ISSN: 1813-0534






Volume 2 No 2 December 2006

Monopoly Pricing under Demand Uncertainty in Dynamic Markets: Pricing Hedge Strategy(ii)

Kuang-Jung. Tseng ,Associate Professor ,Department of International Business ,Hsuan Chuag University,Taiwan


Pricing of products and services is a major issue in marketing researches. We examine pricing policy for a monopolist facing uncertain demand in a dynamic market. Many researches try to set the price from maximizing the profit. They estimate the demand and costs associated with alternative prices and choose the pricing policy that produces the maximum profit, cash flow, or rate of return on investment. Such a pricing policy is based on the assumption that market demand for the product is predictable over the entire planning horizon. In reality, the demand is difficult to estimate and unpredictable, especially in the case of innovative new products. Due to its unpredictability, we assume that the demand follows a lognormal random walk. We then develop a mathematical modeling of pricing processes by stochastic calculus, which is just like the mathematical modeling of financial processes. From Ito’s lemma, the profit of a product has a correlation with the demand, is also unpredictable and follows a random walk. Such a random behavior is the risk of marketing. By choosing a price strategy to eliminate the randomness, which is called price hedging, we obtain a risk-free profit determined by the Black-Scholes equation. From price hedging and the Black-Scholes equation, we can determine the profit and price of a product, which is changing with time and demand. Such a dynamical price can revise often enough to capitalize on market changes. Risk management in marketing is tied with our price hedge theory. We define Greeks to understand the risk induced by price hedging strategy.

A Comparative Study of Manufacturing Strategy and Operations
Management in Small and Medium-sized Enterprises between Korea and Japan

Choong Y. Lee, Pittsburg State University, U.S.A.


Small and medium-sized enterprises (SMEs) have contributed significantly to the economic growth in many countries all over the world. Historically, however, in Korea the success of large corporations had been well acknowledged until just before the financial crisis in 1997. The new economic environment after the financial crisis in Korea makes it increasingly difficult for Korea to continue economic development based on large corporations. Korea needs a strategic shift from a large corporation- oriented strategy to a small business-oriented strategy. However, a systematic investigation of the manufacturing strategies and business practices of SMEs in Korea has yet to be reported. Investigating manufacturing strategies and business practices of Japanese SMEs may provide significant insight to Korean SMEs into understanding the success of Japanese economy in global markets. The success of the Japanese small manufacturing industry may hold greater promise for Korea than for any other country owing to the similarity in their socio-cultural heritages and socio-economic and legal environments. The purpose of this study is to compare and contrast manufacturing strategy and business practices between Korean and Japanese small manufacturing firms.

Dividend Changes and Stock Prices Revisited: The Malaysian Experience

Ros Zam Zam Sapian, Mohamad Abdul Hamid and Mohd Hasimi Yaacob
Faculty of Economics and Business, Universiti Kebangsaan Malaysia, 43600 Bangi, Malaysia


Even-though Miller and Modigliani (1961) argue that dividend policy is irrelevant to the value of a firm, some studies suggest the signaling effect of dividends that stipulates a positive (negative) dividend change announcement will produce a positive (negative) stock price change. Research in this area is still quite scarce in Malaysia. We study all dividend announcements made in 1996 through 2000 for stocks listed on the Second Board of the Kuala Lumpur Stock Exchange (KLSE). Our finding suggests that the unexpected dividend increase carry with it a negative signal to investors in the marketplace, as opposed to the usual positive signal shown in studies such as Aharony and Swary (1980), Kwan (1981), Eades (1982), and Woolridge (1982, 1983). In addition, it seems that the market reflects this new information (unexpected dividend increase) quite efficiently, as shown by the non-significance of mean daily returns for each one of the four days before and after the event period. In the case of unexpected dividend decrease, the finding suggests that the market does not seem to view this news (unexpected dividend decrease) as a piece of significant and relevant new information. Finally, in the case of unchanged dividend, our finding indicates that the market views this information positively. Again, as in the case of unexpected dividend increase, the market reflects this new information (no change in dividend) quite efficiently. Overall, our findings are not consistent with the signaling effect of dividends. The closest explanation we can get is the finding of a study by DeAngelo and DeAngelo (1990) who find that firms in financial distress are reluctant to cut their dividends and the market views this action (not cutting dividend) as bad news and thus the decrease in stock price. Another possible explanation lies in the period of our study that covers a period of Asian financial crisis beginning in July 1997. Most possibly, the market views firms with increased dividend payment as firms which have no future investment prospect. In addition, the decrease in dividend payment and the unchanged dividend are viewed as something positive because the investors believe that the firms are still on the right track with their future investment prospect. The relatively small size of companies listed on the Second Board might also explain this phenomenon since most investors expect these companies to reinvest their dividends for future expansion rather than increasing the dividend payment.


