Controlling Case study Essay Example for Free

Controlling Case study Essay Abstract This paper studies management control design of supplier relationships in manufacturing, a supply chain phase currently under-explored. Compared to supplier relations during procurement and RD, which research found to be governed by a combination of formal and informal controls, supplier relations in manufacturing are more formal, so that they could be governed by more formal and less informal controls. To refine the management control system and influencing contingencies, we propose a theoretical framework specifically adapted for the manufacturing stage. This framework is investigated by an in depth case study of the supplier management control of a Volvo Cars production facility. We identify three types of suppliers visualizing the associations in the framework and illustrating the framework’s explicative power in (automotive) manufacturing. Furthermore, the case contradicts that supplier relations in the manufacturing phase are governed by little informal control, because the automaker highly values the role of trust building and social pressure. Most notably, a structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens the automaker’s control on dyadic supplier relations. Keywords: Management control; Supplier relationships; Manufacturing; Contingency theory; Case research; Automotive 2 1. Introduction In the current economic environment, characterised by globalisation and enhanced levels of competition, companies require an effective supply chain with inter-organizational relationships (IORs) to strive for sustainable competitive advantage. Not surprisingly, studies show that IORs have a high potential impact on organization performance (e. g. Anderson Dekker, 2005). Literature, however, also argues that many IORs do not provide the expected benefits and are often terminated because of managing difficulties (Ireland, Hitt Vaidynanath, 2002). Academics often propose that lack of coordination and opportunistic behaviour of partners are the two main reasons for the relatively high relationship failure rate (e. g. Dekker, 2004). Hence, management control systems (MCSs) are argued to play a critical role in preventing such failure, by establishing governance mechanisms to control the relationship (Ireland et al. , 2002). The fundamental goal of MCSs is to influence decision making in attaining strategic objectives (Nixon Burns, 2005). In an inter-organizational setting, this implies creating bilateral incentives to pursue mutual goals. Already in the mid-nineties, scholars started calling for more attention for this topic (e.g. Hopwood, 1996; Otley, 1994), and have not stopped since (e. g. van der Meer-Kooistra Vosselman, 2006). Consequently, inter-organisational MCSs have been studied from several angles, including outsourcing (e. g. Anderson, Glenn Sedatole, 2000), inter-organizational cost management (e. g. Cooper Slagmulder, 2004), partnerships (e. g. Seal, Berry, Cullen, Dunlop Ahmed, 1999), strategic alliances (e. g. Dekker 2004), networks (e. g. Kajuter Kulmala, 2005) and joint ventures (e.g. Kamminga van der MeerKooistra, 2007). Yet, the main emphasis was put on relational collaboration during the first stages of the supply chain, namely procurement, which involves the make-or-buy decision, partner selection and contract design, and RD. Although this historical focus is certainly justified, management control in a later phase of the supply chain, namely manufacturing, remains relatively under-explored (Cooper Slagmulder, 2004; Langfield-Smith Smith, 2003). However, purchased products and services for manufacturing account for more than 60% of the average company’s total costs (Degraeve Roodhooft, 2001) and are subject to continuous improvement with suppliers, also requiring adequate management control. Therefore, this study illustrates how manufacturers design the MCS of supplier relations in the manufacturing phase of the supply chain, which we refer to as â€Å"manufacturer-supplier relationships† (MSRs). In other words, we abstract from 3  procurement and RD influences. 1 Nevertheless, management control research on previous supply chain stages, offers a first theoretical insight into how a MCS for MSRs could look like. In particular, prior empirical research on IORs such as RD collaboration (Cooper Slagmulder, 2004), strategic alliances (Dekker 2004) and joint ventures (Kamminga van der Meer-Kooistra, 2007) found MCSs that combine both formal controls, like outcome controls, and more informal controls, such as trust building. Also the execution of service outsourcing projects, like industrial maintenance (van der Meer-Kooistra Vosselman, 2000), IT (Langfield-Smith Smith, 2003) and accounting (Nicholson, Jones Espenlaub, 2006) is governed by a combined MCS. So if we assume these findings to hold for other IOR types (external validity) and neglect potential characteristic differences, MSRs could be expected to be governed by a combination of formal and informal control as well. Yet, by taking into account differences between MSRs and other types of IORs, the MCS design could be different. In that respect, we argue that manufacturing is more formal than procurement and RD. Indications for that argument and its consequences for management control can be found in the management control framework of Das Teng (2001). Based on the variables in their framework2, task programmability and outcome measurability, it should be clear that for manufacturing both variable levels are high, or at least higher than in the case of procurement and RD. Consequently, the framework indicates that formal controls are suited mechanisms to govern MSRs. This argument is strengthened by the type of knowledge usage in MSRs, for which organization literature provides a clear distinction between knowledge exploration and knowledge exploitation. On the one hand, it is argued that the first supply chain phases, think of procurement and RD, aim at knowledge exploration, while the later stages, like manufacturing, primarily 1 Obviously, procurement and RD do impact the manufacturing phase. Yet, as our aim is refining supplier MCS design in the  manufacturing phase, we deliberately exclude these influences. In terms of research methodology, this abstraction is put into operation by studying a MSR between a manufacturer facility and supplier facility only dealing with manufacturing, while procurement and RD are handled by their respective mother companies (cf part three of this paper â€Å"research methodology†). 