Competition Between The Three Major Supermarkets Economics Essay

Competition Between The Three Major Supermarkets Economics Essay For my Extended Essay, I decided to investigate the competition between the three major supermarkets in my local area, and whether they collude or not, prompting my research question: To what extent do the larger supermarkets in my local area collude with each other? By analysing data collected on pricing from the three supermarkets, it was found that two of the three supermarkets at hand colluded tacitly with each other, under and oligopoly market structure. The prices of fifteen identical prices were recorded across a time span of three weeks. The analyses of these prices lead to two conclusions. Firstly, it was found that two supermarkets colluded with each other, but still had non-price competition between them. This was mainly due to the advantage of the two stores acting as a monopoly by charging the same price. This allowed the two supermarkets to make abnormal profit, which in turn they used to create a stronger brand loyalty, and thus, a more inelastic demand curve. Secondly , it was found one of the supermarkets was undercutting the other two supermarkets prices. The main reason for this was that the supermarket could gain greater revenue at the time by undercutting rivals, due to having more customers. These findings show that there was collusion between larger supermarkets in my area, but not between all supermarkets. Finally, the essay could be improved if I included more products in my data collection, as well as collecting the data over a longer time period. 1. INTRODUCTION Tesco, Asda and Sainsburys are the three main supermarkets that constitute weekly shopping for the public in my local area, west Charlton. These three supermarkets are recognised for their vast range in goods and at affordable prices. It is no surprise then that in terms of market share, they each comprise the top three places for having the most market share in the U.K.1 During the last couple of years, though, I have noticed that many of the smaller supermarkets in the same area have begun to close down. Since enrolling in the IB Higher Economics course and studying market structures in particular, Ive developed an interest into how supermarkets compete with each other, or even, how they collude together. Maybe, given their large hold of the market share, the benefits from collusion would be unmatchable compared to other smaller supermarkets, in terms of increased sales revenue. Also, formal collusion, one of two forms of collusion, is illegal as it goes against the Competition Act 1998 (the Act) Chapter 12. Therefore, the research question I have formulated is To what extent do the larger supermarkets in my local area collude with each other? To be able to explore this research question, I will first present a summary of the supermarkets, where the characteristics of them will be described. This will lead on to my next section where I will discuss relevant theoretical market structures and relate economic theories to them. After I have presented these theories, I will hypothesise which market structure is adequate for the supermarkets present, thus creating a sufficient research design where the prices of similar products will be compared. Finally, I will analyse the collected data and prove or disprove my research question, leading to a conclusion of my essay and exploring possible limitations. 2. MARKET SUMMARY In the area I am studying there are three main supermarkets; Asda, Tesco and Sainsburys, situated in West Charlton (appendix 1.1). Each supermarket is similar in size, satisfying the vast needs of the inhabitants in the area. It is worth mentioning that due to the supermarkets being of a substantial size structurally, there must have been large start up costs. Each of the three engages in non-price competition. This includes things such as advertising on T.V, having parking areas and the use of brand names. The offerings of these services are in the attempt to attract more customers. Take for example, Asda, which has parking as well as various sectors to its stores such as electrical and clothing sections as well as groceries. The aim of this is that customers can visit only this store by satisfying all their needs from the vast offers of goods. Furthermore, each supermarket advertises their brand names to gain more customers due to the brand loyalty it has established. This could ma ke their demand curve more inelastic, meaning that an increase in the price of a good would result in the increased revenue exceeding the reduction of quantity sold (appendix 1.2). These three supermarkets also dictate the majority of market share, as I have mentioned. Lastly, it is worth mentioning that Sainsbury ¿Ã‚ ½s and Asda are open for 24 hours from Tuesday to Friday, otherwise it is from 7 in the morning to 11 in the evening. Tesco are open from 7 to 11 everyday, apart from Sunday when they open an hour later and close an hour earlier. I don ¿Ã‚ ½t think that the slightly lesser hours that Tesco is opened during the week will affect my research much, or at all. This is due to the fact that I don ¿Ã‚ ½t believe Tesco make much of their sales between midnight and 7 in the morning. 