PROJECT MANAGEMENT ASSIGNMENT 1

What is meant by project management? Please indicate some of the benefits of learning / practicing project management.


20 marks]

Set of jobs usually directed towards some significant outcomes & requiring a significant period of time is termed as a project. The management of such large number of activities poses complex problems in planning, scheduling, directing & controlling resources. Project management is nothing but synchronization between all these above mentioned activities, especially when the project activities have to be performed in a specified technological sequence. The two methods critical path method & program evaluation & review technique are aids to efficient project management. However, they differ in their approach to the problem & solution technique.

After getting a tutorial of project management, any manager gets the ability to organize & schedule the activities in a proper way. The time management is often considered as a mandatory factor; hence, identifying the deadlines is the most critical issue for a project manager. To be formal, learning aids of project management are:-

• Planning the project ahead of time & foresee possible sources of trouble & delays in completion.

• Schedule the project activities at the appropriate times to confirm with proper job sequence so as to complete the project ASAP.

• Coordinate & control the project activities so as to stay on schedule in completing the project.

Write short notes on the following topics:


a) Opportunity studies
Before starting with any new projects parties involved in it make studies regarding the chance of success in the project. So for this purpose opportunity study is done which includes feasibility study, detailed study & technical study.
Opportunity Study:

In the preliminary stage parties involved in the project evaluates whether the concept is viable or not. The purpose is to understand whether the users request matches with the objective of the organization. In opportunity phase the needs of the client should be identified & plans should be made according to that. Opportunity study leads to the making of the scoping note & it shows the intent of the project.


Feasibility Study:

It evaluates the economic, organizational & technical feasibility of the project.


Detailed Study:

This is done to understand all the phases of the project & to see that the process is maintained as per the requirement.
Technical Study:

In this study design of the technology that needs to be used is made to understand the technological requirement of the project.
b) Feasibility studies


When a person wants to start a new business or to expand, consideration of strengths and weakness of the business to be started is known as feasibility study. By doing this study a business person can find the answers to an important question: whether business is viable, idea will work and how to proceed to attain objective.

Various components of feasibility study are description of business, market feasibility, technical feasibility, financial feasibility, organizational feasibility.

By doing feasibility study people arrive on decision of go or no-go with the idea of business. It is one of the critical steps while starting a business and if this step proves to be right then investment made in the particular business will be best ever.
c) Project Planning and Management Cycle – various phases and their inter-connections


Phases of Project planning:


1. Project Initiation:

At this stage management decides that a project is needed & establishes their objective & also estimates resource required for it.
2. Project definition:

Project plan & schedule is done foe operational purpose here.
3. Project Implementation:

Here main works of the project is done.

4. Project Completion:

Project is terminated at this stage.
Phases of Management Cycle:
1. Identify Needs:

Business needs & objective is identified at this stage.

2. Plan:

Makes plan about how to go with the process & what sort of technology to use.

3. Adopt:

Here the technology is adopted before going for another one.
4. Maintain:

Here the whole process is maintained as decided before.
3. Evaluate:

Evaluation is done so that to know if everything has gone as per plan. & if any changes is required that is done.
[20 marks]

PROJECT MANAGEMENT ASSIGNMENT 2

Write short notes on the TWO (2) of the following:



i) Project Manager – main responsibilities and desired traits


Project manager is a person in an organization who has a sole responsibility of handling the project and achieving the objectives stated. The main responsibilities are planning, organizing and controlling. He also has to make decisions on the constraints of time, cost and quality to achieve the desired results. He should also make sure that team members under him complete the task in desired time.

A manager should have expertise knowledge about the work to perform, should be a good communicator, should have empathy, team building skills, problem solving skills, Focus on motivation and not intimidation i.e. treat people as human beings but not just resources etc.


ii) Project Organization – types and their suitability for implementing various types of organization


Project organization makes an alignment between the project and the parent company to deliver or complete the project effectively and efficiently. There are three types of project organization:

1. Functional organization: In this part of project is assigned to various functions of company such as marketing, product development, sales etc so that specialist would do their part of work. It is mainly used when one functions plays dominant role in completion of project.

2. Pure project organization: this is referred as creation of separate project teams to complete task. This is unit which is self independent and has own staff to do work that is own team of people. The organization is developed in such a way that functional department helps the project teams in their work.

3. Matrix organization: this organization structure is a combination of functional and pure project organization both. This type of structure optimizes the use of resources available with the company. The boundaries between the project team and functional units is not very strict hence make it flexible which makes it more popular among the firms to use this structure but decision making process is very slow in this type of structure as various functional departments and project group should agree for the work to make it inot action.


iii) Evaluation of Public Sector Projects – Benefit – Cost Ratio and the Cost Effectiveness Criteria


Benefit-Cost Ratio

Benefit-cost analysis, is the economic decision making approach, which is used particularly in the government & business. Benefit-cost analysis is used in assessment of either the proposed project, programme or the policy is worth doing or for choosing between so many alternative ones. This involves comparing total expected costs of every option against total expected benefits, for seeing whether benefits outweigh the costs and by how much. In Benefit-cost analysis, the benefits & costs are expressed in the money terms and are adjusted for time value of money so that all flows of the benefits & flows of the project costs over time are expressed on the common basis in the terms of their present value.

Benefit-Cost Ratio = Equivalent Users’ Net Benefits / Equivalent Sponsors’ Net Cost

When the Benefit-Cost Ratio exceeds 1 then the project may be justified



Cost-Effectiveness Criteria

The Cost-effectiveness analysis is the form of economic analysis which compares relative costs & outcomes of two or more courses of the action. Cost-effectiveness analysis is distinct from the cost-benefit analysis that assigns the monetary value to measure of effect. Cost-effectiveness analysis is mostly used in field of the health services, where this can be inappropriate for monetizing health effect.

Cost Effectiveness Criteria

• The cost-effectiveness method allows us for comparing the projects on basis of the cost & nonmonetary effectiveness measures.

• We can either maximize effectiveness for the given cost criterion or minimize cost for the given effectiveness criterion.
[20 marks]

What is meant by the Work-Breakdown-Structure? Give some example.


It is a simple way to express the full project in graphical way. This makes the project easier to understand and communicate. The whole project is broken down into tasks, each of which has a manager, an institution, costs and schedule & technical scope. The Work-Breakdown-Structure begins with a single box at the top which signifies the whole project. The project is then broken down into its components with lower level boxes. The major role of the WBS is first to divide the whole project deliverables into smaller parts to improve the accuracy of cost forecasts or estimates, secondly to provide a procedure for collecting, organizing and managing actual costs and thirdly to provide a means for control & performance measurement. But it shouldn’t be mistaken as the system that deals with schedules and thus has time dimension, instead it is used as entry criteria for schedule enlargement and improvement. Thus we can say WBS charts a project in a simple map of what is to be produced.

What are the various Project Control mechanisms / techniques. Briefly discuss.


Project controlling has been established as an independent function of Project Management and provides a detailed plan of activities and deliverables that need to be controlled and measured to assure the achievement of proposed solution while maintaining the set quality standards and time limits. It begins with project planning and ends with post-implementation review, being thoroughly involved at each step in the process.

