Learn Awesome Skills For Free


WebSites That will Teach You Awesome Skills For Free

Everyone knows the internet is filled with useful (and not so useful) information, and many site’s won’t even charge you a penny.

Why spend your hard-earned dollars on a class when you can gain tons of new skills online for free?

Awesome Skills to Learn for Free OnlineBecome an Excel expert.
http://chandoo.org:  Chandoo is one of many gracious Excel experts who wants to share their knowledge with the world. Excel excellence is one of those skills that will improve your chances of getting a good job instantly, and it will continue to prove invaluable over the course of your career. What are you waiting for?

 

Instructables.com: Learn how to DIY just about anything (seriously!) with instructions from hundreds of contributors offered up free of charge. DIY solar food dehydrator, anyone?

LEARN HOW TO CREATE ANNIMATED GIFMake your own animated GIF at http://gifmaker.me/ http://makeagif.com/: Learn how to make a gif. Create animated gifs online with our free gif animator in just three easy steps. Upload, Customize, Create.
SAMPLE ON HOW TO MAKE GIFT ANIMATION FROM YOUTUBE VIDEO:

http://makeagif.com/D8deb5

http://www.buzzfeed.com/katienotopoulos/how-to-make-a-gif-without-photoshop

Lifehacker.com/Night School: Hidden among the hacks on this uber-useful site are posted tagged “night school” where you’ll find freebie lessons on everything from how to build a computer to photography basics.

LEARN PHOTOGRAPHY

Lifehacker’s basics of photography might be a good place to start. Learn how your camera works, the basic of composition, and editing images in post-production. Life Hacker Course

Skillshare.com: Find out how to brew a perfect cup of coffee, pickle like a pro, knit, sew, and 100s of more skills. Cram your head full with the site’s complimentary 14-day trial, stat!

JustinGuitar.com: Always dreamed of becoming a rock star? You won’t even have to busk to take advantage of this site’s 850+ gratis guitar lessons.

All kids draw — so why do we become so afraid of it as adults?Drawspace.com: Sharpen your drawing skills with lessons from pros. About 15% of Drawspace’s content is on the house.

All kids draw — so why do we become so afraid of it as adults? Everyone should feel comfortable with a sketchbook and pencil, and sketching is a wonderful way to express your creativity.

DrawSpace is a great place to start. I also highly recommend the book Drawing on the Right Side of the Brain if you can drop a few dollars for a used copy

YogaMeditationAtHome.com: YOME is made up of 100% free online yoga videos that will get you saying ‘omm’ in seconds.

Chesscademy.com: Become a chess master by watching videos, solving puzzles,  and playing games, all free of cost.

GoHighBrow.com: Sign up for unpaid bite-size courses delivered to your inbox daily, aimed at expanding your knowledge on topics ranging from philosophy to Greek mythology.

Spreeder.com: Quick: How fast can you read these words? Use this Spreeder’s completely free reading program to double, triple, even quadruple your reading speed.

DuoLingo.com: Learn a new language from this site’s extensive costless online courses. Bonus: The ‘lessons’ are set up like games!

learn for free Codecademy.com: Get yourself up to speed on the in-demand skill of coding—all without spending a dime.

http://academicearth.org/online-college-courses/

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Joint Ventures


joint venture (JV) is a business agreement

A joint venture (JV) is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity.

By Alla Gul (MBA)Our Contributor

A joint venture (JV) is a legal organization that takes the form of a partnership in which individuals, groups of individuals, companies, or corporations jointly undertake a transaction for mutual profit (“Joint Venture”, n.d.).

The parties agree to create a new entity by contributing equity.

Then they share in the revenues, expenses, and control of the enterprise. This paper discusses why joint ventures may be formed and what benefits may be expected when domestic and foreign companies form a venture. Then resent joint venture example is briefly illustrated.

The partnership can happen between big companies in an industry to differentiate, for example. The joint venture can occur between two small businesses that partner in order to successfully fight their bigger competitors. In addition, companies with identical products and services can also join forces “to penetrate markets they wouldn’t or couldn’t consider without investing tremendous resources” (“Joint Venturing”, n.d., p. 2). Next, a large company can decide to form a joint venture with a smaller business “in order to quickly acquire critical intellectual property, technology, or resources otherwise hard to obtain, even with plenty of cash at their disposal” (“Joint Venturing”, n.d., p. 2). To add, “There are good business and accounting reasons to create a joint venture with a company that has complementary capabilities and resources, such as distribution channels, technology, or finance” (“Joint Ventures (VS)”,  n.d.). Below are some major reasons for forming a joint venture:

