Strategic Management At Honda

Strategic Management At Honda With over 182,000 employees, Â ¥ 10,011, 241 million in annual revenues in 2009 coupled with upwards of $ 1370.1 million$ and 1896.4 in operating profits for the FY 2008 and 2009 respectively, Japans Honda is easily the industrys biggest manufactures of motor cycles, besides being a among the leading automobile producers. Operating across the globe, Honda is involved in the development, manufacturing as well as marketing and distribution of motor cars, motor cycles and a range other power products (Honda Ltd, 2010). It was founded in 1946, by Soichiro Honda and subsequently incorporated two years later, followed by years of success and growth as a motor cycle maker. Away from its core business, the companys 105 affiliates and 396 subsidiaries across the world provide financial services to thousands of its clients. It operates a four tier business model which includes the financial services division, motorcycle, automobile as well as power products (Honda Ltd, 2010). Besides multi wagons, Honda also produces a range of passenger cars, SUVs, mini vans, passenger cars, mini vehicles as well as sports coupes among others. Hondas flagship car and motor cycle models include the Accord, Civic, Legend, Insight, Acura CSX and Acura RL, CR-V, Cross Road, ASIMO Robots as well as the scooters among many others. The company recorded sales of over 10,114,000 units mainly in Japan, North America and Europe, representing an 8.5% rise over the previous years figures. Its sales have been on the rise despite through the global economic down turn that hit its American competitors, and largely driven by Toyotas PR woes over alleged flaws in the breaking system in its flagship Prius model. This success is largely attributable to the company strategic preparedness. Case in point, in 2002, it launched a hybrid car model to tap into the ever growing environmentally conscious clientele, besides launching the Environmental Learning Center (based in Texas), while in 2004, the company entered into a strategic partnership with GE, that led into the development and production of a trail blazing light jet engine, suited for business jets. Sethi and Swanson (1984), commencing in the year 2000, the company has embarked on an ambitious program to set up production plants in the emerging car and motor cycle markets, notably China, Argentina, Russia and the motor bike hot spot, Vietnam. The company prides itself with the twin principles of respect individuals and the Three Joys Principle i.e. buying, selling as well creating. These values reflect the company does wish to build on each persons unique abilities and its endeavor to ensure that everyone who comes by purchasing the products or by other means should have a great/joyous experience. Honda ensures this by relentlessly, lead in the creation of value, innovation, new products at accessible prices. RECONCILIATION OF DICHOTOMIES Honda ltds strategic innovation is founded on a process of dichotomies reconciliation which include both learning and planning, positioning on the market vs. internal resources development and lastly, core competencies related to the product against the core capabilities related to the processes. These three dichotomies do representing divergent strategies etc that drive Honda as a company since its establishment and through years of exemplary growth and expansion. De Wit Meyer (2010), assert that a critical look at Hondas strategies points especially its successful entry and dominance of new markets raises questions as to whether, Hondas strategy and subsequent decision making is solidly based on a meticulous, analytical and rational planning or whether its strategies are a direct result of the some decisions/ strategies reached at by the company, which evolved or became modified due to the environmental influences of the industry in which the company operates. PLANNING v. LEARNING While designing its strategies, the company has consistently followed a rational approach based on a critical analysis of the market and the industry environment. This strategy hinges on and it suited for a seasoned industry player such as Honda, since it seeks to built on, and exploit the companys immense experience in the automotive industry (Johnson et al., 2005). As a strategy, this is an important bottom up strategy that uses the already gained knowledge to optimize the companys needs. Planning takes into consideration both the companys resources as well as the environmental factors, as such will most likely utilize the companys set objectives within the constraints. Hondas largely seen as having successfully employed the planning strategy while entering into new markets notably while launching into the US motor cycle industry. Its recent strategic alliances with GE as well as its design and launch of innovative new products and expansion of manufacturing plants, in the ultimate attainment of huge scale economies and extremely law costs represent examples of internal planning. Planning is largely apparent from an outsiders point of view. However, interviews with the companys top management reveal a far different picture that suggests at best a company that is far from an overly rational, academic planning seeking to impose its corporate values and policies on the market and the industry, but rather a company, with a management structure that is at all times willing to learn. It is evident and widely accepted by many observers that Hondas strategies have evolved, without a clear plan or analysis of the industry. Case in point, the huge success attained by the companys 50 cc Supercab surprised everyone including the companys management. Mintzberg et al. (1998) observe that though the