I found a video on Labor Markets: Perfect and Imperfect Competition at http://www.youtube.com/watch?v=JNkchLUURWg.
I can't be bothered to upload it and I am not sure how to either, so you can go to the website to look at it if you like.
This video clip basically talks about the labour market under perfect competition and monopoly conditions. Under perfect compeition, labour can be hired at a fixed price in any quantities. For monopoly however, exploitation can occur when the wage paid to the workers are less than their the marginal revenue they can give the company hiring them. This is when labout unions come in to push for higher wages. The video clip also introduces Marginal Factor Cost which corresponds to the LDMR principle.
This video clip can be used to explain the different types of market structures and their implications to the real world: labour wages and exploitation of wages. It can be showed in conjuction with some articles about exploitation of labour by MNCs which have substantial monopoly power.
Sunday, April 27, 2008
Follow-up to the Video I Have Posted
Hi all,
apparently, there hasn't been any discussion on the video clips I have posted quite some time ago. This could have been due to the sheer length of the clips - as a result, it was unable to captivate your interest although I found it interesting how economics concepts could be applied to such a topic.
Nevertheless, I am going to answer the questions that I had posted myself. Here goes:
Economics is not just about money.
The major misconception most students have about economics is challenged by the content of this video clip. Economics is not just about money – and this fact has been demonstrated adequately. To the student of economics, economics should be seen as a social science that studies how individuals and societies allocate scarce resources among alternative uses so as to satisfy their unlimited wants, and this will be the first impression of economics as a subject that this video will help to construct. Even in issues such as teenage dating (as addressed in the video clip), economic concepts will serve to explain human behaviour in a logical manner.
Supply. Demand. Equilibrium.
The laws of supply and demand that ‘govern the lustful desires of teenagers all overAmerica
Opportunity cost.
And as far as scarcity is concerned, choices have to be made and an opportunity cost will be incurred. A simple interview (as shown in the video clip) revealed the two main priorities in the life of any average student in Monta Vista as Homecoming approaches – studying for AP (US History) and getting ready for dance. Undoubtedly, the more time spent on dance, the less time can be spent on studying. The opportunity cost incurred for investing too much time in preparation for the dance is, thus, a reasonable score for US History. Apparently, the opportunity cost of partaking in the dance did not coincide with the monetary expenditure involved in preparing for the dance (although in some cases it may) – buying dresses, purchasing new shoes etc. – and this is one of the many key learning points about the opportunity cost that has to be brought across to students.
Scarcity.
Furthermore, the fact that scarcity is not shortage is expounded upon. The fact that despite having sufficient numbers of guys in Monta Vista, the problem of ‘hottie scarcity’ is not solved, and probably will not be solved. The reason is simple – wants versus needs. Needs, in this context, have been defined as ‘an instinctive primal instinct to seek out a mate in order to procreate, thereby leaving their mark on the world’. Wants, on the other hand, are more complex. Girls perceive the more scarce attractive ‘hot’ guys as more desirable even though ‘hotness’ is not a prerequisite for procreation. As a result, scarcity develops, in spite of the absence of shortage. This is yet another vital concept that students must grapple with.
Utility and satisfaction.
Apart from the concept of scarcity, the concept of utility has also been addressed. Defined as the ‘pleasure derived from being in a healthy relationship’, the basic assumption that holds true for the Monta Vista case is that any rational girl will try to maximise her marginal utility, or, in other words, try as much as possible not to date ‘ugly’ guys. However, ‘making out’ has its limits too. Couples may experience a high marginal utility at the beginning of brand new relationship, but ‘the more they got together, the less they enjoy it’, it asserted. This is termed, the concept of diminishing marginal utility – a rather crucial concept students will have to deal with later when faced with the task of analysing consumer choice and behaviour.
Public goods.
Finally, the services of ‘public goods’/normal goods become overstretched as demand for ‘public goods’ hit record highs. ‘Hotties’ labelled as ‘public goods’ become the target of pursuit of many, leaving scores of girls having to resort to ‘inferior goods’ at the same time. This translates conveniently into the scenario where the tragedy of the commons is played out. Most girls will, therefore, prefer ‘private goods’ that involve ‘one person at one time’, since consumption by one consumer prevents the simultaneous consumption by other consumers.
What inspired me most about this video was the realization that economics can and should be related to real life. To me, the value of economics is that it is possible to apply economic knowledge in decision-making so that we may make the most rational/logical decisions.
Of course, sometimes rational/logical decisions may not be ethical decisions. So there is also a need to use a bit of common sense.
Jian Hua
apparently, there hasn't been any discussion on the video clips I have posted quite some time ago. This could have been due to the sheer length of the clips - as a result, it was unable to captivate your interest although I found it interesting how economics concepts could be applied to such a topic.
Nevertheless, I am going to answer the questions that I had posted myself. Here goes:
Economics is not just about money.
The major misconception most students have about economics is challenged by the content of this video clip. Economics is not just about money – and this fact has been demonstrated adequately. To the student of economics, economics should be seen as a social science that studies how individuals and societies allocate scarce resources among alternative uses so as to satisfy their unlimited wants, and this will be the first impression of economics as a subject that this video will help to construct. Even in issues such as teenage dating (as addressed in the video clip), economic concepts will serve to explain human behaviour in a logical manner.
Supply. Demand. Equilibrium.
The laws of supply and demand that ‘govern the lustful desires of teenagers all over
Opportunity cost.
And as far as scarcity is concerned, choices have to be made and an opportunity cost will be incurred. A simple interview (as shown in the video clip) revealed the two main priorities in the life of any average student in Monta Vista as Homecoming approaches – studying for AP (US History) and getting ready for dance. Undoubtedly, the more time spent on dance, the less time can be spent on studying. The opportunity cost incurred for investing too much time in preparation for the dance is, thus, a reasonable score for US History. Apparently, the opportunity cost of partaking in the dance did not coincide with the monetary expenditure involved in preparing for the dance (although in some cases it may) – buying dresses, purchasing new shoes etc. – and this is one of the many key learning points about the opportunity cost that has to be brought across to students.
Scarcity.
Furthermore, the fact that scarcity is not shortage is expounded upon. The fact that despite having sufficient numbers of guys in Monta Vista, the problem of ‘hottie scarcity’ is not solved, and probably will not be solved. The reason is simple – wants versus needs. Needs, in this context, have been defined as ‘an instinctive primal instinct to seek out a mate in order to procreate, thereby leaving their mark on the world’. Wants, on the other hand, are more complex. Girls perceive the more scarce attractive ‘hot’ guys as more desirable even though ‘hotness’ is not a prerequisite for procreation. As a result, scarcity develops, in spite of the absence of shortage. This is yet another vital concept that students must grapple with.
