Organization Impact of E-Business
Abstract:
Online security seems to become a good industry to get involved with since there always has been a demand for online criminal activity. Companies are concerned with their privacy just the same as they are to protect their customers privacy. Unfortunately, hackers, crackers, and other offenders are always developing new ways to bypass security measures and do whatever their means. After reading this report, readers will understand the very importance of online security regardless how big a business is. In addition, readers will consider the basics to improve their e-business security from unwanted invaders.
The purpose of enforcing security is kind of like playing to win the lottery. The more numbers you pay to chose, the more odds you have for winning. For security, the more security you enforce the less likely a problem will occur. Security should always be considered especially if it puts customers at risk. If a company is small then less security should be imposed. On the contrary, if a business is large then more security should be added. More specifically, the types of security vary from each industry. For example a bank website may have several levels of firewalls to block numerous attacks from intruders; where as a flower shop website may settle for HTTPS encryption for its customers. Nevertheless, security is an important risk assessment to take into thought due to rising identity fraud offenses and also hackers simply toying with a company’s personal property. In addition, despite how insecure internet security can be, most governments also use strict levels of internet security. This brings the topic to family’s food e-business and why security is important to think about.
The family business has been running successful for many generations as far back as when the forefathers simply farming and providing to the community. The company has come a long way from a small farm, now providing to the entire North American continent with food commodities such as wheat, sugar, and corn. Currently, everything is technology and each order from a customer has to be processed online due to the company being so large. Moreover, the company must offer market prices for each commodity so these prices have to be updated on a daily basis.
Lately, within the family there has been a debate on expenses for internet security which is currently being used. One brother argues that internet security is irrelevant and the company possesses no risk. Another brother favors security because it protects the company and its customer’s private information. Although the brother opposing online security feels that there is no threat, the other brother favoring online security has suggested some reasons and tools to how and why internet security should be enforced. These tools help protect from hackers, crackers, and viruses affecting the system and the customers private and/or financial information. If any data is compromised, then the company has the risks to lose many customers. Lack of security also affects the company’s servers, which many employees use to complete their work. Another problem is most of the company’s financial information is stored on the server. By not having a firewall to protect it, invaders have the ability to obtain this information at any time. More importantly, if an invader compromises the server, this opens the ability to change any of the company’s private data at will. For example, the going market price for a bundle of wheat is $100 and a highly respectable client orders 10,000 bundles of wheat. If the main server is left vulnerable due to lack of security, then invaders have the ability to change the price to $25 per bundle of wheat. Examples such as that put the company at risk from losing profits and the relationships to each customer. Even email poses a risk for internet security, which is why the company will need subscriptions to the leading anti-virus programs to prevent from malware, worms, and viruses that can harm the entire network.
Security Tools:
· HTTPS
· Firewalls
· Anti-Virus Programs
Since our customers sign in on the website under a HTTPS (Hypertext Transfer Protocol Secure) with SSL (Security Socket Layer) encryption, this safely keeps intruders from stealing their login information by the “server establishing a unique certificate” with the customer (Instantssl.com, 2011). HTTPS is standard when customers make online purchases.
Firewalls “deny or accept all messages and sites based on a list that is stored in the system” (Warrier, 2002). Since the network is connected to the internet, this helps prevent outside and unwanted communications from other networks. In other words, this helps our network avoid being attacked from an outside network.
Anti-Virus Programs will be needed in case an actual virus is placed in the system. It is possible that our very employees can accidently place a virus into the system simply by opening an infected document from their email and “multiple avenues of attacks can be employed through emails” (SANS, 2011). As soon as the anti-virus detects the problem, it automatically corrects it.
If the case of the tools is not being used on our current network, the company will risk major losses in customers and profits. However, if these tools are implemented and sustained, it will greatly reduce the risk of errors to security. Although the internet will never be fully secure due to offenders continuing their efforts to attack this and other networks, this shouldn’t intimidate the company. Profits are obtainable through the online business, as long as the proper security is placed. Granted, the very trade secret the company has mastered from the very first generation is sensitive to attackers. Thus, neglecting support for online security puts the entire company at risk.
In conclusion, security is now and will continue to be in the future a great importance and asset to e-businesses. As many risks there are involved, to not enforce internet security to an e-commerce business is too great to put on the company. Although online security may get expensive, the investment is worth taking. Depending on what type a business, online security should be administered thoughtfully. Internally, to prevent employee’s from accidently downloading viruses, and externally through the servers connecting to the internet to prevent unwanted intruders.