A Study of Individual Differences and Product Attributes Influencing Counterfeit Purchase Intentions:
An Analysis of Purchasing Behavior on Branded Counterfeits

Ju-Hsiu Kuo, National Chung Hsing University,Taiwan
Tien-Tien Liao, Chinese Culture University,Taiwan


The rapid growth of counterfeits is an economic, social and political issue. Prior studies on counterfeits have focused exclusively on the supply side with scant research addressing the demand side of counterfeits. This article investigates the variables of individual differences of product knowledge, perceived risk and moral values from the consumers’ perspective as well as the influence of counterfeit product attributes on consumer intentions to purchase counterfeits. The results indicate that perceived risk impact consumer willingness to purchase counterfeits while no significant difference exists for product knowledge and moral values. In addition, the four product attributes of style, quality, brand and price also exert varying levels of influence toward consumer preference for counterfeit jewelry, watches, clothing, bags and shoes.

Intelligent Facility Layout for Information Network System Infrastructure

Charles C. Willow
,Management Information Systems & Management of TechnologyDepartment of Management and Marketing,School of Business Administration,Monmouth University,West Long Branch, NJ 07764-1898,U. S. A.


Building a cellular yet effectively modular infrastructure is critical for major productive systems such as information and engineering, among others. In particular, flexible, optimized, and dynamic layouts of facilities are critical for successfully incorporating infrastructures for organizations. Application examples range from determining physical topologies for local area networks to cellular, agile manufacturing, in which the problem is closely associated with determining the optimal number of clusters of workgroups, comprising servers, wireless access points, PC’s, printers, routers, firewalls, or automated welding machines.

A general-purpose neural-network application is suggested in this paper for real-time intelligent facility layout. Classical clustering techniques such as Hungarian algorithm, Group Technology, and BLOCPLAN have been proven to be ineffective, relative to the method outlined in this research. The effect of the development is illustrated with a simplified numerical example.


The Effects of Training on Wages in Malaysian Manufacturing Sector

Rahmah Ismail,
Zulridah Mohd Noor, e-mail: oe


Human capital theory postulates that human capital investment has positive effect on wages. Training as one of the human capital variables will enhance workers skills and productivity and hence, raise their wages. However, training effectiveness is rarely studied in Malaysia. Viewing from great emphasis of the Malaysian government on training through its large budget allocation, it is very important to view training effectiveness. Training can take many forms and its expenses can be financed by individual or employers. Training can also take place in short, medium or long- term, on-the-job or off-the job. The variation in the forms of training will subsequently lead to different effects on wages. It is hypothesized that company financed, long- term and on-the-job training are more effective than own financed, short- term and off-the-job training respectively. This paper attempts to examine the effect of various types of training on individual wages in manufacturing sector in Malaysia. Analysis is based on the data of 2045 workers surveyed in 1999 in Lembah Klang and Penang. They comprise of production workers working in various manufacturing sub sectors. The results from this study show that various fields of training have positive significant effect on wages. Training received from previous job and on-the-job training also contributes significantly to wage increase. In contrast, off-the-job training and length of training are not significant.