Project control mechanism includes formal infrastructure, transparency among project processes and a proper communication system to maintain smooth flow of right information and to avoid disparity in project parameters. The various techniques of project controlling are:

• Investment analysis: this helps in analyzing whether an investment is suitable for a particular project and how it shall perform. It is a look back on the past investment and a thought process of mainly future investments.

• Cost-benefit analysis: it is an economic decision making approach for the purpose of assessing whether a proposed project is worth undertaking. It involves the comparison of total expected cost against the total expected benefits of the alternatives.

• Value benefit Analysis: A useful tool for preparing systematic decisions. It measures the effectiveness rather than the efficiency of a solution while working on a project.

• Expert surveys: a reliable way of quality of work of a project.

• Simulation calculations: it studies the random failure times and combines it with the reliability of the solution while working on a project and then the overall results are analyzed to determine the behavior of the whole project.

• Trend analysis: In project management, trend analysis is a quality control tool and a technique that uses historical or past results to measure or forecast the future results.

[20 marks]


Write brief notes on:
a. Role of leadership in project management
A project manager must also be a strong and confident leader. Leadership is a great quality, trait or characteristic that a person can have. Project managers and decision makers are required to display leadership in various aspects in their work and jobs. This is so because when we work with people or in a team, someone has to take the initiative to coordinate and synchronize in such a way that it is possible for the team to move forward as a whole. Leadership is a quality possessed by a person that enables him to motivate and influence people. It is not about dominating, but about winning consensus. Leadership is thus a trait that helps obtain support for accomplishment of a common goal. Effective leadership is concerned not just a science, but an art and also a philosophy. Leadership can be considered to be effective in case of the leader being able to take the team ahead and create a common vision which stimulates and synergizes the channelizing of the efforts of all of the employees and managers towards the common vision or common goals of the organization. Leadership is an extremely essential and important trait required for efficient and effective management. It cannot be refuted that good governance requires effective leadership in order to be able to manage people and direct or channelize their efforts in the required direction. This makes leadership eccentric to the core of management as well as the tools that helps influence and motivates people to give in their best.
b. Team building – strategic elements
Team building, from the strategic perspective requires cultural convergence and this can be achieved through cross cultural training. Cross cultural training has an important role in case of the strategic function mainly because in order to communicate the information, especially obtained from management accounting to the top management and other workers and employees. It becomes important to have a common language as well as a common understanding about how each of the employees would perceive information about different aspects. Moreover it also becomes important to assess and understand the work methods and styles of the top management in order to provide them with relevant information and also to be able to understand their point of views and judgments as well as decisions. In this way cross cultural training and an understanding about other cultures has an important role to play even in case of accounting and several other strategic functions. It is extremely important that the firm considers human resource aspects while designing and using information systems and prioritizes it over the compliance element as human resources are a very important function in every business. Acquisition and retention of human resources is a very big challenge for every firm or business. Improving the talent pools' skills and enhancing their value is essential in order to remain dynamic and ever-improving. This helps every firm achieve its strategies and long term goals. The talent pool can be improved through the usage of a number of human resource development techniques including training and development. Cross functional teams and seminars as well as techniques of improvement on the job as well as off the job can be used.
c. Project termination – essential steps
Project termination means that closing the project which occur when the project is successfully completed or either shut down before completion due to early warning signs to the company.

Various steps that are needed to take to terminate the project are:

First of all the required payments to any of the concerned person is to be done whether supplier, vendors etc. after making payments responsibilities are transferred to other if required and the duties are reassigned to those people who were involved in doing the project so that they can be involved in order to perform other duties.

The resources if left over should be released while terminating the project such as raw materials or any other. Books related to bills, costs should be completed or closed when the project is terminated. After this the results of the project should be compiled and the recommendation to make better in future time period should be made so the opportunity can be taken and risk can be avoided. In the last step the presentation should be made and should be communicated whether the project is accepted or rejected.

If the project is accepted then it should be installed and if it is rejected then the reasons should be determined so as to keep in mind for any future reference or to know the changes required.
[20 marks]

INTERNATIONAL BUSINESS ASSIGNMENT 2

Discuss the similarities and differences between global, international and regional business.


International business is the business which works in different countries but does not exists across the globe. International business is generally prevalentwith small firms and organization. Global business is the business which operates across the world. Regional business is the business which operates in a particular region.

Example: McDonalds has expanded its reach not only to the local US market but also to different countries. It has expanded its reach by following transnational strategy.

It has expanded its reach particularly by following franchising. The concept of franchising is the key for McDonald’s world wide success. Through this they have ensured consistency of quality and uniformity of product from location to location and country to country. McDonalds key objective was global standardization with an statement ‘Expand our mindset by sharing best practices and leveraging our best people resources around the world’. The strategy of McDonalds relies on achieving low costs and prices with reliable quality and value for money. The company’s strategy is based on knowledge of modern lifestyles, young people tastes, food production processes and service levels coupled with a strong brand image, its constant product innovation and effective marketing tools.

McDonalds follows transnational strategy to reach its customers globally. To facilitate global reach McDonalds follows Local preferences of products by customers. The overall strategic mission and vision of the company is based on the resources and competence of the organization and the extent of industry and market globalization. McDonalds took into consideration the expanding market and increasing needs of the consumers and the changing preferences and tastes of consumers of different countries of its operations.

McDonalds focuses on the needs of every nation so as to cater to the specific needs of the customers of every nation and thus follows transnational strategy.

[7.5 marks]

Discuss the role of culture in international business.

Understanding culture is crucial when a company does across borders. For international companies to be successful, in a global society they must adapt to, relate to, and understand the culture of the countries where they conduct business.

Culture is an essential part that defines the individual, a human community and different social organization. Culture is basically the values, beliefs, perception and traditions which shape the behaviour of an individual. “Culture is defined as the collective mental programming of the people in the environment. Culture is not characteristics of the individuals; it encompasses a number of people who are conditioned by same education and life experience” (Hofstede) . Thus, it can be said that the culture is affected by the place we live, time, language we use, traditions followed. So each country has different culture.

With the increase in global trade and globalization the need to know the culture of different nations as important as it will facilitate the better working. Each individual has different attitudes, perception and value towards certain things, these are the main things which helps in shaping the culture of an individual. Belief is a thought which an individual hold about a particular thing, this is highly influenced by the place the individual live in. Culture is an unconscious thing which comes in an individual while the development of his personality.

Communication is based on culture. One perceives and draws conclusion of the communication on the basis of what he has learned. The main problems faced in the cross cultural communication are body position and movements, each country or culture interprets the movement or non verbal communication differently. For example if an individual moves his hand to and fro, it can be interpreted as a good bye in America and No in Europe.

[7.5 marks]

Outsourcing is the key strategy in global supply chain. Discuss.