companys strategy may have looked analytical and well thought out, the management did blunder severally up until the market gave them the correct formula. Rational planning on its own is hardly, suited to many organizations and is in fact removed from the day to day running of a business as compared to learning, which permits management to continually develop and adjust their policies and strategies as they are implemented, in the light of new experience (De Wit Meyer, 2010). Hondas development of hybrid vehicles and energy efficient models e.g. the Honda Civic Sedan, in the wake of Toyotas success in the same field represent examples of learning from the environment. Honda has as well launched joint ventures in RD with other companies. Using both strategies gives the company an advantage, not least because it only allows the formulation of strategies that best meet both the internal resources as well as the environmental factors prevailing in the industry. POSITIONING VERSUS DEVELOPMENT OF INTERNAL RESOURCES Hondas positioning helps its brand to be associated with a given market segment. It is an equally helpful guide to the companys other strategies, particularly the marketing strategy, not least because it does clarify the essence of the brand and the helps the consumers to better identify the goals that the product seeks to meet in a unique way. In positioning a product or brand, managers must make decisions, seeking to appeal a given segment of the population, while at once risking losing the other(s). Honda has placed its various products on the basis of benefit, target, distribution as well as prices. The company offers competitive prices owing to its scale and technology advantages, which in turn permits it to achieve better client franchises. This strategy does however; affect the prestige of the brand, besides reducing the profit margins. Target, distribution and benefit positioning, that has seen the introduction of green models to serve the needs of green conscious clients, co upled by Hondas expansion into India, China and Vietnam, which was entirely meant at catering for emerging middle class in those countries. As against, development of internal resources, Hondas product positioning allows it to use fewer resources but still reach the target markets. It however, has enormous resources in capital, management, cutting production technology as well as manpower, which have driven the companys expansion across the globe. More investment in RD is, and has been possible, leading to greater innovation. While other smaller industry players struggle with limited resources constraining their RD as well as expansion, bigger companies like Honda, Toyota and GM can attain a better edge in the industry. Hondas has been able to pursue both strategies owing to the availability of niche products that it has successfully positioned e.g. motor bikes in Vietnam (over 400,000 units in annual sales), coupled by its huge availability of resources which allows it rope for RD, diversification and expansion. This does not entirely hold though, Honda spends just a fifth of GM expenditure on RD and launches fewer mode ls than the latter, yet it products/models are more successful than GMs. CORE COMPETENCIES VERSUS CORE CAPABILITIES Competencies are as a result of coordination of multiple production skills as well as a complex coordination of numerous technologies. They give a company access to newer markets; provide high barriers for competitors to enter the market, besides contributing considerably to the benefits of the end product(s). Hondas core competencies as regards products are the driving force behind the development of the numerous, innovative end user products. Hamel Prahalad regard Hondas product competencies as a brilliant example of how a small company can break into, and establish itself in a mature, stable market. In 2010 alone, Honda has set up a solar H2 station (Los Angeles), introduced the versatile iGX and GX engine series for general purposes. The company has as well produced lithium-ion based batteries intended for the new range of hybrid motor vehicles, alongside an ELC to spear head its green agenda. Honda is famed for its ability to recycle technologies in all its range of products, affording it RD efficiency. There are elements of core capabilities associated with its processes, but perhaps far lacking behind Toyota and many other industry players. These include efficient distribution channels, cost effective production processes. It trains dealers, determines shop floor plans and has strict operating procedures among others. Core product competencies in the automobile industry are far superior to the process capabilities and Hondas success is an outstanding testimony to this fact. MANAGEMENT STYLES Japanese and Hondas management styles do differ from the American style in at least six distinct aspects. These include differences in the interdepartmental relationships, communication patterns, and supervisory styles, mechanisms for control as well as existence of, or lack of a paternalistic orientation. According to Hofstede (2004), these differences largely stem from the inherent cultural differences between the two countries, which in turn influence the respective corporate cultures. Lifelong Tenure Most of the companies in Japan do provide lifelong jobs to their employees, with greater emphasis being laid on not age, but also seniority. Promotions are thus much more difficult, just as there is greater job security for the workers. Many organizations effectively hire employees for the, and are interested in the long term objectives as against Americas corporate worlds obsession with short term goals. Case in point, Hondas top management i.e. Satoshi Aoki (Chairman), Takanobu Ito, Koichi Kondo and Atsuyoshi Hyogo joined the company in 1968, 1978, 2000 and 1972 respectively, during which time they have risen through the ranks to reach the top management. On the contrary, the western corporate world is characterized by short term contracts for both managers and workers, charged with meeting short term objectives. Teams v. Individuals In contrast with the Western model where managers are responsible for decision making and subsequently accountable for the decisions reached, the Japanese system recognizes the importance of individual expertise, but the performance of the entire team is more emphasized than an individuals. In the western corporate world (Germany and American), certain employees have the star statuses e.g. in Germany, the engineers play central roles to the success of motor companies. Some elements of convergence exist though. Long apprenticeships and cadres (seniorities in Japan) do exist both in Germany, France as well as the Netherlands. Employees attain positions, promotions etc. through years of internships, apprenticeships or memberships to given classes-attained through education and or experience. Decision Making While most western corporations are characterized by top down decision making, the Japanese style of management is largely characterized by collective decision making by individual teams. Hondas decision making is characterized by the Ringi system, where decisions are passed based on a consensus of all the employees in a department or even the entire organization. This management style is identical to that practiced in Holland, except that the latter is anchored on existing contracts or class differences of among the employees. Communication As against the largely bureaucratic communication, hierarchical channels characterizing western corporations, which is largely effective and efficient, the Japanese channels of communication compromise in large part of face-to-face communication. These comprise everything from provision of information regarding assignment of tasks, responsibilities, organizational goals and the development and rechanneling of feedbacks. Implicit Mechanism of Control Honda ltd is concerned with building of its relationships with it biggest assets, the employees. Inspired by its philosophy Respect for the Individual, the company always seeks to develop collaborative relationships with each and every employee, where all mechanisms of control and supervision are largely informal. Supervisors work alongside other employees, who are involved, the decision making, which in turn renders decision making, execution of decisions and reception of feedback a lot more expedient. On the contrary, Hondas competitors run on a rigid, formal control mechanism. This sets goals, measurable, complete with targets that must be met by departments, franchises and individual employees, while the Japanese system is anchored on the management philosophies that all employees as well as managers identify with. Departmental Relationships Pascale Athos (1981), states that attainment of the goals set for a department etc requires inputs not just from the concerned departments, but perhaps most importantly, close collaboration with other departments in the company or even other organizations. Formal (necessary) relationships largely accomplish these goals (characteristic of the western model), while the Japanese style has an extra dimension; voluntary collaboration which is far more productive and results in greater knowledge sharing. Paternalistic Orientation Honda and many other Japanese companies are concerned by the holistic needs of every employee, including the concern for the well being of their families (Culpan, 2009). This imposes a social support role on the managers, a feature which is largely absent in the western world, safe for a limited number of family organizations. CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY With car markets in the developed world already saturated, most car companys are looking abroad in the emerging markets notably China, India and Brazil. A recent study by TNS shows that car buyers rate car makers more according to their CSR than those consumer in the first world, thus companies that perform better in this sphere stand a far greater chance of winning the hearts and minds of the new middle class is guaranteed success. In 2005, Honda was ranked the UKs best car company based on its social responsibility initiatives, by the foremost research company on automotives, TNS Automotive. It performs equally well in the US, Indonesia, Italy and Spain among other countries alongside BMW, Shell, Malaysias Petronas, Michelin and Germanys Porsche (Nissan Corp., 2010). Honda spent over 2.3% of its annual revenues in 2009, on its CSR commitments, with the environment taking the lions share of the budget. The company has undertaken numerous actions in an attempt to meet the challenges posed by global warming and climate change. With the reputation of the automobile industry and fossil fuels already damaged, due to its huge carbon footprints, and the growing fears among the public of air pollution, it is only reasonable that companies act in accordance to the wishes of the consumers. Honda has initiated the LCA system, which identifies and sets targets for the required actions. The company develops energy efficient models, adheres by the 3Rs (in design) and noise reduction etc. Hondas corporate governance is a typical Japanese style bottom down structure, characterized by collective decision making and a collective sense of belonging among to the company that in turn reflects on the companys performance (Honda Ltd, 2010). Any companys corporate governance does determine the direction