Uncertain Market Conditions Research Articles

Annualized Returns of Ventured-Backed Public Companies Stratified by Decades and by Stages of Financing

This paper investigates the actual performance of 2,678 Initial Public Offerings (IPOs) of companies that were backed by venture capital from 1969 to 2002. The main purpose is to compare the annual returns of the venture capital industry during the 1980s and 1990s. Comparisons between the decades provide some reasoning for the increased media coverage of the industry. There is no doubt that the media is fascinated by the release of any good news concerned with venture capital. For example, many people are familiar with the recent venture-backed Initial Public Offering (IPO) of Google, which brought in $1.7 billion on its opening day in August 2004. The shares of Google have risen by almost 50 percent since then (Wall Street Journal, October 1, 2004, Page C15). One hears much less about companies such as Nanosys Inc. or PlanOut Inc., which postponed their IPOs, citing uncertain market conditions. Nowadays, one often hears about the biotechnology sector that draws big bucks as financial analysts refer to this sector. Recent examples include Avera Pharmaceuticals Inc., a developer and licensor of treatments for neurological and psychiatric disorders who raised $48 million in a third round of financing, or Sophrion Therapeutics inc., a maker of oncology, asthma and allergy drugs who raised $47 million in a second round. Achievements in the telecommunication sector are also widely publicized, recent examples of which include ABS Capital leading a $23 million round of investment in ControlPoint Solutions Inc., a company whose products target telecommunications cost-management problems, and BridgePort Networks Inc., a manufacturer of products that link mobile and internet telephone calls who raised $25 million in a second round.

Imperfect Competition, Integer Constraints and Industry Dynamics

Amir and Lambson (2003) developed an infinite-horizon, stochastic model of entry and exit by integer numbers of firms facing sunk costs and uncertain market conditions. Here, as examples of the model's usefulness, special cases are applied to the following three issues: (1) the relationship between sunk costs and industry concentration, (2) entry when current profits are negative, and (3) the relationship between entry and the length of the product cycle.

Optimal Production Planning for Chemical Processes under Uncertain Market Conditions

AbstractDue to lack of a systematic reliability analysis, intuitive decisions can often be made in production planning under uncertainty. These decisions will lead to either conservative or aggressive production. In this work, we propose a novel analysis and optimization framework to address this problem, with which the relationship between the profitability and reliability of a planned operation can be quantified. By using probabilistic programming, the solution of the problem provides comprehensive information on the economical achievement as a function of the desired confidence level of satisfying process constraints. The feasible region will shrink and the profit will decrease when increasing the confidence level. For complex plant operations under multiple uncertainties, the sources of risk that have the most significant impacts on the profitability can be identified. Through this approach, an optimal as well as reliable decision for operations can be made, from which a suitable compensation between the profit and the probability of constraints violation can be received. The approach is applied to three problems of production planning under uncertainty and various issues in planning these operations are discussed.

Can genetics deliver?

For the past thirty years pig genetics has enjoyed a clear message from its end–users: reduce backfat and production costs. During that period, genetics, nutrition and health have together delivered improvements of some 60% in lean growth rate and feed efficiency. To compound the recent misfortunes of the UK industry, meat is now slipping further behind everything else on the supermarket shelf in quality, uniformity, and above all predictability. The notion of quality stretches far beyond the product into responsibility for animal welfare, human nutrition and food safety.The industry's present dilemma arises from five factors:1.uncertain market conditions with cyclical profitability2.poor communication of what constitutes good quality3.payment systems that no longer reflect what the market requires4.independent management of the different steps in the pork value chain5.possible effects of animal health on quality and uniformity.Meanwhile the understanding of gene function and the ability to detect potentially useful genetic variation is gathering momentum. This paper examines the role that genetics can play in adding value, reducing risk and differentiating the product, from the perspective of a large vertically coordinated pork producer.

Relationship Governance in a Supply Chain Network

The authors examine how a firm's strategy in a (downstream) customer relationship is contingent on how a related relationship outside of the focal dyad is organized. Drawing on emerging perspectives on interfirm governance and networks, the authors propose that the ability to show flexibility toward a (downstream) customer under uncertain market conditions depends on the governance mechanisms that have been deployed in an (upstream) supplier relationship. The governance mechanisms take the form of (1) supplier qualification programs and (2) incentive structures based on hostages. The authors develop a set of contingency predictions and test them empirically in the context of vertical supply chain networks in the apparel industry. The tests show good support for the hypotheses. The authors discuss the implications of the findings for marketing theory and practice.

Developing and managing a romantic business relationship: life cycle and strategies

Companies operate in a highly competitive climate and offer a wide variety of new products and services to both individuals and business firms. Today, companies find themselves facing more aggressive competition, uncertain market conditions, and unlimited opportunities. Managers and marketers have witnessed that they have to respond and must change the way they do business with other companies. This new environment has led managers and marketers to realize that they must change and restructure the way of establishing and maintaining ongoing business relationships. The paper provides a different perspective. It analyses the process of establishment and development of a strategic business relationship over time by considering the life cycle and stages of this relationship. The paper also describes the evolution of strategic business relationships as a relation between people or as a love affair and a commitment to marriage which is ideally based on shared interest, love, mutual trustworthiness, and commitment to continue the relationship. It also provides some strategic and managerial implications.

Improving organisational performance by exploiting workplace flexibility

Companies large and small, in every industry, face a common challenge: do more, better, with less. The organisational problems to be solved, while meeting this kind of corporate mandate, are also widely shared: attract and retain high quality employees; strengthen brand identity; increase flexibility in the face of highly uncertain market conditions and new technologies; assimilate mergers and acquisitions; accommodate frequent changes in group and team size and structure. This paper describes findings from research that examined the workplace strategies of independent small startup initiatives, as well as those initiated inside large corporations. The findings suggest that it is possible to identify aspects of overall workplace planning and design that reduce costs and increase flexibility while maintaining or enhancing organisational effectiveness.