3. MARKET STRUCTURE THEORIES I will now present the four types of market structure theories and their assumptions. I will not going into great detail on the structure of a monopoly as this is not a possible market structure for the supermarkets, given the fact that there is evidently more than one firm in the area. This is the same for perfect competition, as the goods produced by supermarkets are not identical. Firstly, I will present the market structure of a monopolistic competition. The assumptions of this market structure are3: * The industry is made up by a large number of firms * The firms each act independently of each other, due to each firm being small, relative to the size of the industry * The firms produce differentiated products; consumers can tell one product from another * Firms are free to enter and exit the industry, due to lack of barriers to entry and exit * Firms are able to make abnormal profits in the short run, however due to lack of barriers to entry; this attracts other firms into the industry. This means that in the long run, only normal profits are able to be made Due to the fact that the supermarkets in question are of a substantial size, I believe that the start up cost in itself will be of a great barrier to entry. Also, I don ¿Ã‚ ½t believe the industry I am examining is made up of a large number of firms, as there are only three supermarkets of their type in the local area. Another market structure that the supermarkets could come under is an oligopoly. These are the basic assumption of an Oligopoly:4 * A few firms dominate the industry * There are barriers to entry and/or exit for the industry * The firms are price makers as they have a downward sloping demand curve * The firms are interdependent; the action of one firm can have an effect on another * Abnormal profits can be made both in the short run and long run In addition to these assumptions, firms in an Oligopoly can be either collusive or non-collusive. Non collusive oligopolies face price stability due to the kinked demand curve. This is shown in figure 1. Figure 15 Due to the kinked demand curve, price will be stabilized at price  ¿Ã‚ ½P ¿Ã‚ ½. This happens as the Price elasticity of Demand (PED: The responsiveness of the quantity demanded of a good or service to a change in its price)6 above price  ¿Ã‚ ½P ¿Ã‚ ½ is greater than 1. This means that an increase in price above point  ¿Ã‚ ½P ¿Ã‚ ½ will result in a loss of revenue. Likewise, the PED below price  ¿Ã‚ ½P ¿Ã‚ ½ is less than one, meaning a reduction in price to this level will result in a loss of revenue again. Due to these factors, it is logical that firms do not favour either move, so they are said to be stable at point P. This also results in the output being stable at point  ¿Ã‚ ½Q ¿Ã‚ ½ as a change in marginal cost from MC1 to MC2 would still mean output would stay at  ¿Ã‚ ½Q ¿Ã‚ ½. This is due to firms in this market structure producing at the profit maximising point, where MC=MR.7 Firms in this market structure may also be collusive. This exists when the firms collude to charge the same prices for their products, in effect acting as a monopoly. There are two types of collusion, formal and tacit. Formal collusion exits when firms openly agree on the prices they will charge. In the case of supermarkets in the U.K, it is illegal for this to occur as it is deemed to be going against the interest of the consumer due to it resulting in less output and higher prices. Tacit collusion, however, exists when firms charge the same prices without any formal collusion. The three supermarkets in question may have decided to charge the same prices and not compete with each other, in order to increase revenue. This is represented in figure 2. Figure 28 As shown in figure 2, firms can make abnormal profits between their price and cost, due to the price exceeding the cost to the firm. This form of collusion is very possible as each supermarket is very similar to each other and all produce similar type goods. Firms in an Oligopoly can experience economies of scale. Economies of scale are any decreases in the long-run average costs that occur when a firm changes all of its factors of production, in order to increase its scale of output. There are a number of different economies of scale that can benefit a firm as it increases its scale of output. These can be: 9 * Specialisation- Firms can be more efficient when they specialize in different areas of expertise * Division of labour- This is the breaking down of a longer production process into many smaller activities, making production more efficient by reducing unit costs * Bulk buying- As firms increase in scale they are often able to negotiate discounts with their suppliers, as they are buying more altogether. This reduces the firm ¿Ã‚ ½s cost of input, and thus their unit costs of production * Financial economies- Larger firms are able to get loans at lower interest rates, as they are seen as a lesser risk to lend money to than smaller firms, by the bank The assumptions of a monopoly are as followed:10 * Only one firm producing the product at hand, so the firm is the industry * High barriers to entry and/or exit * Abnormal profits can be made in the long run, due to barriers to entry This market structure is unlikely to be present in my research area as there are clearly more than firm in the same industry. Finally, the basic assumptions of perfect competition are: * The industry is made up by many firms, so total output cannot be affected by one firm * The firms all produce homogeneous (exactly identical) products * No barriers to entry and/or exit * Producers and consumers all have perfect knowledge of the market Again, this market structure is unlikely to feature in my study, mainly due to the fact that there is product differentiation, as well as evident start up costs. 