that it assumes, which ultimately reflects on its financial performance. Nissans corporate philosophy, governance as well CSR activities are not different from Hondas. It seeks to bring enrichment of the peoples lives and the environment in which they operate. It has made CSR an important part of its corporate management policies. It has devised its green purchasing guidelines, coupled with Nissan-Renault Suppliers Guidelines, which ensure that the companys entire supply chain is green and serves the purposes of the policies set by its top management. Through its charitable arm, Chryslers management makes annual donations to needy communities, projects and causes (Chrysler, 2010). In 2009, the company advanced upwards of $100000 to Good Harvest geared at combating hunger. The companys CSR initiatives are not as extensive as both Nissan and Hondas partly because the company caters for the luxury market segments that are in the main concerned about the quality and luxury as against a companys CSR etc. CONCLUSIONS Honda is largely touted by observers and varied literatures in strategic management. Its strategies have largely been used either rightly or wrongly to back up a number of conceptual dichotomies, with contracting positions i.e. learning v. analytical planning, core capabilities v competencies etc. Most of these assumptions, and evidences have however, proven erroneous owing to empirical mistakes that result into the over emphasis of the companies strengths, while its mistakes go largely unnoticed. Further, strategies and explanations are expressed in form of reductionist, single-sided theories that largely fail to portray the actual strategic orientation of Honda. Hondas thrives on reconciling dichotomies. Thus many observers in the west have largely missed out in studying, learning from and understanding Honda. Rohlen (1974), it is evident that capabilities as well as competencies can possibly complement one another, forming into one theory. The latter does focus on the production expertise and technologies while the capabilities serving to improve the whole chain of value. Capabilities are far more visible and easily appreciated by the clients than are product competencies. Hondas ability to meet high targets and post tremendous growth rates is largely due to its tendency to set stretched targets, which brings into direct competition with the biggest players in the automotive industry. In order to compete, it uses its resource base to compete by either providing niche products or undercutting competitors on basis of cost advantages, attained through scale economies. This ability to leverage her resources offers the key to its success, as against the widely fabled Japanese management styles. This style is widely different from and more appealing that the western style corporate management is only suitable for the Japanese and Asian environments. There are aspects in both management styles that could beneficially be, and have largely been adopted by either side to the great advantage of the corporations, but not the complete management packages as they will be utter failures in the other ones environment (Schein, 1981). Finally, this report has demonstrated the importance of corporate governance, policy and CSR is important in the ever changing consumer tastes as well as preferences, and most importantly, increasing consumer awareness. RECOMMENDATIONS Increased spending and expansion of Hondas and other automotive companies in CSR, environmental protection and production of innovative environmentally friendly models should continue as the only way counter changing consumer needs as well as the changing times. The Western and Japanese styles of corporate management should be blended to suit both the practical and strategic objectives of each organization. Reconciliation of strategies is crucial for success and helps companies reap the benefits of divergent strategies, thus companies must seek common grounds between strategies rather than opting for only one.

Winston Churchill :: essays research papers

Winston Churchill Sir Winston Leonard Spencer Churchill was born at Blenheim Palace on Nov. 30, 1874. His father was Lord Randolph Churchill, who descended directly from the 1st duke of Marlborough, of whom Winston was to write a biography. His mother was Jennie Jerosme, an American. Churchill's childhood was unhappy. He spent most of his time at school, something he didn't really love. His teachers caracterized him as bright, but stubborn and obstinate. He loved to read history and poetry, however, and was fascinated by soldiers and battles. From childhood he had an extraordinary memory. Winston Churchhill didn't want to go to university. Instead, he enrolled in the Royal Military College at Sandhurst. He graduated in 1894. After service in Cuba and India, he worked as a war- correspondent in Northern India, Sudan and in South Africa, where he was captured by the Boers. His daring escape made him an overnight celebrity. Churchill always wanted to become a politician. His wish came true in 1900, when he was elected to the Parliment as a Conservative, and he quickly made his mark. His political sympathies began to change, however, and he "changed sides" in 1904, when he abandoned the Conservative party for the Liberals. When the Liberals came to power in 1905, Churchill entered the government as secretary of state for the colonies. In 1908, the year of his marriage to Clementine Hosier, he became a member of the cabinet as president of the Board of Trade. Winston's political missions became more and more important, in 1910 he became a member of the Admirality. In 1913-1914 Churchill completed British naval preparations for war. During World War Churchhill made some fatal