Outsourcing refers to giving out a portion of the work to another nation in order to have it done in a better and more efficient way. It may be within the country or may be given to a firm in another nation. U.S. manufacturers become vulnerable to offshore outsourcing as they have to compete with them.In cases of not being able to perform a task efficiently and effectively, outsourcing becomes a blessing and helps the firm achieve a lot of savings of effort, time and capital. A firm might not be able to handle an order completely, but would be extremely competent at delivering some of the tasks. In such cases, it is essential that the firm opts for outsourcing and delivers the completed product or service to the final customer. Outsourcing can be based on technological outsourcing or outsourcing of a particular business function. In any of these cases there is a requirement of consideration of certain factors which includes the cost benefit analysis as one of the most important considerations. It really matters as the cost of the final product is greatly influenced by this strategic decision of outsourcing.The outsourcing market has experienced strong growth over the last several years because of businesses' need to focus on core competencies, Web implementation initiatives, consolidation across industries, and a tight labor pool. The outsourcing of noncore, transaction-based processes has gained significant momentum over the last few years as organizations have become more comfortable with the concept of outsourcing and its advantages.

Organizations elect to outsource for a variety of reasons. Some of these reasons are tactical, while others are strategic. No one would seriously expect an oil company to outsource its exploration and refining functions; pharmaceutical companies probably would not outsource their research and development; and few, if any, major automakers would consider out-sourcing their production planning or marketing campaigns. These activities are core to their businesses and often the means for differentiation in the marketplace and a source of competitive advantage. Businesses outsource their noncore functions, such as payroll and IT.

In the urge to downsize, “right size,” and eliminate headquarters staff, and to focus on value-added activities and core competencies in order to survive and prosper, public and private organizations have outsourced an extremely broad range of functions and activities formerly performed in-house. Some activities, such as janitorial, food, and security services, have been outsourced for many years. Information systems (IS) is one activity that has received much attention recently as a target for outsourcing.

Other popular outsourcing targets are mail rooms, copy centers, and corporate travel departments. Almost no function is immune to outsourcing. Accounts payable, human resources, marketing/sales, finance, administration, logistics, engineering, and even purchasing are examples of functions now outsourced but previously done in-house. The company may outsource the entire function or outsource a part of it and keep the remaining part as in-house. Like an IT firm can outsource the technical part but may retain the basic things so as to focus on lower purchases. The function needs to be identified and then segregating the same in potential components which can be kept in house and outsourced.

[7.5 marks]

Discuss the theories of competitive advantage.

Competitive advantage is the most important and crucial strategy for the organization to achieve and to get benefited with this strategy for the long run of business. Since, it is a kind of integrated strategy of cost minimization and profit or wealth maximization. It makes the thing effect by making the optimal use of the resources to get the maximum benefit from this. So, the organization could make the most perfect and effective move at this age of competitive scenario.

According to Michael Porter, there are basically two types of competitive advantage:

Cost advantage and differentiation advantage strategy. These two aspects are very important for the competitive advantage as the cost is one of the most important and crucial factor for any business to make it effective and efficient and on the other hand differentiation strategy also plays a vital role to make an effective and efficient move to gain the core competency and finally helps in achieving the competitive advantage for the long run of business.

Differentiation can be achieved by innovation of new and value added products, through an integrated and enhanced customer service. Cost leadership can be achieved through economies of scale in production and distribution and optimal utilization of resources.

Competitive advantage is the most crucial and important strategy now a days that makes an organization effective and efficient for the long run of business and also helps to cut the competition in the market.

[7.5 marks]

INTERNATIONAL BUSINESS Asssigment 1

What is the impact of Japan’s Tsunami crisis on the world economy?


[10 marks]

Japan the third largest economy in the world behind china and US has been suffering from world’s largest and costliest natural disaster of a deadly earthquake and huge tsunami. This not only affected Japanese economy but the impact is being felt on the world economy. Before this disaster Japan was contributing 18% to the world’s economy which fell to only 9% after this problem.

Process of exports and imports the major dependence business is affected by this disaster and raised fear of high interest rates. Various numbers of manufacturing companies are in Japan which is not able to produce and trade hence not able to fulfill the needs of various economies. The various sector in which Japan faced a trouble are car industry, electronics etc. this disaster halted the orders because of no production which may increase the prices also for the products in near future.

Panic on trading can also be felt on Tokyo’s stock exchange which is hammering markets worldwide.

The industry of smart phones and computers are also harmed because Japan supplies chips for making these products and in turn affected tech companies all over.

Global oil markets are also hampered as Japan was the biggest importer of oil because of presence of more industries but after the disaster many of the companies are shut down hence consumption of oil is near to nil due to which prices of barrel decreased.

Reconstruction of Japan economy and the northeastern coast of Japan could even strike heavily on the growth of economy

In order to combat with the problem and to raise money Japan will be selling some of holdings of US government debts which would push the prices of US treasury bonds down which may raise interest rates of US.

Even steel mills are also expected to suffer as demand is likely to reduce as industries are shut down which affects iron ore industry. There may be also problem arise of fuel in Asian countries as Japan is main exporter of fuel.



Toyota decided to manufacture its products in ASEAN countries. What factors do you think Toyota considered in selecting ASEAN countries as the site for the factories? Who benefits and who losses from the new plant in ASEAN? Is the firm’s decision consistent with OLMA model?


[10 marks]

ASEAN is the name given to the Association of Southeast Asian Countries. It was formed on 8th August, 1967 and till date the total number of countries in this association has gone up to 19. Some of the major countries in this association are Singapore, Indonesia, Thailand, and Malaysia. The business philosophy of Toyota Company is stable and a long term growth by developing those activities which focus on the importance of close relationships between society, individuals, the global environment and also the world economy. As Toyota is planning to consider an ASEAN country for its new manufacturing plant, it will go in favor of the company strategy. The people or the customers in these countries also have the same vision as the company has. Not only this , the vehicles produced by Toyota is within the buying level of the citizens in these countries than any other European company. One can observe considerable increase in the sale of Toyota automobile in ASEAN countries. Moreover the culture of these countries is somewhat similar to Japan and hence there is no distance problem for the company even. Moreover, the trade integration between Asian nations also makes the business of Toyota move smoothly. After going through all the above points, it seems that this new business strategy will go in the positive direction for the profit of Toyota. The major loss from this step will be to the competitors of the company, basically European cars. The European countries are expensive than the cars produced by Toyota and the major population living in ASEAN countries comprises of middle level income. So, more people will prefer to buy cheaper product having good quality. This is what Toyota is providing to the masses. Though it will be a bit difficult for the company to replace the competitor completely but if with some new technologies and ways, it gets replaced then ASEAN countries will be the major contributor in the company’s profits



How are the components of international strategy (scope of operation, resource deployment, distinct competency) likely to vary across different types of corporate strategy (single business, related diversification and unrelated diversification)

[10 marks]

In today’s turbulent business environment, corporate should be flexible and responsive. Corporate parent in a multi firm organization can facilitate creating strategically organization, which have cascading effect on divisions under its control, which can become a true value driver. From the last fifty years, there has been a rapid change in the global economy. There has been a tremendous development in the world economic integration and some of the standardized products. The prime components of international strategy of any business organization are the scope of its business operation, resource deployment of the product and most important its competitors across the international boundaries. International business strategy can be defined as all those set of activities which can help in managing organizational business at both national and international level. It helps in the achievement of competitive advantage over its competitors at both the levels. As the corporate culture, basic culture varies across the world; it becomes entirely necessary for the organization to make its strategy as per the demand of the country in which the operation is going on. Customers today expect these things, making it necessary for firms to adopt strategic responses that emphasize speed, innovation, cooperation, quality, and cost effectiveness. The foreign policy of any country is one of the important policies of a country. There are number of terms and decisions regarding the foreign trade, foreign investments and relationship between the countries. Today is the time of globalization. If the economy of a country is good the only the country will be capable to establish profitable trade relations with the foreign countries. Otherwise due to any reason, if the country is facing slum in economy or if its economic growth rate is low, then the foreign countries will think whether they should trade with that country or not. In this way the economy affects a lot in foreign policy making decisions.