References:
Warrier, G. (2002). Security Issues on the internet. Retrieved from:
http://www.web-enable.com/industry/online_security.asp
Instantssl.com. (2011). Https: What it is and how it works. Retrieved from:
http://www.instantssl.com/ssl-certificate-products/https.html
Top 20 internet security problems, threats and risks. (2011). Retrieved from:
http://www.sans.org/top20/2007/#c3
Electronic Marketing Resources
Abstract:
The purpose of this report is for the reader to understand that technology is a necessity to nearly all aspects in modern day businesses to compete with others. Internally, technology is used to provide faster and cost efficient services to deliver the needs to the consumer. Externally, technology is offered for better response from the customer. Considering that technology evolves, competitors must evolve along with it to stay ahead of the competition. After reading this, readers will learn a simple process for business to business technology (B2B) and business to consumer technology (B2C) and how it’s implemented into the environment.
The food industry has come a long way from the traditions of placing an order and paying with cash. Now days, its common that customers have options to pay with credit/debit cards, or gift cards, to almost every restaurant they eat at. Moreover, restaurants have several technologies to better serve their customers with touch-screen LCD cash registers, wireless headsets to take orders, and for a luxury, some even offer free wireless internet. As an example, a new pastry company has been quite successful among its competitors, consider there is limited technology used within the building (phone, computer, cash register). The owners are now looking to invest towards better technology. These technologies are likely to increase profits due to offering more productive and cost-efficient strategies they now lack.
Currently, the pastry company is using a push button cash register, with external credit/debit card dial-up modem to checkout customers. The owners are looking to invest in a new technology for LCD touch-screen cash registers with internal credit/debit card cable modem. This new piece of equipment is pricy, however 100 times faster by comparison to the dial-up modem. The reason why owners are so interested is during “rush hour” service times, the dial-up modem is so slow that some customers often walkout. Another technology owners are interested in, is offering free wireless internet services because most of their competitors offer the same services. Between these B2C (Business to Consumer) technologies, they have the potential to increase customer interest for this pastry company. Although costly at first, profits are obtainable.
Aside from customers being able to pay faster or enjoying the internet while eating their pastries, owners are looking to invest in technologies that increase their productivity. One technology is an order-to-serve-timer. This timer starts as soon as an order is placed and stops once an order is delivered. An average time is tracked per day and per month. The reason why this is important is because goals and standards for order-to-serve times can be set, increasing service effort from employees. For example, as soon as an order is placed on the register, the chef can begin preparing the customer’s order and is likely to be finished before the order is paid out. For better communication between each employee, wireless headsets should be used if, for example, an order is changed. These two B2B (Business to Business) technologies can increase productivity, service, and customer satisfaction.
Outside of the pastry business, other industries implement new technologies into their environment as well. UBM Asia, a company that specializes in online trading for jewelry, rereleased their new portal in early 2011. Manager of e-business, Jerome Hainz said “"We now offer a faster and simpler interface to find wholesale fashion, jewelry and engage with suppliers and manufacturers” (Asia Pulse, 2011). Another example, Saudi Post recently “launched the first e-shopping portal designed and developed by Link Development” (Saudi Economic Survey, 2010). Opposed to traditional walk-in shopping center, customers now have the opportunity to purchase their items online.
If I had my own retail store, I would look into having an online store before a walk-in store. Marketing my products online would be much more effective than marketing to the local public. Given that I live in a small community, the target market is small, however compared to an online market, the target market is much larger. Developing online applications that scrape and place keywords throughout other webpage’s would be a great way for my products to be ranked higher in search engines.
In conclusion, regardless of what type of business there is, owners must always consider the use of technology to improve their business. Investing in B2B or B2C technology to improve the environment is almost a certainly to bring profits and allow opportunity to stay ahead of competition. The examples given from the pastry company scenario, is just a few of several ways how technology can improve company’s performance.
References:
Leading jewelry, accessories B2B portal gets new look and feel. (2011, February 28). Asia Pulse. Retrieved from AIU online library, ABI Inform Global
Saudi post launches first virtual mall. (2010, November 15). Saudi Economic Survey. Retrieved from AIU online library, ABI Inform Global
Sir Shannon Scott Williams
April 22nd, 2011
MGMT230
Unit 5: Discussion Board
The International University of Japan (IUJ) is an educational facility based in Japan. IUJ mission is to “train candidates to contribute a practical resolution for global problems in various countries and regions of the world, as well as organizations including governments and companies” (IUJ, 2011). Students may chose from an international relations program or focus on international business management. Here students will learn the importances of international business lifestyles as well as experience different customs from other countries. Graduates are most likely to work in an industry where international business is conducted. Some graduates may work for governments facing international business issues.