2 Although this framework was originally developed by Ouchi (1979) for use in MCS design within organizations, Das Teng (2001) further adapted it for use in IORs. Task programmability refers to the degree to which managers understand the transformation process in which appropriate behaviour is to take place. Outcome measurability refers to the ability to measure outcome precisely and objectively. When outcome measurability is high/low and task programmability is low/high, formal outcome/behaviour control should be set up to govern the relation. When both dimensions are low, informal control is preferable, but when both measures are high, both outcome and behaviour control are suited control mechanisms (Das Teng, 2001). 4  aim at knowledge exploitation. On the other hand, research shows that the exploration of knowledge is best governed by informal controls, while knowledge exploitation is most adequately controlled by formal controls (Bijlsma-Frankema Costa, 2005). Thus, based on the characteristics of high task programmability, high outcome measurability and knowledge exploitation goals, MSRs could be expected to be governed by primarily formal controls with little informal controls. In other words, the literature offers different management control designs for MSRs regarding the informal control level. Therefore, this study investigates how the MCS of MSRs is designed and how important informal controls are in that design, in particular in IORs between an original equipment manufacturer (OEM) and suppliers of outsourced manufacturing activities in the trend-setting automotive industry (cf Womack, Jones Roos, 1990). An automobile is a complex product manufactured with thousands of components. Consequently, also this industry increasingly outsourced non-core activities and started relying on suppliers to create lower costs. To that end, a variety of supply chain management practices has been implemented, such as lean supply and continuous improvement. Yet, these induce the need for appropriate management control structures and bi-directional communication to organize and manage the relation (Carr Ng, 1995; Scannell, Vickery Droge, 2000). In that respect, one particular automaker, namely Toyota, is known for partnering with suppliers, transferring its expertise to help suppliers and installing softer forms of control including trust. To govern the search for continuous improvement in manufacturing, Toyota established the â€Å"Toyota Group† by means of a supplier association, an operations management consulting division and voluntary small group learning teams (Dyer Nobeoka, 2000). However, practitioner literature (e. g. Automotive News/Automotive News Europe) describes several other automakers governing this search by heavily formalized supplier relations. Contrary to cooperation during procurement and RD, manufacturing is argued to become much more demanding towards suppliers. Automakers increasingly transfer manufacturing risk and supply responsibility to first-tier suppliers, which results in suppliers delivering to very tight just-in-time and in-sequence schedules (Alford, Sackett Nelder, 2000). As a result, OEMs install formal controls and supplier improvement techniques, which alert suppliers to the importance of ameliorating supply performance at lower costs. Hence, also automotive practice shows evidence of high and low levels of informal control. Therefore, this study specifically investigates how the MCS of automotive MSRs is designed. Yet, besides illustrating MCS design, this paper contributes to explaining MCS design of automotive 5 MSRs. To our knowledge, little inter-organizational management control research specifically investigated contingency theory’s explicative power in manufacturing. Naturally, several papers study influences on MCS design in production environments, like the impact of manufacturing flexibility (Abernethy Lillis, 1995), customization and related interdependence (Bouwens Abernethy, 2000), profit centre strategy (Lillis, 2002), production strategy, production technology and organization (van Veen-Dirks, 2006). However, these studies investigate characteristics explaining MCS design in one organisation, while our study focuses on inter-organizational relations. To that end, we propose a refined theoretical contingency framework based on recent inter-organizational management control theory, but specifically adapted for the manufacturing stage. This framework proposes several contingencies determining the level of risk, which is governed by different levels of management control techniques. In order to illustrate the validity of the framework in practice and answer how and why automakers design their MCS, we perform an in depth case study of the relations between a facility (VCG) of the international OEM Volvo Cars and a selection of its first-tier supplier facilities. The case study provides considerable evidence of three supplier types, namely batch, low value-added just-in-sequence and high value-added just-in-sequence suppliers, visualizing the associations in the framework between contingencies, risks and management