Qns

1. Type of merger relevant in this article?
2. It is mentioned that MAS is considering mergers as the industry is struggling as it is coping with high fuel costs and softer demand. How would a merger help?
3. And the article seems to suggest that big is the way to go / in order to survive, the airlines must consolidate / merge. Another evidence to support this assertion is the inclusion of the part about 4 budget airlines collapsing. So, is being big necessary for survival?
4. But to MAS, which reason for the merger is more impt? Cost or revenue? Use data to justify.
5. What does it mean by ‘over-capacity? What has it got to do with over-crowding?
6. What is ‘code-sharing’ and how does it overcome the problem of ‘over-capacity’?

Further research:
1. Why is the airline industry facing ‘softer demand’?

Economics Article Review - Rising Grain Prices

Click to enlarge

BILL GATES!

Wahahaha I LOL'd when I saw this cartoon:


For those who don't understand, PEARLY GATES is, in Christian context, the gateway to heaven. What does the cartoon imply by replacing PEARLY with BILL....? :D

STRONG NAMES BEAT THE MARKET

I highly recommend this article cos it is closely related to branding and advertising in relation to the market!Take a look yourself!


STRONG NAMES BEAT THE MARKET


By Salamander Davoudi
Friday, April 25, 2008


Branding
is becoming ever more important as companies face an increasingly global and competitive marketplace.
Millward Brown Optimor's third annual ranking of the world's top 100 most powerful brands is based partly on WPP's Brandz database, which covers more than 50,000 of them. It found that the world's top 100 brands have a total value of about $1,900bn, equivalent to the GDP of Italy.
“Brand is becoming more and more important,” says Joanna Seddon, chief executive of Millward Brown Optimor. “Technology brands have done very well this year, Google and Apple are in the top 10. For the second year running Google is the world's most valuable brand.


“Some of the world's most successful companies are successful because they built their brand along with the business,” she adds. “Orange is a good example of that. They invested in the brand before they even had a business.”
But Millward Brown Optimor has also been measuring the effects of brand on stock market performance – an area where little research has been done. It has created a “Brandz” portfolio incorporating all the brands in its top 100 survey that it was possible to invest in.
The brands had to be public limited companies with liquid stock. The portfolio returns were measured in US dollars so the results are subject to currency effects.
The Brandz portfolio is benchmarked against the S&P 500 as this exchange mirrors its composition most closely – large and small caps, industry and international exposure.
“We didn't use the FTSE, as eight of the world's top brands are in the US so it would be skewed by currency effects,” says Malte Nuhn, senior consultant at Millward Brown Optimor.
Not all companies received equal investment at the onset of the portfolio. There was a higher investment in companies with stronger brands and those whose branded businesses were a larger part of the group.
Millward Brown also isolated the stronger brands into a separate portfolio – those that have a brand contribution above 30 per cent (in the rankings the brand contributions are indexed but in fact they are percentages). This “Strong Brands” portfolio incorporates around two-thirds of the world's top 100 brands.
On April 3, the S&P had risen 3 per cent over 12 months, the Brandz Top 100 portfolio was up 15 per cent and the strong brands portfolio was up 22 per cent.
On December 31 last year the S&P was up 11 per cent, the Brandz Top 100 portfolio was up 25 per cent and the strong brands portfolio was up 34 per cent.
The Millward Brown study showed that products and companies with strong brand value enjoyed markedly stronger returns in good times and also during the recent market downturn.
Hayes Roth, chief marketing officer of Landor Associates, the consultancy, says: “There is remarkable consistency between strong brand value and stock performance.”
“Brand power can be significantly linked to stock market strength, adding on average – and depending on category – more than 25 per cent market value to an organisation.”
Ms Seddon believes that the drivers behind this outperformance include the fact that strong brands can more readily increase their revenues and market share. This is because people are more attracted to the products and are more likely to be loyal to them.
“You also may have the possibility of achieving a price premium,” adds Mr Nuhn. “Apple's products sell for roughly 20 per cent more than equivalents from rivals, which will affect margins.”
But there are plenty of examples of strong brands hitting nasty bumps in the road.
“Look at Starbucks. You can do a world class job of building brands and do everything right but when you rapidly expand your global footprint it is hard to maintain what made the brand great in the first place. They over-extended themselves,” says Mr Roth.
“McDonald's suffered with the Americanisation of the world but they went back and reinvented themselves and they have moved up the list,” he adds.
Studies have shown that a strong brand affects not only demand but also the supply chain. For example, if you have a strong brand such as Goldman Sachs or Microsoft it is easier to attract top graduates from business schools.
“You can pay them less and they will stay longer, you can get better terms with suppliers. If you have a strong brand and invest in new products or markets you can get somebody else to take your investment risk,” says Ms Seddon.
There are no global brand funds to date, although Millward Brown Optimor says its study has generated a lot of interest from the fund management community who have mooted the idea of creating a global brand fund where they would use the data as a basis for stock picking.
Mr Roth says: “Look at the Optimor study. If you had picked the top five you would have done OK. Of the top 100 brands there is a lot of jockeying up and down because there are other things that affect performance.”
“But strong brands will see you through and leave you in a far better place. A global brand fund would be a long-haul investment, it ought to look like a blue chip fund. It would be terrific to see. There is certainly a lot of interest.”