As this e-business was developed, it is clear that the university wanted to inform the world as effective as possible. Since the campus was founded in 1982, internet use was probably close to nonexistent. However, as the internet became more popular over the years, this becomes a great advantage for IUJ to attract more students. The website gives an ideal perspective to what an actual campus would consist of. A campus directory is provided, media relations to inform the public on current events, career support which has a feature to guide students career path. In addition, if students have unanswered questions, contact comes in a variety of options to answer questions.
When searching for international businesses in Japan, IUJ was nearly at the top of the list and their use in advertising appears to be quite efficient. The design of the website is very professional and bilateral for both English and Japanese versions. Although security is openly insecure, the setup has no need for viewers to create accounts and sign in to view content. It is very possible that IUJ has sufficient internal security to protect from unwanted intruders. IUJ has upper management, faculty, and staff to make both the e-business and actual business complete.
Typical market influences are those interesting in obtaining an education abroad, primarily focused on Japan oriented companies. IUJ offers many incentives for students to become interested in the international business world. As a promotion to talented students whose grades are higher than average, IUJ offers a scholarship program to help students for their extra efforts in their education. Financial aid is also an option. For students studying from other countries, they have an option to stay in the dormitory for their room and board. Also, there is a message board provided by the students and alumni regarding their education experience and current life which IUJ provided.
In conclusion, not all e-businesses are targeted specifically for the internet, or solely for the purpose to sell products online. Some companies, just like IUJ, are located in other countries and create websites to increase their potential to attract customers. In the case for IUJ, this company is located in Japan; however its purpose is to not only attract domestic customers, but also international customers.
References:
International University of Japan. (2011). IUJ Education. Retrieved from http://www.iuj.ac.jp/web/iuj_section.cfm?category=0104#program
Sir Shannon Scott Williams
April 13th, 2011
Unit 4: Discussion Board
The process for deciding what to name a company is very important for many reasons. Reasons that include legal matters, attracting customers, and a name that helps define a company are just a few to name. Regardless if a company is new, merging, or changing structure for example these are situations which companies must consider choosing the perfect name.
Possibly the most important reason why a company name should be chosen wisely are due to legal matters. If a company name is similar to a competitor’s name, this becomes a legal matter against trademark laws. For example, if a small business is named Coca Cola it faces legal matters against the large corporation Coca Cola.
Choosing a company name to attracting customers can also be important. For instance, if a company’s division is limited to the northeast area of a state, this helps customers search easier. When it comes to the industrial maintenance industry for example, their customers are usually those within a limited distance. If a customer finds a company that is across the nation, this would be more of an inconvenience compared to a company that is closer by. On the other side, some companies are very large, yet limited to the domestic country, so the term intercontinental or national is often used.
A company name should also define the service or product types offer. A gun store may want to have a name such as Gunners, or a cleaning service may want to have Spiffy Clean. If a poor name is chosen, if can make the company look bad to its customers. For example the healthcare company Perrigo had a recall on one of its products Acetominophen, “ironically Perigo in Portuguese translation to English is danger” says Chefguy from StraightDope.com.
If a new education e-business wants a good name which specializes in tutoring for grades 9-12, I suggest the naming the company Online Educatio, which is built on the Latin language. The English translation for educatio means education. Latin language is not used very often in modern day times, however many new words in a variety of different languages are based on the Latin language. Combining e-Business with Latin language create a unique approach. In addition, Online Educatio is an available name online and doesn’t face legal matters.
In conclusion, naming a business should be taken into careful consideration. If not, the company can face legal matters. It is more effective if a company name defines its products or services. Although these are just the basics to what a company name faces, the person or persons naming a company should consider researching more in depth before making a final decision.
References:
Chefguy. (2006, November 15). A very poor company name choice [Online forum comment]. Retrieved from http://boards.straightdope.com/sdmb/showthread.php?t=396368
Sir Shannon Scott Williams
MGMT230
Unit 3: Discussion Board
The idea of converting a traditional walk-in store into an e-business takes careful planning and consideration. For those who are interested, they should plan a gap analysis first. A gap analysis is a technique used to “help managers decide upon marketing strategies and tactics” (Marketing Teacher 2011). This helps determine where the business currently is, and where management would like the company to be. In the case for a shoe store, managers are practicing gap analysis to determine if converting to an e-business would be more profitable. If decided to convert to e-business, management should arrange and execute a well planned transition or else risk failing.