Internal reasons

1.         Build on company’s strengths

2.         Spreading costs and risks

3.         Improving access to financial resources

4.         Economies of scale and advantages of size

5.         Access to new technologies and customers

6.         Access to innovative managerial practices

Competitive goals

1.         Influencing structural evolution of the industry

2.         Pre-empting competition

3.         Defensive response to blurring industry boundaries

4.         Creation of stronger competitive units

5.         Speed to market

6.         Improved agility

Strategic goals

1.         Synergies

2.         Transfer of technology/skills

3.         Diversification

(“Joint Venture”, n.d.). 

Joint ventures between companies headquartered in different countries can be particularly beneficial. First, companies may use joint ventures to gain entrance into foreign markets. For example, foreign companies form joint ventures with domestic companies that already are present in markets the foreign companies would like to enter.  Moreover, due to local regulations, some markets can only be accessed via joint venturing with a local business (“Joint Venturing”, 101, n.d., p.2). For example, China and to some extent India, require foreign companies to form joint ventures with domestic firms in order to enter a market (“Joint Venture”, n.d). Next, the foreign companies “generally bring new technologies and business practices into the joint venture, while the domestic companies already have the relationships and requisite governmental documents within the country along with being entrenched in the domestic industry”( “Joint venture”, n.d.). For example, joint ventures are common in the oil and gas industry, and are often formed between a local and foreign company. “A joint venture is often seen as a very viable business alternative in this sector, as the companies can complement their skill sets while it offers the foreign company a geographic presence” (“Joint Venture”, n.d.).

Recently the Hindustan Aeronautics Limited (HAL) and CAE, Canada signed an agreement to establish a joint venture company that will open a helicopter simulator training center in Bangalore, India.

The company, Helicopter Academy To Train By Simulation Of Flying (HATSOFF), will be owned equally by HAL and CAE. The training center is expected to begin operations in late 2008 by providing both civil and military helicopter pilot and maintenance training services. (“HAL”, 2007)

Questions to Answer Before You Approach a New Joint Venture Partner

Questions to Answer Before You Approach a New Joint Venture Partner.
Click to read more…

CAE is a world leader in providing simulation and modeling technologies and integrated training solutions for the civil aviation industry and defense forces around the globe (“About CAE”, n.d.). The Hindustan Aeronautics Limited (HAL) is in the list of top 100 defense companies in the world (“HAL 34th”, n.d.). Among its products are helicopters, aircrafts, advances communication and navigation equipment, and aerospace equipment (“Our Products”, n.d.). By forming the joint venture, the CAE is trying to extend its business-jet training network, to expend its distribution channels, to increase sales of its stimulators, and to capture and extend into India’s growing market (“Remarks for”, 2007,  p.3).  For the Indian partner, this joint venture provides the opportunity to differentiate, to acquire new skills and technology and to extend its marketing reach. Finally, both companies are expected to benefit from a development of a new market and from growth in revenues and profits.

To conclude, a joint venture is a strategic alliance where two or more parties form a partnership to share markets, intellectual property, assets, knowledge, and,  profits. (“Joint Venturing”, n.d., p.1).  The partnership may be formed between domestic companies or between domestic and foreign partners. When carefully planned and successfully implemented, joint ventures bring multiple benefits to parties involved

 By Alla Gul (MBA)Our Contributor


References

About CAE. CAE Inc. Retrieved September 26, 2007 from

 http://www.cae.com/www2004/About_CAE/index.shtml

HAL, Canada’s CAE ink joint venture for helicopter simulator training center. (2007).

Yahoo Business News. Retrieved September 26, 2007 from  http://in.news.yahoo.com/070926/139/6l8gn.html

HAL 34th among top 100 defense firms. Hindustan Aeronautic Limited. Retrieved

 September 26, 2007 from http://www.hal-india.com/34th.asp

Joint ventures. Cornell University Law School.  Retrieved September 26, 2007 from

 http://www.law.cornell.edu/wex/index.php/Joint_venture

Joint venture. Wikipedia. Retrieved September 24, 2007 from

 http://en.wikipedia.org/wiki/Joint_venture

Joint ventures (JVs). E-coach: Sharing Capital, Technology, Human Resources, Risks

 and Rewards. Retrieved September 26, 2007 from

 http://www.1000ventures.com/business_guide/jv_main.html

Our products. Hindustan Aeronautic Limited. Retrieved September 26, 2007 from

 http://www.hal-india.com/products.asp

Remarks for first quarter fiscal year 2008 results. (2007). CAE. Retrieved September 26,