What is the true cost of the China price?---PART 2

What is the true cost of the China price?


By Alexandra Harney
Tuesday, April 15, 2008

In
a new book, The China Price: The True Cost of Chinese Competitive Advantage, journalist Alexandra Harney describes the practices used by unscrupulous companies in China to extract greater profits from their western partners, to the detriment of their own employees and western consumers alike. The result is unsafe working conditions, a polluted environment – and the goods that reach the hands of Western consumers are often badly made and sometimes downright dangerous.
Not all of Chinese manufacturing should be measured by this yardstick, but Ms Harney raises serious questions. How aware are western companies of the “shadow factories” that lurk behind the show factories foreign visitors see? Can the west cure its addiction to cheap goods? Are the good actually cheap, when the real environmental and economic costs are taken into account? And who has the power to change things – consumers, Beijing, provincial governments?
------------------------------------------------------------------


I get the distinct impression that China knows it is in a strong position and hence can flex its economic and political muscles to get what it wants - at the expense of the wellbeing of its own people, the quality of its exports and the rest of the world. Do you think that the London and Paris protests linked to Tibet and the Olypmics have in any way made China think they have a reputational risk they have to manage?Mani Pillai, London
Alexandra Harney: I believe it's important to see these issues from China's perspective. When China exports its goods overseas, it's not trying to flex its muscles, it's trying to help its economy develop and raise the standard of living of its people. The quality problems, in my opinion, are a reflection of a combination of factors: the lack of law enforcement in China, the pursuit of ever-lower prices and faster delivery times by international buyers, the level of complexity of international supply chains, and the desire of various people within those supply chains to save money where they can.
Separate to that, I am sure that the protests in London and Paris have given officials in Beijing pause, and it will be very interesting to see how they respond.
.....................................................................................................................
How can socially responsible investors begin to discount the price of externalities (pollution, carbon emissions, etc) that should be considered the true costs of Chinese production?Joseph Basralian, New York, NY
Alexandra Harney: I think all investors - not just the socially responsible ones - should be asking more questions of the companies they invest in. There is much more to be learned about the hidden environmental and labour costs that are not yet fully accounted for, whether it be the emissions from the factories that they are using or the amount of overtime they are having suppliers' employees work. The answers to questions about conditions in factories provide excellent insight into the way a company operates as well as the amount of potential hidden costs in the supply chain. And asking these questions has the added benefit of encouraging greater transparency among listed companies.
.....................................................................................................................
China, besides paying ridiculously low salaries, practises on some items dumping and produces with no regulations on pollution etc, making fair competition impossible. Don't you think that the only way to protect protection against cheap imports from China is imposing import duties, as the US is already doing? Roberto Castellano, Salsomaggiore, Parma, Italy
Alexandra Harney: I agree that it is very difficult indeed for other countries to compete with a country that doesn't adequately enforce its labour or environmental laws. But it is also the nature of modern supply chains and capitalism that companies will move their orders to the country with the lowest overall costs, as we see happening today as costs rise in southern China. If one country erects import barriers against another, cheaper country, companies will move their orders to the next cheapest country.
If the aim is to protect and nurture industry in one country, say the US or Italy, then import duties seem to me a short-term solution. Far better to think creatively about how to strengthen the competitive advantage of US or Italian industry, given the reality that another developing country is always waiting in the wings to produce goods at low prices.
.....................................................................................................................
What happens when China can no longer compete on cost? Having driven down to nil the job prospects of factory workers in late industrializing countries, will the Chinese worker join the queue of global, urban, jobless poor unable to afford rising living costs or, will there always be a supply of rural-urban migrant willing to take the lowest global wage? Will the State use its surplus to provide? Will domestic growth take up the slack?Jimmy Greer, London, UK
Alexandra Harney: This is a fascinating question because to a certain extent, this is already happening in southern China. Thousands of factories are closing in southern China's Guangdong province because of the combination of the appreciation of the renminbi, the rise in raw material costs, increasing wages and a new labour law.
So far, workers in southern China displaced by these closures seem to be having little trouble finding work: with the economy growing at double-digit rates, there are plenty of jobs to go around. And today, as you mention, there are still plenty of migrants coming out of the countryside into the cities to look for work.