Utility and satisfaction.
Apart from the concept of scarcity, the concept of utility has also been addressed. Defined as the ‘pleasure derived from being in a healthy relationship’, the basic assumption that holds true for the Monta Vista case is that any rational girl will try to maximise her marginal utility, or, in other words, try as much as possible not to date ‘ugly’ guys. However, ‘making out’ has its limits too. Couples may experience a high marginal utility at the beginning of brand new relationship, but ‘the more they got together, the less they enjoy it’, it asserted. This is termed, the concept of diminishing marginal utility – a rather crucial concept students will have to deal with later when faced with the task of analysing consumer choice and behaviour.
Public goods.
Finally, the services of ‘public goods’/normal goods become overstretched as demand for ‘public goods’ hit record highs. ‘Hotties’ labelled as ‘public goods’ become the target of pursuit of many, leaving scores of girls having to resort to ‘inferior goods’ at the same time. This translates conveniently into the scenario where the tragedy of the commons is played out. Most girls will, therefore, prefer ‘private goods’ that involve ‘one person at one time’, since consumption by one consumer prevents the simultaneous consumption by other consumers.
What inspired me most about this video was the realization that economics can and should be related to real life. To me, the value of economics is that it is possible to apply economic knowledge in decision-making so that we may make the most rational/logical decisions.
Of course, sometimes rational/logical decisions may not be ethical decisions. So there is also a need to use a bit of common sense.
Jian Hua
Saturday, April 26, 2008
Article Review: Rice price hits new high on global markets
Hi all,
you've had your potatoes, now take a look at rice.
This time, it's about the recent issue of soaring prices of rice. Rice, as we know it, is a staple food for the Asians - the Chinese, the Japanese etc. However, it's not just the Asians who have been hit by soaring prices. You might be intrigued to find out what impact the price hike of rice has had in the USA.
Happy reading!
Jian Hua
Oh, and before I forget, I will try to do up another article review that is unrrelated to food next time :)
you've had your potatoes, now take a look at rice.
This time, it's about the recent issue of soaring prices of rice. Rice, as we know it, is a staple food for the Asians - the Chinese, the Japanese etc. However, it's not just the Asians who have been hit by soaring prices. You might be intrigued to find out what impact the price hike of rice has had in the USA.
Happy reading!Jian Hua
Oh, and before I forget, I will try to do up another article review that is unrrelated to food next time :)
Review of GM & Ford
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses.
'I’m not sure whether this is an EOS, but this move will certainly lower its LRAC and lower the overall production costs.'
In order to answer this query, we must first consider the issue of what exactly is meant by the 'restructuring plan'. I would think that the restructuring plan will mostly be simply undergoing the process of rationalisation, and improving the efficiency of the corporate structure.
Thus costs are reduced due to:
i) Reduction in number of employees
ii) Shutting down of some factories/plants/offices
iii) Reduction in delays et cetera
It may then appear to be involving economies of scale - for example, the reduction in number of say, machines, may result in the fixed costs being seemingly spread over a larger output level.
But, we must not forget to go back to the definition of 'economies of scale'. Economies of scale are experienced when long run average costs decrease, due to the scale of production increasing. In this case, we shall only consider the internal (dis)economies of scale since the measure involves only a singular firm, and thus external (dis)economies of scale are irrelevant.
Thus, while it is indeed true that the move by Rick Wagoner will reduce the costs incurred by the firm , it is not via any internal expansion or whatsoever, and hence scale of production does not increase. In fact, referring to an earlier part of the article:
"But in this case, size doesn't necessarily make for success in the car business. Today the companies are too big, with expensive plants that are not running and thousands of union workers they have to pay even when they do not need them. Combine that with the financial burden of pensions and providing health care to workers and their families, and you see that size can, in fact, hurt a company."
Thus, it appears that, in fact, GM is probably already experiencing significant internal diseconomies of scale instead, and so it is highly unlikely that GM would increase its scale of production. Even if it did, the increase in the scale of production would incur even greater internal diseconomies of scale, and most definitely not internal economies of scale.
Therefore, since the cost savings are not due to an increase in the scale of production, the measure thus does not involve internal economies of scale. I would think that the measures would be instead helping to reduce the diseconomies of scale experienced - for example, addressing issues in coordination and communication between departments, hence resulting in the cost savings.
I hope that has been useful.
Zhe Wei
'I’m not sure whether this is an EOS, but this move will certainly lower its LRAC and lower the overall production costs.'
In order to answer this query, we must first consider the issue of what exactly is meant by the 'restructuring plan'. I would think that the restructuring plan will mostly be simply undergoing the process of rationalisation, and improving the efficiency of the corporate structure.
Thus costs are reduced due to:
i) Reduction in number of employees
ii) Shutting down of some factories/plants/offices
iii) Reduction in delays et cetera
It may then appear to be involving economies of scale - for example, the reduction in number of say, machines, may result in the fixed costs being seemingly spread over a larger output level.
But, we must not forget to go back to the definition of 'economies of scale'. Economies of scale are experienced when long run average costs decrease, due to the scale of production increasing. In this case, we shall only consider the internal (dis)economies of scale since the measure involves only a singular firm, and thus external (dis)economies of scale are irrelevant.
Thus, while it is indeed true that the move by Rick Wagoner will reduce the costs incurred by the firm , it is not via any internal expansion or whatsoever, and hence scale of production does not increase. In fact, referring to an earlier part of the article:
"But in this case, size doesn't necessarily make for success in the car business. Today the companies are too big, with expensive plants that are not running and thousands of union workers they have to pay even when they do not need them. Combine that with the financial burden of pensions and providing health care to workers and their families, and you see that size can, in fact, hurt a company."
Thus, it appears that, in fact, GM is probably already experiencing significant internal diseconomies of scale instead, and so it is highly unlikely that GM would increase its scale of production. Even if it did, the increase in the scale of production would incur even greater internal diseconomies of scale, and most definitely not internal economies of scale.
Therefore, since the cost savings are not due to an increase in the scale of production, the measure thus does not involve internal economies of scale. I would think that the measures would be instead helping to reduce the diseconomies of scale experienced - for example, addressing issues in coordination and communication between departments, hence resulting in the cost savings.
