University of Wolverhampton

(5IB004) Managerial
Economics
Module tutor: John Reynolds

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Task:1

Introduction

Individuals who own their own firms are extremely keen on profit maximization but in

public Limited Corporation there is a gap between ownership and control. Shareholders who own

the firm, want to maximize their returns profits and keep cost low, but are not in position to run

the firm. Shareholder owns a small part, or share of a business. When business makes profit they

are entitled to share that profit which is dividend, without which they will not feel like investing.

By buying shares, shareholders provide funds to the business for investment purpose.

Shareholders appoint directors to represent their interests and directors appoint managers to run

the company. Professional managers are given control and the interests of managers may be

different from that of the shareholders. Presently the dominant part of vast firms controlled by

expert directors that the extent of expansive firm controlled by proprietorship investments is

declining and that in any occasion there is next to no distinction in conduct in the middle of chief

and manager controlled firms (Beatty & Zajac 1994)

In this research through Berle and Means (1932) recognized a "divorce" of possession

and control that exists on account of an open restricted organization. And, the analysis of the

steps to make the effectiveness of decision process for organization endurance. How a divorce

could alter the organizational objectives and the managerial decisions in a typical public limited

company, and the decision control system of organizations, large and small, in under the

governing board.

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Discussion

There are three common structures of organization ownership, public ownership, private

ownership and collective. In public ownership, structure specifies that the decision making and

participation is directed by board of directors. The regular peak of the choice control

arrangement of associations, large and little, in which boards dependably have the ability to

contract, fire and remunerate the top-level choice supervisors and to endorse and screen vital

choice. Exercise of these top level decision control rights by a board, helps to ensure separation

of decision management and control. Managers hold little stock ownership themselves as there

are powerful oligopolistic owners who separate themselves from the operations areas. The

effectiveness of Berle and Means research is realized when organization witnessed that the

divorce of ownership from control undermines the ability to hold managers to account and

preventing them from pursuing their own sectional interests. The considerable concern was lack

of managerial accountability can held in danger not only to the investors but also separation of

ownership from control can affect concern of society in general (Wiley 2010)

The separation of ownership is stated as the ownership of the equity in organizations.

What's more by control it is implied that having the power to focus corporate strategy has had on

the corporate administration (Cheffins & Bank 2009). This ownership structure has become the

part of strategic decision of organizations as dispersed in recent, times shareholding by a

relatively small number of institutional investors with dispersed stock market. Investors now are

in prime position to monitor company management and help to align the interest of the

management with

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those of their shareholders. Corporate decision making have been encouraged to take on more

role in recommendation. Through this degree of monitoring by the institutions is becoming

known as shareholder activism. The level of proprietorship dispersion has an incredible effect on

the level of participation between the state and corporations and also on the establishment

analysis of the ownership structure. This change was one of the predominant variables that

decided the level of association (Jones 2011).

Economics tend to ignore the analysis of the steps of the making of decision process. The

ways organization makes decision have impact on its survival. Initiation is the generation of the

proposals for the utilization of the resources structure of the contract. Ratification is the

implementation of the decision initiative and its choice. And implementation is once the

ratification is managed the execution of the ratified decision is made, whereas monitoring of the

implementation of rewards and the measurement of the performance on agents decision. It is

convenient to combine two functions under the term decision management. The term decision

control incorporates the endorsement and checking of choices. Choice administration and choice

control are the segments of the association's choice methodology or choice framework. Share

ownership and the ownership patterns in public limited companies have large-percentage

shareholders, and the ownership concentration. Public limited companies have managers with

plans different from those of business owners (Cheffins & Bank 2009).

Different people and group have only limited part to play in making or reaching at any

decision. The decision also turns on potential conflicting grounds and knowing the process of

making decision in the light of their own selective interpretation and politically rationalize the

result, diverted information exist. There has been a dynamic argument on the importance that the

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distribution of stock ownership has for organization. The distribution of ownership has important

implications for the efficiency and strategic development of organizations (Hill & Snell 1989).