However, in the future, demographic shifts already underway will have a big impact on what is happening within China's factories and the Chinese economy generally. The supply of young workers is slowing as a result of the country's ”one child” policy instituted in 1979. Many of the Chinese migrant workers in their 20s I met during the research for my book wanted to get out of the factories and do something else. They wanted higher wages, better treatment and skills, rather than just money for food. I believe this ”Generation Y” will shape the prospects of Chinese workers in the future.
.....................................................................................................................
Given that China is looking to increase agricultural production and already has grain reserves of 200 million tonnes, we can expect it to corner further export markets for foodstuffs. That being the case what can the west do to guarantee the safety of such food after, for example, the recent cases of food poisoning in Japan linked to Chinese dumplings that were laced with insecticide?Tony Makara, Manchester, UK
Alexandra Harney: China needs to look carefully at its food safety, as it has already started to do, if it wants to take an even larger role as an exporter of food, and particularly if it wants to export more expensive foodstuffs. But countries that import food should also look at improving their inspections, which could well add to the cost of food.
.....................................................................................................................
At the beginning of 2008, the price of things increased quickly in China. What do you think about this? And do you think the government can make the situation better?Li Dengfeng, Guangzhou, China
Alexandra Harney: You're absolutely right that things are getting more expensive in China very quickly. I think some of this relates to the extraordinary growth of the Chinese economy, and all of the money that has come into the country. There are clearly also some one-off events, such as the snowstorms earlier this year, that affected prices of everything. I know from talking to Chinese friends that rapid inflation is having a real impact on people's lives by making the products they use every day more expensive.
In addition to what it means for the Chinese economy and ordinary Chinese people, the question that fascinates me is how China's inflation will affect the rest of the world, which it is starting to do. We are already starting to see prices for Chinese-made goods rise in the US. From talking to factory managers in China and buyers of Chinese products, my sense is that this is only the beginning. Prices of goods from China will be rising for years to come.
.....................................................................................................................
China has some industrial companies, factories and mines that are illegal for central government, but sometimes supported by local or provincial authorities, with costs for human lives, the environment and so on. How important is this illegal economy in China?Marco Antonio Tourinho Furtado, Ouro Preto Federal University, Brazil
Alexandra Harney: There are indeed illegal companies and mines in China that enjoy the support of local officials - this is an issue that the central government has acknowledged and is trying to crack down on, particularly among the mines. You're absolutely right that these factories can have very dangerous working conditions and serious environmental issues.
I saw both illegal mines and illegal factories in China, and it would be very difficult to quantify their role within the larger economy. But people I spoke to in industrial areas said that ”shadow factories” or illegal subcontractors were very common, and in the mining areas, everyone knew there were illegal mines in the hills nearby.
I believe it's really important to understand that the people operating both the factories and the mines are ordinary human beings like you and me, just trying to make a better life for their children. People operate ”shadow factories” for the same reason they operate legal subcontractors - to cut costs. And illegal mines exist in part because there is such a voracious demand for coal, and so much money to be made in the process.
.....................................................................................................................
About the expert: Mandarin-speaker Alexandra Harney has been writing about Asia for a decade. From 2003 until 2006, she was the FT's South China correspondent and has also written for The Wall Street Journal, Far Eastern Economic Review and CNN.com.

What is the true cost of the China price?---PART 1

What is the true cost of the China price?


By Alexandra Harney
Tuesday, April 15, 2008

In
a new book, The China Price: The True Cost of Chinese Competitive Advantage, journalist Alexandra Harney describes the practices used by unscrupulous companies in China to extract greater profits from their western partners, to the detriment of their own employees and western consumers alike. The result is unsafe working conditions, a polluted environment – and the goods that reach the hands of Western consumers are often badly made and sometimes downright dangerous.
Not all of Chinese manufacturing should be measured by this yardstick, but Ms Harney raises serious questions. How aware are western companies of the “shadow factories” that lurk behind the show factories foreign visitors see? Can the west cure its addiction to cheap goods? Are the good actually cheap, when the real environmental and economic costs are taken into account? And who has the power to change things – consumers, Beijing, provincial governments?
------------------------------------------------------------------


