...Property Rights Security in Russian Deprivatization by HCM-540, MBOL5, Health Care Organization Instructor: Wenyuan Teng Saint Leo University Distance Learning October 24, 2013 Abstract A strong system of property rights is the common requirement of a capitalistic economic system. Property rights the restrict authority to decide how particular resources can be used; whether it is owned by the government or the consumer. For many years, many critics throughout the world have argued that property rights often become the subject of scrutiny for security. Property rights extend beyond physical property to international boundaries. If owned by the government, it is subject to the governmental security laws enacted to protect the sovereignty of these rights. In 1992 Russia had 70,000 state-owned enterprises that were privatized. This case study examines deprivatization in Russian. After reading this paper, the readers will be able to conclude the ultimate purpose is to eliminate the competition for control of the resources and financial gain. . Introduction Deprivatization refers to the stripping of individual authority to conduct business, pressing it to conform to government control. For international firms operating in Russia, this will have significant impact. The viewpoint of deprivatization will force the international companies to come to the conclusion that their investments will now become subject to more risks...
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...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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...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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...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 is opposed as to what occurs in a free market whereby private enterprises decide on how to use resources. In a privatized setting, the property rights that are owned by the firm are assigned to a specific person(s) and can be transferred, as in sale of the firm and its assets; property rights are alienable. A detrimental effect that may result from escalating deprivatization of...
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...University Mark Pate July 6, 2014 The impact of the deprivatization of Russia in the late 1990’s had a tremendous impact on investment by managers of privatized firms. What Russia had done to private buyers of foreign companies is make a private market public. This means many different things to Russia and the companies that it deprivatized. The first thing is that when you deprivatize a company you lose company goals or missions. The loss of planned managerial objectives and strategic efficiency will be lost with local state run companies. Local managers are only going to do as the regulations require and nothing more. These companies that were privatized and then deprivatized by Russia for any slight wrong in paper work. This allowed the local Russian people to invest their time and money into these now local businesses that were taken over by Russian government. With the initial deprivatization of Russia, managers were very hesitant to make decisions on investments. Russia made it very difficult for privatized companies to exist without local interest. Anyone could report a privatized company for any little violation of state. Again this would lose the company managerial objectives and strategic efficiency. The effects of deprivatization on foreign investment in Russia could be detrimental to investors. Investors have watched oil companies like Sidanko, who was a foreign private firm deprivatization in Russia. The Sidanko assets were sold during bankruptcy proceeding...
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...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 in calculating the Return on Investment. On the other hand, foreign investment in Russia will...
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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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...Case Study Chapter 3, Page 92 MBA-540 Shaneisha Epps “A privatized firm is a privately held company that doesn’t offer shares or stock to the general public.” In Russia, the government decided to become involved and transform a private market into a more public oriented domain, thereby creating deprivatization. The implementation of deprivatization will probably cause the managers of privatized firms a bit reluctance when considering investments. They may assume that the profit may go elsewhere. Depriviatization is the act of transferring ownership from the private sector to the public sector. “Among some disillusioned voters, it's a popular notion. But if implemented broadly, it could kill investment and damage Russian and foreign companies alike.” (Bloomberg.com) More often than not, managers of privatized firms have very varying incentives and strategies than a deprivatized firm. Because of this and the absence of certain incentives, managers will probably be less motivated to associate themselves with these deprivatized firms and their activities. Looking at the number of privatized firms in the 90’s, one can only conclude that foreign investors had a preference for privatized firms. With deprivatization increasing, the ability to maximize on foreign profits will be limited. “Understandably, foreign investors are worried. Even with reform-minded governments in power, they have suffered under Russia's arbitrary and corrupt legal system.” (Bloomberg.com)...
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...Chapter 03 - Markets, Organizations, And The Role Of Knowledge CHAPTER 3 MARKETS, ORGANIZATIONS, AND THE ROLE OF KNOWLEDGE CHAPTER SUMMARY This chapter answers three primary questions: How do market systems work? What are the relative advantages of market systems compared to central planning in large economies? Why do we observe so much economic activity conducted within firms in market economies? In addition to covering 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...
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