controls. These controls include both formal and informal techniques, of which trust building and social pressure are highly valued. Most notably, VCG’s structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens control on the OEM’s dyadic supplier relations. As our framework draws on case findings from other less formal IORs, it seems that our case findings offer more evidence of their external validity. That way, the findings contradict that informal controls play a minor role in automotive MSRs. In particular, VCG’s MCS, combining both formal and informal controls, is argued to be designed specifically to improve supply performance. The remainder of this paper is organized as follows. In the second part, we develop the theoretical contingency framework. The third part describes the case research methodology. The fourth part is the actual case study, which presents VCG, describes three supplier types by means of contingency levels and clarifies how VCG designed the MCS governing them. In the fifth part, we discuss our findings by comparing VCG’s management control with previous findings and elaborating on the significance of VCG’s supplier team. We conclude the paper with a summary of the main findings and some avenues for further research. 6 2. Theoretical framework In this part, we develop a theoretical contingency framework for MCS design of MSRs, which can be found in figure I. Contingency theory originated with the aim of explaining the structure of organizations by particular circumstances. Later, management accounting researchers adopted and further developed the theory in order to explain the shape of MCSs in organizations (e. g. Chenhall, 2003; Luft Shields, 2003). Therefore, contingency theory suits this study, regarding MCS design of MSRs and its explicative variables. The central concept of the framework is the level of risk a certain MSR runs. Inter-organizational management control theory proposes two types of risk, which result from five different situational antecedents, characterizing the MSR. Although we clarify both risk types separately, we stress the integrative interpretation of all contingencies jointly determining both levels of risk. Subsequently, this risk is governed by different management control instruments, either with a large or a small role for informal control. 3 2. 1. Performance risk The first risk type is performance risk, defined as the probability of not achieving the MSR objectives, despite satisfactory cooperation (Das Teng, 2001). This type of risk is also referred to as â€Å"coordination requirements† (Dekker, 2004; Gulati Singh, 1998) or â€Å"the mastery of events† (Tomkins, 2001). As the MSR objective concerns manufacturing as many products of the order book as possible, on time, with good quality at the lowest possible cost, performance risk is the risk of a supply chain interruption disturbing the realisation of this goal. Three contingencies related to technology increase this risk, namely complexity, task uncertainty and task interdependence (Chenhall, 2003). Yet as complexity and task uncertainty are highly related (Chenhall, 2003), the framework does not include complexity separately (cf Dekker, 2004). 3 According to van Veen-Dirks (2006), all situational characteristics and MCS characteristics are determined jointly instead of sequentially. Also Kamminga van der Meer-Kooistra (2007) propose that the influence of contingencies is not determined by each antecedent as such, but by their interaction. In addition, they suggest studying control as an integrative concept, in which all control dimensions are incorporated. Consequently, we do not propose one-on-one associations between one specific contingency, one specific type of risk and one specific type of control, suggested to suit that risk type. Instead, our model simultaneously studies the associations between situational contingencies, risks and management control techniques, as put forward by the three boxes of figure I. The boxes of contingencies and risks are put together to stress their interdependence and joint impact on management control. 7 Task uncertainty relates to variability in transformation tasks and the available knowledge of methods for performing those tasks (Chenhall, 2003). This situational characteristic determines the measurability difficulty of output and activities (Kamminga van der Meer-Kooistra, 2007; van der MeerKooistra Vosselman, 2000), which increases with increasing levels of complexity of both the delivered product and its operational processes (Woodward, 1965). The first complexity is related to the added value of the product and gradually increases depending on whether the supplier delivers a standard component or an important customized module (Cooper Slagmulder, 2004). The second complexity regards the added value of the production process and reflects the complexity of the supplier’s manufacturing processes needed to effectively produce and deliver products as required. Task interdependence refers to the degree to which subactivities of the value creation process have been split up and made dependent on each other (Dekker, 2004). In MSRs, this interdependence is sequential (Thompson, 1967)4, because the relation involves transferring the supplier’s output to the manufacturer’s input process. The level of sequential interdependence is impacted by the dependence level of the manufacturer’s operational performance on the supply quality (timeliness and product quality). Moreover, the interdependence level of a specific MSR is influenced by the production flexibility required from both parties and the manufacturer’s lack of precise knowledge to perform activities previously done in-house. 2. 