Using the gap analysis, managers will to need consider tactics and strategies for product development and how to penetrate a target market. They should research as much as possible to authenticate possible profit margins. For the shoe store, walk-in customers restricts only to the local community. A manager using gap analysis can consider where the company would like to be by implementing, or reformatting to e-business. This will open target markets to the entire world. A new format may result in a change in prices. Prices will be more competitive online versus a competition level for prices within a local community.
To begin the transition, notify customers that the walk-in store will be changing to an e-business for customer’s easy access. Customers should be explained that they will be able to shop the all the same products online. It is highly recommended that the store implement a marketing campaign informing customers the change to e-business, this is also a gap analysis technique. Not letting customers become aware will risk losing several customers who have enjoyed the former shoe. Advertisements for mass email newsletters, SEO (Search Engine Optimization), local advertisements, and other marketing tactics will be needed for the campaign to be more successful.
Other planning should be the placement of employees and their new tasks. Compared to the traditional walk-in store, cashiers, sales persons, greeters, etc. will have new responsibilities. In addition, management could consider losing some of their staff being that some positions will no longer be needed. For example, a greeter could be effective for a walk-in store, however for an e-business; a greeter could be replaced with an automated answering service. This is also useful to determine gap analysis effects for employees.
The shoe store does not specialize in the internet industry, so it is recommended to consult with web-development professionals to design the online store. The “architectural implementation is to establish a computer system consisting of the databases, applications and user-interfaces” (Metal Pass, LLC. 2002). Proper internet security should be implemented to protect customer’s private data. VPS (Virtual Private Server) or standard servers should be used to store all online data. Also, user friendly graphic design should be coded throughout the website so viewers can easily navigate. Product development for target markets also affects gap analysis.
The new e-business should allow customers a variety of methods for checkout, such as PayPal, credit/debit card, money orders, and checks. In addition to checkouts, a variety of methods for delivery should be offered such as standard, 2 day air, and next day delivery.
In conclusion, gap analysis is a useful technique to determine where a company would like to be in the future, such as a walk-in store to an e-business. Although a company may go through many changes, if the opportunity costs can provide a return, then new change is well worth it. Gap analysis may involve labor, equipment, location, and product development. Although these are the mere basics, gap analysis can become as technical as the investigator specifies. Prices for everything between one option and another, will ultimately determine which is best for the company.
References:
Architecture for transformation into e-business. (2002). Retrieved from, http://metalpass.com/metaldoc/paper.aspx?docID=198
Gap Analysis. (2011). Retrieved from,
http://marketingteacher.com/lesson-store/lesson-gap-analysis.html
March 31nd, 2011
MGMT230
Unit 2: Discussion Board
In the market world there are two different types, we have the traditional walk-in stores and the e-commerce stores; e-commerce being an online store. Walk-in stores in the past were much smaller compared today due to the simple fact that if you buy more in bulk, your inventory will be cheaper, thus these stores today are very large in size (e.g. Wal-Mart). Being in the information age today, e-commerce stores are becoming more popular compared to traditional walk-in stores. Consumers shopping at e-commerce stores do not have to worry about the travel for walk-in stores. In fact, what they desire can be just a few clicks away. Also, in some cases e-commerce does not enforce sales taxes. Particularly for the store owners, and possibly the most important reason why e-commerce is becoming more common is because developers have access to open-source applications, in other words meaning the applications are absolutely free and are able to be customizable however the owner choices.
Open source e-commerce applications probably hurt the market world more than it helps it because of the simple fact of being free. In this case, specifically subjecting towards the current economic recession around the world is taxes. E-commerce businesses in the USA, for example, are by law, required to have a sales tax as long as the business is located somewhere within the USA and if “the value of goods and services sold online” (IRS.GOV, 2009). There is a catch, due to anyone throughout the world may own their own online business, and consumers from one country purchasing a product from another country are not obliged to pay taxes limited to the location of the seller. For example, if I live in the USA, and want to buy some special socks from an online store located in Kenya, then “those transactions are left out of a VAT (Value Added Tax) bracket for both USA and Kenya” (Juma, 2010). Now for consumers, that is a great thing because of lower prices; however for governments needing to meet their budgets, that is a bad thing.
