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Article
Publication date: 1 February 1999

Brendan Phillips and Peter Sanders

Service industries, such as public bus transport, are time‐bound, which makes it impossible to inventory their service output. The potential revenue from an empty seat on…

Abstract

Service industries, such as public bus transport, are time‐bound, which makes it impossible to inventory their service output. The potential revenue from an empty seat on a bus is lost for good once the service run is complete. Conversely, when demand for a seat on a service run exceeds supply, the revenue is also lost. As public bus transport has a high fixed to variable cost ratio, these demand and supply imbalances have a significant impact on cost recovery performance. Addresses a number of factors that influence the cost recovery performance of public bus transport using data from one of Australia’s largest operators. It considers the shortcomings of current fare price structures and how these may be changed to reflect operational cost drivers in a way that improves cost recovery performance. The various non‐monetary costs passengers incur when purchasing and using public transport are also considered along with methods of reducing these to increase the revenue‐generating performance of operators’ fixed capacity.

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Journal of Product & Brand Management, vol. 8 no. 1
Type: Research Article
ISSN: 1061-0421

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Servitization Strategy and Managerial Control
Type: Book
ISBN: 978-1-78714-845-1

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Review of Marketing Research
Type: Book
ISBN: 978-0-85724-728-5

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Book part
Publication date: 19 April 2017

Catherine Thomas

This paper shows that consumer preference heterogeneity affects whether multinational firms serve local markets via imports or local production. Firms are least likely to…

Abstract

This paper shows that consumer preference heterogeneity affects whether multinational firms serve local markets via imports or local production. Firms are least likely to choose local production over imports for product varieties that have relatively inelastic demand because transport costs have a smaller impact on the firm’s local profits for these products. The results suggest that there is complementarity between centralized production, with local market access via imports, and strategies that maintain low price elasticities at the brand level, such as advertising and within-brand product proliferation. A partial equilibrium study of the laundry detergent industry in Western Europe illustrates how firms and consumers interact at different levels of transport costs and reveals the product varieties that are most and least likely to be manufactured locally when transport costs are high.

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Geography, Location, and Strategy
Type: Book
ISBN: 978-1-78714-276-3

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Article
Publication date: 23 May 2018

Oluwole Alfred Olatunji, Adenike Omolabake Orundami and Oluwatomi Ogundare

A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic…

Abstract

Purpose

A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs.

Design/methodology/approach

The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (detailed in the study). The goal of the analysis is to explore spontaneity and causal impact in the relationship between changes in prices of construction materials and project costs. Kolmogorov-Smirnov and Anderson-Darling tests were used to obtain the probability distributions of the causal relationships.

Findings

Findings show disproportionate positive correlations between changes in material prices and outturn costs in Nigeria. An important dimension to this, however, is that although fluctuations in material costs often trigger variations to project costs, outturn price only accounts for about one-third of actual cost variability. Recovery of costs, not least profit making, under these conditions is a complex process.

Originality/value

This paper concludes that dynamism in cost attributes is neither a deceit nor a delusion; understanding and tolerating them is not a systemic weakness, rather an essential key to project success and stakeholder satisfaction. Findings from the study also bring measured certainties to the transformation of variable costs into fixed price outcomes, an important consideration that will help contract estimators and project managers to understand the likelihood of fluctuation in material costs and how these might trigger variability in project costs.

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Built Environment Project and Asset Management, vol. 8 no. 4
Type: Research Article
ISSN: 2044-124X

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Article
Publication date: 1 September 1992

Randolph M. Russell and Martha C. Cooper

Addresses a number of issues relating to determining whetherproducts should be ordered independently and therefore shipped as asingle‐product order, or co‐ordinated and

Abstract

Addresses a number of issues relating to determining whether products should be ordered independently and therefore shipped as a single‐product order, or co‐ordinated and shipped as a group, or multiproduct, order from a single source. Factors which might influence the decision include the level or volume of demand, the distribution of demand across products, the weight of items and the attractiveness of the quantity discount offered. Uses an optimal inventory‐theoretic model, that incorporates transport weight breaks and quantity discounts, to assess when product orders should be combined and what products should be ordered separately. The effects of these decisions on the order interval, the number of order groupings, the proportion of items ordered independently, the proportion of attractive discounts forgone in favour of consolidation, and the relative cost savings, are examined using an extensive set of simulated data that are based on a firm in the automobile industry supply chain.