4. HYPOTHESIS After reviewing and comparing the discussed market summary and theories, I have hypothesised that the market structure the supermarkets are in are oligopoly. I have reached this hypothesis for the main reasons that: * There are evident barriers to entry such as strong branding of products and start up costs * There are only three supermarkets in the local area, between them sharing almost 64% of the market share.11 In addition to these points, I believe tacit collusion between the three supermarkets would greatly benefit their competition with other smaller supermarkets in the area. It would also avoid unnecessary competition between each other, and perhaps result in gaining more customers. After hypothesising that the three supermarkets are in an oligopoly, and thus capable of collusion, I will now be able to test my research question  ¿Ã‚ ½To what extent do the larger supermarkets in my local area collude with each other? ¿Ã‚ ½ 5. RESEARCH DESIGN For me to test my formulated research question, I will create a methodology. I will compare the prices of 15 different products across the three supermarkets. I will check the prices once every week for three weeks, so I can get a mean price at the end, making the result more reliable. I will make sure the prices of the same products are taken in the same time period, and where possible, use products produced in the U.K. This would avoid export costs affected and invalidating results. If not enough U.K based products can be found, I will make sure that any exported product used will have been exported from all supermarkets. This will maintain a degree of validity in the research. I will also avoid products produced by the supermarkets themselves. This would be because the cost of production may be very different from one supermarket compared to another, thus having a large impact on the final pricing. I will compare independent brands that feature across all three stores. Each superm arket in the area of West Charlton is located within one mile of each other.12 In terms of the data collection, I will go to each supermarket and compare similar, or when possible, identical products and their prices. I will note down their current price at which they sell at. Also, I will go to each supermarket close to their opening times on Saturday, as on this day the stores all open at the same time. The reason for not going later on in the day is because of price reduction on non-durable goods that are set to expire. If I include goods which prices have just been reduced temporarily to get rid of lasting stock, it would not represent the overall pricing of the good in regular situations. Lastly, I will compare the prices using adequate means of analysis; thus deducing whether or not there is enough similar pricing evident to suggest collusion of some sort. 6. DATA COLLECTION ANALYSIS Firstly, I will present my data collected for the prices of 15 products from all three supermarkets, across a span of three weeks, once a week. Table 1 shows my findings of the prices. Table 1 Source: Prices collected by me for all supermarkets To analyse the spread of the data, I will work out the standard deviation for each product, which will indicate the spread of the data. A lower standard deviation would indicate a set of closer, similar prices, likewise a higher standard deviation would imply less chance of collusion evident.13 The standard deviation for each product is represented in Table 2, along with the mean prices for each product over the three weeks. From the standard deviation, we can see they are all overall quite small, indicating the prices are all close to the mean price. This seems to indicate some form of collusion occurring between the supermarkets. However, there are some exceptions. For some goods the standard deviation is relatively high to the other products. Also, in most of these goods, such as soft drinks, crisp packs, pizza, ice cream and cooked chicken, it is Asda who feature the lowest price out of the three, while Tesco and Sainsbury ¿Ã‚ ½s have similar prices to each other. This seems to show that there is possible collusion between Tesco and Sainsbury ¿Ã‚ ½s, while Asda undercuts their prices. The similar pricing between Sainsbury ¿Ã‚ ½s and Tesco suggests a form of collusion, tacit or formal. I inquired to the Office of Fair Trading (OFT) about my findings. The OFT are a government based organisation that ensure businesses are  ¿Ã‚ ½fair and competitive. ¿Ã‚ ½14 In a reply they stated:  ¿Ã‚ ½Although similar prices might seem to suggest that companies are getting together to agree them, this is not necessarily the case. For example, one company might have independently decided to price at a level similar to another or both may have independently decided to behave in the same way ¿Ã‚ ½.15 As similar pricing does not necessarily mean formal collusion is taking place, I will assume that the two supermarkets are tacitly colluding, although this area may be needed to be researched into further for a definite result. As well as colluding, I have also noticed that there is evidence of non-price competition between Tesco and Sainsbury ¿Ã‚ ½s. This included things such as the use of advertising, free delivery and other services situated in the store themselves. This has lead to each supermarket gaining brand loyalty, and as a result, creating a more inelastic demand curve for their products. This is possibly another explanation of why these two supermarkets in particular where of a higher price overall, compared to the other supermarket, Asda. For the case of Asda, they have engaged in price war tactics, rather than forming a collusion. In this case, undercutting rivals may be beneficial to them by increasing their sales revenue. This can be represented by  ¿Ã‚ ½game theory ¿Ã‚ ½. Supermarket The table shows that if both supermarkets lower price, they will make less revenue than if they had colluded. However, it is still tempting to undercut the other store as then that would lead to greater revenue. The highlighted box shows the possible situation at the moment, with Asda undercutting the other supermarkets thus increasing revenue. This choice making situation is known