Best 2011 Campaign List

January 2011      – “I am HSSEQ (Honourable, Sober, Safer, Educated, and Questionable)”


February 2011    – “AFE (Alert For Emergency)”

March 2011        – “BOSS (Boat Operation Safe & Save)

April 2011           – “FOUL (Find Out Unsafe Level) out”

May 2011           – “It’s m(a)y Day”

June 2011           – “BLOSSOM (Best Level Of Satisfaction Ship Owner / Manager)”

July 2011            – “THUMPS (Target High Up Mountain Peak Success) up “

August 2011       – “POLSC (Plan, Organize, Lead, Supervise, Control)”

September 2011 – “MAP (Maximizing Accumulated Profit)”

October 2011     – “PIC (Performance, Innovative, Creative) area”

November 2011 – “Go Green”

December 2011 – “BUDGET (Bring Up Diversity, Graveyard External Threats)

Mamat Khalid's ESTET the movie

Yesterday I saw the movie named “ESTET” by Mamat Khalid on astro tayagan hebat channel 952. On my opinion the movie rated well in overall performance as my background was from Estate. As per the advertisement before screening the movie was culturing the Malaysian. The director was not racist in showing the Tamilan culture and religion. Last 30 over years I did not seen any Malay script movie exploring an Indian identity clearly as was in this movie.


I was wondering during this screening who was the director of this movie? And I was shocked when saw Mamat Khalid name at the poster. He is a person raise the 1 Malaysia concepts by directing a non Islamic movie. I appreciate Mr. Mamat Khalid on his success of this movie.

I would like share some of my thoughts. As I was born and brought up at Ladang Kerling, Hulu Selangor, I did not agree the costume given to Indian community is not practical currently. May be the director encouraging the use of traditional cloth such as “Saari”, “Dhoti”, and “Thavani”. These costumes are imaging the movie to the life around late 60’s and 70’s. In my estate no one use these costumes other than temple festival. Hopefully the Tamilan community restarts using their traditional clothing on normal life.

I fail to categorize this movie. I have seen some comedy parts and some serious parts. The “BOM ATOM” was funny. Who idea was that? Why the fighting scene took so long like Hindustan movie. Please come back to the reality world. May the P.Ramlee, MGR generation may still want to watch long fighting scene. But not for the young generator, show some real effect fighting.

The climax not has expected. The movie screenplay was spoiled due to the football match of 17 goals. That is not a reality. The director may limit to max of 5 goals. Actually I was thought after the keeper injured, Dato’ David Arumugam will become goal keeper as remembrance of the our late hall of fame keeper Arumugam .

The director may extend the ending with screening the faith of Geetha and Farid’s love. Did the director encourage the inter-racial marriage? What about Sasi?

The songs are not so clear. I understand the music are base by Tamil and the lyric look like “Rojak”. Sorry to say like that. I am really not getting any single line of the all 3 songs. May be later I will down load the song and listen again.

For team of ESTET,

Story rated                   7 of 10 (Not clear as comedy or love or football fever or social)

Screenplay rated          7 of 10 (Too much of non reality shows)

Script rated                  6 of 10 (including the song lyric)

Love rated                   8 of 10 (a gentle touch)

Comedy rated              9 of 10 (I laugh most of the scenes)

Social content rated     5 of 10 (avoid the smoking and drinking content)

Direction rated             7 of 10 (Overall) class “B” Rating

10 things to learn from Japan.

1. THE CALM


Not a single visual of chest-beating or wild grief. Sorrow itself has been elevated.

2. THE DIGNITY

Disciplined queues for water and groceries. Not a rough word or a crude gesture.

3. THE ABILITY

The incredible architects, for instance. Buildings swayed but didn’t fall.

4. THE GRACE

People bought only what they needed for the present, so everybody could get something.

5. THE ORDER

No looting in shops. No honking and no overtaking on the roads. Just understanding.

6. THE SACRIFICE

Fifty workers stayed back to pump sea water in the N-reactors. How will they ever be repaid?

7. THE TENDERNESS

Restaurants cut prices. An unguarded ATM is left alone. The strong cared for the weak.

8. THE TRAINING

The old and the children, everyone knew exactly what to do. And they did just that.

9. THE MEDIA

They showed magnificent restraint in the bulletins. No silly reporters. Only calm reportage.

10. THE CONSCIENCE

When the power went off in a store, people put things back on the shelves and left quietly!

Managerial Economic Additional Question from Shaani_911

Q1. A competitive constant cost industry always has a horizontal long run aggregate supply curve, true or false, explain

A long-term industry supply curve signifies that the minimum price at which the firm will offer various number for sale. Moreover, it also means that sufficient time is given for two things i.e. for adjusting plant size and to enter or leave the industry. The shape of the long-run industry supply curve depends on the behaviour of costs of production of an industry because the output of the whole industry is altered. Competitive constant cost industry is those industry in which in spite of expansion of input for the industry, the price and cost of production remains same. In other words, the long run supply curve is horizontal. An example of the competitive constant cost industry is match industry. Since, the entry of new firms brings about an increase in demand and does not affect the long-run average cost curve of an individual firm. It means that the minimum efficient level of production doesn’t change. The above-explained case is an example where the industry supply will have perfectly elastic curve because the factor i.e. the price remains unchanged, even when the industry expands, the additional unit will be produced at same unit cost. The reason for the occurrence of constant cost industry is most likely attributed to the industry’s very small demand for resources. The short-run supply curve will be shifted to the right as the production has already been stimulated, thereby increase in the supply. This process will continue until the market price drives it down to the initial level as a result the excess profit will also disappears completely. However, if the condition of the constant cost remains same the larger quantity will be offered for sale at the same price in long run. Therefore, in above discussed situation, the long-run industry supply curve will be completely elastic-----a horizontal straight line. Thus, the statement is correct.

Q2. In the short run profit maximizing firm produces output if it covers all its marginal costs. True or false, explain?