mistakes in war strategy. This was one of the main reasons that he was removed from the Admirality when the Conservatives (many of whom now detested him) joined the government in 1915. After a period of active military service in France, he was re-elected in the Parliment. He became minister of munitions under the prime minister David Lloyd George. He subsequently served as secretary of state for war and air and for the colonies and helped negotiate the treaty that created the Irish Free State. But he lost both his office and his seat in Parliament when Lloyd George's coalition government fell in 1922. Over the next year or two, Churchill gradually moved back into alliance with the Conservatives. He used to remark with a mischievous twinkle, "Any fool can rat, but I flatter myself that it takes a certain ingenuity to re-rat." Returning to Parliament in 1924, he was offered the post of chancellor of the exchequer in

Critically Evaluate the Management Model of Baumol

Under the traditional economic understanding, it is always assumed that profit maximization is treated as the main goal or objective for businesses, subject to perfect knowledge, single entity and rational logic. However, as illustrated by the principal-agency problem, managers do not usually make rational decision entirely like owners who take company interest as their sole basis for their decisions. Past examples have shown that managers do take their own personal goals and satisfactions as consideration in their decision-making. In addition, information gathering is not always perfect as managers do make decision by relying solely on the implicit knowledge gained from past experiences, without referencing to the macro-economic environment and the current market changes. Combining all these factors, it is therefore understandable that businesses do not always work toward profit maximization, at least in the short term, and other objectives like financial objective, market share, executive power, etc. do involve in business decision making. However, as pointed out by various academics (Baumol, 1962; Marris, 1964; Williamson, 1963), profit maximization does not always serve as the only correct objective for a firm, especially at various phrases of the business on a timeline scale. A point-in-hand is Baumol model. As an alternative to profit maximization model, Baumol model works on the correlation between price and output decision with the objective of maximizing sales revenue, subjected to minimum profit constraint by shareholders. In profit maximization model, profit is maximized at the output where Marginal Revenue (MR) is equaled to Marginal Cost (MC) whereas Baumol Model emphasizes on maximizing sales revenue (TR) and may miss the MC = MR point to achieve its goal. This model argues that businesses try to maximize sales revenues rather than profits with the possible motives such as growing or sustaining market share, to fill up spare capacity, discourage new entrants, management performance and etc. In addition, Baumol model provides a platform to understand some of the pricing strategies adopted by certain industries, which usually share common characteristics of having huge sunk cost and low variable cost. In such industries where fixed cost or sunk cost takes up a huge part of the total cost, producing a single unit and its maximum allowable output (without expanding its capacity in the short term) does not have any significant impact to the total cost. In such instances, profit maximization model is neither practical nor feasible as a focus of the model relies on seeking the output point where MC=MR. In the case of Walt Disney, the operational cost does not differ much whether there is one patronage or maximum allowable patronages as a theme park has to be fully functional during its operation hours, which render the MC at zero or near zero level. The objective of the company to seek sales revenue maximization for the day rather than focusing its effort to achieve the output point where MC=MR to maximize its profit does make sense. This explains the two-part pricing strategy adopted by Walt Disney where a fix initialization fee per entry is charged and allows the patronage to have as many free rides as they wish. Another example is the telecommunication industry, where the initial investment/fixed cost (for example launching the satellite and setting up the infrastructure) is huge, and the variable cost per call is insignificant to the total cost. In such industry, firms will focus on maximizing sales revenue (with constraints to maximum capacity/output) by using strategies like price discrimination strategy. In this strategy, the firms charge a different unit price to peak and off-peak hours, as there is plenty of spare capacity at off-peak hours. Since MC of output is low, any additional revenue that can be generated from this surplus capacity will be profit to the firms. As such instance, it is rational for telecommunication industrial to adopt sales maximization model like Baumol. In addition, as short term capacity is always constraint and limited, telecommunication industries would not want to experience loss sales due to their inability to meet customer demand, especially during peak hour usage. As service providers, consistent and frequent service failure could prove to be fatal in term of their survival and their long-term brand reputation. Therefore it would make sense for telecommunication firms to divert the peak-hours traffic into non-peak hours by using a price discrimination strategy which segments the users based upon their willingness and abilities to pay. For instance, business-users are willing to pay higher price for peak-hours usage due to their inelastic demand whereas in