The public corporation best describes the government-owned corporations. However,

their private or public businesses, both deal with similar managerial problems. Decision makers

strategies of the appropriate way of dealing with these problems in business may significantly

differ in the two types of organization. The management of private business firm and has

different objectives and far clearer standards for success. A public limited company (PLC) is a

firm owned by a group of shareholders, and whose shares are traded on the stock exchange.

People buy shares in order to maximize their returns, that is, their dividends (so shareholders

want profit to be maximized. In Public Limited Corporation such as government agencies,

hospitals and universities are openly political; they are not agreed on goal of profit

maximization, but need for power. Managing public organization is more concerned on meeting

with the multiple interests of stakeholders. To merge the interest and reach to the final decision

one may use wide range of political strategies (Wiley 2010)

Berle and Means recognized that having arrived at a condition in which the individual

enthusiasm of the shareholder is unquestionably agreeable to the will of a controlling gathering

of supervisors despite the fact that the capital is comprised of the collected commitments of

people those are tremendous in numbers. The dispersion in ownership is an important part of the

wealth of individuals consists of interests of organization of which no one individual owns a

main part. Management of companies is management-controlled underlying the main cause on

the basis; their major shareholders were themselves corporations that were management-

controlled eventually (Cheffins & Bank 2009).

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The principle goal of business is to make profits; firms are strongly motivated in the

search for profits and prefer to make more profits rather than less profit. There is pressure to

make large profits in the short run to appease shareholders and to maintain the price of the

company shares (Cheffins & Bank 2009).

Conclusion

When organization witnessed that the divorce of ownership from control challenges the

ability to hold managers accountable and precluding them from pursuing their own sectional

interests. How a divorce could alter the organizational objectives and the managerial decisions in

a typical public limited company, is as the considerable concern can hold back of managerial

accountability, and can held in danger not only to the investors but also separation of ownership

from control could affect concern of society as a whole. Managing public organization is more

concerned on meeting with the multiple interests of stakeholders. To merge the interest and reach

to the final decision one may use wide range of governmental strategies.

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Reference List
Beatty, R.P. & Zajac, E.J., 1994. Managerial Incentives , Monitoring , and Risk Bearing: A Study
of Executive Compensation , Ownership , and Board Structure in Initial Public Offerings.
Administrative Science Quarterly, 39(2), p.313. Available at:
http://www.jstor.org/stable/2393238?origin=crossref.
Cheffins, B. & Bank, S., 2009. Is Berle and Means Really a Myth? Business History Review,
83(03), pp.443474.
Hill, C.W.L. & Snell, S.A., 1989. EFFECTS OF OWNERSHIP STRUCTURE AND CONTROL
ON CORPORATE PRODUCTIVITY. Academy of Management Journal, 32(1), pp.2546.
Jones, R.M., 2011. Corporate Governance and Accountability. In Corporate Governance: A
Synthesis of Theory, Research, and Practice. John Wiley and Sons, pp. 559576.
Wiley, J., 2010. Handbook of Decision Making 1st ed. N. C. Paul & W. C. David, eds., Sussex:
Liberty of Congress Cotologing-in Publishing Data.

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Task: 2

Introduction

This report provides more holistic review of market. Among, various structure of markets

such as Monopoly, Oligopoly, Monopolistic Competition and Perfect Competition. The

household cleaning equipment market falls on perfect competition. Shaving and hair removal

markets structure is Oligopoly with few dominant firms. Product differentiation takes place; as

repackaging of an existing product in household cleaning equipment market. Among various

sources of communicating the product, television is the dominant media channel for advertising,

products in the cleaning equipment category also for shaving and hair removal markets.

Advertising the product for shaving and hair removal markets is focusing on football campaign

as part of its support and sponsorship for the 2014 World Cup. Technological advancements are

seen from the traditional cleaning equipment market, with the rising popularity of electronic

cleaners, steam cleaners. There is an opportunity for cleaning equipment manufacturers to direct

their products more specifically at younger consumers. Households with children are more likely

to incur dirt and mess than those without, and this is evidenced by the higher level of product

usage seen amongst families with children than those without. Promotional Pricing is regularly

utilized for the essential advantage of driving more income and trade stream for the short term.

