Product Positioning in a Two‐Dimensional Market Space

This paper examines the optimal product portfolio positioning for a monopolist firm in a market where consumers exhibit vertical differentiation for product performance and horizontal differentiation for product feature. Our key results are as follows: (i) Variable costs drive vertical differentiation. In the presence of significant volume‐dependent manufacturing costs, the optimal portfolio contains a mix of vertically and horizontally differentiated products and an increase in the variable cost makes adding vertically differentiated products relatively more profitable; if fixed volume‐independent design costs dominate, the portfolio exhibits solely horizontal differentiation. (ii) Horizontal differentiation is the main profit lever, and vertical differentiation brings only a marginal benefit; this is true even when most of the consumers exhibit low willingness to pay for performance, which is often used as an excuse to offer low‐end products. (iii) There are more low‐quality products than high‐quality ones, and market coverage increases when the willingness to pay for performance increases. In summary, the model shows how portfolio composition decisions depend on the product cost structure and the consumer preferences.     

Measuring management quality in the factory

The last decade has seen a growing consensus that manufacturing matters. The factory as the producing unit is the core of the firm's manufacturing activities. However, even now, it is not agreed on or even fully understood what constitutes a well-managed factory. This article attempts to create a causal model of management quality in the plant, identifying key managerial levers for improving plant performance. The model is based on an integrated view of three core processes: supply chain, product and process development, and strategy deployment. We postulate that the joint performance of the three processes is determined by the quality with which they are managed. Management quality is operationalized as consisting of six types of action: delegation (or decentralization), integration (or coordination), measurement, employee participation, communication, and employee development.This management quality model has been applied to the design of the Top Usine 1995 Best Factory Award administered in cooperation with the French weekly L'Usine Nouvelle. Data collected from participating plants do substantiate our view that plant performance is substantially driven by management quality: the six management quality dimensions are shown to be statistically linked to performance improvement rates in the plant, and we provide further evidence of this link by detailing the case example of the award winner. Our survey also shows that supply management appears to be a common problem area for the factories participating in the Top Usine award, including the best ones.     

College alcohol use: a full or empty glass?

Data from the Harvard School of Public Health College Alcohol Study (1993) were used to describe weekly alcohol consumption and its associated problems among a representative national sample of college students. The median number of drinks consumed/week by all students, regardless of drinking status, was 1.5. When students were divided by drinking pattern, the median number of drinks/week was 0.7 for those who did not binge drink and 3.7 for those who did so infrequently. For frequent binge drinkers, the median was considerably higher: 14.5 drinks/week. Nationally, 1 in 5 five college students is a frequent binge drinker. Binge drinkers consumed 68% of all the alcohol that students reported drinking, and they accounted for the majority of alcohol-related problems. The data indicate that behavioral norms for alcohol consumption vary widely among students and across colleges. Therefore, it may not be possible to design an effective "one size fits all" approach to address college alcohol use.     

Is Imperfect Competition in the Product Market Relevant for Labour Markets?

Recent research in macroeconomics emphasises the importance of imperfect competition in the product market for labour market outcomes. We investigate one aspect of this issue by specifying a dynamic labour demand model where firms face different degrees of competition in the product market and test its predictions for 299 US manufacturing industries. We find that the long-run equilibrium level of industry employment as well as the speed of labour demand adjustment decreases with market power. Our results imply that imperfect competition in the product market explains part of the observed labour market rigidities and also sheds new light on two “stylized facts” in industrial organisation, the observation of procyclical movements in productivity and price–cost margins in concentrated industries.     

How an aging society affects the economic costs of inactivity in Germany: empirical evidence and projections

Background

Aging societies represent a major challenge for health care systems all over the world. As older people tend to be more physically inactive, economic costs of inactivity are likely to increase notably. The present study aims to investigate this relationship between an aging society and economic costs of inactivity using the example of Germany.