Another reason is that the competition level between each online business is way too high. For example, BestBuy.com is a major walk-in store as well as a well known e-commerce store. Being that anyone may have access to open-source e-commerce application, they may duplicate a store quite similar to BestBuy.com. Not limited to a business such as BestBuy.com, given that open-source applications are fully customizable and FREE, the keyword there is important, the possibilities for any e-commerce business are near limitless. For example, say I enjoy buying products from BestBuy.com, but one day I come across a website called GreastestBuy.com (not affiliated with the actual GreatestBuy.com) offering the same products as BestBuy.com but cheaper. Then the next day, I discover PerfectBuy.com (not affiliated with actual PerfectBuy.com) which offers an even better deal than GreatestBuy.com. Logically any consumer will favor the cheapest deal of the same product. The scenario could continue on and on, and for that matter the competition level continually increases given that anyone can start an e-commerce business using open-source application.
Ironically, I’ve come across some websites using open-source based applications, such as e107, WordPress, Blogger selling custom open-sourced e-commerce applications. Moreover, open-source e-commerce applications can be found even in mobile technology today such as the Android Market or Apple Apps Store.
To consider what may happen in the future for open-source e-commerce to be open-sourced, I do not know. But my best guess is that these applications will become the standard. Technically, it already is due to the fact of how easy they are to obtain. Unless you heavily funded and want a custom design e-commerce store, open-sourced is the way to go! Though it may not be best for e-commerce businesses in general, but you can’t force the developers to not give away their work when they choose to do so.
References:
Electronic Business & Electronic Commerce. (2009). Retrieved from http://www.irs.gov/businesses/small/industries/article/0,,id=209249,00.html
Juma, V. (2010) Kenya: Online shopping keeps consumers out of revenue authority's reach. Retrieved from http://allafrica.com/stories/201008160015.html
Sir Shannon Scott Williams
Microeconomics
Unit 4: Individual Project
Pure, Per Se and Natural Monopolies
American InterContential University, Online
January 29th, 2011
Abstract
Externalities, can lead to government intervention for a inefficient market economy, (Krugan, Wells, 2009, p. 434). A common term to understand the basics of why policies are written to companies that are producing a good but an unintentional harm affects its consumer. The perfect example is focused towards many power plants. One certain power plant is coal, in which the burning of coal emits sulfuric dioxide that accounts for most of air pollution, (CoalEducation.org). As a policy maker, you are try and persuade the government to enforce polices on a local coal power plant which has been known for its harmful emissions and causing nearby residents to develop several health problems.
First policy is, thanks to Pew Center (Pewclimate.org), list’s several reasons why coal burning becomes a major problem for its gas emissions. Although coal is a cheap source of energy, the ultimate downfall is that it’s responsible for nearly half of the world’s greenhouse gases. In addition, much of USA is dependent on its electricity for coal burning. This adds more greenhouse gases every day as coal is continued to be used. As the USA, and other nations, maintains its dependency on coal, this will add to the demise of our home planet. To begin with, these gases create the often called “Global Warming Effect”, (EDF.org). In a brief summary: since the 1700’s an increase in greenhouse gases have increased due to industrialization; an increase which the Earth cannot naturally discharge; this creates a blanket in the atmosphere that is heating the Earth’s surface more each year. Examples include: extreme weather, thinning ice/icing seas, threat to human health, (EDF.org). If we fail to reduce such gases from coal emissions, this “Global Warming Effect” will be the very destruction of our planet unless we can make a change.
Second policy is thanks to Health and Environment Alliance, (Env-Health.org), is focused more on health, specifically in the EU, but can still apply to USA because all humans have health in common with each other. This policy points out that a reduction on emission gases could save the nation millions, if not billions of dollars on health care due to the harmful effects of gas emissions. Some problems have been known to affect blood, central nervous system, and also cause cancer (BBC.co.uk). There are many more health problems that begin from gas emission.
An estimated cost to reducing emission in USA will be an average of $50 billion annually or $1.1 trillion by 2030, (EnergyandCapital.com). If the coal power plant uses a “Carbon Capture and Sequestration” (CSS), the cost to produce electricity can expect to increase by 15-80%, (ClimateCentral.org). Investors to the power plant may consider increasing rates on electricity by means of reducing emission, which will also reduce health risks. As a result, consumers will pay less on healthcare and can compensate to an increased electricity rate. An option other than CCS is a nuclear power plant. By converting coal power plants to nuclear power plants the cost will pay itself off in the long run, (CBO.gov). Overall the cost will be expensive, but the investment well worth it. Aside from converting to nuclear, it would be best, if not cheaper if the power plant was forced to investing in CCS and get involved with the community. This is also another option for the power plant can get involved with the community and reduce the consumption of electricity. According to Nick Hodge, the most economic way to reduce emissions is upgrade HVAC and insulations in buildings, (EnergyandCapital.com). Inevitably, people will speak up and the power plant will have to react or face the consequences.
