Higher Profit Margins Research Articles

A real options approach to analyse wind energy investments under different support schemes

A real options model is developed to evaluate wind energy investments in a realistic and easily applicable way. Considering optimal investment timing and sizing (capacity choice), the model introduces a capacity constraint as part of the optimisation. Several correlated uncertainty factors are combined into a single stochastic process, which allows for analytical (closed-form) solutions. The approach is well suited for quantitative policy analysis, such as the comparison of different support schemes. A case study for offshore wind in the Baltic Sea quantifies differences in investment incentives under feed-in tariffs, feed-in premiums and tradable green certificates. Investors can under certificate schemes require up to 3% higher profit margins than under tariffs due to higher variance in profits. Feed-in tariffs may lead to 15% smaller project sizes. This trade-off between faster deployment of smaller projects and slower deployment of larger projects is neglected using traditional net present value approaches. In the analysis of such trade-off, previous real options studies did not consider a capacity constraint, which is here shown to decrease the significance of the effect. The impact on investment incentives also depends on correlations between the underlying stochastic factors. The results may help investors to make informed investment decisions and policy makers to strategically design renewable support and develop tailor-made incentive schemes.

How community pharmacists perceive generic substitution impact on community pharmacies profits in absence of medicines price control policy: A Malaysian pilot nationwide study

Background Generic medicines are introduced to the market after the expiry of the patented innovator medicine. Being usually sold at lower prices compared to branded medicines, they may provide a low-cost alternative for consumers. In Malaysia, where there is no Medicines Price Control Policy, it is not known if pharmacy profits differ between generic and branded medicines. It is also not known if this difference may affect pharmacists practice of generic substitution. Objective To develop and validate questionnaire to evaluate the perception of Malaysian community pharmacists toward the impact of generic substitution on community pharmacies’ profits. Setting Community pharmacies in 9 out of the 12 Malaysian states including Pahang, Kelantan, Melaka, Perak, Negeri Sembilan, Pulau Pinang, Selangor, Terengganu, and Sarawak. Methods A cross-sectional descriptive study was conducted using a newly developed questionnaire. A convenient sample of 99 community pharmacists was surveyed using this questionnaire. Result The Cronbach’s alpha value for all of the statements in theme 2 of the questionnaire is 0.706, which lies in an acceptable range. It is found that generic medicines constituted 41–60% of merchandise in 41 of the surveyed pharmacies. Of the respondents, 72.9% stated recommending generic more than branded medicines and 89.9% of them reported that customers accepted their recommendations. Community pharmacists agreed that generic substitution results in financial benefits to community pharmacies. This can be found as most of the pharmacists agree that generic medicines lower whole sale price results in merchandise cost reduction, increase in pharmacy profit, higher profit margin, increase in pharmacy sales, and rate of return and reduction in community pharmacies capital. The maximum profit margin obtained with generic medicine is >100%, whereas for branded medicine, it is 81–100%. Conclusion Generic medicines are actively dispensed by community pharmacists and result in higher profit margin than innovator medicines.

The responsiveness of hospitals in healthcare financing: Pharma-equity problems and pitfalls

Objectives: Considerable disparities in healthcare and its related services persist due to medical intervention and its subsequent follow-up requirement. Increase in patients’ cost sharing at the point of services for medical interventions plays a major role in such disparities. The present study analyses how far the hospitals subsidize the household expenses on drugs and medicines for their patients. This study also aims to examine the pharma-equity-model, where patients have the same opportunities even if the outcomes are unequal, and how far the hospitals retain their patient inflows towards their own growth and development.Methods: The sources of data are drawn from the selected hospitals in National Capital Region, India and conducted in five multi-specialty hospitals with 500 beds and are managed by five different establishments. Patients are selected from the hospitals’ registration data list from January 2012 to May 2014.Key findings: No systematic pattern or price difference could be deciphered across the studied hospitals. The study shows that the price rise of drugs and medicines has displayed an enormous upswing. However, it is also revealed that the initial price per se is fixed with higher profit margins. The tender purchase of drugs and medicines by the hospitals has revealed the post-tender margins running into high in retail purchase, and there being no method to determine the margin charged by the hospitals. The studied hospitals have exercised to reign in drug prices from increasing to unreasonable levels, while criteria vary from one hospital to another.Conclusion: The hospitals have some form of healthcare financing mechanisms to purchase drugs for the benefit of patients. The studied hospitals have evolved various criteria and policy initiatives to improve the outcome, i.e. patient inflows. In addition, it noted that ‘walk-the-extra miles’ healthcare policies of hospitals and their responsiveness reduce the burden of the diseases.