contrast, leisure-users’ demand is elastic and are willing to make call during off-peak hours in return for lower price. By adopting the price discrimination strategy, telecommunication firms are able to maximize sales revenue during peak and off-peak hours by balancing the air-time traffic based upon different market segment of users. At this point, it is also noticeable that one of the characteristics of Baumol firms lies in the perishable products/services offered which cannot be inventoried. The loss sale of the day on the unutilized capacity/outputs is an opportunity cost to the firms. Baumol model is not only applicable to huge/large corporations, but also to small retailers like bakery shop or wet market, which explains the reason why some bakery shops offer a special discount one hour before the shop closed to maximize the revenue. The rationales applied similarly to the low cost carriers (LCC) where price discrimination is used as a strategy to maximize revenue. LCCs sell a cheaper price to early booking passengers and a higher price for last minute passengers to increase the revenue. LCCs used the existence of multiple segments to serve and the opportunity to utilize surplus capacities to generate additional revenue. The adoption of sales revenue maximization model is also used as an effective way of securing additional market share within a regulated market with limited players where market dominance is vital. In related to pricing, add-on product/services like travel insurance, priority boarding and choosing-a-seat are used as bundled offering to the customer to gain extra profit. Firms are willing to earn a smaller profit if it means that they are able to gain a competitive advantage from their rival firms. As an illustration, Fitness club is a good example to elaborate how Baumol model is applied through adopting different pricing strategies. The reasons behind Fitness Club in adopting Baumol model include penetration to new market segments, retaining existing customer and to fill up spare capacity. True Fitness, which is a chained fitness centre, is effectively using Baumol model by offering different pricing strategies to capture different market egments, for instance, offering monthly fees to uncertain-customer and yearly/lifetime membership to certain-customer. Two types of pricing strategies are used by True Fitness to maximum its sales revenue, which are:- i)Two part pricing ( lifetime membership) The company offers a lifetime membership at ? 1. 5K as one-off payment and charges a minimal price of ? 20 yearly as administration/subscription fee. By payi ng a lifetime membership fees as fixed price, the customers are able to enjoy the facilities for life for as low as ? . 67 per month, which no other rivals is able to compete with this low price. As per other industries discussed above, fitness clubs have the similar characteristic like high initial set up cost and low marginal cost to adopt the Baumol model. The company charges an upfront fee to gain maximum consumer surplus and utilizes the yearly subscription fees, which is equaled to the marginal cost/average variable cost, to cover its yearly running costs. In addition, in order to adopt the two-part pricing strategy to maximize sales revenue, the company needs to have a minimum output (also known as critical mass), so that the full consumer surplus can be derived from the fixed fees. For example, if the yearly running cost (without considering the depreciation cost of the initial set up) is ? 200,000, in order to offer a yearly subscription fee of ? 20, the company needs to have a minimum membership of 10,000 in order to reduce the average variable cost/marginal cost to this level. By adopting Baumol model, which gives a higher output with lower price, this is achievable. This pricing strategy is also applicable to other chained-companies where the firms can derive the maximum profit from the fixed fee and use it as capital/investment to set up a new chain store. At the same time, individual chain store is able to run by itself from the revenue derived from the minimal pricing. ii)Price discrimination ( monthly membership vs. lifetime membership) True Fitness segments their customers into certain and uncertain customer by ffering different pricing to monthly and lifetime membership. The club is willing to offer a lower price to customers who are willing to commit, in comparison to uncertain customers. As illustrated in earlier examples, fitness clubs need to fill up spare capacities as any unutilized capacity carried an opportunity cost. With customers’ commitment, they are able to secure their stability in term of both volume and sales revenue. For thos e uncertain customers, the company charges a higher price, which customer willing to pay due to the flexibility and short-term commitment. From the above illustrations, it is apparent that a key characteristic of the Baumol model hinges on the elasticity of demand. As shown, Baumol model uses pricing strategies as a mean to achieve revenue maximization, and is therefore heavily dependent on the price elasticity to achieve the objective of the model If the demand is inelastic, Baumol model will not work as the demand of the product/services will not increase proportionately and therefore the sales revenue will not maximize from the reduction in price. In addition, advertising effect has not been considered in the above examples, which is a common tactic used to increase the inelasticity of demand. The psychological effect of advertising has been proven effective in occupying the mindset of consumers through brand image building, which increase the affiliation of the consumers to certain products/services, thus the inelasticity of the demand. The pointers from the last paragraph are well-illustrated by the Memo 1 example in Baye text book. In this example, it is shown that the price change does not correlate with the demand. By reducing the price from the current, $10. 