In conclusion, at some point or another all companies’ production creates externalities. Whether its emission gases, or some other waste, these by-products are having the public grow more concerned with the conditions of a cleaner and safer environment. The polices provided, a special thanks to all those whom helped create them, are vital to getting government and legal officials active towards reducing emissions which affects health care and also the world’s climate. To mandate these policies to the local coal power plant, it is not intended to eliminate the business, rather provide a safer and cleaner environment to preserve for our children’s children. In addition, the coal power plant should come to understand that the public cares for its safety, and is willing to cooperate. If not, the government must take control of the situation, because this is what the tax-payers demand. If policies are needed to be enforced, the costs to make these improvements will pay itself off on a long enough time scale. All is logical that providing a cleaner energy can benefit consumers, government, and investors for this emission reduction concern.
References:
Armstrong, Kotler. (2009). Introduction to Marketing (9th Ed.).
Pearson Education, Inc, Upper Saddle River, New Jersey.
Kentucky Foundation. (2008). The burning of coal emits these gases. CoalEducation.org. Retrieved 1.29.2011, from, http://www.coaleducation.org/lessons/twe/envi.pdf
Pew Center on Global Climate Change. (2011). Gives credit to Pew Center for its written policy briefing. PewClimate.org. Retrieved 1.29.2011, from, http://www.pewclimate.org/docUploads/Coal.pdf
Environmental Defense Fund. (2010). “Global Warming Effect”. EDF.org. Retrieved 1.29.2011, from, http://www.edf.org/page.cfm?tagID=35215&source=ggadgw35215&gclid=CN_96f_z4KYCFYXu7Qod4nqM1A
Effects of global warming. EDF.org. Retrieved 1.29.2011, from, http://www.edf.org/page.cfm?tagid=54203
Health and Environment Alliance (HEAL). (2011). Gives credit to HEAL for its written policy. Env-Health.org. Retrieved 1.29.2011, from, http://www.env-health.org/IMG/pdf/HEAL_30_co-benefits_report_-_FULL.pdf
BBC. (2011). Emissions affects blood, central nervous system, and also cause cancer. BBC.co.uk. Retrieved 1.29.2011, from, http://www.bbc.co.uk/health/physical_health/conditions/exhaust_emissions.shtml
The White House. (2011). Recovery Act Investments for Clean Energy, WhiteHouse.gov. Retrieved 1.29.2011, from, http://www.whitehouse.gov/issues/energy-and-environment
Sara Goldenberg (2010). Locals getting fed up with getting sick due to the effects of their provided power plant. Bartlesvillelive.com. Retrieved 1.29.2011, from, http://www.bartlesvillelive.com/dpps/news/local_news/ok-town-fights-potentially-toxic-dump_5617466
Nick Hodge. (2007). $50 billion annually or $1.1 trillion by 2030. The most economic way to reduce emissions is upgrade HVAC and insulations in buildings. EnergyandCaptial.com. Retrieved 1.29.2011, from, http://www.energyandcapital.com/articles/cost-reducing-emissions/567
Mark Lasky. (2003). Converting coal power plants to nuclear power plants the cost will pay itself off in the long run. CBO.gov. Retrieved 1.29.2011, from, http://www.cbo.gov/ftpdocs/41xx/doc4198/2003-3.pdf
Climate Central. (2009). The cost to produce electricity can expect to increase by 15-80%. ClimateCentral.org. Retrieved 1.29.2011, from,http://www.climatecentral.org/library/climopedia/making_low-carbon_electricity_from_coal_will_cost_more_than_the_conventional_way/
Sir Shannon Scott Williams
January 24th, 2010
ECON220
Unit 3: Discussion Board
Pure, Per Se and Natural Monopolies
Importing and exporting are common in today’s world, well for the world which involves trade between two or more nations. Some agree that a nation should focus on importing where as another side supports exporting. Between the two for the fashion industry, business varies by the sole opinion of the each individual consumer.