One for All or All for One: Does the Category Captain Play Favorites

Category management is challenging for retailers that sell thousands of products across hundreds of categories and often lack the resources and capabilities to manage all of them intensively. Picking one supplier to be the category captain (CC) to manage the category – including rival’s brands – through pricing and merchandising is a recent retail management initiative that aims at improving a retailer’s overall performance in a product category. Despite tremendous retailer and manufacturer interest in CC and its adoption in the industry, much uncertainty exists about the consequences of CC. This paper empirically examines the role of CC by utilizing a unique data set on ready-to-eat cereals category, characterized by high concentration and market power, before and after the transition into category captain management. We find that after the transition, CC acted to improve its own market shares and those of private labels. A private label is designating a product under the name of the retailer rather than the name of the manufacturer and often offers higher profit margins for the retailer. In addition, CC improved its market shares by focusing on its core competency brands at the expense of some of its smaller brands while CC improved private labels’ market shares through an uniform increase across all private label brands. Using estimates from a structural model, we find consumer welfare is increased by 8.8% after the transition into category captain management.

Selection of Brand Names for a Drug by Indian Pharmaceutical Companies

Brand names are important for building brand equity. A brand's power derived from the goodwill and name recognition that it has earned over time, which translates into higher sales volume and higher profit margins against competing brands is called brand equity.

Technopreneurship (entreprenology) as the Holy Grail of SMEs growth: a historical analysis

Technopreneurship / entreprenology is a relatively new term and is receiving increasing recognition from the scholars of various streams of business and science and technology disciplines, as well as from the industry players and business men practically. Technopreneurship is, indeed, becoming vital in the current globalization and liberalization economy, as it provides greater opportunities and enables effective optimization of resources to attain high profit margins. This article presents a summary of research on entrepreneurs and discusses the trends in the development of entrepreneurship to present day technopreneurship. It begins by introducing the pioneers of the domain, Cantillon, Say and Schumpeter. The contribution of economists such as Knight, Hayek, Penrose, Kirzner and Casson are mentioned. A second section presents the contributions of the behavioral scientists and the characteristics most commonly ascribed to entrepreneurs. From the 1980s onwards, the field of entrepreneurship detonated and was absorbed into almost every soft science discipline. Two separate trends - one applied, the other theory-based - began to emerge. Thus, the article necessitates that the field is in the process of dividing into two separate entities: entrepreneurship, the applied aspect, and technopreneurship, the theoretical aspect. Keywords: technopreneurship, entreprenology, enterpreneurship, SMEs. JEL Classification: L26

Determinants of Trade Credit in European Construction Firms: a Preliminary Study

The aim of this paper is to present a comparative study of trade credit indicators and the possible determinants of trade credit for firms acting in the construction sector, using a sample of 958 medium and large firms for the period 2004-2013. The objective of the study is to identify and examine selected variables that may determine trade credit used and provided by selected firms. The sample is derived from the Amadeus database. The examined firms were ones that have sold and bought on credit. The data was organised as panel-data and quantitative analyses were performed. This study demonstrates results that firms with higher trade receivables are less profitable; a positive correlation was found between trade receivables and liquidity, whereas a negative correlation was detected between trade receivables and gearing; larger firms provide and obtain more trade credit than medium firms; more profitable firms use less gearing; firms with higher profit margin are more liquid and more liquid firms use less gearing; based on an average and overall terms, there is not such a clear distinction between Western and Eastern European countries from viewpoint of net trade credit and net trade period.