I get the distinct impression that China knows it is in a strong position and hence can flex its economic and political muscles to get what it wants - at the expense of the wellbeing of its own people, the quality of its exports and the rest of the world. Do you think that the London and Paris protests linked to Tibet and the Olypmics have in any way made China think they have a reputational risk they have to manage?Mani Pillai, London
Alexandra Harney: I believe it's important to see these issues from China's perspective. When China exports its goods overseas, it's not trying to flex its muscles, it's trying to help its economy develop and raise the standard of living of its people. The quality problems, in my opinion, are a reflection of a combination of factors: the lack of law enforcement in China, the pursuit of ever-lower prices and faster delivery times by international buyers, the level of complexity of international supply chains, and the desire of various people within those supply chains to save money where they can.
Separate to that, I am sure that the protests in London and Paris have given officials in Beijing pause, and it will be very interesting to see how they respond.
.....................................................................................................................
How can socially responsible investors begin to discount the price of externalities (pollution, carbon emissions, etc) that should be considered the true costs of Chinese production?Joseph Basralian, New York, NY
Alexandra Harney: I think all investors - not just the socially responsible ones - should be asking more questions of the companies they invest in. There is much more to be learned about the hidden environmental and labour costs that are not yet fully accounted for, whether it be the emissions from the factories that they are using or the amount of overtime they are having suppliers' employees work. The answers to questions about conditions in factories provide excellent insight into the way a company operates as well as the amount of potential hidden costs in the supply chain. And asking these questions has the added benefit of encouraging greater transparency among listed companies.
.....................................................................................................................
China, besides paying ridiculously low salaries, practises on some items dumping and produces with no regulations on pollution etc, making fair competition impossible. Don't you think that the only way to protect protection against cheap imports from China is imposing import duties, as the US is already doing? Roberto Castellano, Salsomaggiore, Parma, Italy
Alexandra Harney: I agree that it is very difficult indeed for other countries to compete with a country that doesn't adequately enforce its labour or environmental laws. But it is also the nature of modern supply chains and capitalism that companies will move their orders to the country with the lowest overall costs, as we see happening today as costs rise in southern China. If one country erects import barriers against another, cheaper country, companies will move their orders to the next cheapest country.
If the aim is to protect and nurture industry in one country, say the US or Italy, then import duties seem to me a short-term solution. Far better to think creatively about how to strengthen the competitive advantage of US or Italian industry, given the reality that another developing country is always waiting in the wings to produce goods at low prices.
.....................................................................................................................
What happens when China can no longer compete on cost? Having driven down to nil the job prospects of factory workers in late industrializing countries, will the Chinese worker join the queue of global, urban, jobless poor unable to afford rising living costs or, will there always be a supply of rural-urban migrant willing to take the lowest global wage? Will the State use its surplus to provide? Will domestic growth take up the slack?Jimmy Greer, London, UK
Alexandra Harney: This is a fascinating question because to a certain extent, this is already happening in southern China. Thousands of factories are closing in southern China's Guangdong province because of the combination of the appreciation of the renminbi, the rise in raw material costs, increasing wages and a new labour law.
So far, workers in southern China displaced by these closures seem to be having little trouble finding work: with the economy growing at double-digit rates, there are plenty of jobs to go around. And today, as you mention, there are still plenty of migrants coming out of the countryside into the cities to look for work.
However, in the future, demographic shifts already underway will have a big impact on what is happening within China's factories and the Chinese economy generally. The supply of young workers is slowing as a result of the country's ”one child” policy instituted in 1979. Many of the Chinese migrant workers in their 20s I met during the research for my book wanted to get out of the factories and do something else. They wanted higher wages, better treatment and skills, rather than just money for food. I believe this ”Generation Y” will shape the prospects of Chinese workers in the future.
.....................................................................................................................
Given that China is looking to increase agricultural production and already has grain reserves of 200 million tonnes, we can expect it to corner further export markets for foodstuffs. That being the case what can the west do to guarantee the safety of such food after, for example, the recent cases of food poisoning in Japan linked to Chinese dumplings that were laced with insecticide?Tony Makara, Manchester, UK
Alexandra Harney: China needs to look carefully at its food safety, as it has already started to do, if it wants to take an even larger role as an exporter of food, and particularly if it wants to export more expensive foodstuffs. But countries that import food should also look at improving their inspections, which could well add to the cost of food.
.....................................................................................................................
At the beginning of 2008, the price of things increased quickly in China. What do you think about this? And do you think the government can make the situation better?Li Dengfeng, Guangzhou, China
Alexandra Harney: You're absolutely right that things are getting more expensive in China very quickly. I think some of this relates to the extraordinary growth of the Chinese economy, and all of the money that has come into the country. There are clearly also some one-off events, such as the snowstorms earlier this year, that affected prices of everything. I know from talking to Chinese friends that rapid inflation is having a real impact on people's lives by making the products they use every day more expensive.
In addition to what it means for the Chinese economy and ordinary Chinese people, the question that fascinates me is how China's inflation will affect the rest of the world, which it is starting to do. We are already starting to see prices for Chinese-made goods rise in the US. From talking to factory managers in China and buyers of Chinese products, my sense is that this is only the beginning. Prices of goods from China will be rising for years to come.
.....................................................................................................................
China has some industrial companies, factories and mines that are illegal for central government, but sometimes supported by local or provincial authorities, with costs for human lives, the environment and so on. How important is this illegal economy in China?Marco Antonio Tourinho Furtado, Ouro Preto Federal University, Brazil
Alexandra Harney: There are indeed illegal companies and mines in China that enjoy the support of local officials - this is an issue that the central government has acknowledged and is trying to crack down on, particularly among the mines. You're absolutely right that these factories can have very dangerous working conditions and serious environmental issues.
I saw both illegal mines and illegal factories in China, and it would be very difficult to quantify their role within the larger economy. But people I spoke to in industrial areas said that ”shadow factories” or illegal subcontractors were very common, and in the mining areas, everyone knew there were illegal mines in the hills nearby.
I believe it's really important to understand that the people operating both the factories and the mines are ordinary human beings like you and me, just trying to make a better life for their children. People operate ”shadow factories” for the same reason they operate legal subcontractors - to cut costs. And illegal mines exist in part because there is such a voracious demand for coal, and so much money to be made in the process.
.....................................................................................................................
About the expert: Mandarin-speaker Alexandra Harney has been writing about Asia for a decade. From 2003 until 2006, she was the FT's South China correspondent and has also written for The Wall Street Journal, Far Eastern Economic Review and CNN.com.