According to one of the output determining rule (i.e. MR=MC rule) make clear that in short run, the firm will maximize profit by producing the output at which marginal revenues equals marginal cost. That means, in the short-run, the firm has a fixed plant. Thus, the firm can adjust its output by making changes in its variable resources such as materials, labour etc that are used in producing the output. Perhaps, it adjusts its variable resources to achieve the output level that maximize its profit. Moreover, specifically, the firm compares the amounts or cost that each additional unit of output will add to total revenue and to total cost. In other words the firm compares the marginal revenues (MR) to the marginal cost (MC) of each successive unit of the output. Therefore, by estimating all above described values, if a firm covers all its marginal cost then its marginal revenues will exceed the marginal cost; this means that the firm will gain more revenues from selling that unit. Also, then producing will be more preferable than to shutting down the same. In addition to this, a firm can maximize its profit when an increment in margin percentage is equals to the reciprocal of the absolute value of the price elasticity of demand. That price will be its profit-maximizing price. Also, it has been analysed that when the marginal revenue cost is equal to the marginal cost, then the incremental margin percentage will be also equals to the reciprocal of the absolute value of the price elasticity of demand. Therefore, for maximizing profit the firm should set the price such that incremental margin percentage = -1/price elasticity of demand. Lets explain it with an example, suppose a firm find that at its present level of output, the cost of making another unit per month (marginal cost) is less than the revenue that would be gained by selling that unit (marginal revenue). So, producing another unit will be the better option for increasing the total profit by the firm. A change in the optimal level of output will be required by the firm in the short-run if there is a change in the market price to maximize its profit. It will lead to optimal output when the price will be equal to its marginal cost, as long as marginal cost will be greater than the average variable cost. Lastly, the firm will shut down the production only if the price falls below average variable cost. So, from the above discussion it is clear that the statement is true.

Q3. A monopolist continues to produce output even if it is suffering from loss given the good has positive income elasticity, true or false, explain?

Understanding of income elasticity is an important factor for the firm to see how changes in the macro-economy will change or convert into the demand for the good or service produced by it. There are two types of factors one which is influencing and dependent i.e. the consumption of goods items related to the luxuries is very much dependent on the changes in economic growth and consumer incomes. But on other side, factor does not have much impact on one other i.e. the necessities items such as food and housing are comparatively less affected by economic swings and the corresponding changes in consumer incomes. Accordingly, there are two possibilities for the goods to have positive income elasticity of demand i.e. the first possibility is to attain value greater than one for income elasticity of demand and second is that it lie in the range of 0 and 1.The former is in the case of luxury goods where for a 1% change in income, demand for the good changes by more than 1%. However the later one corresponds to the necessities goods where for a 1% change in income, demand for the good changes by less than 1%. Therefore, a firm is which is facing loss will continue to produce an output for following reasons. 1) As it will be recovered in the long-run when the economy will change which will brings changes in the income of the consumer in turn and thereby increase in the demand for its good. This is because the goods produced by the firm belong to the category of positive income goods. Increase in income will correspond to increase in demand either in greater (luxury) or comparatively lesser (general goods). 2) The shutting down the production is seems to be less favourable in terms of its profits. As the profit from production will likely to be more than the shutting down the same.

Q4. A monopolist having only fixed cost always sets a price at which price elasticity is greater than unity. True or false? Explain

Price elasticity is denoted as the percentage change in quantity demanded or supplied over the associated percentage change in price. Popularly, it is used to know the changes in quantity demanded or supplied will price increases or decreases of that commodity. This is known as either price elasticity of demand or price elasticity of supply. When the monopolists have only fixed cost but not variable cost, then maximizing revenue will be exactly same as maximizing profit. So, the monopolist will simply choose that point on the demand curve where the price elasticity is equal to one. A natural monopoly has found to have very disparate cost structure. For example, having a high fixed cost for a product and it does not depend on the output, but its marginal cost of producing one more good is more or less constant and found to be small. An important aim for any firm is significant return on investment, in order to fulfil this; the firm with high fixed costs should have a large number of customers. This is the main point where an economy of scale becomes important.

It is important to note that each firm incurs huge initial costs, but with the business gaining larger market share and increases it’s output. This results in reduction of fixed cost in large number of customers. Therefore, in industries that is having large initial investment as capital requirements, the average total cost decreases as there is increase in output over a large range of output levels.

Maritime Law – International Convention for the Safety Of Life At Sea 1974 (SOLAS ’74) – Chapter I (General provisions)

Q1. Define “International Voyage”

Under regulation 2: Definitions

A voyage from a country to which the present Convention applies to a port outside such country, or conversely.

Q2. Define :

a. Passenger

Every person other than: the master and the member of the crew or other persons employed or engaged in any capacity on board a ship on the business of that ship and a child under one year of age.

b. Passenger ship

A ship which carries more than twelve passengers.

c. Cargo ship

Any ship which is not a passenger ship

d. Tanker

A cargo ship constructed or adapted for the carriage in bulk of liquid cargoes of an inflammable nature.

e. Age of a ship

The elapsed period of time determined from the year of build as indicated on the ship’s registry papers.

3. Explain who may carry out surveys for the enforcement of the provisions of SOLAS

Under regulation 6: Inspection and surveys

Officers of the Administration or entrust the inspections and surveys either to surveyors nominated for the purpose or to organizations recognized by it.

4. Describe the procedures which apply if the surveyor finds that the ship does not comply with the provisions or is in such a condition that it is not fit to proceed to sea without danger to the ship or to persons on board.

Under regulation 19: Control

Ensure that the ship shall not sail it can proceed to sea or leave the port for the purpose of proceeding to the appropriate repair yard without danger to the ship or persons on board.

5. Explain who will decide whether a survey required when any accident or defect affecting safety, efficiency or completeness of LSA of the ship?

Under regulation 11: Maintenance of conditions after survey

The nominated surveyor or recognized organization responsible for issuing the relevant certificate, who shall cause investigations to be initiated to determine whether a survey as require.

6. Describe the circumstances in which certificates cease to be valid.

Under regulation 14: Duration and validity of certificates

i. if the inspections and surveys are not carried out within the periods specified.

ii. upon transfer of the ship to the flag of another Government.

Maritime Law-International Convention on Load Lines 1966

Q1. Explain to which ships the conventions applied?

Under regulation 2: Application

a. Ships with mechanical means of propulsion or lighters, barges or other ships without independent means of propulsion.

b. Ships carrying timber deck cargoes

c. Ships designed to carry sail, whether as the sole means of propulsion or as a supplementary means, and tugs

d. Ships of wood or of composite construction, or of other materials the use of

e. every ship to which a minimum freeboard is assigned

Q2. What is the duration of the validity of an ILLC 1966?

5 Years

Q3. On what circumstances the ILLC cancelled by the administration?

a. Infringement of Freeboard Condition:

– Ships Proceed to sea with less freeboard than that approved or

– Load line marks have been altered in any way.

b. Material alterations have taken place in the hull or superstructure which infringed the assigned freeboard.

c. No or poor maintenance of fittings and appliances for protection of openings and means of safe for crews.

d. No periodic ILLC endorsement

e. Structural strength of the ship is reduced causing the ship to be unsafe

Q4. Define the purpose of the regulations:

a. Freeboard

b. Freeboard deck

c. Superstructure

 Recognize that limitations on the draught to which a ship may be loaded make a significant contribution to her safety.