Methods

Using data from the German Socio-Economic Panel, this study applied the comparative risk assessment method developed by the WHO to estimate the direct costs of inactivity for the period 2001–2013 differentiated by gender-specific age-groups (15–29; 30–44; 45–64; 65+). Based on population statistics predicting the aging of the German population for the years 2014–2060, this research projects the development of future costs of inactivity and potential effects of interventions promoting physical activity among the German population.

Results

The results reveal an increase in the level of physical activity during the observed period (2001–2013) which compensated the negative effect of aging and resulted in a decline of inactivity costs. The projections for the years 2014–2060 indicate a constant increase in direct per capita costs until 2060 because of an aging society. Scenarios indicating how a short-term reduction of physical inactivity impacts costs of inactivity reveal the crucial role of the oldest age-group in this context.

Conclusion

The findings indicate that the aging of the German population demands further actions and initiatives to promote physical activity, especially for the oldest age-group.

     

ILP formulation of the degree-constrained minimum spanning hierarchy problem

Given a connected edge-weighted graph G and a positive integer B, the degree-constrained minimum spanning tree problem (DCMST) consists in finding a minimum cost spanning tree of G such that the degree of each vertex in the tree is less than or equal to B. This problem, which has been extensively studied over the last few decades, has several practical applications, mainly in networks. However, some applications do not especially impose a subgraph as a solution. For this purpose, a more flexible so-called hierarchy structure has been proposed. Hierarchy, which can be seen as a generalization of trees, is defined as a homomorphism of a tree in a graph. In this paper, we discuss the degree-constrained minimum spanning hierarchy (DCMSH) problem which is NP-hard. An integer linear program (ILP) formulation of this new problem is given. Properties of the solution are analysed, which allows us to add valid inequalities to the ILP. To evaluate the difference of cost between trees and hierarchies, the exact solution of DCMST and z problems are compared. It appears that, in sparse random graphs, the average percentage of improvement of the cost varies from 20 to 36% when the maximal authorized degree of vertices B is equal to 2, and from 11 to 31% when B is equal to 3. The improvement increases as the graph size increases.     

Women bankers in black and white: exploring raced,classed and gendered coalitions

ABSTRACT

Black women constitute the majority of the population but they lag significantly behind white women and other groups in their participation in the labour market. Intersectionality requires that we recognise the differences in experience between black women and white women. This is not for the purposes of what some have called the “oppression Olympics” but to research the stratifications of social asymmetries in a manner that allows for an understanding of the complexity of inequality. Based on interview data and observations, we use employment equity discourses to explore the differential positions of black women and white women managers in a major bank’s headquarters in Johannesburg, South Africa. A historical analysis of black women and white women’s experience illustrates the systemic and institutional aspects of intersectionality as well as the difficulties in forming coalitions between black women and white women. In the final analysis we argue that the mutual advancement of women requires historicisation and renewed commitment to partnerships to eradicate sexism and racism.     

Internal audit function quality and financial reporting: results of a survey on German listed companies

Most prior studies on internal audit function (IAF) quality and financial reporting have focused on the US setting and have found a positive association between IAF quality proxies and both financial reporting quality and audit efficiency. In this study, we apply the German setting that is characterized by a two-tier board system of corporate governance and different prerequisites for the serving-two-masters problem. This might weaken the IAF’s ability to monitor financial reporting-related processes. To analyze this, we use survey data to measure IAF quality in the German setting and run multiple regressions to examine the association of several IAF quality characteristics and a self-developed IAF quality score with financial reporting quality and audit efficiency. The results show that also in a two-tier system, a high-quality IAF is able to contribute to both financial reporting quality and audit efficiency. Our findings support the notion that the IAF serves as an essential element of effective corporate governance and plays an important role in financial reporting. Moreover, as a practical implication of interest to regulators and managers, we identify that the external certification of the IAF and internal audit-related certifications of IAF employees may contribute to higher financial reporting quality and lower audit fees.