I hope that has been useful.
Zhe Wei
Friday, April 25, 2008
Cartoons!
Thanks for the cartoons, Mui Suan.
You are right in the sense US is still the largest oil consumption country follow by China.... as for the LDC, you may want to find out more how heavily the government subsidises oil.
Ms How
You are right in the sense US is still the largest oil consumption country follow by China.... as for the LDC, you may want to find out more how heavily the government subsidises oil.
Ms How
Review on GM&FORD
Good job Wei Yang! It's a very thorough article review and you have gotten them right!
As for the part you are not sure:
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses.
'I’m not sure whether this is an EOS, but this move will certainly lower its LRAC and lower the overall production costs.'
Anyone bothers to comment before me?
Ms How
As for the part you are not sure:
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses.
'I’m not sure whether this is an EOS, but this move will certainly lower its LRAC and lower the overall production costs.'
Anyone bothers to comment before me?
Ms How
Thursday, April 24, 2008
Cartoons on rising oil prices
Hi
here are some cartoons which i found interesting.
As the third world countries develop, their demand for oil will increase as well. However, as this cartoon points out, the increase in demand for oil by these countries are driving the oil prices higher (as claimed by America). In my opinion, the demand from the thrid world countries is not as great as the demand from other developing countries such as China, India. The demand for oil from these 2 countries probably have a greater impact on oil prices than the demand from third world countries. It is important to note that there are other factors which escalate the oil prices, such as decrease in supply etc. (for more info, look at the previous article review i did on rising oil prices)
this cartoon is kind of funny. in the sense that while consumers are having a difficult time trying to cope with the rising oil prices, the oil companies are really REAPING BIG $$$. i am not exactly sure if it's really true that oil companies are reaping huge profits. but given that the demand for oil is price inelastic and that the oil prices are rising, the total revenue for the companies will increase. however, to determine if they are making supernormal, normal, or even subnormal profits, we still need to know their total costs.
hope that was easy to understand. btw, i got the cartoons from this website: http://www.cagle.com. there are more econs cartoons on recession etc. do check them out =)
Cheers,
Mui Suan
here are some cartoons which i found interesting.
As the third world countries develop, their demand for oil will increase as well. However, as this cartoon points out, the increase in demand for oil by these countries are driving the oil prices higher (as claimed by America). In my opinion, the demand from the thrid world countries is not as great as the demand from other developing countries such as China, India. The demand for oil from these 2 countries probably have a greater impact on oil prices than the demand from third world countries. It is important to note that there are other factors which escalate the oil prices, such as decrease in supply etc. (for more info, look at the previous article review i did on rising oil prices)
this cartoon is kind of funny. in the sense that while consumers are having a difficult time trying to cope with the rising oil prices, the oil companies are really REAPING BIG $$$. i am not exactly sure if it's really true that oil companies are reaping huge profits. but given that the demand for oil is price inelastic and that the oil prices are rising, the total revenue for the companies will increase. however, to determine if they are making supernormal, normal, or even subnormal profits, we still need to know their total costs.
hope that was easy to understand. btw, i got the cartoons from this website: http://www.cagle.com. there are more econs cartoons on recession etc. do check them out =)
Cheers,
Mui Suan
Wednesday, April 23, 2008
GM Ford Review
I decided to take up the challenge to review this article. Please enjoy.
To put into context, the main reason why GM and Ford are deciding to merge is due to the fact that Toyota is catching up in market share and is a big threat. Toyota has the edge over GM and Ford because it decided to research into small, cheap, energy efficient cars as opposed to that of GM’s and Ford’s large, expensive, energy-guzzlers. As global warming sets in and petrol prices skyrocket, Toyota’s cars are seen as more environmentally friendly and cheaper, so Toyota may soon become the number 1 car producer, so GM and Ford considered merger to prevent this scenario.
Times are so tough in the American auto industry that the country's two biggest nameplates have actually talked about a massive combination. Reports out of Detroit suggest that GM and Ford had discussions about the possibility of a merger or alliance.
In this case, it would probably be a horizontal integration since both GM and Ford are car manufacturers and both companies are quite well established, with considerable experience, technology and market share."
It's a joke, there's no real meat on that bone," said Kevin Tynan, senior auto analyst at Argus Research Company. "They need to get smaller, not bigger. They need to be more flexible, not continue in their old way of doing business."
I am not sure whether I agree to this comment here because being bigger certainly allows GM and Ford to reap significant EOS and increase their competitiveness. The motivation for this merger is actually to deal with the increasing threat from Toyota, so I believe that GM and Ford will not “continue in their old way of doing business”.
But the tantilizing possibility of a mega merger has many industry experts rubbing their eyes in disbelief, wondering if these two icons could actually find a way to marry, and if they did, how that would change the auto industry landscape."Does it become General Ford? Gord? Ford Motors?" asked Karl Brauer, editor-in-chief of auto web site Edmunds.com. "That's actually one of the strengths of a merger -- they'd be combining two of the world's most recognized brands."
Indeed, the brand name will be extremely powerful as both consumers of GM and Ford will come to recognize this name. Also, advertisement will be made cheaper as advertisement costs can be spread over larger outputs (or 2 companies, if you like to think of it that way).
Combined, Ford and General Motors would be a force to be reckoned with.Based on their most recent sales reports, a merged company would have accounted for more than 4.6 million cars and trucks sold in the United States so far this year. That's an astounding 41 percent of the U.S. auto market and almost three times the size of Toyota's slice of the auto pie.
The aim of most vertical integrations is to increase market share so that the companies can enjoy greater internal EOS, especially in the car manufacturing, where start-up costs are generally high and companies can enjoy significant technical EOS. R&D is especially important (research into energy-efficient cars to compete with Toyoya.)
As such, GM-Ford will have a lower LRAC, which will be beneficial as it can reduce pricing to compete with Toyota, which is extremely important since people are starting to prefer Toyota’s small, CHEAP, energy-efficient cars over GM-Ford’s large, EXPENSIVE, fuel-guzzlers. Therefore, to win over market share, a low price is crucial.
That new sizable company would have leverage with suppliers that neither has enjoyed for decades. Experts say a combination could allow for better deals on everything from steel components to tires, air conditioners to ad time.
Being large means that GM-Ford will be able to experience bulk purchase and distribution EOS.
But in this case, size doesn't necessarily make for success in the car business. Today the companies are too big, with expensive plants that are not running and thousands of union workers they have to pay even when they do not need them. Combine that with the financial burden of pensions and providing health care to workers and their families, and you see that size can, in fact, hurt a company."