Platform Pricing and Investment to Drive Third Party Value Creation in Two-Sided Networks

Many two-sided platforms (e.g., eBay, Google, iOS, Android, Twitter, Amazon) provide integration tools, such as modular interfaces, interactive development environments, application programming interfaces (APIs), and help desks to reduce the costs and improve the functionality of third party content developed for the platform. The need for such investment is increasing with the rise of major new markets such as the Internet of Things. While crucial to platform success, platform integration tools are costly to create. We develop an analytic model to explore the key trade-offs behind investment in integration tools and how that investment interacts with pricing decisions in a two-sided market. We model these decisions under various scenarios including monopoly and competitive platforms as well as symmetric and asymmetric platforms. Our results suggest that the consideration of integration investment can push the market into regimes in which the standard pricing results from extant platform literature no longer hold, in particular the tendency to reduce prices to one side of a market in response to increasing benefit of the network to the other side. Moreover, integration investments must be well-coordinated with developer and consumer pricing decisions and may have to be revised dynamically as the platform gains traction in the market. Higher levels of investment into integration become desirable when the platform (1) faces favorable expectations, (2) has access to a high-quality developer community, and (3) operates in a market where developers earn a high profit margin creating content that is highly valued by the consumer market. Finally, we also discuss a number of policy implications of this work.

Mining High Utility Itemsets with Regular Occurrence

High utility itemset mining (HUIM) plays an important role in the data mining community and in a wide range of applications. For example, in retail business it is used for finding sets of sold products that give high profit, low cost, etc. These itemsets can help improve marketing strategies, make promotions/advertisements, etc. However, since HUIM only considers utility values of items/itemsets, it may not be sufficient to observe product-buying behavior of customers such as information related to purchases of sets of products having a high profit margin. To address this issue, the occurrence behavior of itemsets (in the term of regularity) simultaneously with their utility values was investigated. Then, the problem of mining high utility itemsets with regular occurrence (MHUIR) to find sets of co-occurrence items with high utility values and regular occurrence in a database was considered. An efficient single-pass algorithm, called MHUIRA, was introduced. A new modified utility-list structure, called NUL, was designed to efficiently maintain utility values and occurrence information and to increase the efficiency of computing the utility of itemsets. Experimental studies on real and synthetic datasets and complexity analyses are provided to show the efficiency of MHUIRA combined with NUL in terms of time and space usage for mining interesting itemsets based on regularity and utility constraints.

Gender Differences on Newsvendor Behavior

In this paper we present the results of a Newsvendor experiment. We study the differences between the ordering decisions of female and male subjects under low profit margin and high profit margin treatments. We show that female subjects’ ordering decisions are lower under both profit margins, with the difference being significant under high profit margin. Additionally, female newsvendors have higher order variability and affected more by demand chasing behavior.

Price Search and Periodic Price Discounts

This paper empirically investigates the interplay between buyer search behavior and firm pricing strategy in a commodity market where many firms price compete to sell homogeneous products. We use the heterogeneity in buyers’ search costs to explain why a firm offers periodic price discounts and enjoys a high profit. An estimation method is proposed to recover the non-parametric distribution of the search costs from the price and transaction volume data. With both data, we show that the search cost distribution can be estimated non-parametrically in a sequential search model, and estimation results from a non-sequential search model are robust to the assumption of the maximum number of searches. We also show the commonly observed high-low pricing strategy can be an optimal strategy for firms when buyers search prices sequentially. As an empirical application, we use the proposed method to estimate the search models using data on a commodity product sold by a firm in a B-to-B market. The models predict a high profit margin for the firm that is consistent with the data, but the sequential search model fits with the observed price distributions and supply costs better than the non-sequential search model.