Modeling voluntary participation in a cost‐sharing agricultural water quality management program

This economic analysis of farmers' voluntary adoption of water quality management alternatives integrates three biophysical simulators to predict crop yields and soil erosion/water quality impacts under uncertain weather and market conditions. Farmers' willingness to cost‐share was used to estimate expectations of net returns and associated water and soil pollution based upon government cost‐share scenarios. Simulations integrated into mathematical programming results indicate that irrigation and nitrogen fertilizer applications do not alter water quality in the Gum Creek Watershed as much as generally anticipated. Under limited government payments, pollution abatement through reduction of irrigation and/or nitrogen fertilizer applications significantly reduces farmers' net revenues and hence, without threats of other regulatory means, more farmers opt out of a voluntary program. Abatement of nitrogen runoff and leaching should consider other management alternatives and include non‐agricultural sources of pollution.

Investors Facing Opportunistic Governments: Is it Really Good to “Know the Market” before Investing?

When a government cannot commit to future policies, investors face the risk of opportunistic behavior in addition to uncertain market conditions. We show that although reducing market uncertainty is sometimes essential for investment, it may aggravate problems of opportunism. The better informed the investor is before investing, the more information the government can infer from observing that investment takes place, in turn enabling more efficient rent extraction. This signaling effect can dominate; if the investor receives “too accurate” information before investing, the only equilibrium is the one in which no investment occurs. JEL classification: D82; L51

Setting Price Controls While Facing Variable Or Uncertain Market Conditions

Price controls under variable or uncertain market conditions do not lead to market equilibrium. Under different assumptions for the rationing mechanism during shortages and surpluses, I find, assuming small market shocks, that the optimal regulated price can be related in a simple way to the relative slopes of the marginal benefit and marginal cost functions. In addition, if the consumption price may differ from the production price, then consumers should pay less than or equal to what producers receive, implying possibly a unit subsidy to market transactions.

Assessing the attractiveness of turbulent markets: The Ukrainian experience

The uncertain market conditions in Eastern Europe pose new challenges for marketing planning. Techniques such as risk analysis and matrices may not be applicable in assessing the attractiveness of markets, which are subject to discontinuous change. This paper analyses 15 cases of entry into Ukraine by western Multi‐national Corporations. The process whereby they assessed the risks and opportunities of operation in the market are studied. The implications of the findings of this study are discussed.

Investment Under Uncertain Market Conditions

This paper studies the responsiveness of firm investment to shocks in the input factor and output prices (the market conditions) by using stock market information on excess returns. The 'q' theory of investment is modified to allow for heterogeneous capital, ex post inflexible technology, and irreversible investment. A structural model linking the excess returns to a firm's equity to the firm's investment history and the evolution of the market conditions is estimated using a panel of U.S. manufacturing firms. The estimates of the cost of adjusting tile capital stock are economically sensible. They imply a high degree of sensitivity of investment to fundamental variables that affect the profitability of capital such as the market conditions and the purchase price of capital. Copyright 1995 by MIT Press.

A Reel Witness: Steven Spielberg's Representation of the Holocaust in Schindler's List

This essay explores why Steven Spielberg's Schindler's List is significant for American cinema, for movies about the Holocaust, and for the artist himself. Two primary concerns guide its search: (1) to review the relationship between film history's prince of profit and his account of the Holocaust and (2) to emphasize how moving pictures might offer us something not possible in academic historical studies. The thesis is that the movie and the filmmaker are inextricably intertwined and that an understanding of that bond is useful not only for appreciating the film but also for reducing misconceptions about depicting the Holocaust in a commercial medium. My goal is to suggest to readers that movies do not function in a vacuum, that their ability to entertain and to educate is tied to uncertain market conditions, daily censorship battles, prevailing industry practices, and powerful financial considerations. The more one understands these aspects of the film's background, the more one appreciates Spielberg's challenges and accomplishments. Thus, a subtext of this exercise is that mainstream theatrical films are both a business and an art, that historical and biographical movies make use of the past to comment on the present, that the mass media mediate between us and the events they depict, and that audiences often mistake that mediation for reality.1 The reader should also know at the outset that the tone of this essay differs markedly from that of many film studies. Rather than denigrating pragmatic moviemakers for bowing to commercial realities, I want to explore how artists like Spielberg employ their box-office clout to express their personal visions to a mass audience. As William D. Romanowski aptly stated, Film has long been realized as a powerful transmitter of culture because it transmits beliefs, values and knowledge; serves as a cultural memory; and offers social criticism. Consequently, the cinema remains a continual battleground in the cultural conflicts in America.2

Industry evolution with sunk costs and uncertain market conditions

Firms often make decisions which entail sunk costs and have long-lasting effects. For example firms often must decide which technology to install in a plant without knowing what market conditions will prevail during the life of the plant. This paper presents a dynamic competitive equilibrium framework in which to analyze these issues.

A Community in Transition: Painters in Munich, 1886–1924

The idea of writing a social and economic history of Munich painters in the period between the death of King Ludwig II and the end of the German inflation evolved from earlier work on literary and theatrical censorship in the city. It soon became clear that artists, compared with writers and especially dramatists, normally ran little risk of police interference. Although pictures were occasionally removed from exhibitions, or rehung, for religious, moral, or political reasons, such cases were rare and controversial. Generally speaking, only artist-contributors to satirical papers likeSimplicissimus, or specialists in erotic book illustration, were at all likely to fall foul of the law. Most painters' principal concern was not legal but financial: how to survive economically in the uncertain market conditions which had followed theGründerzeitart boom.