Even when the companies are split, their total costs in these areas are still almost about the same. So I don’t see what they are arguing about here.
Even if a merger happened, they'd still face these costs," said Brauer. "Becoming a single company doesn't reduce their obligations to the UAW or their health care costs. Unless they made these issues a part of the alliance negotiations and included the unions in whatever deal they struck."
Asian competitors Toyota and Honda -- both of which have made big headway in grabbing market share from GM and Ford in recent years -- have a younger work force, which means lower pension obligations and less expensive health care costs. Those foreign competitors have used those lower financial burdens to make cars in the United States for less than their American competitors.
Well I guess this is something GM and Ford can’t change: Toyota’s advantage of a younger workforce, unless it tries to hire foreign workers.
A merger would allow the combined company to negotiate simultaneously with its unions about cost reducing moves, but GM is already a few steps ahead of Ford in cutting these costs with aggressive hourly-worker buyouts and layoffs of salaried managers.
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses. Ford's recent acceleration of its "Way Forward" plan is taking a line from GM's script, offering one-time payouts of up to $140,000 to workers willing to walk away from their jobs and drop corporate health insurance in their retirement years.
I’m not sure whether this is an EOS, but this move will certainly lower its LRAC and lower the overall production costs.
But success is not just about reducing costs. It is about making cars and trucks that people want to buy.
"You could easily end up with a stronger line-up of vehicles and nameplates," said Bauer. He says both GM and Ford have brands that they could jettison without having a negative effect on their bottom lines. Losing the car and truck nameplates that haven't found a place in the marketplace would make the overall car market stronger; a Darwinian thinning of the herd. A big auto merger like the one reportedly discussed by GM and Ford has happened before. The $38 billion combination of Chrysler with German auto giant Daimler-Benz in 1998 offers a precedent. It took years and a shift in top management to get the merger to work."
Indeed, the larger the company, the more internal DEOS it experiences in management difficulties, such as problems with communication, coordination and low morale. So management needs to be really good, but of course, big companies can buy better management.
The real challenge will be getting somebody that can actually manage it and make it stronger, instead of just creating an unwieldy monster," said Bauer. "It would take a hell of a management effort.
"But the speculation about a merged GM/Ford is just that: speculation.
Most analysts are not confident that a GM/Ford marriage is in the offing, pointing out that there's no real financial benefit to either company that would justify the Herculean effort of pulling off a combination.
To put into context, the main reason why GM and Ford are deciding to merge is due to the fact that Toyota is catching up in market share and is a big threat. Toyota has the edge over GM and Ford because it decided to research into small, cheap, energy efficient cars as opposed to that of GM’s and Ford’s large, expensive, energy-guzzlers. As global warming sets in and petrol prices skyrocket, Toyota’s cars are seen as more environmentally friendly and cheaper, so Toyota may soon become the number 1 car producer, so GM and Ford considered merger to prevent this scenario.
Times are so tough in the American auto industry that the country's two biggest nameplates have actually talked about a massive combination. Reports out of Detroit suggest that GM and Ford had discussions about the possibility of a merger or alliance.
In this case, it would probably be a horizontal integration since both GM and Ford are car manufacturers and both companies are quite well established, with considerable experience, technology and market share."
It's a joke, there's no real meat on that bone," said Kevin Tynan, senior auto analyst at Argus Research Company. "They need to get smaller, not bigger. They need to be more flexible, not continue in their old way of doing business."
I am not sure whether I agree to this comment here because being bigger certainly allows GM and Ford to reap significant EOS and increase their competitiveness. The motivation for this merger is actually to deal with the increasing threat from Toyota, so I believe that GM and Ford will not “continue in their old way of doing business”.
But the tantilizing possibility of a mega merger has many industry experts rubbing their eyes in disbelief, wondering if these two icons could actually find a way to marry, and if they did, how that would change the auto industry landscape."Does it become General Ford? Gord? Ford Motors?" asked Karl Brauer, editor-in-chief of auto web site Edmunds.com. "That's actually one of the strengths of a merger -- they'd be combining two of the world's most recognized brands."
Indeed, the brand name will be extremely powerful as both consumers of GM and Ford will come to recognize this name. Also, advertisement will be made cheaper as advertisement costs can be spread over larger outputs (or 2 companies, if you like to think of it that way).
Combined, Ford and General Motors would be a force to be reckoned with.Based on their most recent sales reports, a merged company would have accounted for more than 4.6 million cars and trucks sold in the United States so far this year. That's an astounding 41 percent of the U.S. auto market and almost three times the size of Toyota's slice of the auto pie.
The aim of most vertical integrations is to increase market share so that the companies can enjoy greater internal EOS, especially in the car manufacturing, where start-up costs are generally high and companies can enjoy significant technical EOS. R&D is especially important (research into energy-efficient cars to compete with Toyoya.)
As such, GM-Ford will have a lower LRAC, which will be beneficial as it can reduce pricing to compete with Toyota, which is extremely important since people are starting to prefer Toyota’s small, CHEAP, energy-efficient cars over GM-Ford’s large, EXPENSIVE, fuel-guzzlers. Therefore, to win over market share, a low price is crucial.
That new sizable company would have leverage with suppliers that neither has enjoyed for decades. Experts say a combination could allow for better deals on everything from steel components to tires, air conditioners to ad time.
Being large means that GM-Ford will be able to experience bulk purchase and distribution EOS.
But in this case, size doesn't necessarily make for success in the car business. Today the companies are too big, with expensive plants that are not running and thousands of union workers they have to pay even when they do not need them. Combine that with the financial burden of pensions and providing health care to workers and their families, and you see that size can, in fact, hurt a company."
Even when the companies are split, their total costs in these areas are still almost about the same. So I don’t see what they are arguing about here.
Even if a merger happened, they'd still face these costs," said Brauer. "Becoming a single company doesn't reduce their obligations to the UAW or their health care costs. Unless they made these issues a part of the alliance negotiations and included the unions in whatever deal they struck."
Asian competitors Toyota and Honda -- both of which have made big headway in grabbing market share from GM and Ford in recent years -- have a younger work force, which means lower pension obligations and less expensive health care costs. Those foreign competitors have used those lower financial burdens to make cars in the United States for less than their American competitors.
Well I guess this is something GM and Ford can’t change: Toyota’s advantage of a younger workforce, unless it tries to hire foreign workers.