Cruise Ships: Continuity and Change in the World System

Cruise ships present a useful context to study contemporary developments in globalization. U.S.-owned cruise companies have managed to create the “ideal” context for contemporary corporations: very little government oversight of labor relations, an available pool of very cheap labor dispersed across the globe, lax environmental regulations, high profit margins, and corporate tax rates around 1%. A typical cruise ship leaving the U.S. contains workers from 75 to 90 nationalities. Crewmembers performing menial service work are recruited exclusively from “poor countries” in Asia, Eastern Europe, Latin America, and the Caribbean. Crewmembers typically sign 10-month contracts stipulating 10-14 hour workdays/7 days a week without vacation or sick days. There is a striking correlation between workers’ pay/status and their countries’ position within the world system. Staff members are usually white Westerners, while crewmembers are exclusively from the global south. On cruises the legacies of imperialism and colonialism are often the basis of workers’ racialization as appropriate servants.

How Nurse Leaders Can Reduce Burnout: Focus on Mental Energy!

The U.S. workforce, including those in the health care sector, is in the midst of a workforce burnout crisis. For the past 20 years, annual surveys consistently show that organizations with employees reporting higher energy at work have greater customer satisfaction, increased productivity, higher profit margins, lower employee turnover, and fewer accidents. 1 Gallup Q12 Meta-Analysis: The Relationship Between Engagement at Work and Organizational Outcomes. 2014. Gallup website. http://www.gallup.com/services/177047/q12-meta-analysis.aspx Google Scholar Yet, with demand for our time and energy increasingly exceeding our capacity in a leaner, highly competitive, post-recession workforce, both personal and professional burnout has become ubiquitous. This burnout, or complete draining of one's energy due to overwork or overstress, is negatively impacting organizations. In a 2014 Insights Study of 160,000 employees across a broad spectrum of the U.S. workforce, the most important factor driving employee engagement was an employee's ability to manage stress. 2 Manciagli D How to Keep Your Rock Star Employees From Burning Out. July 18, 2014. The Business Journals. http://www.bizjournals.com/bizjournals/how-to/human-resources/2014/07/how-to-keep-your-rock-star-employees-from-burning.html?page5all Google Scholar This factor may explain why of the approximately 100 million people in America who hold full-time jobs, only about 30 million (30%) are engaged and inspired at work, with professional workers (e.g., nurses) mirroring the national trend. Active disengagement (20%) costs the United States $450 billion to $550 billion per year according to a 2013 Gallup study. 3 Gallup State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders. 2013. Gallup website. http://www.gallup.com/services/178514/state-american-workplace.aspx Google Scholar Beyond cost, the health care industry is also charged with ensuring patient safety. When nurse vigilance declines, strict observance of safety protocols may be reduced. In fact, research has shown that higher nurse burnout is associated with significantly higher rates of infection. 4 Cimiotti JP Aiken LH Sloane DM Wu ES Nurse staffing, burnout, and health care–associated infection. Am J Infect Control. 2012; 6: 486-490 Abstract Full Text Full Text PDF Scopus (452) Google Scholar Despite increased executive awareness, a human energy crisis continues to plague the health care sector as well as the entire U.S. workforce. The U.S. workforce, including those in the health care sector, is in the midst of a workforce burnout crisis. For the past 20 years, annual surveys consistently show that organizations with employees reporting higher energy at work have greater customer satisfaction, increased productivity, higher profit margins, lower employee turnover, and fewer accidents. 1 Gallup Q12 Meta-Analysis: The Relationship Between Engagement at Work and Organizational Outcomes. 2014. Gallup website. http://www.gallup.com/services/177047/q12-meta-analysis.aspx Google Scholar Yet, with demand for our time and energy increasingly exceeding our capacity in a leaner, highly competitive, post-recession workforce, both personal and professional burnout has become ubiquitous. This burnout, or complete draining of one's energy due to overwork or overstress, is negatively impacting organizations. In a 2014 Insights Study of 160,000 employees across a broad spectrum of the U.S. workforce, the most important factor driving employee engagement was an employee's ability to manage stress. 2 Manciagli D How to Keep Your Rock Star Employees From Burning Out. July 18, 2014. The Business Journals. http://www.bizjournals.com/bizjournals/how-to/human-resources/2014/07/how-to-keep-your-rock-star-employees-from-burning.html?page5all Google Scholar This factor may explain why of the approximately 100 million people in America who hold full-time jobs, only about 30 million (30%) are engaged and inspired at work, with professional workers (e.g., nurses) mirroring the national trend. Active disengagement (20%) costs the United States $450 billion to $550 billion per year according to a 2013 Gallup study. 3 Gallup State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders. 2013. Gallup website. http://www.gallup.com/services/178514/state-american-workplace.aspx Google Scholar Beyond cost, the health care industry is also charged with ensuring patient safety. When nurse vigilance declines, strict observance of safety protocols may be reduced. In fact, research has shown that higher nurse burnout is associated with significantly higher rates of infection. 4 Cimiotti JP Aiken LH Sloane DM Wu ES Nurse staffing, burnout, and health care–associated infection. Am J Infect Control. 2012; 6: 486-490 Abstract Full Text Full Text PDF Scopus (452) Google Scholar Despite increased executive awareness, a human energy crisis continues to plague the health care sector as well as the entire U.S. workforce.