 2007 from

http://www.cae.com/www2004/Investor_Relations/PDF/2008/CAE_FY08Q1_Remarks-en.pdf

Scott Allen. Joint venturing 101. About.com- Entrepreneurs. Retrieved September 26,

 2007 from http://entrepreneurs.about.com/od/beyondstartup/a/jointventures.htm

History of Income Tax in the United States


History of Income Tax in the United StatesThe history of income tax in the United States is also a study in irony.
As an English colony, the American Revolution began with the slogan of “taxation without representation is tyranny.” Today, we have plenty of representation, but the tax burden is heavier and very fluid.

The concept of taxing income is a modern innovation and presupposes several things: a money economy, reasonably accurate accounts, a common understanding of receipts, expenses and profits, and an orderly society with reliable records. For most of the history of civilization, these preconditions did not exist, and taxes were based on other factors. Taxes on wealth, social position, and ownership of the means of production (typically land and slaves) were all common.

A Brief History of Income Tax in the United States

In the Beginning

As a new nation, the United States Constitution becomes the centerpiece of government in this country with each colony adopting it by 1787. One of the provisions of the Constitution allows the federal government to tax the people as it sees fit. Pennsylvania was the first to object to a tax.

Pennsylvania was the first to object to a tax.Originally, any tax proposal would fund the daily obligations of running a central governing body for the good of the nation. Congress would establish a federal individual income tax in 1861 to raise funds to support the Civil War effort.

They let that federal income tax expire in 1872 and soon came to the reality that funding the government was a top priority and that each citizen must participate in that effort.

The implementation of an initial federal income tax was not lasting as the Supreme Court votes it unconstitutional in 1894.
Congress did adopt and enforce the corporate income tax in 1909 while, at the same time, beginning talks about a Constitutional amendment to establish a federal income tax.

The Sixteenth Amendment

Congress approves and adopts this amendment in 1913 and the annual collection of an individual income tax begins. People with income above $500,000 pay the highest income tax rate of 7%.
In 1914, the Bureau of Internal Revenue presents the first Form 1040 even as members of Congress were vocal about the fact that the form was too complex.

Over the next sixty years, the income tax rate gradually rose to a record high of 94% and drops to 80%, where it settles until the late 1960s. When it began, the income tax in the United States was grossly unfair. Yet, over the years, fixing it only made it grossly unfair, complex, arbitrary and corrupt.

It was under President Howard Taft that the constitutional amendment legalizing a personal income tax and a corporate income tax came into being.
Taft’s proposal was brilliant, ahead of its time and became the law in 1913 as his term was ending.
President Woodrow Wilson and a solid Democratic Congress were prompt to enact a personal income tax.

A Two-Tax Dilemma

Deductions from income, a feature of the first federal personal income tax remains to this day. It reduces taxable income by the amount of the deductions. The corporate income tax, a temporary setup, remains in effect to this day allowing the upper class, who own businesses and optimize their riches, to use the two taxes to their advantage.

The lawyers and accountants, working within the system, were capable of finding creative legal methods to utilize the two systems to the client’s advantage. Congress spent many hours with income tax reform to outlaw or regulate these loophole advantages. While its goal was admirable, they only made the tax code more cumbersome.

One consequence of keeping the corporate and personal income tax separate was public accusation of unfair practices.

The rich are not paying their fair share to support the government and its infamous budget.

Internal Revenue Service

History of Income Tax in the United States

A Brief History of Income Tax in the United States

During the mid-to-late 1950s, the Bureau of Internal Revenue became the Internal Revenue Service (IRS). Its Commissioner and Chief Counsel are appointments made by the President and brought to the Senate for confirmation.

Forty years later, the IRS Restructure and Reform Act brought a reorganization meant to resemble an organization in the private sector. The new model was one of customer service grouping customers with similar needs together.
April 15th is Tax Day, although it was not always the deadline for filing the individual income tax.

The IRS Mission
Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

This mission statement describes our role and the public’s expectation about how we should perform that role.

  • In the United States, the Congress passes tax laws and requires taxpayers to comply.
  • The taxpayer’s role is to understand and meet his or her tax obligations.
  • The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share.

income tax in usaRevenue and Expense Precipice

The accounting system for the balance of incoming revenue and outgoing expenses suffers abandonment in favor of limitless spending and then borrowing to finance spending. Income tax monies became bailouts for large companies. These companies are so vital to the economy that we could not allow them to fail.