as  ¿Ã‚ ½the prisoner ¿Ã‚ ½s dilemma ¿Ã‚ ½. 16 Another explanation for the lower price offered by Asda for goods could be down to lower unit costs caused by a greater storage capacity. The supermarket ¿Ã‚ ½s cost of storage mainly depends on the material used to build them, which is the surface area of the building. The level of output for the supermarket will depend on its storage capacity, so its volume area. As the size of a supermarket increases, the volume to surface area ratio increases. Therefore, the cost per unit overall will be much less than a smaller supermarket, such as Sainsbury ¿Ã‚ ½s and Tesco. Lastly, from analysing my collected data, I have reached the conclusions: * Tesco and Sainsbury ¿Ã‚ ½s collude by charging very similar prices, but still have non-price competition between them. * Asda competes with a price-war tactic, by undercutting the other two supermarkets. 7. CONCLUSION The aim of my research was to investigate the type of competition, if any, between the three major supermarkets in my area, West Charlton. The question  ¿Ã‚ ½To what extent do the larger supermarkets in my local area collude with each other? ¿Ã‚ ½ prompted me to gather the pricing of 15 identical products across the three stores. The prices were taken every Saturday morning one a week for three weeks. I found that two of the three supermarkets had signs of collusion, while the third supermarket engaged in a price-war by undercutting the other two supermarkets. Firstly, Tesco and Sainsbury ¿Ã‚ ½s have similar prices to each other, while having higher prices than Asda. This was mainly due to the two stores acting as a monopoly by colluding and charging similar prices. This meant that each firm could make abnormal profit, which they used to create greater brand loyalty, thus making the demand for their products more inelastic. Lastly, the final supermarket, Asda, engaged in price-war tactics. The main reason for this was due to the idea of gaining more revenue as indicated by  ¿Ã‚ ½the prisoner ¿Ã‚ ½s dilemma ¿Ã‚ ½. In addition to this, Asda had a greater storage capacity, meaning an overall lower cost per unit. Therefore, after collecting data and analysing them, it is found that there was evidence of collusion, but only between two of the supermarkets, not all three studied. There are, though, apparent limitations in my study. Firstly, my area of research was only in one town. If there is found to be some form of collusion between supermarkets here, it doesn ¿Ã‚ ½t necessarily mean it is occurring all over the country with those same supermarkets. Also, the time span of my investigation was three weeks. This may not have been enough time to gather an appropriate amount of results to come to a reliable decision. This could be said the same for the amount of products used in my investigation; 15 products may not have been enough to come to an appropriate result. As well as this, I could not make a judgment whether the collusion between Tesco and Sainsbury ¿Ã‚ ½s was either tacit or collusion. This would have to be investigated further. All of these limitations overlook the aim of my study and thus should be inspected further. 8. BIBLIOGRAPHY/ACKNOWLEDGMENT Anderton, A. (2006). Economics: Fourth Edition. In A. Anderton, Economics: Fourth Edition (pp. 63-64). Causeway Press. Dorton, I. (2007). Economics. In I. Dorton, Economics (pp. 119-123). Oxford University Press. Dorton, I. (2007). Economics. In I. Dorton, Economics (pp. 114-118). Oxford University Press. Dorton, I. (2007). Economics. In I. Dorton, Economics (p. 115). Oxford University Press. Dorton, I. (2007). Economics. In I. Dorton, Economics (pp. 81-82). Oxford University Press. Dorton, I. (2007). Economics. In I. Dorton, Economics (pp. 105-111). Oxford University Press. Garner, E. (2010, June 1). TNS Global. Retrieved June 1, 2010, from TNS Global Website: http://www.tnsglobal.com/news/news-56F59E8A99C8428989E9BE66187D5792.aspx Measure of Spreads. (2007). Retrieved June 3, 2010, from Stats4students: http://www.stats4students.com/Essentials/Measures-Of-Spread/Overview_3.php Office of Fair Trading. (n.d.). Office of Fair Trading. Retrieved June 3, 2010, from http://www.oft.gov.uk/: http://www.oft.gov.uk/ Office of Fair Trading. (2010, May 25). Office of Fair Trading Reply Letter. London, U.K. Prisoners Dilemma. (1997, September 4). Retrieved June 3, 2010, from Stanford Encyclopedia of Philosophy: http://plato.stanford.edu/entries/prisoner-dilemma/

The Call of the Wild :: essays research papers

Title:  Ã‚  Ã‚  Ã‚  Ã‚  The Call Of The Wild Author: Jack London Copyright: 1986 Setting:   Ã‚  Ã‚  Ã‚  Ã‚  The beginning setting takes place on the property of Judge Miller in Santa Clara Valley, California in 1897. Later the setting takes place in Alaska during the Gold Rush of the Klondike. Main Character:   Ã‚  Ã‚  Ã‚  Ã‚  Buck is the only main character of the book. Buck is a dog who is part Saint Bernard and part Shephard. Summary:   Ã‚  Ã‚  Ã‚  Ã‚  Buck is my favorite character of the book. He had such a great life before he was stolen and sold to some very nasty people. Buck was treated very badly and he had to learn how to survive. He didn’t let the people know he was scared. The only way to survive was to listen, watch and learn. Buck wanted to be the leader and fought for what he wanted and he got it.   Ã‚  Ã‚  Ã‚  Ã‚  Buck had a great life living with Judge Miller and his family. He had free run of the place and played with his daughters and hunted with his sons. All the other animals were stuck in the house or behind fences.   