2. Relational risk The second type of risk is relational risk, implying the probability of not having satisfactory cooperation because of opportunistic behaviour of the supplier, exemplified in shirking, cheating, distorting information and appropriating resources (Das and Teng, 2001). This type of risk is also referred to as â€Å"appropriation concerns† (Dekker, 2004; Gulati Singh, 1998) or â€Å"the generation of trust† (Tomkins, 2001). Transaction cost economics (TCE) theory5 proposes three contingencies that influence relational risk and subsequently determine appropriate control: asset specificity, environmental uncertainty and transaction frequency (Williamson, 1979). Yet, as the manufacturer possesses no specific assets related to a certain supplier, at 4 Thompson (1967) identifies three levels of task interdependence from low to high, which influence the level of inter-organisational coordination and communication: pooled, sequential and reciprocal interdependence. 5 TCE argues that parties are only boundedly rational and behave opportunistically. Therefore, the total cost of outsourcing is the sum of both the supplied component costs and the transaction costs, including costs for negotiation, drawing up contracts, coordination, control and risk of opportunistic behaviour (van der Meer-Kooistra Vosselman, 2000). 8 least not in the manufacturing phase of the supply chain, there is no lock-in to supplier opportunistic behaviour. 6 Hence, unlike uncertainty and transaction frequency, asset specificity does not influence supplier opportunistic behaviour in MSRs and is not included in our theoretical framework. Consistent with being a central contingency research concept, environmental uncertainty also forms a powerful characteristic of MSRs (Chenhall, 2003). In particular, this contingency relates to general market uncertainties and uncertainty about unknown future contingencies (Kamminga van der Meer-Kooistra, 2007; Langfield-Smith Smith, 2003; van der Meer-Kooistra Vosselman, 2000). Because manufacturer and supplier interact under these uncertainties, both parties face changes over time, which require detailed contracts (Dekker, 2004). However, incomplete contract theory argues that there exist limitations in drawing up complete contracts, because all future contingencies can not be foreseen, are too expensive to foresee or are too expensive or impossible to contract upon (Gietzmann, 1996). Consequently, the combination of uncertainty and incomplete contracts leads to potential opportunistic behaviour of the supplier. According to TCE, more frequent interactions lower the possibility of opportunistic behaviour (Williamson, 1979). So, to preserve a positive relation between contingencies and relational risk, we could utilize infrequency as contingency variable (e. g. Anderson Dekker, 2005). Yet, as we study MSRs with no connection to commercial negotiations determining the contract term, we include the antecedent relational stability aim. This contingency relates to the manufacturer’s aim of continued future interactions with the supplier and serves to build bilateral commitment (Cooper Slagmulder, 2004). We argue that MSRs, in which relational stability is considered necessary and thus aspired by the manufacturer, are subject to higher relational risk. For example, if supplier switching costs are high due to high interdependence, high commitment from the manufacturer could incite the supplier to accept lower quality or delivery performance. Besides including a transaction environment characteristic and a transaction characteristic, we also incorporate a transaction party characteristic (Langfield-Smith Smith, 2003; van der Meer-Kooistra Vosselman, 2000). In particular, we include supplier knowledge importance, which encompasses the degree of importance for the manufacturer to know the supplier and to be able to assess characteristics, such as management competence, trustworthiness and willingness to share proprietary knowledge. Usually, this kind of assessment is done by means of first-hand or second-hand experience. Hence, we argue that when the 6 Obviously, suppliers do have specific assets in place, rendering them vulnerable to opportunistic behaviour from the part of the manufacturer. However, this study and the developed theoretical framework only focus on supplier opportunistic behaviour. 9 importance of supplier knowledge rises, the risk for insufficient or erroneous assessment and subsequent supplier opportunistic behaviour increases. 2. 3. Management control system Although MCSs have been conceptualised and categorised in various ways, the current management control literature has reached a consensus on two types of management controls, namely formal and informal control instruments (Langfield-Smith Smith, 2003). Obviously, studying the usage of informal controls compared to formal controls requires both control types to be included in the theoretical framework. Formal controls are explicitly set up to coordinate the MSR and include outcome controls and behaviour controls. Outcome control involves the measurement and evaluation of the outcomes of operations against pre-defined outcomes or targets, by using several performance measurement techniques (Ouchi, 1979; Dekker, 2004). The most important outcome metrics for MSRs are percentage of defects, quality of delivered goods and on time delivery of goods (Gunasekaran, Patel McGaughey, 2004). Behavioural control concerns the specification and actual surveillance of behaviour, by means of rules and standard procedures (Ouchi, 1979). Additionally, behaviour control includes evaluating compliance with pre-specified planning, procedures, rules and regulations (Dekker, 2004). Informal controls (also called social controls) are not explicitly designed, but are grown out of shared norms and values, shaped by frequent interaction, meetings and management attitude (Ouchi, 1979; Merchant, 1998). Especially trust building7 has emerged as a very important informal control instrument in inter-organizational MCSs (e. g.Dekker, 2004). While formal controls reduce the risk by altering the incentives for underperformance and opportunistic behaviour, trust mitigates risk by minimizing the fear of underperformance and opportunistic behaviour to occur (Das and Teng 2001). Therefore, we include three types of inter-organizational trust building, namely building contractual trust, competence trust and goodwill trust (Sako, 1992). 