record keeping in order to remain compliant with the federal government because if that is not up to par, then that could be bad news for him (Krueger, 2009). The sources of the problem are the values each person considers the most important to do their jobs the best. These values differ which causes issues throughout the organization. Singh likely does not seem to understand the hospital staffs opportunity cost. Taking time away from patients could be worse long term for the financial part of the business if they were to focus more on record keeping. Likewise the hospital staff does not seem to realize that proper record keeping could mean better patient care in the long term. Both...
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...the basic principles of exchange and supply-and-demand analysis, the chapter introduces two concepts that are critical to the subsequent development in the book: specific knowledge and contracting costs. The chapter also makes the important point that individuals have incentives to choose value-maximizing organizational arrangements. An appendix presents the basics of present value analysis and the valuation of common stock. It also discusses the concept of stock market efficiency. This appendix provides useful background material (for example, when instructors want to discuss the stock market reactions to events). CHAPTER OUTLINE GOALS OF ECONOMIC SYSTEMS PROPERTY RIGHTS AND EXCHANGE IN A MARKET ECONOMY Dimensions of Property Rights Managerial Application: Patent for Priceline.com Managerial Application: Property Rights Insecurity in Columbia Gains from Trade Managerial Application: While Animosity between the Governments of Venezuela and the U. S. Grow, So Does Trade Managerial Application: Strategic Business Planning—Ignoring Economics of Trade Academic Application: Gains from Trade BASICS OF SUPPLY AND DEMAND The Price Mechanism Managerial Application: Shifts in Demand, Quantity, and Price at the PGA Tournament Linear Supply and Demand Prices as Social Coordinators Managerial Application: Supply of Online Resumes Bogs Down Employers Measuring the Gains from Trade Government Intervention Price Controls Price Floors Academic Application:...
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