Efficient Business Practices Research Articles

Succession in Family-Owned Businesses: A Case Study of Reliance Industries-India

The split that followed the failed succession plan for Reliance Industries Limited is one of the most significant and publicized narrative in the Indian corporate sector. The long family feud that followed the death of the founding patriarch Dhirubhai Ambani highlights the critical role of succession planning in large family businesses. Succession planning becomes extremely critical in the emerging markets where the legal and institutional arrangements regulating the corporate entities and the corporate governance practices are still being developed. The absence of a solid succession plan observed in the case of Reliance Industries is not uncommon among large business houses in India. However, given its size (market capitalization of over Rs. 1.2 Lakh Crores) the Reliance saga has implications beyond just souring of personal relationships among family members. Given the fact that it is one of the largest and most successful exchange traded conglomerates, the economic implications in terms of corporate value erosion and shareholder wealth destruction are immense. The uncertain environment since the death of Dhirubhai in 2002 has had negative implication for firm's stock performance. In addition, the recently unveiled plan of de-merger and split of the empire among the two brothers most likely is not the best way to spin-off business units from a conglomerate. There may be value erosion due to lost diversification benefits, synergies, economies of scale and scope, and complementarities. This case deals with the implications of the dispute for corporate value and continuation of efficient business practices. It also concerns the regulatory environment and how to ensure effective corporate governance mechanisms to ensure that various stakeholder interests are protected.

DOES ECONOMICS PROVIDE A RELIABLE GUIDE TO REGULATING COMMODITY BUNDLING BY FIRMS? A SURVEY OF THE ECONOMIC LITERATURE

This article surveys the voluminous economic literature on commodity bundling. While bundling has been widely studied, the vast majority of the literature has focused on theoretical treatments of bundling that demonstrate a wide range of reasons why firms might engage in bundling. These papers generally contain restrictive assumptions, including assumptions regarding the existence of monopoly in some markets, and the nature of rivalry in others. The models contained in these papers also generally suppress the more obvious and ubiquitous reasons firms may use bundling. Moreover, these models have not been subject to robustness checks, nor have their assumptions been tested empirically. This review of the economic literature generally confirms the US Solicitor General's view in 3M v. LePage's regarding the underdeveloped state of the economics literature and its position that the US Supreme Court should defer promulgation of antitrust standards for bundling. While the literature has demonstrated the possibility that bundling can generate anticompetitive harm, it does not provide a reliable way to gauge whether the potential for harm would outweigh any demonstrable benefits from the practice. As a result, the widespread application of the antitrust laws to bundling by firms can generate significant error costs by erroneously condemning or deterring efficient business practices. In the future, economists should seek to expand their understanding of both the anticompetitive and procompetitive reasons firms engage in bundling. This will entail studying the reasons why bundling is adopted by firms without market power, relaxing the assumption of monopoly in theoretical models, and generating testable hypotheses and the data to test them.

Making new mortgage markets: Case studies of institutions, home buyers, and communities

America's housing and mortgage markets are undergoing a dramatic transformation, as urban reinvestment and attempts to tap underserved markets of new homeowners alter historical processes of redlining and discrimination. This article synthesizes findings from case studies of private lenders, lender consortia, and nonprofit community organizations that are active in underserved markets and analyzes the strategies these organizations use to attract and qualify mortgage applicants and retain new homeowners. The case studies reveal a diverse array of strategies designed to address market imperfections related to information, discrimination, and household financial characteristics. Although these strategies expand homeownership opportunities, challenges remain. They reflect inherent tensions between the industry trend toward standardized, efficient business practices and the customized, often expensive programs needed to address the multiple obstacles to homeownership and community development faced by underserved households and communities. They also reflect the historically unequal distribution of risks and rewards in America's central socioeconomic institution—homeownership.

EDI in the Process Industry

EDI is the automated exchange of business information. It simplifies the trade procedures and makes the data more reliable. In the chemical industry EDI is considered as a strategic tool for their international business. Paper elimination is only a minor advantage of EDI, the substantial benefits are achieved through an increased internal efficiency, more efficient business practices and long term partnerships. EDI is therefore not something that can be left to the IT department. EDI applications can only be successful if it is driven by business considerations and management is committed to it.