Current Event Post: U.S. Fossil Fuel Industry Rebounds

U.S. Fossil Fuels Industry Rebounds

In a stagnated economy hoping for any well spring of job development, the fossil fuels industry is offering a light to guide the way in the coming years.  In blog posted by Mark J. Perry, a University of Michigan economics professor, data from the U.S. Energy Information Administration indicated significant growth in U.S. energy production from oil, coal and natural gas since 2009.  It appears that much of this growth is directly attributable to technological advances including hydraulic fracturing and horizontal drilling.  Perry wrote that these advancements “…have allowed us to tap into previously inaccessible underground oceans of domestic oil and gas trapped inside shale rock far below the earth’s surface.” (Sebastian) 

The use of this technology is not cheap.  Initial investments can be as much as ten times more expensive than a similar traditional well.  However, the payoff continues for a longer term.   Because the supply chain for oil and gas drilling is very long, and mostly domestic, the trickledown effect on the economy is vast.  IHS, a global information company, published in a recent Global Insight Study that the increase in unconventional oil and gas drilling will bring more than $5 trillion in capital spending that will support more than 3.5 million jobs by within the next twenty years. (Dlouhy)

Aside from the boost to the domestic economy, oil production from shale has had another effect.  Oil production in the Gulf of Mexico continues to fall as a percentage of total U.S. output.  In the past, when a hurricane enters the Gulf, oil rigs shut down and prices soar.  Shale extraction is proving to stabilize the hurricane issue as proven at the end of August when hurricane Isaac shut down Gulf production for more than a week.  Compared to a few years ago when hurricane Katrina caused oil prices to jump to $130 a barrel, stemming 95% of Gulf production during Isaac caused no appreciable change in the price of crude. (Zhou)

Technological advancements in gas and oil drilling have lead to a dramatic increase in U.S. fossil fuel production.  Coupling this increase with diminished domestic fossil fuel usage in recent years positions the United States as a major player in the world reserve and decreases U.S. dependence on foreign oil.  Moreover, it increases domestic economic development and limits disruption in the market due to late summer tropical storm activity.  This allows managers to better plan for long term activities independent of massive fluctuation in crude oil prices. 

Sebastian, Simone. "U.S. on track to produce record fossil fuel energy." Houston Chronicle 25 10 2012, D3. Print.

Dlouhy, Jennifer. "A potent economic force: Study says energy from shale is a bonanza for future jobs." Houston Chronicle 23 10 2012, B6. Print.

Zhou, Moming. "Storm Effects on Oil Prices Waning As Shale Booms: Energy Markets." Bloomberg (2012): n.pag. Bloomberg.com. Web. 28 Oct 2012. <http://www.bloomberg.com/news/2012-09-14/storm-effect-on-oil-prices-waning-as-shale-booms-energy-markets.html>.

Internet corporate reporting by listed firms in Hong Kong

By Pak-Lok Poon and Yuen Tak Yu

Internet corporate reporting has rapidly increased since the last decade to provide newest company information to global customers and investors. This information can be financial or non-financial such as company overview, history, products and services, etc. Hong Kong is a one of the biggest financial centers in the Asia-Pacific region. As many companies went public, the demand for their financial information roars up. Since financial information plays a very important role in investor’s decisions, Internet financial reporting is an economical and fast way to reach potential investors.

Under high pressure of dynamic and competitive business environment, firms see Internet corporate reporting no longer an option, but rather a necessary way that any firm needs to implement. The purpose of this article is to illustrate the relationships between the degree of reported information on corporate websites and the characteristics of Hong Kong's listed firms.  This is measured in terms of the richness of the corporate information disclosed on their websites which reflects firm's commitment, resources and level of strategic significance attached to Internet corporate reporting.

This empirical study test the theories of innovation theory, the expectation-confirmation theory, corporate governance theories, and the learning/experience curve theories. This research can imply on many contexts related to the adoption of Internet corporate reporting. The authors implemented an empirical study by using the questions, measuring the variables in formulating hypotheses under the local context, and collecting lots of data during three years. The data set composed of the top 200 listed firms which collectively make up over 80% value of the total capitalization of the stocks in Hong Kong.

The authors found that the degree of a firm using Internet reporting has a positive relationship with some of its characteristics, such as the level of corporate governance and previous experience of adopting such a reporting practice. Furthermore, other factors including firm's size, revenue and stock trading activity also play an important role. Interestingly, it is found that system openness does not affect the degree a firm adopts Internet reporting.