A merger would allow the combined company to negotiate simultaneously with its unions about cost reducing moves, but GM is already a few steps ahead of Ford in cutting these costs with aggressive hourly-worker buyouts and layoffs of salaried managers.
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses. Ford's recent acceleration of its "Way Forward" plan is taking a line from GM's script, offering one-time payouts of up to $140,000 to workers willing to walk away from their jobs and drop corporate health insurance in their retirement years.
I’m not sure whether this is an EOS, but this move will certainly lower its LRAC and lower the overall production costs.
But success is not just about reducing costs. It is about making cars and trucks that people want to buy.
"You could easily end up with a stronger line-up of vehicles and nameplates," said Bauer. He says both GM and Ford have brands that they could jettison without having a negative effect on their bottom lines. Losing the car and truck nameplates that haven't found a place in the marketplace would make the overall car market stronger; a Darwinian thinning of the herd. A big auto merger like the one reportedly discussed by GM and Ford has happened before. The $38 billion combination of Chrysler with German auto giant Daimler-Benz in 1998 offers a precedent. It took years and a shift in top management to get the merger to work."
Indeed, the larger the company, the more internal DEOS it experiences in management difficulties, such as problems with communication, coordination and low morale. So management needs to be really good, but of course, big companies can buy better management.
The real challenge will be getting somebody that can actually manage it and make it stronger, instead of just creating an unwieldy monster," said Bauer. "It would take a hell of a management effort.
"But the speculation about a merged GM/Ford is just that: speculation.
Most analysts are not confident that a GM/Ford marriage is in the offing, pointing out that there's no real financial benefit to either company that would justify the Herculean effort of pulling off a combination.
Monday, April 21, 2008
Article Review: "Spud we like"
Hi all,
here is an Article Review I have done up on the potato industry. So common is the humble potato in our diet, but how much do we actually know about the market for potatoes? So here it is:
This short article very effectively sums up the market of potatoes to the producers and to the consumers. Very useful general information for us since potatoes are as important to Westerners as rice is to Asians/Chinese.
Please feel free to comment.
Jian Hua
here is an Article Review I have done up on the potato industry. So common is the humble potato in our diet, but how much do we actually know about the market for potatoes? So here it is:
This short article very effectively sums up the market of potatoes to the producers and to the consumers. Very useful general information for us since potatoes are as important to Westerners as rice is to Asians/Chinese.
Please feel free to comment.
Jian Hua
Rising Oil Price
Hello =)
the following article is from Straits Times (21 Apr). It's about buyers and sellers agreeing that the rising oil price is beyond control. I have highlighted the reasons behind the rising oil price, such as the slight decrease in supply as well as increasing demand from China and India. There's the part about stocks that I didnt quite understand.. Maybe someone can explain?? happy analysing the article :)
Mui
the following article is from Straits Times (21 Apr). It's about buyers and sellers agreeing that the rising oil price is beyond control. I have highlighted the reasons behind the rising oil price, such as the slight decrease in supply as well as increasing demand from China and India. There's the part about stocks that I didnt quite understand.. Maybe someone can explain?? happy analysing the article :)
Mui
Sunday, April 20, 2008
Some Information on Investment Banking
Hi guys! The other day we were discussing about how banks make money and we brought up investment banking too, so here's an introduction about investment banking.
____________________________________________________________________
Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Acknowledgement: http://www.wisegeek.com/what-is-investment-banking.htm
____________________________________________________________________
Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.
Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.
Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.
An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.
The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.
Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people.
Acknowledgement: http://www.wisegeek.com/what-is-investment-banking.htm
Microsoft Monopoly
Here's an interesting article about Microsoft, its monopoly power, as well as some attempts by some US courts to weaken Microsoft's monopoly power. Enjoy.
My comments are in purple.
My highlights are in orange.
__________________________________________________________________
Issues and Background
The current popularity of Windows does not mean that its market position is unassailable. The potential financial reward for building the "next Windows" is so great that there will never be a shortage of new technologies seeking to challenge it. Powerful competitors such as IBM, Sun Microsystems and Oracle are spending hundreds of millions of dollars annually to develop new software aimed squarely at replacing Windows. That is one reason why we price Windows so low. If we increased prices, failed to innovate, or stopped incorporating the features consumers want (such as support for the Internet), we would rapidly lose market share. ~Bill Gates, The Economist, 6/13/98
//According to Bill Gates' point of view, Microsoft is not having a monopoly because it still faces stiff competition from IBM, Sun Microsystems and Oracle, who are trying to dethrone microsoft from its dominant position. It is pressured to lower prices and constantly innovate. This is unlike a true monopoly is which the firm can decide on its price or output without caring about compeition from others.
My comments are in purple.
My highlights are in orange.
__________________________________________________________________
Issues and Background
The current popularity of Windows does not mean that its market position is unassailable. The potential financial reward for building the "next Windows" is so great that there will never be a shortage of new technologies seeking to challenge it. Powerful competitors such as IBM, Sun Microsystems and Oracle are spending hundreds of millions of dollars annually to develop new software aimed squarely at replacing Windows. That is one reason why we price Windows so low. If we increased prices, failed to innovate, or stopped incorporating the features consumers want (such as support for the Internet), we would rapidly lose market share. ~Bill Gates, The Economist, 6/13/98
//According to Bill Gates' point of view, Microsoft is not having a monopoly because it still faces stiff competition from IBM, Sun Microsystems and Oracle, who are trying to dethrone microsoft from its dominant position. It is pressured to lower prices and constantly innovate. This is unlike a true monopoly is which the firm can decide on its price or output without caring about compeition from others.
//If Microsoft becomes complete monopoly, allocative ineffieciency might set in because Microsoft will price a higher price so that MC=MR and this will result in a deadweight loss as well as loss in consumer surplus. 
Picture from http://en.wikipedia.org/wiki/Image:Monopoly-surpluses.svg
Everyone who uses a computer or depends on computers has an interest in seeing Microsoft's anticompetitive and anticonsumer practices curtailed by the antitrust authorities. Microsoft's claim that it is defending its right to innovate is a cruel joke in an industry that sees its best innovators attacked by the company's anticompetitive actions. Microsoft's agenda isn't innovation, it's imitation, as well as the imposition of suffocating control over user choices and an ever-widening monopoly.~Ralph Nader and James Love, ComputerWorld, 11/9/98
//Large firms/Near monopolies have the market power to engage in anticompetive practices such as predatory pricing. The primary motivation for this, as suggested by the last sentence, would probably be to increase its monopoly power.