Ã‚  Ã‚  Ã‚  Ã‚  One day a gardener named Manuel, that Buck had trusted, stole Buck and took him to a train station and sold him to people who used large dogs to pull sleds in Alaska. These men were not nice and would beat Buck and the other dogs very badly to let them know who was boss. Buck and the other dogs had no idea what was happening to them. The dogs were put onto the trains and taken to a ship that took them to Alaska where they would be sold again in teams to pull the sleds of people looking for gold and other work.   Ã‚  Ã‚  Ã‚  Ã‚  When Buck and the other dogs got off the ship, the first thing they saw was white. They didn’t know what it was. It was snow. They learned quickly how hard and scary this would be. Other dogs being used were wild wolves that would tear the new dogs apart if they had the chance.   Ã‚  Ã‚  Ã‚  Ã‚  Buck and eight other dogs were sold to Perrault and Francois. Buck knew he needed to learn how to survive fast. One of the dogs, Spitz, who was the leader was a wolf and very mean. He would bully the other dogs. Buck hated him and one day wanted to take him down to take his place as leader. The dogs had to live through many dangers and survive with little food and sleep.

Research Methods and Modeling Techniques Essay

Mergers and acquisitions (M&As) are important modes through which firms undertake their domestic and international strategies. M&As research is important because these transactions have significant implications for firms’ performance (Laamanen & Keil, 2008). When a firm carries out an international M&A it gains full control over the foreign unit (Arregle, Hebert & Beamish, 2006). In addition, once established, these transactions are difficult to change, because they have long-term consequences for the  firm (Capron & Pistre, 2002). Given its high relevance, numerous empirical studies have addressed the M&As research such as the overview by Noe & Rebello in 2006, as well as theoretical articles written by Chi in 2000 and Shaver in 2006. However, even after decades of research on this issue, the empirical research provides no clear consensus on the impact of these transactions on the firms’ performance. For instance, Child, Faulkner and Pitkethly (2001) found that cultural differences are likely to have a negative impact on the firms’ post-acquisition performance. According to Morosini, Shane and Singh (1998) international M&As have become major strategic tools for corporate growth of multinational corporations. M&As increase the efficiency and effectiveness of whole industries, and also affects individual companies’ competitive ability (Hitt, Ireland & Harrison, 2001). Most of the times M&As are the only way to acquire resources and knowledge that are not available in the market. A transaction is known as an acquisition when a buyer acquires all or part of the assets or businesses of a selling company. In case the target company is purchased despite its active resistance the transaction is also known as hostile takeover. A merger, in contrast, is the corporate combination of two or more independent business corporations into a single enterprise, usually the absorption of one or more firms by a dominant one. Most of transactions are considered as acquisitions. One possibility is to literally merge two companies, in which case one company automatically assumes all the assets and liabilities of the other. In this case, the merger must have the approval of at least 50 percent of the stockholders of each firm concerned. The alternative is to simply acquire the sellers stock by purchasing it on the stock market or in exchange for shares. This development usually takes place by increasing slowly, but surely revenues over time in the market the company has become part of. Knowing the clients needs products get adjusted, differentiated and new products get launched. Now it’s been a while since the acquisition and it is more than obvious that this kind of venture was a great idea from Adidas and now it is up to them to try to improve even more and pretty soon overcome Nike as global leader in department of sports equipment, and in unity with Reebok it will be much easier. The closing of the Reebok transaction on January 31, 2006 marks a new chapter in the history of the Adidas Group. By combining two of the most respected and well-known brands in the worldwide sporting goods industry, the new group will benefit from a more competitive worldwide platform, well-defined and complementary brand identities, a wider range of products, and a stronger presence across teams, athletes, events and leagues. The merged companies will maintain their individual brands yet, together, will cover a larger variety of sports and geographic regions, with Reebok’s strength in U.S. sports and Adidas’ more international presence. Their combined clout will also give them stronger bargaining power with retailers. The combination of Adidas and Reebok accelerates the Adidas Group’s strategic intent in the global athletic footwear, apparel and hardware markets. The new Group will benefit from a more competitive platform worldwide, well defined and complementary brand identities, a wider range of products, and an even stronger presence across teams, athletes, events and leagues. Adidas is a German company and has 14,217 employees with global sales of 81 million in 2004 (http://www.fashionbrandsonline.net/adidas-reebok-merger-and-what-the-real-motives/). Reebok was originally a British company, moved to the United States in 1979 and started production of Reebok products in 2004, global sales of 40 billion dollars. Through the merger of Reebok, Adidas will significantly increase market visibility, integrating the two companies complement each other’s consumer base and geographical advantages. This will allow them to be able to narrow Nike lead in the market share to a minimum. The main goal is to benefit from the best sides of each company and emphasize on it. In case of Adidas it is focus on producing