Let us begin with importing, goods and services purchased from other countries, (Krugan, Wells, 2009, p. 196). A good example of an imported clothing company is Jayli Imports, which is a company that specializes in “Bohemian style hippie wear”, (Jayli.com). The current best selling product for Jayli, is the Long Halter Pumpkin Dress.
Next, exporting, goods and services sold to other countries, (Krugan, Wells, 2009, p. 196). The perfect example is Carhartt “100% made in the USA since 1889”, (Carhartt.com). My favorite product is the 8” Logger/Linemen Boot.
After reviewing importing/exporting between Jayli and Carhartt, I see that most imported products from Jayli are less durable compared to Carhartt products. Jayli may be designed for fashion purposes; where as Carhartt’s products are designed for hard-working purposes. However, I know many people in Georgia that wear Carthartt clothing just for fashion reasons. Nevertheless, if one is to buy an imported durable product, it’s likely that it will be more expensive versus a durable exported product. For example, on my honeymoon vacation, my wife and I went shopping in Stockholm, Sweden. While shopping, I came across a several pairs of Chuck Taylor’s Converse Sneakers. Domestically in the USA, the average prices for these are around $40. However in Sweden, they sold for more than $120, the most expensive shoe in the store. Another situation is when I was also browsing Armani clothing. In Sweden it is fairly reasonable, however in the USA, Armani can be very expensive.
In my point of view, I prefer quality. If I am to purchase a product, price is next in line for my criteria. So when I look for a product, imported/exported may have the same quality but if one is more expensive just because it is imported, then I would rather purchase the domestic product because it’s cheaper. In addition, I would rather purchase a domestic product to support the national employment, than seeing many fellow Americans without jobs. Products of the fashion industry produced in the USA, help supply job for those who live there.
References:
Armstrong, Kotler. (2009). Introduction to Marketing (9th Ed.).
Pearson Education, Inc, Upper Saddle River, New Jersey.
Jayli Imports. (2007). Jayli clothing style. (Jayli.com). Retrieved 1.25.2011, from,
Carhartt. (2011). Carhartt motto. (Carhartt.com). Retrieved 1.25.2011, from, http://www.carhartt.com/webapp/wcs/stores/servlet/HomeView?storeId=10051&catalogId=10101
Sir Shannon Scott Williams
Microeconomics
Unit 3: Individual Project
Production and Perfect Competition
American InterContential University, Online
January 21th, 2011
Abstract
When it comes to production, units produced per day consist of many factors in order to create a good. Labor, electricity, training, repair, and other necessary cost are examples to these factors. In order for a facility to remain in production, revenue must be greater than the cost per day or else the business is at a loss, most likely end in shut down. In this paper, there is a given scenario where a plant is facing a loss in daily revenue due to exceeding cost. To determine whether or not the plant should shut down or continue production, readers will be able to understand the calculations to make these decisions.
In the given scenario there is a plant that employer’s 50,000 workers who produce 200,000 units per day. The cost of each daily wage per worker is $80. Units produced generates the plant $25 per unit. To operate under these conditions, there are other variable inputs totaling $400,000 per day. Another cost, fixed cost, which is unknown, it causing the plants total cost to exceed total revenue per day. To determine whether or not the plant should shut down, or continue to operate, you are to assume a fixed cost of $1 million and $3 million. The calculations provided will determine shut down or continuing production.
To begin with, you need to understand that if Total Revenue (TR) is greater than Total Costs (TC) then the plant can continue production. However, if TR is less than TC, then shut down production.
The first calculation is to discover the Total Revenue being generated per day. You know that the employees produce 200,000 units where each unit sells for $25. So multiply total units by sale price.
Total Revenue (TR) = 200,000 x $25 = $5,000,000 per day.
Next, determine the Total Cost; however you do not know what the total fixed cost, so base the determination on Total Variable Costs.
Total Variable Cost (TVC) is equal to the total number of workers (50,000) multiply by the daily wage of each worker ($80) plus other variable costs ($400,000).
Total Variable Cost (TVC) = (50,000 x $80) + $400,000 = $4,400,000
Based on these calculations for Total Revenue and Total Variable Costs, it is clear that the plant generates enough revenue to cover the various costs. Since the plant is able to cover its cost and continue production.
TR $5 million/per day > TVC $4,400,000/per day = Continue production
However the Fixed Costs are not implemented into this determination, so you need to assume on two different occasions that the fixed costs are $1 million per day and $3 million per day. This input will ultimately decide whether or not to shut down or continue production.