Prospect Theory: Sequential Decision Problems

Takemi Fujikawa[1]
University of Western Sydney, Australia


This paper discusses the appropriateness of the certainty effect—one of most prominent observation in one-shot decision making problems—in repeated-play decision making problems by reviewing the choice problems performed by Kahneman and Tversky(1979).I present the expected utility model,which shows even in repeated-play conditions the certainy effect in approprite,against Barron and Evrev(2003)'s observation of the reversed certainty effect in their experiments.



Mahadzirah Mohamad
Kolej Universiti Sains dan Teknologi Malaysia, Mengabang Telipot 21300 Kuala Terengganu, Terengganu
Tel: 09-6684140, Fax: 09-6684292,
Tg. Nordin Tg. Salim
Universiti Darul Iman Terengganu, Gong Badak 21300 Kuala Terengganu, Malaysia


This paper reports on the findings of a study that focuses on identifying women’s responses to their recent experience with maternity care. The study explores the relationship between patients’ perception of service quality and satisfaction as they relate to their experience getting services provided by Obstetrics and Gynecology Clinic. The research was undertaken in response to the previous works of traditional medical researches on quality, which mainly focus on the technical nature of health-care events. This means previous researches placed heavy emphasis on the training and updating skills of the physicians and the nature of the actual medical outcome, but neglecting the evaluation of quality from the recipients’ perspective, which is emphasized by many services marketing research. Therefore, an approach from the perspective of services marketing that utilizes different aspects of service quality is conducted in measuring the quality of health care services. Hence, patients’ overall level of satisfaction with different aspects of service delivery is ascertained. The findings of the research uncover several important aspects of service quality that could influence their satisfaction.


Gene Smith
Eastern New Mexico University,U.S.A.


International accounting faces broad, complex issues including differences in various country’s accounting standards and bringing consistency and comparability among the different accounting practices for public companies around the world. Because of world-wide accounting variations, the International Accounting Standards Committee (IASC) was established in 1973. Many countries are working to integrate international accounting standards for public companies. A ten question survey was developed to determine current observations of practicing Certified Public Accountants (CPAs) concerning the need for a single-set of world-wide accounting standards. The differences of opinion among practicing CPAs for seven of the ten statements were statistically significant. In summary, a majority of CPAs believe a single-set of world-wide accounting standards will occur within the next decade whereby IASB develops a world-wide conceptual framework and each country’s accounting standards-setters establish accounting standards for their respective countries. Also, CPAs desire the majority of IASB members to come from the United States. There were significant differences of opinion concerning the remaining seven statements.

Strategic Alliance"what cutting edge it gives your organization" Anbalagan Krishnan,Lecturer for AccountingSchool of Business

Curtin University of Technology,Sarawak, Miri
East Malaysia


Elmuti et al. (2005, p. 115) defined strategic alliance has an inter-firm agreements aimed at achieving competitive advantage for the partners. Strategic alliance is essential business strategy tool, which is necessary in order to increase its market share in the global market and particularly reducing escalating production cost through alliance with competitors. In addition, working closely with competitors will help the organization to learn new technologies, further enhance its position in the global market and therefore creates a win-win situation for both parties. According to Peter Drucker, who has been known as a father of modern management theory states: “the greatest change in corporate culture, and the way business is conducted, may be the accelerating growth of relationships based not on ownership, but on partnership” (Drucker 1996 cited in Elmuti et al. 2005, p. 116). There is evidence that number of organization entering into strategic alliance with competitors to gain competitive advantage is increasing. This paper explores the essence of strategic alliance with competitors and illustrates examples of companies entered into this kind of business strategic. The paper also explores companies that failed and the reason it failed. In the final section of this paper explores the factors that a business should consider prior embarking strategy alliance.