sporting goods in all of the categories especially in area of soccer, basketball and tennis. Reebok is in charge of providing market share by emphasizing on their main feature and that is cricket and stylish products well promoted by the celebrities from the music world such as Nelly and Jay Z. PROBLEM STATEMENT Previous research offers no validation that there is a clear relationship of  an improvement of KPI for companies, which participate in M&A transactions, when comparing the figures of the newly merged company, with those of the involved companies separately in case the transaction never happened. The various purposes explained before shows why companies engage in mergers or acquisitions, however, give rise to the presumption that there are positive effects companies benefit from when combining their businesses with those of another carefully selected entity. The overall goal is to get all the necessary info related to the overall situation of the company after merger and to see how the transition went and if the situation at the company is better then before the merger. So the first question is will the new company get a rise in sales and is there a chance to overcome Nike as overall leader in sports brand industry? There’s no such thing as a merger of equals: one company always brings the dominant culture. Smart companies will go out of their way to be protectionist and preserve certain parts of the smaller entity. There may be certain aspects of the culture you want to preserve and value in the firm you’re merging with. Keeping the foundation that made the other company successful must be of essential value. Management absolutely has got to empower people to have a voice in defining what the new corporate culture is going to be. The goal is to find aspects of both cultures that can work in the new combined culture. So basically the second research question would be how the new formed company is going to deal with combining different management values and complexity of joining two corporate cultures? Both Adidas and Reebok went through big financial crises in 90’s so the third and final question would be to investigate what led up to that and what can newly merged company do to avoid that situation. Issues led to big debts to each of the companies involved in this merger and it is of high relevance to research this with big attention. LITERATURE REVIEW To develop a solid answer to the research question, literature review is  necessary and important. Academic literature will help in getting all necessary information to make sure that all the answers have been created properly and that will help in solving the stated problem. The area of Mergers and Acquisitions is a field of great interest to researchers. The will of companies to acquire or merge with another entity is not a new phenomenon as already clearly argued above. There are diverse reasons why a company looks for external opportunities of growth instead of concentrating on its own capabilities of growing organically. Over time, two different tracks of research have developed investigating different aspects and consequences of merger and acquisition transactions. One track is focusing on stock prizes and their fluctuations. This track usually investigates the short-term consequences of mergers and acquisitions around a certain event, which gives it its name: event study. The event can be the announcement of a transaction or the actual transaction date when the deal has not been announced publically before. After all, it does not matter which of the two events will be studied since it is actually the information, which is of importance and priced into the stock and not the event in time like announcement or the actual completion of the deal. The price of the stocks will change the moment investors do change their expectations and take respective actions like going short or long in the securities concerned. Generally, the results of these event studies are that the bidding firms stock prize does fall at the time of the announcement but then recovers shortly after. The stock price of the target firms, in contrast, usually does benefit from the takeover due to the premium, which is normally paid by the acquiring company. Jensen and Ruback (1983) investigate a dozen researches, which are examining event studies during 1956 and 1981. Their overall conclusion is that in those studies the bidding firm does loose while target firms benefit from takeovers. On average, targets do earn 20% when a merger has been announced and up to 30% in case of a tender offer (http://definitions.uslegal.com/m/mergers-and-acquisitions/). In contrast, the companies, which are to acquire do earn just 4% on average in abnormal returns on a tender offer and nothing from merger announcements. Using the cash flow as a measure of economic performance of the investigated companies, Sharma studies the performance of the post acquisition era of the fifty largest companies in the United States between 1979 and 1984. They compare the performance after the merger of the combined new entity with the addition of performance of the companies prior to the merger. Their result is that the more related the two companies prior to the merger have been, more likely it is to have significant performance improvement. Another similar study has been performed by Christian Tuch, which also uses cash flow as determining factor. According to him both acquirers and targets on average earn a lower operating margin on sales prior to the bid (Christian Tuch, International journal of management reviews, The impact of acquisitions, 2007) The intention of the companies is to differentiate their products (Li et al. p.74) from those of their competitors in order to sharpen the brands