Advances In Management

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Advances In Management

Vol. 2(4) April 2009

Behavioral Risk Management for Improper Risk Taking

Goto Shigeyuki

Many errors in risk management result from psychological biases in decision-making under uncertainty. Even when we actively seek to eliminate such biases, they remain unconsciously. This suggests a need to change our mind set. Because biases are always with us, we must consider counter-measures to mitigate them when they appear. This paper recommends building a particular framework, as a routine within the traditional risk management process that monitors for improper risk-taking. The routine is called Behavioral Risk Management (BRM). Tools derived from behavioral study, error management and quality control methods are the components of such a routine.

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Smokers need not Apply

Bernott Jenna, Boehm Casey, Mishra Jitendra1* and Mishra Bharat 2

With ever increasing global competition, companies and businesses are now looking for new ways to cut cost. Companies and businesses have now targeted the health sector as being one of the largest in the company’s operations. The average cost per smoker is approximately $1623 in excess medical expenses and $1760 in lost productivity according to the U.S Centers for Disease Control and Prevention or at least $96 billion in direct medical expenditures and $97 billion in lost productivity every year12. Spectrum Health in Grand Rapids decided to become smoke free and announced that they will dismiss workers if they don’t go smoke free at the end of 2006. Spectrum reasons were a) Tobacco addiction kills five million people worldwide each year, including more than 400,000 Americans b) Health care costs are 2.65 billion annually. c) Smoking employees have six and a half more days absent per year than non-smokers. d) Second hand smoke is responsible for 3000 lung cancer deaths each year. An increasing number of companies ban smoking in the workplace. Companies like Union Pacific; Omaha Nebraska banned smoking in the workplace and won’t hire smokers. Lowe’s home improvement retail chain doesn’t allow smoking on its campuses or on its store properties including parking lots. Alaska Airlines requires a nicotine test before hiring people. Kalamazoo Community College stopped hiring smokers for full time position in Michigan. Weyco, Okemos, Michigan decided to become a non-smoking employer. Weyco fired four (4) employees because they refused to stop smoking even off company premises at their homes. Weyco instituted a policy in 2003 of no longer hiring smokers and offering smoking cessation program to the current employees who smoked. The four employees refused to take a “nicotine test” and were fired. Further, a study of 2500 postal employees found that the absentee rate for smokers was 33 percent higher than for non-smokers (Working Smoke Smokers are absent from work 50 percent more than non-smokers. They are 50 percent more likely to be hospitalized and have 15 percent higher disability rates. Smokers miss more work than non-smokers due to sickness. Smoking causes a weak immune system because of the carcinogen found in the cigarettes. Therefore, smokers use more sick days due to their weak immune system4. A large U.S Airline found that smokers are absent from work as many as 6.16 days per year on average compared with 3.86 days for non-smokers. Employees who smoke are prone to being less productive. Employees who take four ten-minute (4x10) smoking breaks a day actually work one month less per year than workers who don’t smoke (Working Smoke The American Lung Association1 concluded that smoking attributed health-care expenditure amounted to $75.5billion in 1998. The WSJ8,10,18 (Wall Street Journal) reports that even WHO (World Health Organization) banned the hiring of smokers to promote its public health campaign against tobacco use. The authors point out in the paper that smokers are more absent, more prone to sickness, disability and are less productive compared to non-smokers.

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Business Factions and Combination of Capital of Indian Firms

Nidheesh K. B.

This paper combines two rival threads of the business finance literature: the first filament relates to the firm’s capital structure decisions, with stress on the pecking order theory and the trade off theory; the second filament relates to business clusters, particularly in the context of emerging markets. The blend is then used to identify a basic model to buttress the capital structure decisions of group-associated and non-group firms. In universal, the results corroborate that affiliated firms are significantly different from their independent counterparts. In terms of their capital structure decision the results show that the average leverage of affiliated firms is higher than the equivalent measures for non-affiliated firms. In terms of the main determinants of capital structure decisions, we found that group association has a strong result on capital structure decisions such that group profitability has a sturdy negative effect on the leverage decisions of affiliated firms. This may be that profitable groups create internal capital markets to avoid having to resort to expensive external finance. Researchers also find that size, as well as growth, does not matter for the capital structure of group-affiliated firms, whereas these factors are critical for the capital structure decisions of independent firms. In addition, only liquidity has a positive force on the capital structure decisions of affiliated firms while intangibility and profitability, group debt and group size has a negative effect. However, researchers do not find any significant differences between group and non-group firms in terms of the impact of age and stock illiquidity on capital structure decisions.