A GLOBAL APPROACH IS REQUIRED TO TACKLE HIGH FOOD PRICES

A GLOBAL APPROACH IS REQUIRED TO TACKLE HIGH FOOD PRICES


By Dominique Strauss-Kahn
Tuesday, April 22, 2008

High
food prices are today a serious humanitarian concern. They are also a source of macroeconomic instability affecting budgets, trade balances and, of course, incomes almost everywhere in the world.
Global rice prices have increased more than 50 per cent so far this year and most other food prices are up sharply. As the global economy slows, the prices for all kinds of commodities are moving up – the opposite of what we would ordinarily expect. In part this reflects strong demand from emerging markets. But financial turmoil has also increased the attractiveness of commodities as an asset class.
Experts expect short-term commodity prices (including oil and food) to rise even further. The result would be a devastating blow for the world's poorest, who often spend more than half of their income on food.



We must not stand idly by. Unless we act now, the world faces a downward spiral of trade restrictions, higher prices for staples and starvation. The World Food Programme urgently needs additional funds and supporting its well-run programmes to feed the poor is a moral and economic imperative.
Although aid is the first step, we must be bolder in tackling the long-term challenges of food supply.
Many farmers are not increasing output because they are not equipped to gear up production or because market distortions mean they do not benefit from higher food prices. So, just waiting for the market to self-correct is not a satisfactory option.
We must not lose sight of longer-term solutions. This calls for a more global approach to policies. Agricultural policies must change. Higher food prices over the past few years in part reflect well-intentioned, yet misguided policies in advanced economies, which attempt to stimulate biofuels made from foodstuffs through subsidies and protectionist measures.
High food prices also reflect imprudent agricultural pricing policies in some developing countries, and these too need to be improved.
No one should forget that all countries rely on open trade to feed their populations. But we are already seeing actions at the national level, such as curbs on food exports, that have a damaging global impact. Completing the Doha round would play a critically helpful role in this regard, as it would reduce trade barriers and distortions and encourage agricultural trade.
The International Monetary Fund and the World Bank are also engaged in discussions to improve both industrial and developing country policies. Multilateral agencies are stepping up lending to the agricultural sector in poorer and middle-income countries to encourage and support good policies. But there is more to do, and the World Bank's New Deal on Global Food Policy is a big step forward.
We also need a new approach to risk mitigation and insurance at the level of both individual farmers and countries. Important steps are being made in this direction by aid donors with regard to catastrophe insurance and developing robust futures markets. This can greatly help assure farmers that, if they make investments, they will reap the rewards.
We should consider adopting a similar philosophy to dealing with shocks – including, but not limited to, energy and food prices – at the macroeconomic level. Countries need to feel more assured that insurance-type financing will be available in times of need. The IMF will play its part in this regard.
For countries hit by food trade shock, the IMF stands ready to provide rapid financial support to address balance of payments needs. And we are ready to review our loan facilities to ensure that they are responsive to this kind of problem.
We have a moral responsibility to get food into the hands of poor people. The world can afford it and global co- operation can deliver the macro- economic framework and incentives needed to address the problem in a lasting manner.
The writer is managing director of the International Monetary Fund