50 to $10, the subscribers drops from 881 subscribers to 842, causing the revenue to drop from $9251 to $8240 and therefore a profit drop of $614. 5. (Appendix 1). In reverse, the firm should increase the price to $11. 5 to maximize the revenue at $11282 and a price of $12. 5 to maximize the profit at $4734. One of the reasons is due to the advertising and promotional effort from the company which increases the inelasticity of the demand. Secondly, since a loyal group of subscribers has already been amassed, STARZ network functions more as an add-on product to the existing subscribers. The combination of these two factors explained the reason why sales revenues and profit actually increases with price increases. In addition, from the data on STARZ network (Appendix 1), it is apparent that STARZ network does not share the same characteristics of high fixed cost or excess capacity to apply Baumol model. Instead, it seems like advertising or bundled pricing works better for STARZ network rather then price reduction. Further to the points above, Baumol model players are highly susceptible to the price reaction from their rivals, which could easily result in a price-war especially in an oligopolistic market. The existence of a floor triggering price in Baumol model constrained the players from lowering the price too much which will defeat the purpose of revenue maximization. Thus, it is highly unfavorable for Baumol model players to induce a price-cutting reaction from their rivals when they attempt to lower the price. This explained why certain Baumol model players used â€Å"noise† as disguise to their rivals when lowering the price to achieve revenue maximization. To summarize, long-term profit pursuance remains as the ultimate objective for any business. However, due to dissimilar characteristics of different industries, there are various models that can be used to achieve this long-term objective, which explains why certain firms are willing to sacrifice profit today in exchange for profit tomorrow. As illustrated through various examples in this assignment, the application of the correct model for the right industries and at the correct phrase of the company life-cycle becomes an even more important decision for managers to make. With the understanding and knowledge gained through the detailed analysis and critique of Baumol model, an useful insight to the economic rationale adopted by various industries, like Walt Disney, LCC and telecommunication firms is achieved. Bibliography Mercuro, N. , Haralambos, S. Gerald, W. , 1992. Ownership Structure, Value of the Firm and the Bargaining Power of the Manager. Southern Economic Journal, 59(2), pp. 273-83. Baumol, W. J. , 1996. Prediction and the logic of the Averages Variable Cost Test. Journal of Law and Economics, 39(1), pp. 49 – 72. McNutt, P. A. , 2008, â€Å"Signalling, Strategy & Management Type†, Available at: http://www. patrickmcnutt. com/docs/PatrickMcNutt. com_ebook [Accesses 20 Jan 2009]. Baye, M. R. , 2009 . Managerial Economics and Business Strategy. International ed. New York: McGraw-Hill. Conway, L. L. & Craycraft, J. L. , 1974. Sales Maximisation and Oligopoly: A Case Study. Journal of Industrial Economics, 23(2), pp. 81-95. Armstrong, M. & Vickers, J. , 2001. Competitive Price Discrimination. The Rand Journal of Economics, 32(4), pp. 579-605. Oi, W. Y. , 1971. A Disneyland Dilemma: Two-Part Tariffs for a Mickey Mouse Monopoly. The Journal of Economics, 85(1), pp. 77-96. McNutt, P. A.. Management Objectives and Stakeholder Value (Study Guide Unit 1).

Children With Depression essays

Children With Depression essays Running head: PSYCHOLOGICAL TREATMENT FOR DEPRESSED STUDENTS Psychological Treatment for Depressed Students Depression in school-age children may be one of the most overlooked and undertreated psychological disorders of childhood, presenting a serious mental health problem. Depression in children has become an important issue in research due to its many emotional forms, and its relationship to self-destructive behaviors. Depressive disorders are of particular importance to school psychologists, who are often placed in the best position to identify, refer, and treat depressed children. Procedures need to be developed to identify depression in students to avoid allowing those children struggling with depression to go undetected. Depression is one of the most treatable forms of disorders, with an 80-90% chance of improvement if individuals receive treatment (Dubuque, 1998). On the other hand, if untreated, serious cases of depression in childhood can be severe, long, and interfere with all aspects of development, relationships, school progress, and family life (Janzen, The existence of depression in school-age children was nearly unrecognized until the 1990s. In the past, depression was thought of as a problem that only adults struggled with, and if children did experience it, they experienced depression entirely different than adults did. Psychologists of the psychoanalytic orientation felt that children were unable to become depressed because their superegos were inadequately developed (Fuller, 1992). More recently, Clarizio and Payette (1990) found that depressed school-age children and depressed adults share the same basic symptoms. In fact, only a few minor differences between childhood and adult depression have been found, including the assumption that with childhood depression, irritable mood may serve as a substitute for the depressed mood criterion (Waterman Depression in stude...