Logistical Strategies and Risks in Canadian Grain Marketing

Logistics management in grain marketing has become very important with the maturity of the industry. This is particularly critical in the Canadian grain marketing system, which has experienced disruptions for various reasons over many years. These problems have been the topic of numerous industry evaluations, have resulted in a complaint about service obligations during the 1996–97 crop year, and were addressed by the Estey Commission. A detailed model of the Canadian grain logistics system is developed in this paper to evaluate factors that cause disruptions, as well as the effect of several important logistics and marketing strategies on system performance. The results illustrate that there is sufficient randomness throughout the various functions of the system that it is expected that demurrage at the west coast would periodically be an important cost. The frequency of service disruptions and demurrage are affected by several factors, including the distribution of tough and damp grains, mis‐graded grain and the level of exportable supplies. Several strategic variables affect system performance. These include the aggressiveness in selling relative to capacity and the level of beginning port stocks. La gestion de la logistique dans le commerce des céréales a acquis une grande importance maintenant que ce secteur a atteint la maturité. C'est particulièrement important dans le système canadien de mise en marché des céréales lequel, pour diverses raisons, a essuyé bien des perturbations ces dernières années. Les problèmes en cause ont fait l'objet de nombreuses évaluations du secteur. Ils ont même abouti au dépôt d'une plainte sur les obligations de service dans la campagne agricole 1996–1997 et ont étéétudiés par la Commission Estey. Dans la présente communication nous avons construit un modèle détaillé du système canadien de logistique du marché des céréales ainsi que de l'effet de plusieurs stratégies importantes de logistique et de commercialisation sur la performance du systeme. Les résultats obtenus montrent qu'il y a suffisamment d'aléatoire dans les diverses fonctions du systeme pour conclure que les frais de séjour à quai sur la côte ouest seraient périodiquement un important poste de dépense. La fréquence des perturbations des services et les coûts a quai sont associés à plusieurs facteurs dont la livraison de grain gourd et humide, de grain mal classé et le niveau des disponibilités exportables. Plusieurs variables stratégiques influent sur le fonctionnement du système, notamment l'agressivité manifestée dans la vente par rapport aux stocks disponibles et le niveau des stocks disponibles dans les ports au début de la campagne d'exportation.     

Corporate Strategy in the Tobacco Manufacturing Industry: The Case of Philip Morris

The purpose of this case study is to identify corporate strategy options at Philip Morris in an uncertain business and legal environment. Because it controls approximately one-half of the domestic market for tobacco products, efforts by antismoking advocates directed toward getting Philip Morris to change its corporate policies are a major step toward getting policy changes accomplished within the entire tobacco manufacturing industry. The company has been the largest player in a structurally oligopolistic industry with only a small number of important competitors. In October 1999, on a web site position paper, Philip Morris admitted that smoking is a contributing factor to the development of a variety of diseases and that cigarette smoking was addictive. The paper examines legal issues pertaining to lawsuits directed toward claims on behalf of smokers and their families. A jury verdict in the Florida class action lawsuit on behalf of smokers, now under appeal, would require payments approximately equal to the entire market capitalization of Philip Morris on the day the verdict was announced. The paper outlines three possible organizational strategies in the face of continuing legal issues which threaten the future of the company: (1) Continue as they are now operating as a single company; (2) Spin off nontobacco components to shareholders as a separate company; and (3) Discontinue domestic manufacture and sale of tobacco products while maintaining an international tobacco business.     

Teaching Net Present Value Analysis: Returns-to-Assets versus Returns-to-Equity

We survey textbooks from agricultural economics and other subject matter areas to determine their treatments of the returns-to-assets versus returns-to-equity methods for determining the net present value of investment projects. Textbook authors disagree about the appropriate method, often give conflicting advice as to how a given method should be applied, and do not show how the results of the two methods can be reconciled. We provide a consolidated discussion of the circumstances under which the two methods produce the same net present value.     

Implementation of the European Water Framework Directive: Integration of hydrological and regional planning at the Segura River Basin,southeast Spain

The implementation of the European Water Framework Directive (WFD) is a great challenge for a catchment area such as the Segura River Basin. An intense use of hydrological resources has taken place in this semi-arid region of southern Spain, with the huge territorial transformation, demonstrated in the expansion of the irrigated areas and the growth of urbanization, principally in the last few decades. The provision of water to the population in particular has improved since the middle of the 20th century owing to the Mancomunidad de los Canales del Taibilla (MCT) and to their extraordinary development of hydrological infrastructure. The MCT also has to manage various resources, principally the transfer from the Tagus River to the Segura.     

A note resolving the debate on “The weighted average cost of capital is not quite right”

Miller (2009a) derives a weighted average cost of capital for the special case where the cash flows to equity and the cash flows to debt are annuities. The paper attracts debate. We show that the weighted average cost of capital is redundant in a world where interest paid is not tax deductible. The required rate of return on unlevered equity will consistently and reliably estimate the net present value of any project no matter the idiosyncratic beliefs of the analyst as to the year-by-year leverage of the project, or of the firm. We recommend that the weighted average cost of capital method is discarded.     

Business Ethics: A Quantitative Analysis of the Impact of Unethical Behavior by Publicly Traded Corporations

This study examines whether the financial markets penalize public corporations for unethical business practices. Using event study methodology, it is found that upon the announcement that a firm is under investigation or has in some way engaged in unethical behavior, a statistically significant negative abnormal (excess) return is found. This suggests that firms are indeed penalized for their unethical actions.