Strategy adopted by Shaving and Hair removal products. Further, in this report Issues and

Insights are identified among the Hair Removal and Shaving Products and Household Cleaning

Equipment (Duckett 2014; Libby 2014).

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Household Cleaning Equipment

Perfect Competition is when by having small products in respect to the whole market and

produce comparative items (Karuna 2007). In this report is like the usage of cleaning equipment

around the home, including the use of cloths, scourers, dustpans and brushes, brooms and mops,

as well as electrical goods such as vacuum cleaners and steam cleaning devices. The report

likewise covers impacts when purchasing dishwashing gear and disposition towards utilizing

both general supplies and floor-particular cleaning gear. Awareness of household bacteria has

meant that consumers are not only interested in having floors that look clean, but that are also

germ-free, consumers; who use any household cleaning equipment agreeing that it is important

that floor cleaning equipment removes germs from floors as well as dirt. To make an item more

appealing by differentiating its interesting qualities with other contending items basic as

bundling the merchandise in an imaginative manner, or as involved as fusing new useful

gimmicks or creating a new advertising campaign or other sales promotions instead. In this

report differentiation does not involve changing the product at all; household markets try to

differentiate its product by repackaging of an existing product. Their activities accounted for

around half of category new product development each year from 2011, with all of the major

supermarkets regularly active in terms of launching own-label household cleaning equipment.

This has helped own-label effectively compete with branded goods in terms of both range scope

and price (Duckett 2014).

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The cost structure the household cleaning equipment category is one borne out of

necessity, with a large proportion of launches addressing key consumer wants and needs by

economy low price and ease of use convenience. Advertising the product is popular in house

hold equipment. Among various channels of communicating the product, like running online

competitions that offer participants the chance to win prizes, as well as blog posts on its

Facebook page by the celebrity household cleaner Aggie Mackenzie. Television is the dominant

media channel for advertising products in the cleaning equipment category. This is true across

the household care market, with cleaning brands favoring the television advertising due to its

wide reach and ability to show products in action. The technological advancements and lower

prices across the electronic cleaning equipment market are increasingly impacting the traditional

cleaning equipment market, with the rising popularity of steam cleaners having the most

inauspicious impact. Competing on the unique way of cleaning which just uses water rather than

chemicals loyalty, satisfied consumers, high level usage, making sure in-store presence,

accessible (Duckett 2014).

The over all, performance of house hold supplies business sector demonstrates an

increment in the quantity of kids could also provide scope for the cleaning equipment market,

particularly in terms of marketing. Households with children are more likely to incur dirt and

mess than those without, and this is evidenced by the higher level of product usage seen amongst

families with children than those without. There is an opportunity for cleaning equipment

manufacturers to direct their products more specifically at younger consumers, using different

ways of

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encouraging them to trade up. In other household markets, it has proven to be a bigger influencer

to younger consumers. 44% of all people who use any household cleaning equipment agree that

it is important to disinfect dish cloths. An upsurge in marketing activity seen in 2012/13 helped

to drive sales during 2013, with total market value sales up 2.1% in 2013 compared to the

previous year at 284 million. However, total value sales are expected to fall in 2014, down

1.5% compared to the previous year at 280 million, with poor sales from the floor cleaning

segment dragging down overall market performance. Growing concern over chemicals in

cleaning products spells good news for glove manufacturers. Customers demonstrate a critical

enthusiasm for floor cleaning supplies that is not just ready to make floors seem clean, but that

will also make them germ-free, which could be behind the upsurge in popularity of steam

cleaners (Duckett 2014).

Shaving and Hair Removal Products

Among, various structure of markets. The market structure for Shaving and Hair

Removal Products is oligopoly. Oligopoly is a market structure in which a few firms dominate.