8 Contractual trust results from previous contractual relations or grows during the MSR 7 Rousseau, Sitkin, Burt Camerer (1998, p. 394). Define trust as â€Å"a psychological state comprising the intention to accept  vulnerability, based upon positive expectations of the intentions or behaviour of another†. According to them â€Å"trust is not a behaviour (cooperation), or a choice (e. g. taking a risk), but an underlying psychological condition that can cause or result from such actions† (Rousseau et al. , 1998, p. 395; italics added). As such, trust in itself can not be a control instrument in the MCS of MSRs. Instead, the control techniques are the actions the manufacturer performs to create and build trust in the supplier. 8 Contractual trust is based on the expectation that the supplier will keep promises and comply with agreements made, whether these10 (Sako, 1992). Competence trust is increased by previous good performance, i. e. good quality and delivery results. Moreover, competence trust results from buying activities from reputable suppliers or transferring competences to the supplier. Additionally, product and/or process certification and process standardisation enhance competence trust (Sako, 1992). To develop goodwill trust, Sako (1992) identifies shared values and norms as necessary, but insufficient, as transaction parties also need to show the willingness to be indebted to each other. Gulati (1995) stresses creating and growing an inter-organizational bond of friendship to trigger goodwill trust (Gulati, 1995). Other possible goodwill trust initiators are interactive goal setting, trustworthiness reputation and a long term relationship (Dekker, 2004). Next to these specific trust building mechanisms, the literature also proposes an important overall trust building technique, namely close interaction, based on mutual interests and established by means of joint decision making and joint problem solving via a joint relationship board and/or joint task groups (Das Teng, 2001; Dekker, 2004). 9 Besides trust building, MSRs can be governed by another type of informal control, which Ouchi (1979) refers to as clan control. Based on shared norms, values and a common inter-organizational goal, supplier behaviour in the interest of the MSR will be reinforced, because suppliers are motivated to achieve the goal (Das Teng, 2001). This incentive results from inter-organisational social pressure (Spekle, 2001) exerted by the manufacturer, which we believe is social control in its literal meaning. Because of high interdependence between manufacturer and supplier, below standard results of the supplier directly impact the manufacturer’s performance. Consequently, supplier management is unpleasantly confronted with manufacturer management and faces personal humiliation because of the error. Additionally, supplier management runs the risk of their reputation and personal relationship with interacting manufacturer management getting injured. Also Dyer Singh (1998) mention reputation and personal relations as social control mechanisms, besides norms and trust. By acting as negatively valued social sanctions (Bijlsma- are contractually stipulated or not. Competence trust concerns the expectation that the supplier possesses the necessary technical and managerial competences to deliver the order as agreed. Goodwill trust regards the expectation that the supplier shares an open commitment, with the willingness to perform activities beneficial to the MSR, but possibly neither in the supplier’s interest nor required by the contract (Sako, 1992). 9 Other potential overall trust building techniques in a MSR are communication via regular inter-organizational meetings (Chalos O’Connor, 2004; Das Teng, 2001), information sharing of problem areas (Chalos O’Connor, 2004), supplier development activities (Carr Ng, 1995), networking (Das Teng, 2001), training (Chalos O’Connor, 2004) and the extent to which the employees of both parties understand the factors ensuring the collaboration’s future success (Chalos O’Connor, 2004). 11 Frankema Costa, 2005), these social consequences create incentives for satisfactory supplier performance and render supplier opportunism hard to sustain (Spekle, 2001). If we assume operational snags to be day-today business in MSRs, this social pressure creates an informal means to mitigate risk in MSRs. 3. Research methodology 3. 1. Case study research The empirical part of this paper is based on an in depth case study, which is an investigation of a real life phenomenon, relying on multiple sources of evidence and benefiting from prior development of theoretical propositions (Yin, 1994). This research method suits our research that concerns refining existing interorganizational management control theory for the relatively under-explored manufacturing phase of the supply chain. 