Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MAX SALES?Responsible for Customer.

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

MINIMIZE COST?Responsible for resource providers

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

MINIMIZE ERROR OF REPORTING?Responsible to SEC & Professional Org.

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

MAXIMIZE NET PRESENT VALUE?Responsible to Stockholders

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

MINIMIZE LOSS OFGOODWILL?Responsible for main-Taining customer goodwill

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

WHO MAXIMIZES CORPORATE VISIBILITY?

Responsible for Goodwill in the long

run

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

PUBLIC RELATIONSMAX Goodwill visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

MINIMIZE UNDESIRABLE VISIBILITY? ResponsibleFor Enforcement Authorities

PUBLIC RELATIONSMAX Goodwill visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

PUBLIC RELATIONSMAX Goodwill visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

MAXIMIZE WINDFALLS FROM GOVERNMENT? Responsible forTop decision makers in government

PUBLIC RELATIONSMAX Goodwill visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

PUBLIC RELATIONSMAX Goodwill visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

MINIMIZE REPORTING ERROR FOR FIRM’S PAST? Responsible for posterity

PUBLIC RELATIONSMAX Goodwill visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

Historian MIN Reporting Error of Firm’s Past

Historian MIN Reporting Error of Firm’s Past

PUBLIC RELATIONSMAX Goodwill visibility

Studies Used in Private Organizations

Objectives Choices Type of Study Department

Min Error Statistical technique Forecast, Scenarios, Simulations, Sensitivity Analysis

Economics, Finance, Planning, Research

Max Sales Advertising, pricing Advertising, Demand Marketing

Max Ouptut, Min Cost, Max Productivity

Inputs, technologies Engineering, Production, Cost Effectiveness, Feasibility

Engineering, Production, Personnel

Max Profit Planning, method of reporting

Income Statements, Business Plan

Accounting, Finance

Max Net Present Value

Real estate, plant, equipment

Capital Budgeting Finance, Planning

Max net Benefit Public projects, taxes, regulation

Cost-benefit Analysis Lawyers, Lobbyists, Trade Associations, Management

Max Social Welfare

Other govt regulation Govt. Studies (same)

AGENCY PROBLEMPrincipals = OwnersAgents = Managers and other employees who are not owners

Individual Agents compromise an organization’s goals by

achieving goals of their own.

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

ORGANIZATION CHART

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

Historian MIN Reporting Error of Firm’s Past

Historian MIN Reporting Error of Firm’s Past

AP: poison pills, greenmail

AP: Write EXPOSE

AP: unprofitabledeals

AP: larceny,report delay

AP: Whistleblowing

AP: Thievery, waste,failing to report problems

AP: Leakinginformation

AP: Creatinglegal problems

AP: Brusquetreatment of customers

PUBLIC RELATIONSMAX Goodwill visibility

AP: Grab own spotlightUnwanted visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

How does your practice cover these responsibilities?

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

Historian MIN Reporting Error of Firm’s Past

Historian MIN Reporting Error of Firm’s Past

AP: poison pills, greenmail

AP: Write EXPOSE

AP: unprofitabledeals

AP: larceny,report delay

AP: Whistleblowing

AP: Thievery, waste,failing to report problems

AP: Leakinginformation

AP: Creatinglegal problems

AP: Brusquetreatment of customers

PUBLIC RELATIONSMAX Goodwill visibility

AP: Grab own spotlightUnwanted visibility

Research/ EconomicsMIN Error of Forecast

Research/ EconomicsMIN Error of Forecast

Will You do these all yourself? Really?

MARKETING DEPARTMENTMAX SALES

MARKETING DEPARTMENTMAX SALES

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

ENGINEERING, PRODUCTION, PURCHASING, PERSONNEL:MIN COSTS or MAX PRODUCTIVITY or MAX OUTPUT

Accounting MIN Reporting Error

Accounting MIN Reporting Error

MANAGEMENT/ FINANCEMAX Net Present Value

MANAGEMENT/ FINANCEMAX Net Present Value

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

CUSTOMER RELATIONSMIN Loss of GoodwillMIN Cost per customer

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LEGAL COUNSELMIN Undesirable VisibilityMIN Legal Costs (?)

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

LOBBYISTSMAX Government Windfalls MIN Compliance Costs

Historian MIN Reporting Error of Firm’s Past

Historian MIN Reporting Error of Firm’s Past

AP: poison pills, greenmail

AP: Write EXPOSE

AP: unprofitabledeals

AP: larceny,report delay

AP: Whistleblowing

AP: Thievery, waste,failing to report problems

AP: Leakinginformation

AP: Creatinglegal problems

AP: Brusquetreatment of customers

PUBLIC RELATIONSMAX Goodwill visibility

AP: Grab own spotlightUnwanted visibility

MARKET GOVERNMENT GOVERNMENTFAILURE INTERVENTION FAILURE EXTERNALITY PUBLIC ENTERPRISE ADMINISTRATIVE-PUBLIC GOODS-NATIONALIZATION COSTMARKET -PRIVATIZATION COMPLIANCE POWER REGULATION COSTINEQUITIES - OUTPUT EFFICIENCY COSTDYNAMIC - PRICE - NEGATIVE EXTER. MKT. FAIL. - STANDARDS -PUBLIC BADSINDIVISIBILITY ANTITRUST - MKT POWERINFORMATION -STRUCTURE - INEQUITIES ASYMMETRY -CONDUCT - DYNAMIC TAXES (SUBSIDIES) - INDIVISIBILITY PROVISION OF - INFORMATION INFORMATION RATIONING (MONEY)

GOVERNMENT STUDIESType ofStudy

Objective of Study Definition andFocus

ImplicitConstraints

Problem________

Cost BenefitAnalysis

Net Social Benefit Benefits & costsincluded towhomeveroccurring

None Comprehensivemeasurement ofbenefits & costs ishard

Regulatory ImpactAnalysis

Net Social Benefit& other socialobjectives

Includes costbenefit analysis andother studies

Environmental &other constraints

Goes beyond cost-benefit, butbecomes verysubjective

Economic ImpactAnalysis

Describe allregulatoryt impacts

Examines price,output, financial, &employmentimpacts

Assumes impactsshould be minimal

Regulationdiscouraged.Limited weighingof costs/benefits

Closure Analysis Maximizeregulatoryobjective

Defines degree ofregulation that willshut firms down

Implicitly, firmsare not to be shutdown

Overregulatesprofitable,underregulatesunprofitable

Cost EffectivenessAnalysis

Maximize pollutionabatement, etc.

Avoids $ value onbenefits ofgovernmentintervention

Budget or costconstraint limitsamount ofintervention

Comparisonsdifficult acrossdifferent types ofintervention

Fiscal ImpactAnalysis

Up to decisionmakers

Focuses only ongovt. unit

Govt. revnue mustexceed cost

Ignores costws &benefits to society