Earnings Management in U.S. Hospitals

Objective This paper examines the hospital management practices of manipulating financial earnings within the bounds of generally accepted accounting principles (GAAP). Study Design We conduct regression analyses that relate earnings management to hospital characteristics to assess the economic determinants of hospital earnings management behavior. Method and Data From the CMS Cost Reports we collected hospital financial data of all U.S. hospitals that request reimbursement from the federal government for treating Medicare patients, and regress discretionary accruals on hospital size, profitability, asset liquidity, operating efficiency, labor cost, and ownership. Results Hospitals with higher profit margin, current ratio, working capital, days of patient receivables outstanding and total wage are associated with more earnings management, whereas those with larger size and higher debt level, asset turnover, days cash on hand, fixed asset age are associated with lower level of earnings manipulation. Additionally, managers of non-profit hospitals are more likely to undertake some form of window-dressing by manipulating accounting accruals without changing business models or pricing strategies than their public hospital counterparts. Conclusions We provide direct evidence of the use of discretionary accruals to manage financial earnings among U.S. hospitals and the finding has profound policy implications in terms of assessing the pervasiveness of accounting manipulation and the overall integrity of financial reporting in this very special public and quasi-public service sector.

Financing War or Facilitating Peace? The Impact of Rebel Drug Trafficking on Peace Negotiations in Colombia and Myanmar

ABSTRACTRebel involvement in drug trafficking is broadly found to prolong and intensify civil wars. Being an illicit good with strong demand, high profit margins, limited barriers to entry, and few interdiction opportunities, narcotic drugs disproportionately benefit rebel groups as a source of funding in civil wars. Furthermore, drug trafficking is believed to prolong civil wars by creating war economies that benefit rebel groups, making them reluctant to engage in peace negotiations. However, recent peace agreements suggest that drug trafficking can in some cases be used to “buy off” rebel leaders, whereas other insurgents willingly relinquish this source of funding. This article compares attempts at conflict resolution in Colombia and Myanmar, focusing on the impact drug trafficking by Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia) and United Wa State Army has on contemporary peace negotiations.

Comparative analysis of functional food producers' profitability in Serbia: A leader-follower relation

The functional food market in Serbia is relatively young and insufficiently explored both from the aspects of producers and consumers, the qualitative aspect and especially from the quantitative aspect. The aim of this paper is to illustrate the results of the comprehensive quantitative financial analysis of profitability which focuses on the example of two companies. The main criterion applied in the selection of companies for the analysis represents the fact that one company is recognizable as a producer of foods with nutritive and health claims and is a leader within that market segment, whereas the other analyzed company mostly produces traditional products and has entered the aforementioned market segment at a later stage. The key idea is to do a comparative analysis of the profitability of these two companies for a four-year period. The profitability ratio analysis and the Du Pont analysis system are used in the paper as well as the analysis of solvency and financial leverage effect. The vertical analysis of income statement is also done in order to reveal the relation between some cost categories and operating revenues. The research results lead to a conclusion that the company that mostly produces functional foods has higher profit margins and rates of return and is therefore in a more favourable position since it can benefit from positive effects of financial leverage to a higher extent. The profitability of the second relevant company is mostly based on the better asset turnover.