10 According to Keating (1995), such theory refinement needs a clear theoretical starting point, supplemented with openness to the discovery of unexpected findings. To balance these theory attachment and detachment requirements, we developed a theoretical framework to guide the data collection, but at the same time used data collection techniques allowing sufficient openness. Furthermore, several interorganizational management control case studies (e. g. Cooper Slagmulder, 2004; Dekker, 2004; Kamminga van der Meer-Kooistra, 2007; Nicholson et al. , 2006) strengthen the argument that cases allow investigating in detail the structure and influencing variables of IORs (Sartorius Kirsten, 2005). These studies show that theory refinement of MCS design can be adequately investigated by means of qualitative research. The social meaning of inter-organizational MCSs, especially regarding the use and interpretation of informal controls, and the subsequent behaviour of companies and employees is very complex. So if we only skim the surface, we will never discover how different parties interpret certain IORs and whether the MCS is designed accordingly. This argument not only justifies the choice for a case study, but also forms the reason 10 Our research corresponds to investigating a complex phenomenon within its real life context of which empirical evidence is rather limited, and answering how and why questions about this phenomenon, for which case study research is most suited (Eisenhardt, 1989; Yin, 1994). Furthermore, Keating (1995) argues that case studies suit three goals and that our theory refinement goal represents the middle ground between theory discovery (describing novel phenomena) and theory refutation (disconfirming well specified theories by bringing in negative evidence). More specifically, our case research is of the theory illustration type, documenting â€Å"previously unappreciated aspects of management accounting practice† and identifying â€Å"aspects of the illustrated theory that require reformulation or more rigorous specification† (Keating, 1995, p.71). Indeed, the goal of this study is to illustrate how manufacturers design supplier MCSs, to what extent this design differs from designs in other IORs and how the design can be explained by means of a specifically adapted theoretical framework. 12 why more of this research is requested (e. g. Langfield-Smith Smith, 2003; Dekker, 2004; van der MeerKooistra Vosselman, 2006). 3. 2. Unit of analysis In most inter-organizational studies, the unit of analysis is one dyadic relation between two independent parties (van der Meer-Kooistra Vosselman, 2006). Since there exist different dyadic MSRs within one manufacturer and we study MCS’s dependence on relationship contingencies, our unit of analysis consists of specific MSRs. Dyer Singh (1998) explicitly propose the â€Å"relational view†, focusing on the buyer-supplier dyad, as opposed to the â€Å"industry structure view† and â€Å"resource based view†, when analyzing cooperative strategy and sources of inter-organizational competitive advantage. In order to answer the proposed research questions concerning MSR MCS design, we analyzed all relations after the manufacturer had decided to outsource the manufacturing activities. In other words, we addressed neither the make-or-buy decision nor related commercial negotiations, but collected data from the start of production onwards. Furthermore, we only gathered data on standard MCSs for MSRs with good operational performance. 3. 3. Case company selection The selection of the case company and its suppliers was influenced by two selection concerns: theoretical sampling (Eisenhardt, 1989), and open and flexible access to.

Corporate Law Essay -- Business, Free Market

Harmonization of private international law aspects concerning corporations is the best way to resolve the uncertainties surrounding corporate cross-border mobility. Harmonization of substantive laws concerning corporations is, on the other hand, unattainable and undesirable? Discuss in relation to: (i) Regulating company law matters; AND (ii) Regulating their insolvency. 1. Introduction Modern day corporations with their multilateral nature have created their owned corporate governance regime. Proponents argue that this corporation are replacing states and brining their own current in world’s economy especially the free market. Further, with the wave of globalization these firms have established themselves so firmly in the local and cross border markets that are beyond the imagination as to compare to the perception when the idea of company was formally conceived in legislative instrument. The ongoing process of globalization has also provided corporation with profound changes in the way they conduct their business. Today international transactions are not merely exchange of goods with the foreigner as was in the recent past. Now, corporations are involved in every transaction and there are number of agreements and process going in between such transactions. Comparatively there are more complex legal regimes on one hand, and liberty of abolition of national b arriers with great competition. Today, corporations have a number of methods to capture any market around the globe. There are thin line for demarcation of the area of private international law and public international law as both govern the relationship between international person and states or international person with international person or both depending on th... ...ng. [FN9] That is, the con-tracts between shareholders and other constituencies and the constitution between shareholders and managers create appropriate incentives for the value of the firm to be maximised and distributed amongst the various claimants. The need for judicial intervention should be limited to exceptional cases (although the definition of ‘exceptional’ may be debated). Much attention has been paid to the role of contracts in the theory of the firm, but the role of the constitution as a regulator of collective action by shareholders has not been analysed systematically. [FN10] In the section that follows, I initially *422 analyse the role of organisational constitutions in regulating collective action in general terms, having regard to the constitutional economics of James Buchanan and Gordon Tullock. [FN11] I then apply this model to corporations.