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Modeling Economic Phenomenon with Elementary Catastrophes

Ungureanu Laura* and Galiceanu Mihaela

In the research to shape the company’s activity many types of approach have been crystallized. And so there exist models in which the company is considered a homogenous ensemble in report with its environment for work, the wagers being caught in ensemble as a production-work factor. From this perspective the company follows only to maximize the profit on short term. The changes occurred in the exogenous economic factors of the company have a decisive impact over its evolution. Catastrophes theory is concerned with sudden and discrete changes in system state variables which result from a slow, smooth and small change in one or more parameters. The underlying mathematics of catastrophe theory is essentially that of qualitative dynamics and particularly that of the theory of generic bifurcations of dynamical systems. The purpose of this paper is to present three applications of bifurcation and the catastrophe theory to study qualitative properties in economical dynamics.

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Employees Relationship Management (ERM): Strategy to Focus on Employees

Singh Sumanjeet

Business today is undergoing a silent revolution. For the first time businesses are recognizing the power of individual. Just as customer relationship management (CRM) is focused on increasing the value of customer base, employees relationship management (ERM) is focused on increasing the value of the employees’ base. The concept of (ERM) is based on the conviction that satisfied employees tend to be more loyal, more motivated, more likely to have positive impact on the retention of customers, all of which is better for business bottom-line. The concept of ERM is more than attracting and retaining employees, in fact it is a part of modern business strategy that aims to satisfy the employees to make them loyal. As today, most of the organizations are suffering from talent crunch, formulation of good ERM strategy and its successful implantation can reduce the intensity of problem. In the present article, an attempt had been made to study the concept of ERM and benefits from its implications.

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FDI in Services Sector: An Empirical Analysis with Special Reference to the Delhi Region

Agarwal Ranjana* and Sebastian V. J.

The economic role of FDI is increasingly becoming significant in the Indian economy with the transition of FDI policy from a restrictive phase of seventies and early eighties to a relatively liberal phase of nineties. FDI is an important indicator of economic growth and also stimulator of competitiveness. Foreign direct investment has been seen as a dominant determinant to achieve high rate of economic growth because it brings in scarce capital resource, raise technological capability and increase efficiency through enhancing domestic competition. The share of services sector is large in terms of GDP. In developed countries, majority of GDP is contributed by services sector. In developing countries like India, share of services has been increasing in terms of GDP. The contribution of services sector in Indian economy is now almost half of GDP. It is expected to increase further with very high growth rates. After liberalization, FDI inwards flows have increased tremendously. A look at FDI statistics shows that distribution of FDI is uneven across sectors. What is the role of FDI in services sector? Which countries are contributing to service sector FDI. What are the main sectors in services where FDI is flowing? What is the pattern of investment in each sub sector? Which firms are receiving more investment? This paper looks into these issues by examining primary data. A microanalysis of firm investment pattern has been done for Delhi region. Using primary data, this examines investment patterns of firms in 3 major sectors from 2004 to 2006. Data used is for Delhi region taken from Department of Industrial Policy and Promotion It is seen that FDI flow is skewed across different sub sectors. The financial services sector is receiving much more FDI as compared to other sectors. Few firms have much more FDI flowing in as compared to others. Three firms namely, Citi Financial, Kappa Industries and India Bulls are receiving maximum FDI. Policymakers liberalized FDI norms for overall development of the economy. Policy should be made so that all firms, small, medium and large benefit from investment process.

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Innovative Instructional Methods for Technical Subject Matter With Non-Technical Pedagogy: A Statistical Analysis

Willow Charles* and Mosca Joseph

Instruction of technical subject matter to a relatively non-technical audience and vice versa in higher education is a daunting task. In this paper, a junior 300-level Management Information Systems (MIS) course as a student requirement for graduation in the School of Business Administration is selected for in-depth analyses and discussions. In the more recent years, MIS, as an area of study amongst AASCB-accredited Business Schools, has constantly fell victim to cogency problem of its subject matter, often referred to as its ‘Identity Crisis’. One is the management-focused Objectivists Information Systems Management (ISM) and the other information-technology-centered Constructivist’s Computer Information Systems (CIS). Both ideologies are intriguing and useful and in fact necessary to deliver the contents which encompass a gamut of MIS to students of higher learning. The pedagogical problem of MIS while balancing the ISM and CIS is discussed with an empirical analysis.

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