The 10-year tax breaks from President Bush’s stimulus packages are on extension for one or more years. With the advent of a new presidency, income tax reform is more than just a possibility.
The United States’ debt ceiling reaches a new height almost everyday and revenues cannot possibly sustain the growth of this debt.
A new world order is emerging and the history of income tax in the United States is about to acquire a new chapter.

21 Interview Questions that you Might be Asked


Questions You May Be Asked During an Interview for Web Developer Position

Interviewing  Intermediate Web Developer’s Name:_____________

1. How is your experience relevant to this job?

2. What environments allow you to be more effective?

3. What situations excite and motivate you?

4. How have you handled criticism of your work?

5. Compare this job to others you are perusing.

6. What’s your dream job?

7. What industry sites and blogs do you read regularly?

8. Do you prefer to work alone or on a team? Please explain your point.

9. How comfortable are you with writing XHTML entirely by hand?
Please write HTML code for simple for transitional XHTML page:
with:
• all basic meta tags (as more as you think necessary),
• link to external sample.css file
• link to external sample.js file
• table with 2 rows and 2 columns,
• text link to external page,
• image link to external page
• insert image to the page
• embed iframe

10. Please provide links to your recently completed project. Please explain your role in the projects.
Example: Single web developer or/and web designer, web developer or/and web designer in the team…11. Can you write table-less XHTML? Do you validate your code?
Please write example of table-less XHTML page. We want to see sample of code.

12. What are a few of your favorite development tools and why?

13. What skills and technologies are you the most interested in improving upon or learning?

14. Provide link to your portfolio. Please explain why you build it this way.

15. What sized websites have you worked on in the past?
Please provide link and describe scope of the projects.

16. What are a few sites you admire and why? (from a webdev perspective)

17. I just pulled up the website someone’s built and the browser is displaying a blank page. Walk us through the steps you’d take to troubleshoot the problem.

18. What’s your favorite development language and why? What other features (if any) do you wish you could add to this language?

19. Do you find any particular languages or technologies intimidating?

20. What web browser do you use and why?

21. What are a few personal web projects you’ve got going on?

MARKETING STRATEGY CONCEPTS


SUMMARY MARKETING STRATEGY CONCEPTS

__________________________________________

Currently I am working on Part 2 with concentration on “Online Marketing”

Some of the questions of  “Online Marking Strategies”  will cover:

Below some of the fundamental questions to understand the business before start thinking about business strategies:
Do you have list of your competitors?
Why are you better than your competitors?
Where will your company be in 3-5 years?
Does your company have mission or vision statement, or do you have statement of company value?
How are you marketing your business?
Who are your target audience, target geographic area and how to define it?
How often you visit your competitor’s website and what are the reasons to do it?
What is the best time to send Mass Mail and why?
How to promote on Social Media Websites?
Why social media networking does not work despite resources spent?
What is gorilla marketing and how to use it to increase profit?
And more…
come back for more updates
__________________________________________


The Marketing Mix

The Marketing Mix is a combination of five marketing components that are integrated into the marketing strategy. In the Marketing Strategy the company decides what the most appropriate mix is. These components are also referred to as the 5 Ps :

Product

Market (or Place)

Promotion

Pricing

Distribution (or Placement)

The Product

A Product is a package of benefits as perceived by the consumer. In developing a product strategy you have to address several issues:

  • Determine the product/service need
  • How do you serve the need profitably?
  • Do you have the capability to fill the need?
  • What will the effect be on other products?
  • Will it enhance the company’s image?
  • How will the competitors react?

The Market

A “market” is subdivided into market segments. Each market segment represents a group of potential consumers with similar needs and interests. The target market segments are identified in the Marketing Segmentation Analysis. There are many ways to segment a market and they are not mutually exclusive:

  • Demographic: age, gender, family size, marital status, etc.
  • Geographic: language, regions, government, etc.
  • Psychographic: hobbies, lifestyle, interests, etc.
  • Product Usage: frequency, purpose, etc.

“There is no such thing as one market. There are only market segments”

A “Fit” Analysis is carried out to evaluate the market segments against key objectives and issues such as: corporate goals, corporate strengths/weaknesses, growth objectives, market share objectives, competitive threats/opportunities, and the need to maintain focus.

Promotion

Promotion involves communicating the marketing message of your product to the potential buyers. The components of marketing communications strategies are:

  • Target
  • Intensity
  • Message
  • Medium (Push versus Pull)
  • Economics

The push strategy is more commonly used when you have to deliver a more complex message to the consumer.