The study has some implication in providing a clearer picture of Internet corporate reporting in Hong Kong. Larger firms with higher revenues and stock trading activities are typically more innovative, have more financial resources and greater access to technical knowledge and expertise to adopt Internet corporate reporting. But as the popularity of Internet corporate reporting grew, the size, revenue and stock trading activity of a firm were no longer key indicators of adopting such a reporting practice. Manager can utilize that knowledge to transform company website as an effective and cheap community tool with consumers and investors by providing useful information. This can help to build a strong understanding and relationship with more customers, especially when firms enter new market and consumers are lack of their products and company information.

References

Poon, P-L. & Yu, Y.T. (2012). Internet corporate by listed firms in Hong Kong. Information Research, 17(1) paper 510. [Available at http://InformationR.net/ir/17-1/paper510.html]

Second Life and E-Marketing in an Online Social Network: The Implementation in China Marketing.

By Sharma Gajendra, Li Baoku, Wang Lijuan

What are you doing right now? I’m pretty sure that you are using a PC, laptop or smartphone for working, entertaining, communicating, etc. Other word, you are on cyber world – your “second life”, a place some people found more interesting than their real life. Millions of people access to the Internet every day, and many marketers have recognized the huge opportunities and great potential of e-marketing. The article discusses about the significance of communication and internet marketing opportunities in the virtual world generally, and China market specifically. As people spend more time on the internet, it is obvious that firm needs to discover and invest more money on these great opportunities.

Research findings show that there are many important factors affect the chance of success of an internet marketing campaign, such as financial investment, time engagement, customer relations, and quality of products, etc. There are two vital elements for brand recognition and promotion: advertising and communication. The author states that some of the cheapest and most effective marketing is using word-of-mouth and blogging. Just a simple click, potential customers can read thousands of review, written by real consumers, about any kind of product and make their purchase decision quickly. However, the main problems in virtual world are annoyances, hacker, misconduct, and highly-addiction. Other challenge includes increasing competition because it is so much easy to start a business. A website, a bank account, some stuffs and you are ready to run your very first business. But life is not that easy, a successful internet marketing plan requires deep understanding, exactly mirroring all the operation activities of business in the real world. It is stated that the person should have experience in running a real company.

This study confirms that “second life” is a proper place for effective and efficient communication, and e-marketing promotion. This research has two critical implications for managerial practice. First, second life can be a good test place for new ideas, products, and operation process with rapid feedbacks from users, and low cost.  Utilizing those feedbacks, firm can effectively modify their offerings to meet customer requirements in a real world to guarantee a higher rate of success. Secondly, this study argues that communication is the most essential part of cyber marketing. Besides, “second life” has a substantial impact on Chinese Internet users and the development of China market. As the virtual business has significantly influenced the real world economy, many big companies started designing and testing their new products and services concepts in second life website. So, what are you waiting for? Let’s open an account on “second life”, start your own business, and make a huge profit, hopefully.

References:

Sharma, G, Li, B, & Wang, L 2012, 'Second Life and E-Marketing in an Online Social Network: The Implementation in China Marketing', International Journal Of China Marketing, 2, 2, pp. 38-59, Business Source Complete, EBSCOhost, viewed 24 September 2012.

http://libproxy.uhcl.edu:2057/ehost/detail?sid=b675b9cb-58ff-4331-b976-671ea6fc7aa9%40sessionmgr11&vid=3&hid=19&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=76482045

Efficiency and its determinants in pharmaceutical industries: ownership, R&D and scale economy

Pharmaceutical industry is one of the most important industries of some countries. For example: Korea and US. It is really hard to compete in this industry, only firms that are productive and efficient can survive. The article’s purpose is analyzing the relationship between the pharmaceutical firms’ structure and their efficiencies. It investigates relationship of investor structure and R&D as well. This article shows the links between ownership structure and R&D investment with the “return-to-scales and firm characteristics”.

The article mentions about some theoretical background and hypothesis:

-                      Ownership effects on efficiency: owners/managers always pay their attention on cost managing because of its general implication of firms’ efficiency. There, hence, is hypothesis as following: largest (or blockholder) rate, institutional ownership rate, and foreign ownership rate are related to efficiency.

-                      Ownership effects on R&D: increasing productivity of R&D investment is very important thing because this industry has the highest portion of R&D activity among manufacturing industries. So, the authors have hypothesis about the relationship between largest or blockholder, institutional ownership rate and foreign ownership rate, and firm’s efficiency.

Methodology of the study (You and Zi, 2007): (1) estimating four different types of efficiency (cost, alloccative, technical and scale) based on Data Envelopment Analysis method; (2) using regression techniques of Tobit and Panel about Ordinary Least Squares in order to regress efficiency scores. 

Data is collected from 32 Korean and 38 US pharmaceutical firms from 1992 to 2004. Results of this study support the above hypothesises. However, there are not a direct comparative of efficiency scores between the two firms’ groups from Korea and from USA. 