At the point when a business sector is imparted between a couple of firms, it is said to be

profoundly focused. Albeit just a couple of firms command, it is conceivable that numerous

little firms might likewise work in the business sector. The methodology is amazingly essential

to firms that are related. Since firms can't act freely, they must expect the probable reaction of

an adversary to any given change in their cost, or their non-value action (Karuna 2007). In

other words, they need to plan, furthermore, work out a scope of conceivable alternatives

focused around how they think adversaries may respond. Oligopoly has to make critical

strategic decisions, such as: whether to compete with rivals, or collude with

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them, whether to raise or lower value or keep value the consistent, whether to be the first firm to
execute another technique; or to lie low what the opponents do. Pricing is a difficult decision
when launching a product and a high or low pricing strategy may be taken, with the general
effect that the higher the price the lesser the products you will sell. Razor and shaving market in
UK promotional pricing is usually a short-term approach for companies used in this report,
despite the fact that a few retailers utilized repeating special evaluating as an approach to keep up
progressing buys from plan cognizant purchasers. While inordinate utilization of offers
advancements and rebates can result in a value introduction in clients, this strategy does offer a
few advantages to razor and hair shaving business sector. Retail esteem deals in the shaving and
hair evacuation market have suffered a mixed performance in recent years, at first stunted by a
reliance on price promotions and a fashion for beards, then returning to growth after a host of
NPD (new product development). Looking forward, the market continues to be challenged by an
ageing population, however, harnessing a trend for male body hair removal, and longer-term
removal methods such as laser devices, presents an opportunity. Male famous people, and thus
the quantity of men expelling hair from their face declined.however, this business decrease is not
anticipated that will proceed into future (Libby 2014).

Personal technology is fuelling the rise in time saving and productivity perfection more

than anything else. Moreover, the rise in personal data collection and analysis is allowing the

market of shaving and hair removal market to make smarter and faster decisions often

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without having to consult an authority figure. The health space is being revolutionized by new

tools which allow consumers to assess their vital info without stopping by the doctors office.

One in five (19%) men aged 25-34 would like an electric shaver with guide for precise lines.

This can be extended into in-store booths which scan face shape and offer guidance on facial

hair grooming, or eyebrow shaping for women (Libby 2014).

Product differentiation is categorized in three parts. Differentiation is an indication of

vitality and profitability taken from consumer perceptions of a brands standout from others in

its competitive sphere. Trust is an indication of brand integrity and stature. Derived from an

agreement with the statement a brand that I trust; and experience of consumers who have ever

used/visited/bought the brand, an indication of presence in the category. Advertising the

product for shaving and hair removal markets is focusing on football campaign as part of its

support and sponsorship for the 2014 World Cup. The most promotional videos are featuring

celebrities; Presence on both Twitter and Facebook. Video Games where users can pluck

growing hairs out of an image of person are also available to play online television, print and

social media advertising and social blogging (Libby 2014).

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Conclusion

Shaving is the most famous strategy for hair evacuation. Shaving and hair removal

product consumer wants convenience and economy. Despite the fact that the greatest

advancements came in cartridge razors, the only segment to grow in the last two years was

disposable razors; as consumers demonstrate a continual willingness to use products that are

good enough and affordable. Specifically, Shaving is the preferred method for hair removers.

Therefore razor innovations hold

the most interest amongst consumers. Utilization of cleaning supplies around the home,

including the utilization of fabrics, scourers, dustpans and brushes, sweepers and mops, and also

electrical products, for example, vacuum cleaners and steam cleaning gadgets. The increasing

popularity of steam cleaners poses a potential threat to traditional cleaning equipment, with

consumers favoring their ability to rid the house of germs without resorting to hefty chemicals.

Both markets focused mode of communication is advertising on Television. Perfect competition

is followed by house hold cleaning equipment and Oligopoly is followed by Shaving and Hair

removal Razor. Purchasers demonstrate a critical enthusiasm for floor cleaning supplies that is

not just ready to make floors seem clean, but that will also make them germ-free, which could be

behind the upsurge in popularity of steam cleaners. In Shaving and hair evacuation items male

superstars and accordingly the quantity of men expelling hair from their face declined. Then

again, this business decrease is not anticipated that will proceed into future. Overall, both

markets have future and massive competition in new product development.

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Reference List

Duckett, J., 2014. Household Cleaning Equipment - UK - September 2014,

Karuna, C., 2007. Industry product market competition and managerial incentives. Journal of
Accounting and Economics, 43(2-3), pp.275297.
Libby, C., 2014. Mens and Women's Shaving and Hair Removal - UK- September 2014,

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