Price

What is the appropriate price? Market research can help you estimate what customers are willing to pay.

To set your price you have to understand the relationship between fixed cost, variable cost, contribution, profit impact, and break-even volume. Break-even Analysis is a tool used to analyze these relationships.

You cannot charge any more than what the consumer perceives as the value of the product/service compared to the other available choices.

Pricing Strategies can be set to:

  • gain market share
  • prevent market share
  • meet competition
  • price leadership
  • prevent cannibalization
  • milk product

Distribution

Distribution involves getting the product from where it is produced to where the consumer purchases it. Types of distribution Strategies are:

  • Selective Strategy: the availability of the product is limited
  • Intensive Strategy: the product is available everywhere
  • Direct Distribution: the product goes directly from the producer to the consumer
  • Indirect Distribution: there are intermediaries between the producer and the consumer (e.g. wholesaler, retailer

If you are looking for:

  • sample marketing strategy
  • marketing communication strategy
  • sales and marketing strategy
  • marketing strategy consulting
  • product marketing strategy
  • marketing strategy planning
  • ecommerce marketing strategy
  • internet marketing strategy software
  • search engine internet marketing strategy
  • internet email marketing strategy
  • marketing strategy training
  • consumer marketing strategy
  • trade marketing strategy
  • efficient collaborative retail marketing

subscribe to our blog to stay up to date.

Government Mandated Monopolies,


Government Mandated Monopolies

By Alla Gul (MBA) – Our Contributor

Why are drug companies such as Pfizer allowed to establish and maintain monopolies (patents) on drugs – form of barrier?

Conventional wisdom might suggest that generally monopoly is bad for consumers because of the absence of competition.
A) What type of barrier is this?
B) Do you agree that drug companies should have this government mandated monopoly?  Why?

In economics, a monopoly (from Greek monos / μονος (alone or single) + polein / πωλειν (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it. (This is in contrast to a monopsony which relates to a single entity’s control over a market to purchase a good or service. And contrasted with oligopoly where a few entities have )[1][clarification needed] Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.[2] The verb “monopolize” refers to the process by which a firm gains persistently greater market share than what is expected under perfect competition.

A) Monopoly is the situation in which there is a single seller of a product for which there are no close substitutes (Mankiw, 2004, p.314). A monopoly remains the only seller in the market because other firms can not enter the market and compete with a seller. It might happen due to the following reasons (“Monopoly: A Brief Introduction”, n.d.). First, a single firm owns a key resource.

Second, the government gives a single firm the exclusive right to produce some goods or services. Finally, the costs of production make a single producer more efficient than a large number of producers. As a result, all of the above create barriers to entry causing monopolies to arise. “The fundamental cause of monopoly is barriers to entry” (Mankiw, 2004, p.314). Regardless that government mandated monopolies have had some negative effects on the economy, the government grants the monopoly because doing so is viewed to be in public interests.
When a pharmaceutical company discovers a new drug, it can apply to the government for a patent. If the government approves the patent, the company has an exclusive right to manufacture and sell the drug for 20 years. The drug can not be copied due to protection of a patent (“Monopoly: A Brief Introduction”, n.d.). Many drug companies have been allowed to establish and maintain monopolies (patents) on drugs. These government mandated monopolies have created obstacles for other pharmaceutical companies to enter the market and compete. For example, Pfizer has patents on many drugs including Quinapril, Atorvastatin, and Sildenafil. Until these patents expire, no other company is allowed to produce the same drugs. This gives a company strong monopoly power allowing them to set higher prices and lower level of production than under competition that is considered to be harmful to the economy. However, monopolists argue that granting patents is in the public interest because it would allow them to spend more money on research and development in order to develop new and improved products. “It has long been recognized that government-granted monopolies (i.e., patents, copyrights, trademarks and franchises) can benefit society as a whole by providing financial incentives to inventors, artists, composers, writers, entrepreneurs and others to innovate and produce creative works” (“Monopoly: A Brief  Introduction”, n.d.). In fact, the importance of establishing monopolies of limited duration for this purpose is even mentioned in the Article I, Section 8 of the U.S. Constitution which states that “The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” (“Monopoly: A Brief Introduction”, n.d). Thus, “The government grants the monopoly because doing so is viewed to be in public interests” because “granting patents for discovered drugs encourages research and development” (Mankiw, 2004, p.316).