Microsoft operating systems account for approximately 90-95% of microcomputer computer operating systems. Microsoft's Windows operating system has become the de facto standard for home and business computer applications. It is fairly clear that Microsoft is the dominant firm in the market for computer operating systems. The question in the current Microsoft antitrust case is whether or not the computer firm has used its market dominance to restrain trade in violation of federal antitrust statutes.
//Statistics prove that Microsoft is not a monopoly. It does not have 100% of the market.
//antitrust adjective chiefly United States (of legislation) preventing or controlling monopolies.
//Anticompetitive practices are opposed by many goverments as it is unfair.
The specific actions with which Microsoft has been charged include:
- monopolizing the computer operating system market
- integrating the Internet Explorer web browser into the operating system in an attempt to eliminate competition from Netscape, and
- using its market power to form anticompetitive agreements with producers of related goods
//Guess everyone saw that in the "microsoft monopoly" video.
//Eliminating competition is one more step to complete world(market) domination(monoply)!
Under current interpretations of U.S. antitrust law, Microsoft can be found guilty of monopolization in the computer operating systems market only if it used its market dominance to charge a price that exceeds the competitive price. Determining the "competitive price," however, is not an easy task in this market since such a price is not directly observed. Imputing this price from production costs is problematic since many of the costs of research, development, and support in a company such as Microsoft are difficult to accurately assign to individual software products. Those who believe that Microsoft is guilty of monopolization argue that Microsoft has received up to $10 billion in monopoly profits. Microsoft supporters argue that Microsoft has kept prices low because of the threat of potential competition.
//Alleged claims that firms engage in predatory pricing is no simple task as Microsoft argues that they lower price to increase competitiveness. Also, calculating prices is complicated as there are many factors to input.
The government alleges that Microsoft's decision to integrate Internet Explorer into the operating system was designed to eliminate the competitive threat posed by Netscape and Sun Microsystem's Java programming language. Microsoft argues that this action is a natural extension of the Windows environment and that it should not be faulted for providing a free program to all users. The recent purchase of Netscape by AOL is used as evidence by both sides of the dispute. Microsoft argues that this reflects the the dynamic and competitive nature of the software market. Critics of Microsoft argue that this was required only because of the reduction in Netscape's market share as a result of Microsoft's unfair trade practices.
The third part of the government's case is that Microsoft has used its dominance in the operating system market to force other firms to agree to policies that limit competition from products produced by firms that compete with Microsoft.
//Another case of anticompetitive practices
Ultimately, the question that must be answered is whether Microsoft has maintained its market dominance partly by the use of illegal anticompetitive practices. In a somewhat unusual move that may have been designed to spur negotiations, on November 5, 1999, Judge Thomas Penfield Jackson issued findings of fact that were based on the evidence that had been presented on the antitrust allegations. The Court's Findings of Fact held that:
//Alleged claims that firms engage in predatory pricing is no simple task as Microsoft argues that they lower price to increase competitiveness. Also, calculating prices is complicated as there are many factors to input.
The government alleges that Microsoft's decision to integrate Internet Explorer into the operating system was designed to eliminate the competitive threat posed by Netscape and Sun Microsystem's Java programming language. Microsoft argues that this action is a natural extension of the Windows environment and that it should not be faulted for providing a free program to all users. The recent purchase of Netscape by AOL is used as evidence by both sides of the dispute. Microsoft argues that this reflects the the dynamic and competitive nature of the software market. Critics of Microsoft argue that this was required only because of the reduction in Netscape's market share as a result of Microsoft's unfair trade practices.
The third part of the government's case is that Microsoft has used its dominance in the operating system market to force other firms to agree to policies that limit competition from products produced by firms that compete with Microsoft.
//Another case of anticompetitive practices
Ultimately, the question that must be answered is whether Microsoft has maintained its market dominance partly by the use of illegal anticompetitive practices. In a somewhat unusual move that may have been designed to spur negotiations, on November 5, 1999, Judge Thomas Penfield Jackson issued findings of fact that were based on the evidence that had been presented on the antitrust allegations. The Court's Findings of Fact held that:
- Microsoft has a monopoly of PC operating systems
- Microsoft harmed consumers through its use of its monopoly powers
- several of Microsoft's contracts had anti-competitive effects
//The common criticism about monopoly is that it limits the choices that consumers have and stifles innovation and improvement as firms become complacent. This is especially true in markets with high start-up costs and MES. Also, prices may increase as the monopoly firms raises its price such that MC=MR and consumer surplus is lost.
On June 7, 2000 a decision was reached that would split Microsoft into two firms, one that would provide operating systems and a second that would provide software applications. The decision has been stayed pending the completion of appeals. On June 28, 2001, the Washington DC Court of Appeals ruled on Microsoft's appeal. It upheld the decision that Microsoft was a monopoly, but vacated the decision to split Microsoft into two firms. The case has been sent back to the District Court for a new decision on remedies. Judge Thomas Penfield Jackson, the original trial judge, has been removed from the case. Microsoft submitted an appeal to the U.S. Supreme Court. (This appeal was rejected on October 10, 2001.)
//This is a case of monopoly regulation in which the government tries to limit the power of a monopoly. The government might see monopoly as undesirable as software companies need constant innovation and improvement, but a monpoly could make Microsoft complacent and not do R&D anymore.
On September 6, 2001, the U.S. Justice Department announced that it would no longer argue that Microsoft should be broken up into separate companies. A settlement with the Federal government was reached on November 2, 2001 that required Microsoft to release portions of its source code to competitors to allow other programs to effectively function under Windows. A substantial amount of this source code was released in AUgust 2002. This settlement also allows computer makers to select which Microsoft products would be loaded onto computers that they sell. While most U.S. states have accepted this settlement, 16 U.S. states and the District of Columbia (as of 4/10/03) are still pursuing antitrust action against Microsoft.
//Interesting method to limit monopoly.
Microsoft had attempted to settle several private antitrust cases with a settlement in which they would have provided free software to schools. This settlement was rejected by Federal District Judge J. Frederick Motz on January 11, 2002 on the grounds that this settlement would have enhanced Microsoft's monopoly power by encouraging schools to replace computer systems that used alternative operating systems. A variation of this agreement, however, that provides for direct compensation of owners of Microsoft products was used to attain a settlement of a class action suit against Microsoft in California on January 10, 2003. Some of the unclaimed funds from this settlement would be used to fund computer purchases by the poorest school districts in the state.