LONDON INCREASES ITS LEAD IN LUXURY PADS

LONDON INCREASES ITS LEAD IN LUXURY PADS


By Daniel Thomas, Property Correspondent
Tuesday, April 22, 2008

The
rich are getting richer, propelling a big rise in the cost of luxury homes in the capital that contrasts starkly with falling house prices elsewhere in the market.
According to today's 2008 wealth report from Citi Private Bank and Knight Frank, London is the most expensive city in the world to buy luxury residential property. Price growth last year easily outpaced that of rivals such as Monaco.
With the ranks of dollar millionaires across the world swelling by more than 300,000 in 2007, more cash than ever is being lavished on super-luxury properties. Such homes are equipped with the latest gadgets and ultra-tight security.



Although more luxury residential properties are coming on to the market from specialist developers such as the Candy brothers, prices in London barely slowed last year.
The average price of a luxury pad in London rose 29 per cent to €46,000 (£36,500) per square metre in 2007, the report says.
The number of £10m-plus sales in Chelsea, Knightsbridge and Belgravia in the six months to January 2008 was 190 per cent higher than in the same period a year earlier.
Surrey, Buckinghamshire, Hampshire and Berkshire are now among the top 35 most expensive property areas in the world.
The fact that these rub shoulders with more exotic locations such as the C?te d'Azur, Milan and Barbados attests to the strength of the bull run in house prices in the UK during the past decade.
The average increase in capital values of prime property globally was 11 per cent in 2007.
But the report says price growth for high-end residential property around the world has slowed and it records a drop in price in certain prime locations.
In Dublinprices of luxury property dropped by 15 per cent in 2007. There were also falls in Ibiza and in prime US locations such as Palm Beach, Florida, and San Diego, California.
The US was generally more subdued than elsewhere in the world.
One of the authors of the report, Liam Bailey of Knight Frank, warned that the good times could be coming to an end for the high-end property markets, in the short term at least.
“There has been a slowdown coming and we now expect prices to begin to fall in the UK, US and beyond following the boom in prime properties in the developed world over the past few years,” Mr Bailey said.
There had been little real impact on prices in global cities yet, however, and property remained a sound investment for the longer term, he said.
The nearest city to London in terms of price last year was Monaco, where values reached €43,750/sq m, and France's St-Jean-Cap-Ferrat, which saw one of the highest increases in price of 39 per cent to €43,490/sq m.
In these three areas, €1m would buy a small top-end studio flat – the same cost as a five-bedroom mansion in cities in China such as Guangzhou and Shanghai.
But it is in these emerging market cities that some of the strongest growth in house prices is taking place. Prime house prices in Guangzhou rose 28 per cent during the period.
St Petersburg and Moscow, where the rate of growth in 2007 was 38 per cent and 35 per cent respectively, benefited from a combination of increasing affluence and a lack of supply.

RISE OF MACHINES AND MOBILE TECHNOLOGY

RISE OF MACHINES AND MOBILE TECHNOLOGY


By Peter Walshe
Thursday, April 24, 2008

The
level of loyalty or “bonding” (the key metric that helps determine the brand contribution) of the current top 100 most powerful brands is more than twice that of the average brand. This is the same as we saw 10 years ago, showing that the relationship consumers have with brands is as important as ever.
The brand with the highest bonding this year is also the most valuable – Google with 45 per cent. In 1998, this honour went to Gillette (48 per cent) which still has one of the highest bonding scores, showing the power and endurance of a strong, well-managed relationship with consumers. But it also illustrates the shift from grocery and personal care brands to technology.
Looking at the top 20 bonded brands across 20 countries and comparing the findings of 10 years ago we can see this distinct shift in consumer priorities.