To summarize, the laws governing patent have benefits and costs. “The benefits of the patent and copyright laws are the increased incentive for creative activity. These benefits are offset, to some extent, by the costs of monopoly pricing” (Mankiw, 2004, p.316).

B) There are intensive discussions on whether drug companies should have this government mandated monopoly. Supporters of such monopolies argue that even if patent laws do impose costs in the form of higher prices and lower availability for consumers, under patent laws, more innovation will occur, which is beneficial  for society as a whole (“Patent Laws and the War on Good Drugs”, 2001). On the other hand, oppositionists state that the law encourages drug monopolies to create artificial scarcity of some drugs in order to have a higher price for their products (Boldrin & Levine  , Chapter 4). Next argument states that the law deprives the poor from affordable drugs and blocks rights of developing nations under TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights).

Despite the clear need for developing countries to exercise their rights to compulsory licensing and parallel imports to enable their people to have access to affordable medicines, a major and perhaps the most disturbing aspect of the crisis of patents and drugs is that obstacles have been and are being put in the way of developing countries seeking to make use of TRIPS provisions on compulsory licensing or parallel imports in order to buy or produce drugs at more affordable prices. (“Patents and monopoly prices”).

To continue, they argue that the high prices can not be justified by large expenses on Research and Development (R&D) since often most of the profits go to cover marketing expenses rather than R&D: “Pfizer says this pricing is necessary to fund new drug research, but 35 percent of its profits drain into marketing and only 15 percent support R&D, according to the Securities and Exchange Commission in 2002…”(“Gov’t should use power to make drugs affordable”). Oppositionists also state that due to the patent law, the pharmaceutical companies are getting less efficient.

In economics, a monopoly exists when a specific individual or an enterprise

In economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service

… Another major problem with pharmaceuticals today: The pharmaceutical companies are getting less efficient. They are increasingly turning out drugs that are less important to public health because they’re not as profitable. For example, roughly 70% of new FDA approved drugs are copycats or “me too” drugs which are small variations on existing drugs, usually done to reduce R&D costs and extend the patent life of an existing drug. (“Prescription Drugs”).

Finally, oppositionists conclude that “Patent protection is the most effective tool for drug manufacturers to keep out competition from generic producers and thus maintain monopoly control over the production, marketing and pricing of medicines” (“Patents and monopoly prices: Third Word Network” ). They state that “The net loss to society – from this policy is real and enormous” (Boldrin & Levine  Against Intellectual Monopoly, Chapter 4)

I incline to support those opposing the law. However, I also understand that the protection of intellectual property rights is important, and its violation “not only harms those innovators, such as the drug companies, who would be directly affected, it also does great damage to innovative activity, and indeed all types of capital (“Patent Laws and the War on Good Drugs”, 2001). I do not think I am ready to take one side or the other at this point since this is a complex issue and I do not want to jump to a conclusion ahead of time. I would like to investigate it more thoroughly.

References

Boldrin & Levine YEAR: Against Intellectual Monopoly, Chapter 4: The Evil of Intellectual

Monopoly Retrieved on October 21, 2007  from http://www.micheleboldrin.com/research/aim/anew04.pdf

Gov’t should use power to make drugs affordable

http://www.yaledailynews.com/articles/view/10127?badlink=1
October 17, 2007)

Mankiw,G.(2004). Principles of Economics. Mason, OH: Thomson South-Western

Monopoly: A Brief Introduction, Retrieved on October 20, 2007  from

http://www.linfo.org/monopoly.html

Morgan Rose , 2001, Patent Laws and the War on Good Drugs. Retrieved on October 21,            2007  from http://www.econlib.org/library/Columns/Teachers/patent.html.)

Novartis lawsuit threatens access to medicines for millions,  January 20 2007 Retrieved

on October 19, 2007  from http://www.oxfam.org.uk/applications/blogs/pressoffice/2007/01/novartis_lawsuit_threatens_acc.html)

Oxfam Press Release – 12 December 2006: India, Thailand and Philippines must face

down conflicts to guarantee affordable medicines Retrieved on October 21, 2007 from http://www.oxfam.org/en/news/pressreleases2006/pr061212_affordable_medicines6

Patents and monopoly prices: Third Word Network. Retreived on October 19, 2007 from http://www.twnside.org.sg/title/twr131b.htm

Pfizer, Novartis flayed for blocking new drugs to poor nations. Retreived on October 21,  2007  from http://www.dancewithshadows.com/pharma2/pfizer-novartis.asp

Prescription Drugs, April 2006. Retreived on October 20 from http://www.kucinichforcongress.com/issues/prescriptiondrugs.php April 2006