Coordinating a Service Supply Chain under Arms Offset Program’s Intervention by Performance-Based Contracting

This paper investigates a support service supply chain for coordinating with a local third-party logistics provider by arms offset program’s intervention and develops a performance-based contracting framework for the coordinating problem, which remains scarce in the literatures. The performance-based contracting framework evaluates payments and profits for the support service by a game-theoretical approach with principal-agent model. We prove that the proposed framework is an effective tool in acquiring the balance between maximum profit and minimum payment for both parties in the coordinating problem without moral hazard issue. A numerical study consolidates the formulated schemes as contracting preference for both parties’ decision with a higher profit margin at a lower customer’s payment.

Fleet Planning Decision-Making: Two-Stage Optimization with Slot Purchase

Essentially, strategic fleet planning is vital for airlines to yield a higher profit margin while providing a desired service frequency to meet stochastic demand. In contrast to most studies that did not consider slot purchase which would affect the service frequency determination of airlines, this paper proposes a novel approach to solve the fleet planning problem subject to various operational constraints. A two-stage fleet planning model is formulated in which the first stage selects the individual operating route that requires slot purchase for network expansions while the second stage, in the form of probabilistic dynamic programming model, determines the quantity and type of aircraft (with the corresponding service frequency) to meet the demand profitably. By analyzing an illustrative case study (with 38 international routes), the results show that the incorporation of slot purchase in fleet planning is beneficial to airlines in achieving economic and social sustainability. The developed model is practically viable for airlines not only to provide a better service quality (via a higher service frequency) to meet more demand but also to obtain a higher revenue and profit margin, by making an optimal slot purchase and fleet planning decision throughout the long-term planning horizon.

How consumer demand affects order quantity in practice: an empirical study on inventory management decisions in fashion retailing

This study investigates the real inventory decisions in a fashion retailing company through a real sales data-based empirical study. Specifically, we collect a nine months sample sales dataset of 189 fashion product items from a Hong Kong-based fashion retailing company, and statistically verify relationships between the order quantity and several critical factors. Our findings reveal that: 1) the mean of demand, the standard variation of demand, and the profit margin of the fashion items are statistical significantly correlated with the ordering quantity decision of the case company; 2) there is no statistically significant difference on the order deviation from the mean of demand between the high and low profit margin products. We explain these findings by relating them to the analytical models under the newsvendor problem setting. Implications and important insights are discussed.

Marketing channel vis-a-vis economic viability of ornamental fish cum aquarium business in Agartala, Tripura

Economic viability of ornamental fish business is utmost important as this sector has been identified as a powerful tool for rural income & employment generation. The study was conducted in Agartala, Tripura in the year 2015–2016 among 14 traders actively involved in ornamental fish business in Agartala. The data collected through observation, personal interviews with designed interview schedule as well as focus group discussion with the respondents revealed that majority of the respondents (78.57%) were young aged, all are literate and 28.57% of them were graduates. Around 42.86% of the traders considered aquarium business as their main occupation. Around 71.43% were doing retail business and 28.57% were performing as wholesaler-cum- retailer. Majority of traders (28.57%) earned between 3,60,000-4,32,000 per annum. Among the identified six different channels in ornamental fish marketing in Tripura, majority of the traders (64.29%) used to take benefit of marketing channel V due to the higher profit margin i.e., purchased ornamental fishes from the producers of outside state and used to sell directly to the consumers and/or to the retailers. Profitability analysis of the ornamental fish trading indicated that all the cases studied generated positive net returns. Payback period were very short i.e., 0.14 years and 0.29 years for wholesaler cum retailers and retailers respectively which reflects that the investment in the business of ornamental fisheries and aquarium is less risky as well as repaid in the shorter time period and is considered the better choice as investment or action costs are recovered sooner and are available again for further use.