The number of technology brands has more than doubled, including the shift of telecommunications brands to wireless. In 1998, mobile phone penetration rates in many western countries were less than 50 per cent and computers were still a significant investment for a family.
Today in most western markets mobile phone penetration is in excess of 100 per cent and a new laptop can be purchased for little more than a couple of days' average pay – if it is not actually given away as an incentive for some other purchase. In emerging markets there are millions of potential consumers with the desire, the need and the income for technology.
Ten years ago most consumers had not even heard of Google, today's number one, or BlackBerry, this year's fastest riser and top new entrant. Now it is common to see BlackBerry users accessing the internet and searching with Google on the move in many parts of the world. It is therefore not a surprise to see technology brands are worth 52 per cent more on average than other brands in the top 100.
We seem to be more health conscious – the bottled water segment of the soft drinks market has boomed over the last decade. However it will be interesting to see how much the growing concern about the environmental impact of bottled water affects the category.
Health takes second place to convenience for some – we have seen an increase for fast food brands – but legislative pressure on advertising and labelling and self-regulation on health issues is likely to spread, affecting much of what we might like to eat and drink. This may eventually change our attitude to and relationship with key brands.
There are fewer financial services brands represented among the top bonded brands than 10 years ago and even those financial brands in the top 100 have lost a quarter of their bonding. The negative press on the sub-prime lending crisis and on financial probity may exacerbate this. A look across the Brandz data shows that consumers are nearly half as likely to tell others about financial services than almost any other type of brand, but that they are more likely to listen out for information about them. The implication is that consumers are primed to watch for negative finance stories.
Our analysis shows that one of the main barriers to bonding with financial services brands is a lack of trust, in both developed and emerging markets.
We have learnt that the top brands' success comes from four key areas:
•Strong business basics
•Clarity of brand associations
•Projected leadership
•A great product experience
Most of the brands in the rankings have strong business basics, usually backed by a strong corporate culture. GE, IBM and McDonald's (with its latest initiative to provide recognised academic qualifications for its staff) are all good examples.
The second crucial element is that the brand stands for something. The most successful brands are very clear about what they offer the consumer.
Gillette is “the best a man can get”; L' Oreal is “because you're worth it” and “for everything else there's Mastercard”.
These are the convenient handles consumers need to choose between brands.
The third criterion is whether a brand acts like a leader in its category. A brand needs to demonstrate leadership in a relevant way. Perhaps there is something in the innovation or product style or how the brand interfaces with the customer that sets it apart and drives perceptions. Nokia, Porsche and, of course, Google have these qualities in spades.
Finally, a strong brand needs to deliver on its promise through a consistently good experience – preferably a great one. BMW's driving experience, BlackBerry's ubiquitous convenience for mobile professionals and Zara's delivery of tailored fashion at affordable prices all get users talking.
As Hayes Roth, chief marketing officer at leading branding and design business Landor Associates, observes: “In the end, all the fine promises and business and marketing acumen come down to one simple question: does my actual experience with the brand meet or exceed my expectations?”
“It is no coincidence that virtually all of the Brandz top 20 most valuable brands invest heavily in providing consistently superior product, service and retail brand design as the most tangible and compelling expression of a positive brand experience.”
Innovation and revitalisation allied to a clear brand promise, delivering a great experience backed up by a sound and ethical corporation – that is the route to continued financial success.

Wah! Liu Hao... v chiem...

Any one wants to comment?

Here's my contribution... hinting about the 'evils' of subsidies.

Enjoy!

jtengara

Is perfect competition always a more desirable market structure than monopoly?

Perfect competition (PC) is a market structure where there a large number of buyers and sellers such that no individual buyer or seller can influence demand, supply or price. All firms sell homogeneous products. The firm is a price taker. Marginal revenue (MR) equals average revenue (AR) which is also equal to price. There is perfect information and free entry and exit into the market due to perfect mobility of resources.

On the other hand, there are many buyers but only one seller in monopoly. The monopoly sells a unique product which has no close substitutes. It is a price maker and can affect price or output but not both.


When evaluating which is a more desirable market structure, we should consider their economic efficiency. Resources are said to be allocated efficiently when no one can be made better off without making one other person worse off. From society’s point of view, this occurs at the socially ideal level of output. Efficiency in allocation of resources is known as pareto optimality or pareto efficiency. This can be attained when both productive and allocative efficiency are achieved

Productive efficiency requires that whatever output is being produced, it is being produced at the lowest possible costs. A firm is said to be productive efficient if it produces at the minimum point of its long-run average cost (LRAC) curve. Under this situation, there is efficient allocation of resources, all economies of scale are realized and all diseconomies of scale are avoided. When the firm allocates resources at the most efficient manner possible, full productive efficiency is attained.

PC firms can achieve at productive efficiency as it can produce at the P=AR=minimum point of LRAC=minimum point of short run average cost curve at long run equilibrium. Under such a situation, it incurs the lowest cost possible and utilities plant size at the optimum. Consumers pay the lowest possible price possible as only normal profits can be made in the long run.

However, the monopolist can make supernormal profits in the long run. But it can never achieve productive efficiency as it can never produce at the minimum point of its LRAC. Instead, it always produces at the falling portion of LRAC, when it is making normal profits. Hence, it can never achieve optimum level of output. Equilibrium price is at OPe and equilibrium output is at OQe, which is less than the optimal level. There is excess capacity.