Even with the settlement of the federal antitrust case, there are still several aprivate ntitrust actions pending against Microsoft. AOL and the Be Corporation have each brought antitrust charges against Microsoft, claiming that Microsoft has undertaken actions that harmed the producers of Netscape and BeOs. The European Commission is also currently discussing possible antitrust action against Microsoft.
Acknowledgements: http://www.swcollege.com/bef/policy_debates/microsoft.html
//This is a case of monopoly regulation in which the government tries to limit the power of a monopoly. The government might see monopoly as undesirable as software companies need constant innovation and improvement, but a monpoly could make Microsoft complacent and not do R&D anymore.
On September 6, 2001, the U.S. Justice Department announced that it would no longer argue that Microsoft should be broken up into separate companies. A settlement with the Federal government was reached on November 2, 2001 that required Microsoft to release portions of its source code to competitors to allow other programs to effectively function under Windows. A substantial amount of this source code was released in AUgust 2002. This settlement also allows computer makers to select which Microsoft products would be loaded onto computers that they sell. While most U.S. states have accepted this settlement, 16 U.S. states and the District of Columbia (as of 4/10/03) are still pursuing antitrust action against Microsoft.
//Interesting method to limit monopoly.
Microsoft had attempted to settle several private antitrust cases with a settlement in which they would have provided free software to schools. This settlement was rejected by Federal District Judge J. Frederick Motz on January 11, 2002 on the grounds that this settlement would have enhanced Microsoft's monopoly power by encouraging schools to replace computer systems that used alternative operating systems. A variation of this agreement, however, that provides for direct compensation of owners of Microsoft products was used to attain a settlement of a class action suit against Microsoft in California on January 10, 2003. Some of the unclaimed funds from this settlement would be used to fund computer purchases by the poorest school districts in the state.
Even with the settlement of the federal antitrust case, there are still several aprivate ntitrust actions pending against Microsoft. AOL and the Be Corporation have each brought antitrust charges against Microsoft, claiming that Microsoft has undertaken actions that harmed the producers of Netscape and BeOs. The European Commission is also currently discussing possible antitrust action against Microsoft.
Acknowledgements: http://www.swcollege.com/bef/policy_debates/microsoft.html
Wednesday, April 16, 2008
Post with your REAL name!
Dear all,
Whenever you post, use your REAL name. I need to know who exactly you are so that I can grade accordingly.
Yes, besides serious stuff like article reviews, videos and songs, do post economist jokes, cartoons, etc.
How
Whenever you post, use your REAL name. I need to know who exactly you are so that I can grade accordingly.
Yes, besides serious stuff like article reviews, videos and songs, do post economist jokes, cartoons, etc.
How
Indecent Proposal?
Indecent Proposal?
What a Ford/GM Merger Could MeanWould Americans Buy Cars From A Company Called 'Gord'?
By DAN ARNALL
Sept. 18, 2006 —
(Anyone bother to comment on this article? It's closely linked to the essay in tutorial 10.)
Times are so tough in the American auto industry that the country's two biggest nameplates have actually talked about a massive combination. Reports out of Detroit suggest that GM and Ford had discussions about the possibility of a merger or alliance.
"It's a joke, there's no real meat on that bone," said Kevin Tynan, senior auto analyst at Argus Research Company. "They need to get smaller, not bigger. They need to be more flexible, not continue in their old way of doing business."
But the tantilizing possibility of a mega merger has many industry experts rubbing their eyes in disbelief, wondering if these two icons could actually find a way to marry, and if they did, how that would change the auto industry landscape."
Does it become General Ford? Gord? Ford Motors?" asked Karl Brauer, editor-in-chief of auto web site Edmunds.com. "That's actually one of the strengths of a merger -- they'd be combining two of the world's most recognized brands."
Combined, Ford and General Motors would be a force to be reckoned with.
Based on their most recent sales reports, a merged company would have accounted for more than 4.6 million cars and trucks sold in the United States so far this year. That's an astounding 41 percent of the U.S. auto market and almost three times the size of Toyota's slice of the auto pie.
That new sizable company would have leverage with suppliers that neither has enjoyed for decades. Experts say a combination could allow for better deals on everything from steel components to tires, air conditioners to ad time.
But in this case, size doesn't necessarily make for success in the car business.
Today the companies are too big, with expensive plants that are not running and thousands of union workers they have to pay even when they do not need them. Combine that with the financial burden of pensions and providing health care to workers and their families, and you see that size can, in fact, hurt a company."
Even if a merger happened, they'd still face these costs," said Brauer. "Becoming a single company doesn't reduce their obligations to the UAW or their health care costs. Unless they made these issues a part of the alliance negotiations and included the unions in whatever deal they struck."
Asian competitors Toyota and Honda -- both of which have made big headway in grabbing market share from GM and Ford in recent years -- have a younger work force, which means lower pension obligations and less expensive health care costs. Those foreign competitors have used those lower financial burdens to make cars in the United States for less than their American competitors.
A merger would allow the combined company to negotiate simultaneously with its unions about cost reducing moves, but GM is already a few steps ahead of Ford in cutting these costs with aggressive hourly-worker buyouts and layoffs of salaried managers.
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses.Ford's recent acceleration of its "Way Forward" plan is taking a line from GM's script, offering one-time payouts of up to $140,000 to workers willing to walk away from their jobs and drop corporate health insurance in their retirement years.
But success is not just about reducing costs. It is about making cars and trucks that people want to buy.
"You could easily end up with a stronger line-up of vehicles and nameplates," said Bauer. He says both GM and Ford have brands that they could jettison without having a negative effect on their bottom lines. Losing the car and truck nameplates that haven't found a place in the marketplace would make the overall car market stronger; a Darwinian thinning of the herd.A big auto merger like the one reportedly discussed by GM and Ford has happened before. The $38 billion combination of Chrysler with German auto giant Daimler-Benz in 1998 offers a precedent. It took years and a shift in top management to get the merger to work."
The real challenge will be getting somebody that can actually manage it and make it stronger, instead of just creating an unwieldy monster," said Bauer. "It would take a hell of a management effort."
But the speculation about a merged GM/Ford is just that: speculation.
Most analysts are not confident that a GM/Ford marriage is in the offing, pointing out that there's no real financial benefit to either company that would justify the Herculean effort of pulling off a combination.
http://abcnews.go.com/Business/IndustryInfo/story?id=2459206
What a Ford/GM Merger Could MeanWould Americans Buy Cars From A Company Called 'Gord'?