Three worthy points: (1) in Korean, pharmaceutical firms cost inefficiency’s level may due to the allocative inefficiency’s level; (2) in USA, it dues to the technical inefficiency’s level; (3) after 2002, there is an improvement in cost and allocative efficiencies of Korean pharmaceutical firms. 

At the end, the authors confirm that there is “causal links among efficiency, R&D and ownership”. The results from the study in Korean and US pharmaceutical firms can be used in “pushing competitions between domestic and foreign pharmaceutical firm to new levels”. To do this, having timely changes in restructuring ownership and improving R&D strategies (efficiently and productively) in managing pharmaceutical corporates is vital. And, this is the implications of management in doing business internationally. 

You, Teawoo, Chen, Xiaoying, and Holder, Mark E., "Efficiency and its determinants inpharmaceutical industries: ownership, R&D and scale economy", Aplied Economics, 2010, 42, 2217-2241.

Corporate Renewal - Can Services Change an Everchaning Economy

CAN SERVICES CHANGE AN EVERCHANGING ECONOMY

Over the past few years, the banking and financial service industries have been scrutinized unilaterally in the public media.  Innumerable documentaries have been filmed and articles written lambasting corrupt financiers.  The Madoffs and Stanfords of the financial service industry, corrupt politicians reaping huge profits in the U.S. home mortgage fiascos, and the fall of such industry giants as Lehmann Brothers have not only affected the domestic economy, but with the continual advance of open markets, these crises have had a global impact on the world economy.  In spite of these egregious and systemic failures in the financial services industry, the author of this article holds that the world economy can indeed be set right by the further development of global financial services and is reliant upon this industry to pull the world away from recession.  This is an important perspective, for if it is true, a great deal is riding on the proper future oversight of the industry.

 The author holds that there can be no scenario for recovery which excludes the financial services industry and the banking industry in particular.  Alternatives to the current system of world banking would not be practical, as no political body would have the fortitude to suggest such change, and the markets and the people using them would lack the patience to await such development.  Another point the author suggests is that service industries diminish the separation layers between business and customer.  As such, there is little room for companies to fall from favor in the eyes of consumers.  Poor publicity, such as criminal activity and highly publicized law suits, become a direct threat to the existence of any service industry, especially financial services.  Speculating that pursuant to the latest era of global recession, households will tend to pay off debt instead and borrowing, the author contends that investment banks will have to sit on investment monies, making it harder for them to earn the cost of capital.

The author creates a simple explanation involving the global financial services industry as the integral tool in global economic recovery.  This theory is of importance to managers of many industries beyond financial services, however.  If it holds true that global consumers become more intrinsically involved in the furtherance of global financial service industries; and therefore hold these industries to a higher level of propriety than in the past, advertising and marketing may be forced to share some of the budget pie with governance programs.  Coupled with reduced trust from consumers on the heels of significant scandals, image building and maintenance may become paramount for service industries in general.

Source:

Alexandru, D. (2012). Can Services Change an Ever Changing Economy. Global Conference on Business and Finance Proceedings, 7(2), 526-531.

Introductory post - Anh Tran

Hi, I’m Anh Tran. I love watching movie and reality shows (my recent favorite is Master Chef, because of a courageous blind woman contestant, who inspired me and taught me to believe in myself. “ Put your heart on whatever you do, you can do it”, she said). Besides, I love hanging out with my friend, riding a bicycle around our peaceful campus and enjoy beauty of nature.

I consider myself as a fast learner, easy-going type and creative. I’m Vietnamese, so my view of point may be completely different from yours (I believe it’s good to consider an issue from many side of views to reach the best decision.) However, it also provokes some problems as English is my second language. For example, sometimes I had very good ideas but I just couldn’t convince my teammates because of lacking vocabulary to express clearly my ideas. And it made me feel bad about myself. I learnt from mistakes, so I hope it won’t happen again. 

I love to work under a friendly and supportive atmosphere, where I feel easy to share ideas and responsibilities, and support each other. I had lots of good time with my previous teams and hopefully this class is not an exception.

I have almost no experience in working because I immediately pursue an MBA program after graduation. But I had about 3 months of working in an insurance company in Vietnam. I will graduate this fall with an MBA degree, focus on International Business. My current goal is enhancing my English communication so that I can build up my confidence and hopefully it can help me to find a job here. Of course, this will require a little bit of good luck and lots of hard work and effort. But if you “put your heart on whatever you do, you can do it”.

Introductory posting

My name is Michael Kramm.  I have been a police officer for 19 years.  This is my final class before graduation and my first time to read or contribute to a blog.  I hold no specific goals for the blogging experience beyond making a new wrinkle in my brain.