Harvey Leibenstein states that the term x-inefficiency is associated with inefficiency such as overstuffing, inability to keep up-to-date technologically and to the slack management of monopoly firms. This means that the firm produces at a cost greater than the lowest possible costs. Due to absence of competition from rivals, the monopolist may not be forced to produce at the lowest possible costs. Hence, x-inefficiency may result in productive inefficiency.

If a firm produces at an average cost of AC1, when it ought to produce at the lowest possible costs at AC0, there is x-inefficiency. Comparatively, PC firms do not face this problem.

Allocative efficiency refers to price (P) = marginal cost (MC). This means society’s valuation of the last unit of goods is equal to the opportunity cost of producing the good. There is no allocative allocation of resources and resources are used optimally to meet consumers’ demand. Society’s welfare is at maximum.

A PC firm can achieve allocative efficiency. However, due to its downward sloping demand curve, the monopolist cannot produce at the point P=MC. Price is greater than MC instead. Thus, it cannot achieve allocative efficiency.

Assuming constrained costs and producing at MC=MR, the monopolist produces at OPm and OQm. There is a dead weight loss of ABE which comprises of loss of consumers and producers’ surplus which is not gained elsewhere.

For the PC industry, MC is the summation of all the PC firms. Hence, where it costs AR, it is the market price. Thus, equilibrium price is at OPc and equilibrium output is at OQc.

Comparing the two, the monopolist equilibrium output is lesser but the price is higher than that of PC. Thus it can be said that the consumer actually benefit less from the monopoly than PC as it, actually pays more but obtain less of the goods. Moreover, productive and allocative efficiency can be achieved under PC but not under monopoly. However, this does not imply that the monopoly is always a less desirable market structure than PC in certain aspects and the PC does have its shortcomings.

The PC firms are small and cannot reap internal economies of scale. However, the monopoly can produce at larger output and reap internal economies of scale. Thus it can lower its MC curve and shift it to MC. Hence, it is possible for it to produce at a lower price (OPs) and larger output (OQs) than PC.

Moreover, monopolies sometimes do produce out in interest of the public. Natural monopolies such as those providing water and electricity can produce at high output and charge a lower price.

Moreover, PC firms may not entail the use of the most efficient productive techniques due to its small size and inability to make supernormal profits in the long run. Thus, this market structure is not conducive for the improvement of existing products or the creation of new ones.

On top of that, pareto optimality can only be achieved under PC when there are no externalities present. The profit seeking activities of producers will bring about allocation of resources that is considered efficient at MC=MR only if marginal costs embodies all forms of costs incurred and price reflects all the benefits that are obtained from the good’s production only when at MC=MR will total sacrifices balance all satisfaction and society’s welfare is at maximum. If tiny external costs or benefits are not reflected by the price system, then production at MC=MR will not result in efficient allocation of resources.

In conclusion, there is no one model that is superior to the other. Thus it cannot be said that PC is always a more desirable market structure than monopoly. Each market structure has its own strengths and weaknesses and each benefits society to a certain extent.

SS' DD' Cartoon

My first post: Demand Versus Supply.

YOUTUBE VIDEOS ON ECONS CONCEPTS (:

I shall be the first one to start posting on some youtube videos I found, explaining our everyday econs concepts. All by the same guy, lol.

PED - Part 1!


PED- Part 2!


Is Monopoly bad?


Objectives of Firms

Humanities Week 2008
Economics Blog: C1 Inter-CT Competition

7 April 2008 to 23 May 2008

Blog entries can include:

• Review of interesting economic articles from journals or internet
• Economic jokes/cartoons that illustrate certain economics concepts
• Video clips depicting certain economic concepts
• Q & As "forum-like" postings on views and comments that are economics related among class members
• Any other relevant economics postings that will enhance the class's blog (i.e. ILP work, etc)

Class members:

• Direct involvement in design of blog - template, content, updating and so on.
• Actively participate in the blogging activities

Judging criteria:

• Content and relevance (Application of Concepts) : 50%
• Activate and Consistent Class Participation : 30%
  (This component of the marks will also contribute to your individual class participation marks which is part of the Continual Assessment)
• Creative use of multimedia (e.g. flash,music, photographs): 20%

Prizes:

• Best blog will receive a cash voucher of $200. Next 2 best blog will receive a cash voucher of $100 each.
• Results announced on 25 july.

Finished reciting whatever needs to be said.

So, how to post on this blog. You can post via the class account which I have just created, will inform you all with regards to the username and password soon. Other than that, you can send me an email with your gmail account so that i can add you as one of the blog adminstrators which makes blogging much easy.

SO GET BLOGGING EVERYONE, for the $200 and your class participation points economics :D :D :D

-jonneo