By DAN ARNALL
Sept. 18, 2006 —
(Anyone bother to comment on this article? It's closely linked to the essay in tutorial 10.)
Times are so tough in the American auto industry that the country's two biggest nameplates have actually talked about a massive combination. Reports out of Detroit suggest that GM and Ford had discussions about the possibility of a merger or alliance.
"It's a joke, there's no real meat on that bone," said Kevin Tynan, senior auto analyst at Argus Research Company. "They need to get smaller, not bigger. They need to be more flexible, not continue in their old way of doing business."
But the tantilizing possibility of a mega merger has many industry experts rubbing their eyes in disbelief, wondering if these two icons could actually find a way to marry, and if they did, how that would change the auto industry landscape."
Does it become General Ford? Gord? Ford Motors?" asked Karl Brauer, editor-in-chief of auto web site Edmunds.com. "That's actually one of the strengths of a merger -- they'd be combining two of the world's most recognized brands."
Combined, Ford and General Motors would be a force to be reckoned with.
Based on their most recent sales reports, a merged company would have accounted for more than 4.6 million cars and trucks sold in the United States so far this year. That's an astounding 41 percent of the U.S. auto market and almost three times the size of Toyota's slice of the auto pie.
That new sizable company would have leverage with suppliers that neither has enjoyed for decades. Experts say a combination could allow for better deals on everything from steel components to tires, air conditioners to ad time.
But in this case, size doesn't necessarily make for success in the car business.
Today the companies are too big, with expensive plants that are not running and thousands of union workers they have to pay even when they do not need them. Combine that with the financial burden of pensions and providing health care to workers and their families, and you see that size can, in fact, hurt a company."
Even if a merger happened, they'd still face these costs," said Brauer. "Becoming a single company doesn't reduce their obligations to the UAW or their health care costs. Unless they made these issues a part of the alliance negotiations and included the unions in whatever deal they struck."
Asian competitors Toyota and Honda -- both of which have made big headway in grabbing market share from GM and Ford in recent years -- have a younger work force, which means lower pension obligations and less expensive health care costs. Those foreign competitors have used those lower financial burdens to make cars in the United States for less than their American competitors.
A merger would allow the combined company to negotiate simultaneously with its unions about cost reducing moves, but GM is already a few steps ahead of Ford in cutting these costs with aggressive hourly-worker buyouts and layoffs of salaried managers.
GM chief Rick Wagoner says that the company's restructuring plan, announced late last year, has already succeeded in cutting some $9 billion out of the struggling company's expenses.Ford's recent acceleration of its "Way Forward" plan is taking a line from GM's script, offering one-time payouts of up to $140,000 to workers willing to walk away from their jobs and drop corporate health insurance in their retirement years.
But success is not just about reducing costs. It is about making cars and trucks that people want to buy.
"You could easily end up with a stronger line-up of vehicles and nameplates," said Bauer. He says both GM and Ford have brands that they could jettison without having a negative effect on their bottom lines. Losing the car and truck nameplates that haven't found a place in the marketplace would make the overall car market stronger; a Darwinian thinning of the herd.A big auto merger like the one reportedly discussed by GM and Ford has happened before. The $38 billion combination of Chrysler with German auto giant Daimler-Benz in 1998 offers a precedent. It took years and a shift in top management to get the merger to work."
The real challenge will be getting somebody that can actually manage it and make it stronger, instead of just creating an unwieldy monster," said Bauer. "It would take a hell of a management effort."
But the speculation about a merged GM/Ford is just that: speculation.
Most analysts are not confident that a GM/Ford marriage is in the offing, pointing out that there's no real financial benefit to either company that would justify the Herculean effort of pulling off a combination.
http://abcnews.go.com/Business/IndustryInfo/story?id=2459206
Participate in Wanted! & Earn CASH, Participation Points, GNA$, etc
Dear all,
You are strongly encouraged to join the Wanted! Competition! We are extending the deadline till as long as the blog competition is on!
As long as I see some good stuff you have put up and stand a chance of $50 cash, I will alert you and ask you to participate.
Also, it's already mid of 3 terms in which you are graded for 5% participation points..... well, by posting article reviews on this blog will entitled you to that, stand a chance to win best blog - $200 cash, etc. Why not?
I will give you more details on how to score higher for your participation points.
Miss How
Continue your good efforts!
Click to enlarge and see the 'clear version'.
Dear all,
Good that you have gotten the blog started.
Do let good article reviews keep coming. Not forgetting videos, songs, cartoons, etc.
Miss How
Sunday, April 13, 2008
Saturday, April 12, 2008
An interesting video clip
Hi 6K,
I have found a video clip (separated into 3 short segments) that is rather closely related to Economics that you guys might find interesting. For your viewing pleasure:
What are the different economic concepts that the video clips have addressed? In order to stimulate active discussion on this blog, please do post your answers up here! I will be posting my answers here some time later... So watch this space!
Enjoy!
Jian Hua
I have found a video clip (separated into 3 short segments) that is rather closely related to Economics that you guys might find interesting. For your viewing pleasure:
What are the different economic concepts that the video clips have addressed? In order to stimulate active discussion on this blog, please do post your answers up here! I will be posting my answers here some time later... So watch this space!
Enjoy!
Jian Hua
ILP videos
hello
the best way to keep this blog relevant to econs (and only econs) is to post and analyse articles related to econs.. so i guess everyone can work over the weekend to source for articles. in the mean time, maybe we can upload the ILP videos as well. afterall, they are relevant to econs and can provide some entertainment.
all right, remember to post articles and keep this blog alive!!!
ps. why is the backgroung greeen? we are artemis...
Mui
econs: more pros than cons
the best way to keep this blog relevant to econs (and only econs) is to post and analyse articles related to econs.. so i guess everyone can work over the weekend to source for articles. in the mean time, maybe we can upload the ILP videos as well. afterall, they are relevant to econs and can provide some entertainment.
all right, remember to post articles and keep this blog alive!!!
ps. why is the backgroung greeen? we are artemis...
Mui
econs: more pros than cons
Friday, April 11, 2008
Hello everyone!
Erm ya... so are we supposed to post serious stuff only, or can we occasionally post crap here? Like the "economics and Joel" thing... because I think I can somehow link the entire lecture series 9 and 10 to Joel using "a bit no link but yet got link" type of reasoning...
Your 'C' rep
Jia Guang/Jackie
Your 'C' rep
Jia Guang/Jackie
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