THE RELATIONSHIP BETWEEN ORGANIZATIONAL COMMITMENT AND The Willingness of the Organizational Members’ Knowledge Sharing—the Case Study of the
Insurance Industry

Yu-Hsin ,ChengSouthwestern University of Finance and Economics,and National Chung-Hsing University
Tung-Yen Lai,Southwestern University of Finance and Economics,and Ling Tung University
Shang-Juh Kao,National Chung-Hsing University
Hao-Che Chang,Ling Tung Universiy,Taiwan


Under the severe competition and rapid change at the modern epoch of knowledge economy, enterprises have implemented knowledge management in order to gain sustainable development. The culture of mutual knowledge sharing among the organizational members would be not only the prime motivation for creating knowledge or intelligence capitals, but also the critical factor in deciding if the knowledge management is success or not. Thus, the compensation system is a great help to promoting the members’ willingness in sharing knowledge; an appropriate and perfect compensation system will help the cultural formation of mutual knowledge sharing in the companies.

This research, using the insurance industry in Taiwan as the object of study, is aimed at exploring possible factors which may affect the insurance personnel’s willingness to knowledge sharing. Aiming at the personnel with different age, gender and marital condition, our project is to study the difference of their willingness on knowledge sharing under the condition of three different types of compensation, that is, bonus, pay rise and special leave of absence. The result shows that the preference on three different compensation methods would not go divergent because of the different gender, marital condition and age. The study also shows that in knowledge sharing willingness the respondents prefer the pay rise to the other two items; they have similar degree of fondness over the special holiday and bonus.


Professor John Milton-Smith
Curtin Business School
GPO Box U1987 Perth Western Australia 6845


An underlying premise of the Strategic Management concept is that, in order to build and sustain competitive advantage, firms need to design and manage an integrated process for matching their resources and capabilities with opportunities in the business environment. From the early 1980s the evolution of the concept has increasingly emphasized the importance of constructing a value chain culminating in the marketing of superior customer service. However, a common thread and weakness in all these approaches has been the tendency to take the customer for granted. Indeed, an international survey conducted by the author highlights the failure of the great majority of companies to establish a front-of-mind reputation for service excellence. Based on this research, the paper then sets out to develop a new Strategic Management model which reflects the growing reality that value innovation is no longer embedded in products and services per se but rather in the perception and experience of the customer. As the world-wide success of budget airlines has demonstrated, a strategy for serving customers may involve providing less rather than more service.


Measuring Value Added along the Supply Chain:
A Transfer Pricing Perspective

Dr. Michael D. J. Clements, Management and Marketing, University of Wollongong, Australia.
Mr Nigel J. Price, Grant Thornton (Christchurch) Ltd, New Zealand.


This paper introduces and explains a conception of measuring value added along the supply chain from a transfer pricing perspective. This non-conventional supply chain (value-chain) perspective invites the reader to consider measuring added value as it moves between organisations using a model which encourages congruent behaviour between supply chain partners. A proposed model adapted from the Balanced Score Card model (Kaplan and Norton, 1996) provides a tool to measure tangible and intangible value between firms using transfer pricing. It is argued that embracing and appropriately engaging this model will enable organisations to better measure inter-organisational performance along their supply chain.

An Assessment of Cultural Differences and Management Accounting Systems: Evidence from Greece

Dr Therese A Joiner, Department of Management & Marketing, La Trobe University.Suzanne Salmon, Department of Accounting, La Trobe University
Dr Steve Bakalis, School of Applied Economics, Victoria University


Anglo-American theory and research outcomes suggest that budgetary participation is more appropriate in decentralised organisations. Despite evidence of cultural differences between Anglo-Americans and Asians, this outcome was also supported in a study using a sample of Chinese managers (Gul et al, 1995). Whilst Gul’s research results suggests signs of convergence in management accounting system design across cultures, other studies continue to support a divergence in system design where managers national cultural values differ. This study adopts a cultural divergence posture to hypothesise that decentralisation will not interact with budgetary participation to affect performance or job stress among Greek managers. Given the high power distance/strong uncertainty avoidance cultural values of Greek managers, it is expected that high budgetary participation and high decentralisation will be associated with unfavourable job-related outcomes. The hypotheses were tested using a sample of 78 Greek managers working in Greek manufacturing organisations. The results partially supported the hypotheses. The findings have implications for the effective cross-cultural transferability of management accounting subsystems.


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ISSN: 1813-0534