profile. This leads to the situation that products objectively are still comparable but subjectively for the clients become more difficult to substitute one against each other since it is not just any shoe you buy. Healy and Switzer focus on M&A undertaken in USA. Tuch limits his research on transaction and their consequences to the retail sector in UK. One thing is certain and it is that results vary from case to case. However there are no patterns weather this kind of transaction pay out or not. Switzer uses a larger sample than Healy et al. did and surveys 324 transactions in the US between 1967 and 1987. The performance of the companies involved is measured by the cash flow and it is adjusted by industries average. The author finds that targets and bidders are outperforming its industry benchmarks before and after the merger respectively. METHODOLOGY To generate a research strategy, to collect credible data, the paper will use existing theory to develop hypotheses. Consequently, my research paper will  be based on a deductive research approach. With this approach the theory of the research paper will be proved through collecting quantitative data and explaining the causal relationships between variables (Saunders, Lewis & Thornhill 2009). All the literature previously mentioned in chapter two, will represent the base for this research. It will include the research of all archive with the special attention to databases of New York Public Library, such as EBSCO. Next step would be creating a survey, through which I will have the opinions of the employees at Adidas. Taking this step allows to take in consideration opinions of the employees, which will be better explained in further text. The broader literature on survey methods suggests measures for assessing these response tendencies and some corrections of them. However, these measures and corrections are either not simple, or not adequately used or tested in the context of cross-national survey research. More importantly, there is not much clarity on how, if at all, response tendencies distort survey. This questionnaire will be looking for closed answers by providing different options of answers for people to choose from. First thing that I will do is to contact one of the top management at the Adidas, and get their opinion on the questions, which will be part of the survey. By doing this they will be included in the whole process and I could get their opinion on the matter. Since enough time has passed after the merger occurred the answers I get from the employees will enable me to get better understanding of how everything operates since then. The way I will be communicating with them will be via e-mail and the goal is to get as straight- forward and honest answer as possible. The simplest techniques to reduce socially desirable responding are to assure respondent anonymity, indirect questioning (Fisher, 1993), and to keep some distance between the respondent and the researcher (through a telephone or mail survey). However, even these techniques are unable to fully control socially  desirable responding. One reason might be the strength of the tendency among some respondents. Another reason might be the unintentional tendency to exaggerate the possession of socially desirable traits and behaviors among other respondents. (Chandrasekaran and Tellis, 2010) Good way to attract the attention of intended employees for survey is to before hand explain them the purpose of the research, and what I plan to make out of it. For higher number of responses this will be both on the questionnaire and in the e-mail. The number of participants should be at least 50 so I would have a proper picture of the overall situation. The whole survey will be designed based on the Likert scale, which basically consists of five possible answers. Those are: strongly agree, agree, not sure, disagree and strongly disagree. The questions I would like to ask at this stage would focus on information to the previous state, when the companies were separate entities and now whey they are merged company. Examples of the questions that would be part of the survey are if the company changed the policies related to handling their operations, how the company is performing under new management and how did the company transit from two big rivals to the teammates on the task. The whole proposed research would last for 3 months, because in my personal opinion that’s how long it takes to analyze all the aspects relevant to the matter. The first phase would be to analyze the literature that already exists on the matter so I can get a better understanding of the area. Next step would be designing a survey. This step is going to be easier because interviews stage will clarify the question that need to be answered, and this survey would consist of closed questions with few options to choose from. The whole survey will be in English. When we are talking about the resources there aren’t going to be any financial resources required and the only thing this project would demand is dedication and time. ETHICS Given that any changes that happen in an organization may be influenced by the behavior of the workforce in general, it is necessary for communication to be open open on all channels, thus ensuring that there is much confidence as sense of responsibility in each employee to the company. Having in mind that in every organization there is a supply chain that ends and begins with the client, for this reason it is imperative that any decision is made to ensure that there will be no negative impact to customers. And as it is the case in any chain if one link fails, the entire chain will fail. The client himself is not able identify which of the links failed. Therefore, if a company failed to meet any