 Ensure sufficient reserve buoyancy and adequate stability and avoid excessive stress on the ship's hull as a result of overloading.

 External weathertight integrity

 Watertight integrity.

Q5. What is the requirement of painting Plimsoll mark on the ship side hull?

Under regulation 8: Details of marking

The ring, lines and letters shall be painted in white or yellow on a dark ground or in black on a light ground. They shall also be permanently marked on the sides of the ships to the satisfaction of the Surveyor General. The marks shall be plainly visible and, if necessary, special arrangements shall be made for this purpose

Q6. Describe the requirements concerning the provision of closing appliances for ventilations?

Under regulation 19:Ventilator

a. Ventilators in position 1 the coamings of which extend to more than 4.5 metres (14.8 feet) above the deck, and in position 2 the coamings of which extend to more than 2.3 metres (7.5 feet) above the deck need not be fitted with closing arrangements unless specifically required by the Surveyor General.

b. Except as provided in paragraph (3) of this Regulation ventilator openings shall be provided with efficient weathertight closing appliances. In ships of not more than 100 metres (328 feet) in length the closing appliances shall be permanently attached; where not so provided in other ships, they shall be conveniently stowed near the ventilators to which they are to be fitted. Ventilators in position 1 shall have coamings of a height of at least 900 millimetres (35½ inches) above the deck; in position 2 the coamings shall be of a height at least 760 millimetres (30 inches) above the deck.

Position 1 - Upon exposed freeboard and raised quarter decks, and upon exposed superstructure decks situated forward of a point located a quarter of the ship’s length from the forward perpendicular.

Position 2 - Upon exposed superstructure decks situated abaft a quarter of the ship’s length from the forward perpendicular

Q7. Describe the provision for the protection of the crew?

Regulation 25: Protection of the crew

a. The strength of the deckhouses used for the accommodation of the crew shall be to the satisfaction of the Surveyor General.

b. Efficient guard rails or bulwarks shall be fitted on all exposed parts of the freeboard and superstructure decks. The height of the bulwarks or guard rails shall be at least 1 metre (39½ inches) from the deck, provided that where this height would interfere with the normal operation of the ship, a lesser height may be approved if the Surveyor General is satisfied that adequate protection is provided.

c. The opening below the lowest course of the guard rails shall not exceed 230 millimetres (9 inches). The other courses shall be not more than 380 millimetres (15 inches) apart. In the case of ships with rounded gunwales the guard rail supports shall be placed on the flat of the deck.

d. Satisfactory means (in the form of guard rails, life lines, gangways or underdeck passages etc.) shall be provided for the protection of the crew in getting to and from their quarters, the machinery space and all other parts used in the necessary work of the ship.

e. Deck cargo carried on any ship shall be so stowed that any opening which is in way of the cargo and which gives access to and from the crew’s quarters, the machinery space and all other parts used in the necessary work of the ship, can be properly closed and secured against the admission of water. Effective protection for the crew in the form of guard rails or life lines shall be provided above the deck cargo if there is no convenient passage on or below the deck of the ship

Q8. Closing the opening of air pipes to ballast tanks and other tanks should be provided permanently attached. Why?

Act as water tight integrity purposes. It will ensure the containment of any egress.

Nasi Kukus Sempoi Alias, Gong Badak, Kuala Terengganu

It was a sunny day and I just come from an hour of hot sun swimming. I was too hungry. I planned to for Kuala Terengganu town to find a good restaurant. On the way to Kuala Terengganu from Batu Rakit, I saw this restaurant. Lot of customer in queue self serving the food. Normally if any restaurant full with customer in peak hours means the food must be tasty. I did “U” turn my car and park at side of the restaurant.

There was lot of variety food at the food table; verity style of chickens, verity style of sea food and curry (gravy) which hot. I just queue for my turn to get the rice. It first time I saw steam rice in cup form. They were steaming the rice with small cups and 1 cup per serving. Sorry, I could not able to get the photo of the cup steam rice as the queue still long and people are pushing to take their food. As usual I took my chicken, ikan billis cooked with onion and pappadam. The doctor advised me to go on non sea food diet. One more thing either you ate there or took away the rice served on the wrapping paper.

The moment I get my place to eat, the waitress (young girl) was taken my drink order. The food was as I expected; very nice and tasty. No wonder why lots of people are lining up for the food. The hot creamed Nescafe also as I expected.

I not get changes to look around and take more photos as the crowd still increasing and I am tired because of the swimming. Anyhow, I will be back there is get time. This restaurant located just at the “T“ junction for the Tok Jembal and Kubang Badak traffic light at Gong Badak; road to Kuala Terengganu Golf Resort.

Gem Beach Resort, Batu Rakit, Kuala Terengganu

If you all guys did know what to on weekend at Kuala Terengganu, then go for swimming at pool beside beach. It will be good scenery looking at the wave pattern while you swim. The resort is located off from main road. If you driving from Kuala Terengganu to Merang via Batu Rakit, after the roundabout at Batu Rakit Police station, slow down and watch for the sign board on your right side. There will be a ‘keropok Lekor” stall on both side of the road. Careful while you enter the small road to the resort as some big trailer will be on your way as the Gem Beach Resort currently extending the resort.

The resort looked like very poor maintenance on gardening and overall appearance. Even the reception guy with low information as I asked for the price for using the swim pool, he bit confuses and instructs me to see the pool side administration for more info. It’s usual this kind of place where not much customer. I approach the pool side admin. There was a clear sign displayed; RM 10 for an adult and RM 5 for children (Non residence). I ask the time frame for the usage of the swim pool, he answered it is a per entry fee and until 1900 hrs.

From not moving from his seat he shows the shower & changing room. I paid RM 10 and went to changing room. The changing rooms not as I expected and the door even not have the any closing arrangement. Somehow I manage and change my cloth to swimming entire.

There was some family at the pool with their kids are swimming at the children pool. The water was chill and nice for the swimming. It was long time I never practicing my swimming skills. I was bit difficult at earlier but fine later stage. It was about noon time and the sun was burning my skin. About an hour of swimming I decided to go back. My last lap from side to side on free style was 27 seconds and it’s not a good record. I will be back here to improve my swimming record.

Swimming is a good work out and tiring. I probably will have good lunch and a deep nap.

Thanks.

Salamath Restaurant, Kuala Terengganu

To my fellows Indian friends, if you are looking for a thosai as a breakfast at Kuala Terengganu city, then proceed to this road side corner stall. It a tamilan-muslim or Mamak stall has a thosai, vadai and paratha (roti canai). This stall located in Jalan Hiliran Pulau Kambing just near by the MSET (Mara Shipyard and Engineering Terengganu). Now days, I start roaming like “Jalan Jalan Cari Makan” program to evaluate the local foods.


I enter this stall today morning. No one greeted me. I find my own table middle of the stall. The shop looked clean with clean tables and chairs. No waitress here. Only three staff handling this stall. One cook, one tea master and another one cashier or waiter. After one minute of sitting, then the tea master ask what drink I wants. No formal order taking. I order a hot creamed Nescafe as usual because it is my favored drink at outside. He deliver the drink and forgotten to take food order. Then he come after one minute and asks for the food I would like to eat. I order two thosai as I saw on wall written “Here sold thosai”.

