Option For Companies Research Articles

Global e-readiness of web sites: a look at the top 50 companies

Today the globalisation of markets and the blurring of country borders leave no option for companies to contemplate whether they should go global. Even when their intended strategy is to be domestic, the changing competitive landscape forces them to take a global perspective. This scenario is further compounded by the fact that customers now come from all over the world through a relatively inexpensive channel ? the Internet. Thus, what were once considered to be a purely domestic company is now being increasingly drawn into a global market due to the Internet. Hence the central question that one needs to ask is, "Are companies gearing themselves to meet this need?" and, if so "Do their Web sites reflect such a strategy?" In other words what is the global e-readiness of Web sites of so called "big multinational corporations?" This paper reviews the relevant literature on e-readiness and applies proposed typology to measure the e-readiness of Web sites of the top 50 global companies. Implications of this exploratory research are discussed from a managerial perspective.

Capital Allocation for Insurance Companies

This study shows how option pricing methods can be used to allocate required capital (surplus) across lines of insurance. The capital allocations depend on the uncertainty about each line's losses and also on correlations with other lines' losses and with asset returns. The allocations depend on the marginal contribution of each line to default value-that is, to the present value of the insurance company's option to default. The authors show that marginal default values add to the total default value for the company, so that the capital allocations are unique and not arbitrary. They therefore disagree with prior literature arguing that capital should not be allocated to lines of business or should be allocated uniformly. The study presents several examples based on standard option pricing methods. However, the adding up result justifying unique capital allocations holds for any joint probability distribution of losses and asset returns. The study concludes with implications for insurance pricing and regulation.

Network Sourcing: A Hybrid Approach

INTRODUCTION The last few decades have witnessed a number of significant debates in the purchasing literature. However, perhaps the most strategically significant debate has centered around the selection and number of suppliers per specified part or service - the versus multiple sourcing debate. In this context sourcing is the situation in which a company purchases a particular product type from only one supplier, whereas in multiple sourcing or more suppliers are used. This article reviews some of the recent literature and explores the analysis that appears increasingly to recommend a move to This trend is then compared with the situation in Japan where sourcing is believed to be developed to its most advanced stage. The Japanese case of Mazda and its seat sources is used to draw out the key points of a hybrid system we shall call sourcing. A network sourcing system involves the use of or more sources per product type, with only one used for a product or code number. The article then attempts to determine if network sourcing has captured the best elements of both and multiple sourcing without the range of drawbacks of either. It further provides a framework for the practitioner to show where it may be the most appropriate sourcing mechanism. The presentation is designed to review whether there is a third option for companies when faced with the or dual sourcing decision - and, if there is, whether there is any practical evidence of its existence and superiority that may provide help for its Western emulation. However, before moving on to this discussion a brief review of the existing literature is undertaken. TRADITIONAL SOURCING THEORY In their classic Materials Management Handbook, Bailey and Farmer summarize the issues as follows: If a buyer gives all his business to one supplier, does he get a better and more economic service than when he splits the order between or more? Does he lose his competitive position by, in effect, creating a monopolistic source? If, on the other hand, he uses more than one supplier is he dissipating his purchasing power, or is he protecting himself against shortage, fire, and strike?[1] To gain a better understanding of each approach, the Handbook provides a checklist of the advantages of the approaches (See Figure 1). Given the option between the sourcing approaches, a buyer is faced with a rather unenviable choice based on some reasoned analytical technique. Baily and Farmer are careful not to commit themselves to, or recommend, either course and note that decisions must be made after careful consideration of the relevant facts which currently apply. Other authors have suggested specific courses of action to help in this situation. Several American authorities suggest one practical solution for annual dollar volumes of $250,000 or more: they suggest that two contracts could be placed with different suppliers on a 70 percent/30 percent basis.[2] However, some authors associate sourcing with improved performance. In the United Kingdom, advice from the Department of Trade and Industry (DTI) recommends the sourcing method. The DTI video Profit from Purchasing notes that many UK companies claim that sourcing is counter-productive, but that world class competition has shown that the opposite is the case.[3] In addition, Canadian researchers postulate that single sourcing should follow once suppliers, through their actual performance, have proven they can be reliable, high quality producers.[4] THE JAPANESE EXPERIENCE The degree to which Japanese firms have reduced their supply sources and reorganized them into mutli-tiered hierarchies is now well known and has been widely documented. Researchers Womack, Jones, and Roos quote data on the automotive industry to show that the average number of suppliers per assembly plant is 170 in Japan, compared with 509 in the United States (American owned plants) and 442 in Europe. …