specific requirement of the customer, the whole chain fails. Eventually they may find another brand that will provide that  product. However this situation is not good for any either side. (Slack, Chambers, Johnston, 2007). The company needs to have a strong culture in order to transmit to all those who in one-way, or another are involved in it: shareholders, directors, employees, suppliers and customers. Although the supply chain helps accelerate to reducing costs, when they are managed with skill, the risks increase when they become more complex. The consequences of failure of a company have an impact when that error more quickly vibrates throughout the supply chain. By integrating commercial collaborations with other firms, one of the most difficult obstacles is to manage expectations and ensure that each of the companies reached. The supply chain is only as strong as its weakest link. REFERENCES Adidas Group: Yearly Report 2007: ‘MSCI World Textiles, Apparel & Luxury Goods’, p.39, Retrieved from www.adidas.com (Accessed January 6th) Arregle J, Hebert L, and Beamish P (2006); Mode of international entry: The advantages of multilevel methods. Management International Review 46(5): 597-618. Capron L, Mitchell W and Swaminathan A (2001); Asset divestiture following horizontal acquisitions: A dynamic view; Strategic Management Journal 22(9), 817-844. Chambers S., Johnston R., Slack N. (2007). Operations Management. 5th ed. Harlow: Pearson Education Ltd. 121-140. Chi, T., (2000); Option to acquire or divest a joint venture; Strategic Management Journal 21(6): 665-687. Child J, Faulkner D and Pitkethly R (2001) The management of international acquisitions: Realizing their potential value. New York: Oxford University Press. Divesh S., (2002); Journal of business finance and accounting, volume 29 Healy, P., Palepu, Krishna G.; Ruback, R., (1992); _Does Corporate Performance improve after Mergers?_ Journal of Financial Economics 31 (3), Jensen, Michael C., Ruback, Richard S.,(2003). _The Market for Corporate Control: The Scientific Evidence_; Journal of Financial Economics Laamanen, T., and Keil, T., (2008) Performance of serial acquirers: Toward an acquisition program perspective. Strategic Management Journal 29(6): 663- 672. Morosini P., Shane S., Singh H., (1998). National cultural distance and cross- border acquisition performance. Journal of International studies, 29(1): P.137-158 Noe T., and Rebello M., (2006) The role of debt purchases in takeovers: A tale of two retailers. Journal of Economics & Management Strategy 15(3): P.609-648 Shaver J (2006) A paradox of synergy: Contagion and capacity effects in mergers and acquisitions. Academy of Management Review, 31(4): P.962-976 Switzer, Jeannette A., (1996). _Evidence on real gains in corporate acquisitions_; Journal of Economics and Business 48 (5) Tuch C.,(2007); International journal of management reviews, The impact of acquisitions, Volume 9(2); P 141-170

Fate And Free Will In Oedipus Rex - 1577 Words

The complex relationship between fate and free will was a common topic explored in ancient Greek plays. Oedipus Rex written by Sophocles survived through the years with such universal questions provoked by the plot. Fate and free will were driving forces woven throughout the play and considerably difficult to distinguish for both characters and the audience. Fate was considered an all powerful force by the individuals in the play. Oedipus challenged the power of fate in favor of his free will seen through his rash decisions, hubris, and choice to live in ignorance. The fate of Oedipus was created by his own free will and was, therefore, deserved. Oedipus changed his own fate before the opening scene of the play. It was his choice to†¦show more content†¦He was not forced to kill his father, King Laios, but his reckless decisions led him to this disgraceful deed. Oedipus believed God and fate alone constructed his horrible end, although his choices started the sequence of unfortunate events. The distressing situations Oedipus suffered, were all created by his own free will. His decisions alone started and ended his appalling fate. Other than impulsiveness, Oedipus’s hubris was his major flaw that contributed to his horrible fate. Oedipus considered himself to be similar to the gods and just as great, so he could not fathom to be anything less than perfect. When the play began, Oedipus spoke to his people about the plague as if he were an all powerful God and creator, â€Å"Poor children? You must be sure I know/All that you longed for in your coming here...Sick as you are, not one is sick as I.†(60-64) By calling the people his children, Oedipus expressed his hubris that made him feel comparable to a Godly creator. His hubris was emphasized when he explained no one suffered as much as him, because he suffered for everyone. Oedipus is never modest in regard to, â€Å"This country,/Where all power and throne are mine† (223-224). Many characters hinted and told Oedipus outright he was the cause of the plague. However, Oedipus disregarded these claims and threatened anyone who spoke against h im. TeiresiasShow MoreRelatedFate And Free Will : Oedipus Rex1841 Words   |  8 PagesFate and free will have many meanings towards what they mean in Oedipus Rex it’s all based on fate and free will. When your whole life is planned out for you it’s usually fate something you can’t avoid or run away from. Fate is played out in Oedipus Rex although free will happens to be your choice of action which happens to be played out in the play. Oedipus pursed information to seek certain knowledge that he should ve just left alone about his identity. Fate is responsible for Oedipus’s incestRead MoreFate And Free Will Vs. 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