Cafes Monte Case Essay

The company located in Milan, Italy. It was found by Mario Salvetti as a manufacturer and distributor of premium finest coffees. The company faces a hard decision that may affect their future. The company wants to know whether or not they should keep working in the same investing. An important meeting was there among the top management team’s members to discuss the future of the company. The company’s performance was good in 2000. Profit was shown at the financial statement. Giacomo Salvetti the CEO of the company needs to decide which to choose as the business strategy for the company: 1) Keep working in the premium coffee market. 2) Transfer to the private brands market. The current capacity of the coffee production in 2000 was 350,000 K/M , with added additional capacity of 150,000K/M. The cost of the additional units was 6 billion liras. More facts about the profitability and the liquidity were required beside the cash flow and the profit plan to quantify strategic alternatives and to help in making this decision. The idea of changing was not easy to the CEO to accept without a clear image of the financial consequences. The report was provided by the marketing manager showed that the premium market is very volatile. On the other hand, the private brands market is more stable. (Full capacity at the price of 8,800 liras). Price is lower in the private market than the premium. The volume is depending of the number of retailers. ( Every additional retailer need at least 500,000 K/Y). The report was provided by the manufacturing director showed that costs are different in each amount of the volume and quality of beans. These costs include the cost of beans, labor and fixed cost. The company is able to save 65% of selling costs, 75% of R&D costs and 50% of administrative costs, if they choose the private brands market.(Director of strategic planning). Private brands’ retailers will pay slowly- 90 days instead of 30 days. (Financial officer). I took the sales price as the current price 8,800 liras. Most of the expenses are decline compare to what they were in 2000 beside also the profit. Marketing expenses were no longer there because the marketing percentage became 0% in this volume of the private market. The reason of having this decline is the gross margin of the private market comparing to the margin of the premium market. Sales price and cost in private market are less than what they are in the premium market. Cash flows are not stable during the year. It looks vary from quarter to another. In the cash flows, the retailers will pay in 90days (3months) period of time as what it is in the private market. The cash opining was 50% in the first month and 25% in next 2 months. The other expenses were divided by the 12 months equally. Variable and selling costs are showing in page(5). I don’t recommend the full transition to private market. The profit will be lower than what it is even if it is less volatile. There is no reason for the company to lose its premium market if the profit is low, too. I would support the chance of mixing the premium and the private markets together, because of the profitability there.

Importance of Self-Image in the Loman Family - 1483 Words

Published in 1949, Arthur Miller’s Death of Salesman is a post Second World War American drama that highlights the plight of isolation and desolation experienced by the common man, as symbolized by Willy. The play deals with the society, life’s absurdity, various internal and external conflicts, death and above all, the tragedy of existence. It is located in the industrial society of the twentieth century where the pressure to succeed and the financial difficulties seem insurmountable. The play depicts America as the land of opportunity as well as a place where the society has acquired a new set of values that threatens to destroy those who cannot abide by new changes. This paper discusses the importance of self-image in the Loman†¦show more content†¦The best characterization of Linda is in these words: â€Å"Linda, as the eternal wife and mother, the fixed point of affection both given and received, the woman who suffers and endures, is in many ways, the ear th mother who embodies the plays ultimate moral value, love. But in the beautiful, ironic complexity of her creation, she is also Willys and their sons destroyer. In her love Linda has accepted Willys Greatness and his dream, but while in her admiration for Willy her love is powerful and moving, in her admiration for his dreams, it is lethal. She encourages Willys dream, yet she will not let him leave her for the New Continent, the only realm where the dream can be fulfilled. She wants to reconcile father and son, but she attempts this in the context of Willys false values. She cannot allow her sons to achieve that selfhood that involves denial of these values† (Gordon 312). Furthermore, the Loman family lives in a society where the monetary status of residents determines their value. It is a consumer-based materialistic society which measures the worth of people on the basis of wealth owner. Clearly, being a part of this society and finding himself a complete ‘failure’, Willy’s sense of self image