” Novartis lawsuit threatens access to medicines for millions”http://www.oxfam.org.uk/applications/blogs/pressoffice/2007/01/novartis_lawsuit_threatens_acc.html Jan 26 2007

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Variety of studies shown that hostile takeovers actually are efficient


By Alla Gul (MBA) – Our Contributor

“Hostile takeover usually involves a public offer of a specific price, usually at a substantial premium over the prevailing market price, for a substantial percentage of the target firm’s stock” (Jarrell, n.d.).  This type of takeover is called hostile because it goes against the wishes of the target company’s management and board of directors.  Hostile takeovers are often seen as inefficient and undesirable. On the other hand, as Lee and McKenzie (2006) stated, there is plenty of evidence that the shareholders of the target company in a hostile takeover realize large gain.

Constant fear of takeover can hinder growth and stifle innovation, as well as generating fears among employees about job security.

Who Benefits from a Hostile Takeover?

Critics of takeovers state that these gains ignore the economic loses that takeovers impose on other groups connected with the target firms (Jarrell, n.d.). However it has been shown in a variety of studies that hostile takeovers actually are efficient. At the same time, even if it is accepted that hostile takeovers are generally efficient, there still should be corporate defenses against such takeovers (Lee & McKenzie, 2006). Among the most common reasons for defense are the desire to retain autonomy or management control, the preference for an alternative partner, and the desire to negotiate a more favorable financial takeover (Pearce & Robinson, 2004). Opposing hostile takeovers, managers of target companies have access to a variety of anti-takeover defensive strategies. The efficiency of hostile takeovers and several anti-takeover defensive strategies are discussed in the sections below.

The efficiency of takeovers

Takeover bids increase the wealth of the corporation’s stockholders significantly (Lee & McKenzie, 2006). But what about other parties involved?

First, critics of hostile takeovers argue that the acquiring corporation often bids too much and loses in the deal. However, Lee and McKenzie (2006) have shown that for the acquiring corporation’s stockholders, their wealth is not greatly affected since “the winning bid for the stock of a corporation targeted for a takeover will fairly accurately reflect the value of that corporation to the winner” (p.510).

Second, also unsupported is the charge that losses to bondholders finance the shareholder gains from takeovers (Jarrell, n.d.). According to several studies mentioned by Lee and McKenzie, takeovers do not impose losses on bondholders, and “…any losses to bondholders do not come anywhere close to offsetting the gains to stockholders” (2006, p. 511). Considering shareholders of bidding firms, “…the studies that find net losses from bidders also show that these losses – at 1 to 3 percent of the stock price – are minuscule compared with the enormous gains to target shareholders” (Jarrell, n.d.).

Next, there is also an opinion that the constant threat of hostile takeover forces corporate managers to stress short-term policies at the expense of more valuable long-term plans, “thereby impairing the economic health and competitive vigor of their companies and the nation” (Jarrell, n.d.). However, the research has shown that the threat of a hostile takeover is not a reason for managers to become short-sighted. Moreover, making decisions that increase the long-term profitability of the firm even if those decisions temporarily reduce profits is the best protection against a takeover (Lee & McKenzie, 2006).

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Also, after a corporation is taken over, often it is broken up as the acquiring firm sells off divisions, often ones that have been profitable. And, therefore, as critics of takeovers state, takeover is disruptive and inefficient. However, multiple examples have proven that by spinning off some of the acquired firm divisions, its total value often increases (Lee & McKenzie, 2006).

To continue, there is a claim made that although stockholders gain from takeovers, they do it at the expense of workers being laid off. But the fact that workers are laid off after hostile takeovers is consistent with the view that these takeovers promote efficiency (Lee & McKenzie, 2006). Lee and McKenzie (2006) further argued that one of the advantages of the market for corporate control is the increased pressure on managers to keep the size of their workforce under control. In addition, most of the harmed workers are not necessarily made worse off by the system that encourages takeovers. “Workers harmed in the case of their firm’s takeover can receive offsetting benefits from the efficiency improvements they, the workers, realize through the lower price of the goods they buy” (Lee & McKenzie, 2006, p.515).

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Takeover defenses

 

 

They can be classified into two categories: preventive and reactive. Preventive strategies are taken by executives to make the firm less attractive as an acquisition target. Reactive strategies are used when a hostile takeover has begun because the particular suitor is not wanted (Pearce & Robinson, 2004). Poison pills and golden parachutes are examples of preventive defenses’ forms, and greenmail and litigation are the forms of reactive anti-takeover defenses.