The cook took another 5 minutes to cook the thosai as the hot plate occupied with paratha. The thosai served in good order with chatney, dal curry and fish curry (I think as taste alike). I start my tasting sense each of it. The chatney was superb; up to my taste. Normally some of the stall owner took the coconut milk for their curry and make the chatney with the no milky coconut. So, the chatney will have the juice taste. This one I sure they did not done that. The chaney was made with pure coconut puree.

It’s my nature that I hate to eat dal curry, rasam and sothi in south Indian cooking. So that, I did not enjoy the dal curry served to gather with the thosai. No comment on that. The fish curry was good as it tasted a sour. It was delicious with thosai which the chuney was bit spicy. The combination of spicy and sour earlier morning will give you all good taste of the food. I sure the thosai was made on new blended flour as I not taste any sour or yeast formation. Normally the thosai flour must blend a night before and kept at hot place to give the flour get little sour taste. If they blend to early or kept too longer outside chiller the flour will get sourer taste and it will give displeasure to the customer.

The total breakfast cost me RM 3.60 and it’s consider same as klang valley. Observed there isn’t any re-welcoming greeting from the cashier. My opinion, they should practicing he customer relationship like greeting, interaction if regular customer and more like the “smile”. I would grade this stall “B (-)“ even though the food is good. As a MBA student, I consider the customer satisfaction is play main roll in all firm. Remember, the taste and beauty is always difference on individual views.

Thanks.

Naj D’ Leaf Restaurant, Kuala Terengganu

If you had change go to Kuala Terengganu City or you are at Kuala Terengganu City, please don’t forget to drop by this restaurant if you wanted to have a banana leaf served meal for your lunch. I went today for my lunch as I was on business trip to Kuala Terengganu. As you aware Friday is a weekend for this state and most the restaurants are closed for Friday prayer, I had no much choices then an Indian or Chinese food.

I knew that there was a banana leaf restaurant in middle of town as I been there in the year of 2004. Since it’s been long time I was roam around to look for the restaurant. Finally, I found it at the Jalan Tok Lam near Mid Town Hotel. I parked my car nearby. Remember to carry coin all the time at Kuala Terengganu. The Kuala Terengganu public parking is fitted with the coin meter. 10 cents require parking your car for 10 minutes.

The restaurant was clean and tidy. No much decoration on the walls. Decent ceiling lights and wall fans on both sides’ shows a pleasant location for a nice lunch. The foods displayed at the entrance to ease your choices before made your mind to eat. All tables are marble top finishing and present a cleanliness of the restaurant operator.

I was greeting by one of the waitress and she took order so clearly to avoid any mistake. She did asked me either I want a white rice or briyani rice, she did ask either I wish to have a vegetarian or non vegetarian food. She knew that some of the Indians are normally take a vegetarian food on Friday. She explained the main dishes.

I ordered a non vegetarian food with fish curry and a honey chicken. She served me on the table with three vegetables with rice, fish curry topping and a piece of honey chicken (leg piece). She did also ask for the type of drink politely. I request a hot Nescafe with milk. The food served in attractive way.

I started tasting all food separately. The curry powder mixture in the fish curry are not been cooked properly as I can smell or taste the powder differently. They may add the water before the curry powder fried nicely with the hot oil. I knew little bit of cooking as I used to spend some times in kitchen since I was young. Beside of it, the curry was nice with balance spice, salt and gravy.

The vegetables are cooked with oil less cooking and healthier. The combination and selection of the vegetables also consider balance. Long beans cut and cooked in small sizes. A cucumber slice mixed with carrot slice haft cooked with salt for preserve the nutrients. The pumpkins cooked on thick juice turmeric cooking increase the aura of the food.

The honey chicken was less sweet and taste much delicious mixed with fish curry. The food was ranggoli colors. White rice topped with brownies fish curry surrounded by yellow pumpkin, greenies long beans and cucumber, orange carrots and brightens by the red honey chicken.

The hot milked Nescafe was not as I expected. I normally drink the coffee’s aroma must touch my nose before it reach my mouth. This was considering to milky as not brownies in color. I do understand why it is so when I saw an advertisement at their counter “Looking for kitchen assistant and tea master”. They not have a proper person to prepare the drinks.

In overall, this restaurant advice for good lunch as I rated this restaurant as a “B” in term of service, cleanliness, food preparedness and price. Forgotten, above food was charged as RM 8.50 which I consider reasonable for city like Kuala Terengganu where it very hard to find a banana leaf restaurant.

Guys and girls, the banana leaf also acted as you complain or comment letter. Normally in Tamilan culture, if we fold the banana leaf toward your body after the food means you like the food and wish to come back again. It will be other way around, if you fold the banana leave outward of your body means you not like the food and may probably not coming back there. I am not sure the current generation following this or not. This is a silent and polite way to express your opinion.

So, I did fold the banana leaf toward my body and you all know what does means now. Enjoy your lunch there and share your thoughts if I was a tasteless guy.

Thanks.

Managerial Economic Assignment

QUESTION 1


How does the theory of the firm provide an integrated framework for the analysis of managerial decision making across the functional areas of business? Discuss.

[10 marks]

Theory of firms says that the objective of any firm is to maximize the shareholders wealth. Hence when any managerial decision comes into question this framework is used to make the final call. If the decision is going to increase firms wealth then the decision is taken for the work, otherwise the call is rejected.(Answered)

QUESTION 2

Profit rates differ among firms in a given industry and even more widely among firms in different industries. Please explain the factorswhich contribute to different profit rates.

10 marks]

Profit rates differ across industries and also inside a particular industry. The main reason is the margin that is available to all the firms. All industries don’t enjoy the same macro factors and hence are different on margins they can make. Finally in a particular industry the option to command margins is not same for all firms. This is because of cost structure and pricing differ for all firms.(Answered)

QUESTION 3


What is price discrimination? What are the conditions to make price discrimination effective? Discuss some examples from the Airline Industry.

[10 Marks]

Price discrimination or price differentiation exists when sales of identical goods or services are transacted at different prices from the same provider. In a theoretical market with perfect information, perfect substitutes, and no transaction costs or prohibition on secondary exchange (or re-selling) to prevent arbitrage, price discrimination can only be a feature of monopolistic and oligopolistic markets, where market power can be exercised. Otherwise, the moment the seller tries to sell the same good at different prices, the buyer at the lower price can arbitrage by selling to the consumer buying at the higher price but with a tiny discount. However, product heterogeneity, market frictions or high fixed costs (which make marginal-cost pricing unsustainable in the long run) can allow for some degree of differential pricing to different consumers, even in fully competitive retail or industrial markets. Price discrimination also occurs when the same price is charged to customers which have different supply costs.

The effects of price discrimination on social efficiency are unclear; typically such behavior leads to lower prices for some consumers and higher prices for others. Output can be expanded when price discrimination is very efficient, but output can also decline when discrimination is more effective at extracting surplus from high-valued users than expanding sales to low valued users. Even if output remains constant, price discrimination can reduce efficiency by misallocating output among consumers.