Let us assume first that the Fixed Cost is $1 million per day. The Total Variable Cost (TVC) will remain unchanged for this calculation, number of employees (50,000) multiply by daily wage ($80) then add various input costs ($400,000).
Total Variable Cost (TVC) = (50,000 x $80) + $400,000 = $4,400,000
Next the Average Variable Cost (AVC) which is equal to the Total Variable Cost ($4.4 million) divided by the total units of output per day (200,000).
Average Variable Cost (AVC) = $4,400,000 / 200,000 = 22
Next, the Average Total Cost (ATC) which are equal to the Total Variable Costs ($4.4 million) plus the Total Fixed Cost ($1 million), then divided by the units of output per day (200,000).
Average Total Cost (ATC) = ($4,400,000 + $1,000,000) / 200,000 = 27
Finally there is Worker Productivity (WP) which is equal to the total units of output per day (200,000) divided by the total number of employees (50,000).
Worker Productivity (WP) = 200,000 / 50,000 = 4
Assuming that the Total Fixed Cost is $3 million per day, you will use the same calculations as before to determine plant shutdown or continuing production.
Total Variable Cost (TVC) = (50,000 x $80) + $400,000 = $4,400,000
Average Variable Cost (AVC) = $4,400,000 / 200,000 = 22
Average Total Cost (ATC) = ($4,400,000 + $3,000,000) / 200,000 = 37
Worker Productivity (WP) = 200,000 / 50,000 = 4
Since you have assumed the Fixed Cost, you can now calculate Total Cost in which you take the TVC and add the Fixed Cost.
Assuming the Fixed Cost for $1 million:
Total Cost = TVC + Fixed Cost = $4,400,000 + $1,000,000 = $5,400,000
Assuming the Fixed Cost for $3 million:
Total Cost = TVC + Fixed Cost = $4,400,000 + $3,000,000 = $7,400,000
The result is a higher cost than revenue being generated; Profit or Loss details the result by taking the TR minus the TC.
Profit or Loss ($1million) = $5,000,000 - $5,400,000 = -$400,000 loss each day.
Profit or Loss ($3million) = $5,000,000 - $7,400,000 = -$2,400,000 loss each day.
The loss is due to the ATC being higher than the AVC. The plants units sell for $25 each. If the plant operates on TVC, it can generate profit based on the AVC ($22/unit), a $3 gain. However, if the Fixed Cost is added, this results an ATC increasing the price cost. At $1million Fixed Cost, the ATC per unit is $27, a $2 loss. At $3 million Fixed Cost, the ATC per unit is $37, a $10 loss.
Based on the assumption for a Fixed Cost of $1 million, these costs are exceeding daily revenue. The plant could shut down temporary or lay-off some of its employees to reach a break-even-price, whenever price equals minimum average, (Krugan, Wells, 2009, p. 340). Issuing a lay-off, you first need to calculate Profit or Loss then divide by daily wage to determine how many employees need to be laid off.
Lay-off = ($5,000,000 - $5,400,000) / $80 = -5000 employees
Since 5,000 employees are to be laid-off, this will change the daily production. Going back to the Worker Productivity formula, you calculate the change.
Worker Productivity = 200,000 / 45,000 = 4.44
As you can see the change in units produced is increased because the new work force has to make-up for laid-off employees. This isn’t much work to be made up, so this would be the best option for the plant under the conditions of a Fixed Cost for $1million.
Assuming the Fixed Cost for $3 million:
Total Cost = $4,400,000 + $3,000,000 = $7,400,000
In this assumption, the Total Cost highly exceeds Total Revenue and must face an immediate shut down.
TR < TC = $5,000,000 < $7,400,000 = Immediate shut down
A lay-off would not be an option due to the amount make-up work needed from employees. The new productivity is more than double the amount.
Lay-off = ($5,000,000 - $7,400,000) / $80 = -30,000 employees
Worker Productivity = 200,000 / 20,000 = 10
In conclusion, the scenario is an example of what many plants face whenever costs exceed revenue. As for this situation, the plant can operate for a short time with minor lay-offs only with a Fixed Cost of $1 million. It is unfortunate how the fate of the plant must cease production with the Fixed Cost for $3 million. From calculation to calculation, you should now be able to determine a similar situation if ever encountered.
References:
Armstrong, Kotler. (2009). Introduction to Marketing (9th Ed.).
Pearson Education, Inc, Upper Saddle River, New Jersey.
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