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International Journal of Physical Distribution & Logistics Management, vol. 22 no. 9
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 1 March 1990

Roger J. Sandilands

Allyn Young′s lectures, as recorded by the young Nicholas Kaldor,survey the historical roots of the subject from Aristotle through to themodern neo‐classical writers. The…

Abstract

Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.

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Journal of Economic Studies, vol. 17 no. 3/4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 7 June 2011

Ge Zhu, Shan Ao and Jianhua Dai

Switching cost is an important concept in the study of consumer loyalty which has implications for organizational business strategy and regulatory policies. Much research…

Abstract

Purpose

Switching cost is an important concept in the study of consumer loyalty which has implications for organizational business strategy and regulatory policies. Much research has already examined the formation and influence of switching costs on the consumers' repeated purchase intentions, but little research has focused on quantitative measurement of the switching cost itself. This paper aims to address this issue.

Design/methodology/approach

By game theory, a complete Nash‐Bertrand model is proposed to accurately estimate consumer switching costs considering price compensation and transport costs in a duopoly. The relationship between switching costs and market structure is then analyzed by using the example of Hong Kong's wireless telecommunication market. From the observed data of China's wireless telecommunication industry, the model calculates switching costs per year of China Mobile and China Unicom's users respectively, as well as other variables.

Findings

The results demonstrate that reducing consumer switching costs will benefit small operators and increase competition in a winner‐take‐all market.

Originality/value

The model is valuable in calculating unseen switching costs and studying the impact of switching costs on market structure, especially for a duopoly in telecommunication.

Details

Nankai Business Review International, vol. 2 no. 2
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 1 April 2002

Richard F. Kosobud, Houston H. Stokes and Carol D. Tallarico

A new financial asset (Allotment Trading Unit or ATU) that allows a firm to pollute was issued to a number of Chicago firms in 2000 as part of a cap‐and‐trade model to…

Abstract

A new financial asset (Allotment Trading Unit or ATU) that allows a firm to pollute was issued to a number of Chicago firms in 2000 as part of a cap‐and‐trade model to reduce emissions in the Chicago area. A model of this market was developed to enable us to: 1.) Estimate equilibrium tradable credit prices and quantities and calculate compliance costs for comparison with traditional environmental regulation; 2.) Estimate the consequences for prices and quantities of introducing changing emitter costs; and 3.) Estimate the impacts on prices and quantities of changing market features such as auctioning tradable credits instead of a free allocation, introducing spatial constraints, and changing the emissions cap. The model's results on the price determination of this new financial asset are of interest to accountants and financial analysts. A dated bankable ATU credit has a one‐year life expectancy, but future tradable credits can be bought or sold for use at the appropriate future date. It is an intangible asset that should be disclosed, measured and valued. The valuation to place on this asset is an important research topic in finance and accounting and various valuation approaches are discussed to handle the short‐term and long‐term price paths.

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Article
Publication date: 1 January 2004

Gary Davies and Eliane Brito

The selling prices to consumers of similar products vary considerably within the same retail outlet and between different types of retail outlet. Applying a value systems…

Abstract

The selling prices to consumers of similar products vary considerably within the same retail outlet and between different types of retail outlet. Applying a value systems framework, the cost structures behind the selling prices of products in five product categories are identified using primary and secondary data. The quality of the competing products is also compared using conjoint analysis of the ratings given by consumers for the edible products and available chemical analysis in the case of detergents. The main explanation for the differences observed in selling prices and cost structures of competing value systems lay not in the interface costs between value chains such as logistics, as expected, nor only in advertising costs, but in the internal costs of individual value system members. In particular, the internal costs of brand manufactures are shown to be the main source of their cost disadvantage against own brands. Only in one product category was there a quality justification for the higher prices charged by the leading manufacturer brand.

Details

European Journal of Marketing, vol. 38 no. 1/2
Type: Research Article
ISSN: 0309-0566

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