suffers drastically, which worsen when he sees his sons doing nothing about their life. Willy tries to, in fact, he knows that he wants to live in this society but at the same time, his idealism makes him imagine aShow MoreRelatedAnalysis Of Death Of A Salesman By Arthur Miller1235 Words   |  5 Pagestheir accountability, it often leads to inner battles with hypocrisy. This self-deception involves a lot of confusion regarding the nature of ones beliefs, ideals, and principles. Such situations can lead to two very different, yet life changing conclusions, self-realization or misconception of reality. Death of a Salesman, a tragic play b y Arthur Miller, explores the effects of such deception through the character Willy Loman and the consequences of his decisions. It does so by addressing the mentalRead MoreAnalysis of Arthur Millers Death of a Salesman1581 Words   |  6 Pagesï » ¿Arthur Millers play Death of a Salesman was a hit nearly from its debut, and its importance to American literature and theater has not diminished in the over half a century since its first performance in 1949. However, the specific areas of the play that have most intrigued critics have changed over time, as different historical, social, and literary concerns lead critics to come up with different interpretations. By analyzing three different critical responses to Death of a Salesman, it will beRead MoreArthur Miller ´s Death of A Salesman: A Commentary1170 Words   |  5 Pages Arthur Miller Born on October 17, 1915 in Harlem, New York. 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Because of his failed outlook, he believes his self worth is better offRead More Reality and Illusion in Arthur Miller’s Death of a Salesman Essay1088 Words   |  5 PagesReality and Illusion in Arthur Miller’s Death of a Salesman In Arthur Miller’s play, Death of a Salesman, a major theme and source of conflict is the Loman family’s inability to distinguish between reality and illusion.   This is particularly evident in the father, Willy Loman.   Willy has created a fantasy world of himself and his family.   In this world, he and his sons are men of greatness that â€Å"have what it takes† to make it in the business environment.   In reality, none of them can achieveRead More Tragic Heroes in Arthur Millers Death of a Salesman and Henrik Ibsens A Dolls House1709 Words   |  7 Pagesfor example, Arthur Millers Death of Salesman and Henrik Ibsens A Dolls House. Death of Salesman shows the downfall of the modern tragic hero, Willy Loman, a middle class working man. Nora, in A Dolls House displays that characteristics of a tragic hero, in that she shows potential for greatness, but is stifled by her society. Willy Loman in Death of a Salesman and Nora in A Dolls House are two perfec t examples that illustrate a tragic hero. In Tragedy and the Common Man, ArthurRead More Illusion Verses Reality in Death of a Salesman by Arthur Miller 972 Words   |  4 PagesIllusion Verses Reality in Death of a Salesman by Arthur Miller  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Death of A Salesman, by Arthur Miller, is a play that tells the story of a traveling salesman, Willy Loman, who encounters frustration and failure as he reflects on and experiences his own life. Willys quest for the American Dream leads to his failure because throughout his life, he pursues the illusion of the American Dream and not the reality of it. His mindset on perfection, his obsession with success, and his constantRead MoreEssay on The Failure of the American Dream in Death of a Salesman1480 Words   |  6 Pagesknown as a land of opportunity. Out of that thinking comes the American Dream, the idea that anyone can ultimately achieve success, even if he or she began with nothing.  In The Death of a Salesman, Arthur Miller uses the characterization of Willy Loman to represent the failure of his ideal of the American Dream.  Willy’s quest for the American Dream leads to his failure because throughout his life he pursues the illusion of the American Dream and not the reality of it. His mindset on perfection, obsessionRead MoreArthur Miller s Death Of A Salesman1159 Words   |  5 Pagesform their identities. People go through life trying to recognize their character traits, the act of which leads them to their identities, but over time can lose the identities they have through society, through a marriage, or through one’s own self. Willy Loman, a delusional salesman, in Arthur Miller’s Death of a Salesman; Minnie Wright, an unhappy and lonely housewife, in Susan Glaspell’s Trifles; and Oedipus, a king with excessive pride and determination, in Sophocles’ Oedipus the King illustrateRead More A Psychological Reading of Death of A Salesman Essay3503 Words   |  15 Pagesbring his family into grace.  Ã‚   Miller does, however, also uses this play to express underlying themes and ideas.   Reading Death of a Salesman from the starting point of a Marxist results in the perception that miller uses his play as a means to demonstrate the effects of a changing capitalist society.   On the other hand, a psychological reading of Death of a Salesman allows the play to be seen as one mans flight from shame and his own weakened self image.   The Marxist