A poison pill is a very effective way for managers of a corporation to defend against a takeover. It is a defensive strategy that allows shareholders of the target firm to acquire additional shares at attractive prices to dilute the stockholdings of the acquiring corporation causing attacking firms to lose money on its investment (Lee & McKenzie, 2006). Based on results of several studies, the poison pill is a highly popular and effective defensive strategy and may be beneficial to the target firms (Pearce & Robinson, 2004). However, as Lee and McKenzie (2006) have stated, studies indicate that they are in general harmful to the wealth of the target corporation’s shareholders.

Golden parachutes are another form of defensive strategy. Golden parachutes are special, valuable compensation packages that are distributed to a selected group of executives ‘if a pre-specified threshold of outside stock ownership is acquired in a takeover bid” (Pearse & Robinson, 2004, p. 19). Lee and McKenzie (2006) have pointed out that golden parachutes reduce management opposition to takeover bids that benefit shareholders. They can also encourage executives to take greater risks, “given that they know that they will receive a significant severance-pay package if the risks they take result in losses and they lose their jobs” (Lee & McKenzie, 2006, p.517). However, as Lee and McKenzie (2006) continued, ” There is at least tentative support for the proposition that that golden parachutes, across a range of companies, tend to promote the interest of shareholders… by bringing the interests of top managers more in line with those of their shareholders ” (p. 517). Moreover, according to Pearce and Robinson (2004), many studies have indicated that golden parachutes have low effectiveness as a defense strategy and have negligible effects on stockholder wealth.

The next strategy, greenmail, involves repurchasing the shares of stock that have been acquired by the aggressor at a premium in exchange for an agreement that the aggressor will no longer target the company for a takeover (Pearse & Robinson, 2004). Some studies suggest that greenmail can result in small gains for the repurchasing firm’s shareholders. However, any gain to shareholders may encourage others to attempt a takeover (Lee & McKenzie, 2006). Other studies indicate that greenmail has medium effectiveness as a defense strategy and that the effect of greenmail payments on shareholder wealth is generally negative (Pearce & Robinson, 2004, p.21). In addition, Lee and McKenzie (2006) concluded that paying greenmail consistently does not promote the long-run profitability of a firm.

Finally, litigation is a defensive strategy that involves pursuing a legal sanction and restraining order against a pursuer to block that company from acquiring additional stock until the pursuer can prove that that justification for the injunction is unfounded. Litigation is often undertaken to extend the negotiation period so that more attractive offers can be solicited and/or to insure a higher probability of a successful takeover (Pearce & Robinson, 2004). In general, according to a number of studies, the strategy has low effectiveness as a defense mechanism against takeover but has a positive wealth effect for stockholders (Pearce & Robinson, 2004)

To summarize, some individuals and groups do lose in any takeover. However, “The empirical studies offer little or no support for the notion that the huge gains to shareholders reflect similarly large loses to related parties…On average, takeovers reflect wealth-enhancing and socially valuable redeployment of corporate recourses…  Huge gains to target shareholders created large net economic gains”( Jarrell, n.d.).

At the same time, even if it is accepted that hostile takeovers are generally efficient, there still should be corporate defenses against such takeovers (Lee & McKenzie, 2006). It is difficult to define what the best means to protect a corporation against hostile takeover are. Strategies vary in their efficiency and effectiveness. However, “The best defense is efficient management that provides shareholders with a competitive return on their investment” (Lee & McKenzie, 2006, p.516).

The main consequence of a bid being considered hostile is practical rather than legal. If the board of the target cooperates, the bidder can conduct extensive due diligence into the affairs of the target company. It can find out exactly what it is taking on before it makes a commitment. But a hostile bidder knows only publicly-available information about the target, and so takes a greater risk. Also, banks are less willing to back hostile bids with the loans that are usually needed to finance the takeover. However, some investors may proceed with hostile takeovers because they are aware of mismanagement by the board and are trying to force the issue into public and potentially legal scrutiny

References

Jarrell G. Takeovers and leveraged buyouts. The Concise Encyclopedia of Economics. Retrieved on November 5, 2007 from http://www.econlib.org/Library/Enc/TakeoversandLeveragedBuyouts.html

Lee, D.R. & McKenzie, R. B. (2006). Microeconomics for MBAs. New York.

Cambridge University Press

Pearce. J & Robinson. R. (2004). Hostile takeover defenses that maximize shareholder wealth. Business Horizons. 47/5, pp.15-24

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