Managerial Economics
MBA 5600 Managerial Economics
Assignment #1
1. What impact will the prospect of deprivatization have on investment by managers of privatized firms?
The impact will be:
- Loosing corporate focus;
- Missing planned CEO turnover;
- Affecting planned managerial objects and strategic efficiency
Obviously, normal managers invest in long-term projects, products and services, deprivatization may come up with a different strategy that not aligned with corporate goals and its profit will probably go to different parties.
Managers believe, in a privatized firm, in greater gains and therefore have different incentives to implement long-term and in many case different strategies than in a deprivatization firm. In a competitive market, manager will constantly search for better ways to sustain profits and constantly reduce the costs.
In absence of these incentives and the pressure to maximize the profits and reduce the costs, the manager of deprivatization firm will only rarely be involved in such extensive exercise and will only meet his superior requirement. 2. What effect will the deprivatization have on foreign investment in Russia?
Based on the answers of question 1, foreign investment is will decrease if deprivatization increases: The room to maximize foreign profits will be small;
Long-term investment will be no longer valid as the government will have greater share in the local market and will force foreign investment to shrink;
Short-term investment may not be profitable enough to return the investment;
Renovation in technology may suffer as well;
Exceptional technology and knowledge will leave the country and will be expensive to attract again.
3. Who gains from deprivatization? Who loses?
Who will gain?
- The local government;
- Politicians;
- Anyone endorses the deprivatization for his/her own goals.
Politicians and wealthy businessmen will abuse their power to help them increase their power and profits.
Who will lose?
- Foreign and
Assignment #1
1. What impact will the prospect of deprivatization have on investment by managers of privatized firms?
The impact will be:
- Loosing corporate focus;
- Missing planned CEO turnover;
- Affecting planned managerial objects and strategic efficiency
Obviously, normal managers invest in long-term projects, products and services, deprivatization may come up with a different strategy that not aligned with corporate goals and its profit will probably go to different parties.
Managers believe, in a privatized firm, in greater gains and therefore have different incentives to implement long-term and in many case different strategies than in a deprivatization firm. In a competitive market, manager will constantly search for better ways to sustain profits and constantly reduce the costs.
In absence of these incentives and the pressure to maximize the profits and reduce the costs, the manager of deprivatization firm will only rarely be involved in such extensive exercise and will only meet his superior requirement. 2. What effect will the deprivatization have on foreign investment in Russia?
Based on the answers of question 1, foreign investment is will decrease if deprivatization increases: The room to maximize foreign profits will be small;
Long-term investment will be no longer valid as the government will have greater share in the local market and will force foreign investment to shrink;
Short-term investment may not be profitable enough to return the investment;
Renovation in technology may suffer as well;
Exceptional technology and knowledge will leave the country and will be expensive to attract again.
3. Who gains from deprivatization? Who loses?
Who will gain?
- The local government;
- Politicians;
- Anyone endorses the deprivatization for his/her own goals.
Politicians and wealthy businessmen will abuse their power to help them increase their power and profits.
Who will lose?
- Foreign and