Price discrimination requires market segmentation and some means to discourage discount customers from becoming resellers and, by extension, competitors. This usually entails using one or more means of preventing any resale, keeping the different price groups separate, making price comparisons difficult, or restricting pricing information. The boundary set up by the marketer to keep segments separate are referred to as a rate fence. Price discrimination is thus very common in services, where resale is not possible. Price discrimination can also be seen where the requirement that goods be identical is relaxed

Airlines and other travel companies use differentiated pricing regularly, as they sell travel products and services simultaneously to different market segments. This is often done by assigning capacity to various booking classes, which sell for different prices and which may be linked to fare restrictions. The restrictions or "fences" help ensure that market segments buy in the booking class range that has been established for them. For example, schedule-sensitive business passengers who are willing to pay $300 for a seat from city A to city B cannot purchase a $150 ticket because the $150 booking class contains a requirement for a Saturday night stay, or a 15-day advance purchase, or another fare rule that discourages, minimizes, or effectively prevents a sale to business passengers.

Notice however that in this example "the seat" is not really always the same product. That is, the business person who purchases the $300 ticket may be willing to do so in return for a seat on a high-demand morning flight, for full refundability if the ticket is not used, and for the ability to upgrade to first class if space is available for a nominal fee. On the same flight are price-sensitive passengers who are not willing to pay $300, but who are willing to fly on a lower-demand flight (say one leaving an hour earlier), or via a connection city (not a non-stop flight), and who are willing to forgo refundability.

On the other hand, an airline may also apply differential pricing to "the same seat" over time, e.g. by discounting the price for an early or late booking (without changing any other fare condition). This could present an arbitrage opportunity in the absence of any restriction on reselling. However, passenger name changes are typically prevented or financially penalized by contract.

Since airlines often fly multi-leg flights, and since no-show rates vary by segment, competition for the seat has to take in the spatial dynamics of the product. Someone trying to fly A-B is competing with people trying to fly A-C through city B on the same aircraft. This is one reason airlines use yield management technology to determine how many seats to allot for A-B passengers, B-C passengers, and A-B-C passengers, at their varying fares and with varying demands and no-show rates.

With the rise of the Internet and the growth of low fare airlines, airfare pricing transparency has become far more pronounced. Passengers discovered it is quite easy to compare fares across different flights or different airlines. This helped put pressure on airlines to lower fares. Meanwhile, in the recession following the September 11, 2001, attacks on the U.S., business travelers and corporate buyers made it clear to airlines that they were not going to be buying air travel at rates high enough to subsidize lower fares for non-business travelers. This prediction has come true, as vast numbers of business travelers are buying airfares only in economy class for business travel.

There are sometimes group discounts on rail tickets and passes. This may be in view of the alternative of going by car together.

QUESTION 4


What should be the business strategy under:


a. Highly competitive market structure

Under a highly competitive market structure there are two options to work upon. One is to stay differentiated and stay competitive by this way and keep the market share intact by way of better and unique offering to customer. The other is to stay price competitive with competitors since the nature of market allows consumers to switch loyalty based on price changes.

b. Oligopoly

Under Oligopoly scenario since the market conditions are such that the demand is very high for products but providers are very less and the ones who are there are extremely powerful and dominating the market dynamics. The business strategy under this scenario is to create high barrier to switch and high barrier to entry thereby not letting other players enter the market and by not letting consumer switch brands easily, the more widely practiced strategy is of entry barriers.

c. Monopoly

In monopolistic setups also the business strategy of producers is not to allow new entrants to market by way of creating entry barriers like technological set-ups and by way of killing strategies which make the entrant lose money and do not allow him to run in long term. Since the players in these markets are minimal they are as big in every aspect that countering them becomes extremely difficult.

[10 Marks]

QUESTION 5


Write short notes on:


a. Cobb-Douglas production function

In economics, the Cobb–Douglas functional form of production functions is widely used to represent the relationship of an output to inputs. It was proposed by Knut Wicksell (1851–1926), and tested against statistical evidence by Charles Cobb and Paul Douglas in 1900–1928. It was later updated by Dick Boin who splitted productive assets from residential real estate.

For production, the function is

Y = ALαKβ,

where:

• Y = total production (the monetary value of all goods produced in a year)

• L = labor input

• K = capital input

• A = total factor productivity

• α and β are the output elasticities of labor and capital, respectively. These values are constants determined by available technology.

Output elasticity measures the responsiveness of output to a change in levels of either labor or capital used in production, ceteris paribus. For example if α = 0.15, a 1% increase in labor would lead to approximately a 0.15% increase in output.

Further, if:

α + β = 1,

the production function has constant returns to scale. That is, if L and K are each increased by 20%, Y increases by 20%. If

α + β < 1,

returns to scale are decreasing, and if

α + β > 1

returns to scale are increasing. Assuming perfect competition and α + β = 1, α and β can be shown to be labor and capital's share of output.

Cobb and Douglas were influenced by statistical evidence that appeared to show that labor and capital shares of total output were constant over time in developed countries; they explained this by statistical fitting least-squares regression of their production function. There is now doubt over whether constancy over time exists.

b. Diminishing returns to variable input

In economics, diminishing returns (also called diminishing marginal returns) refers to how the marginal production of a factor of production starts to progressively decrease as the factor is increased. According to this relationship, in a production system with fixed and variable inputs (say factory size and labor), each additional unit of the variable input (i.e., man-hours) yields smaller and smaller increases in outputs, also reducing each worker's mean productivity. Consequently, producing one more unit of output will cost increasingly more (owing to the major amount of variable inputs being used, to little effect).

This concept is also known as the law of diminishing marginal returns or the law of increasing relative cost.

c. Economies of scale and economics of scope

Economies of scope are conceptually similar to economies of scale. Whereas 'economies of scale' for a firm primarily refers to reductions in average cost (cost per unit) associated with increasing the scale of production for a single product type, 'economies of scope' refers to lowering average cost for a firm in producing two or more products. The term and concept development are due to Panzar and Willig (1977, 1981). Here, economies of scope make product diversification efficient if they are based on the common and recurrent use of proprietary knowhow or on an indivisible physical asset.

d. The Learning Curve

A learning curve is a graphical representation of the changing rate of learning (in the average person) for a given activity or tool. Typically, the increase in retention of information is sharpest after the initial attempts, and then gradually evens out, meaning that less and less new information is retained after each repetition.

The learning curve can also represent at a glance the initial difficulty of learning something and, to an extent, how much there is to learn after initial familiarity

e. Global economies of production

Economic globalization refers to increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital. It is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market. Depending on the paradigm, globalization can be viewed as either a positive or a negative phenomenon.

Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries. Whilst economic globalization has been occurring for the last several hundred years (since the emergence of trans-national trade), it has begun to occur at an increased rate over the last 20–30 years. This recent boom has been largely accounted by developed economies integrating with less developed economies, by means of foreign direct investment, the reduction of trade barriers, and the modernization of these developing cultures.

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