Managing the Pricing of Integrated Solutions in Export Partnerships

Little research has been conducted to guide the management of marketing variables, such as pricing, in systems business context. Furthermore, given that international partnering has become a popular mode of operation for SMEs, the objective of the current thesis was to explore the scantly researched topic of managing the pricing of integrated solutions in an export partnership. Specifically, the thesis synthesizes literature findings from the three areas of export pricing, systems business, and export partnerships. The empirical section of the study consists of a qualitative single-case study of a Finnish systems integrator that has recently launched its export operations. Primary data was collected by conducting four interviews of the case company’s managers and by organizing one group interview session. The study findings indicate that a systems integrator’s pricing strategy in an export partnership can be very multidimensional and dependant on international pricing environment and partner characteristics, that an export partnership appears to have unique implications on a systems integrator’s pricing process, and that customer value –based pricing strategies might be particularly suited to pricing integrated solutions.

Improving and User Interface to E-Procurement Software Used in Asset Accounting and Investigating Effects to Efficiency

This diploma thesis has been done to international organization which takes care from the accounting actions of two major companies. In this organization are used three different purchasing tools which are used when new asset master data is wanted to input to SAP R/3- system. The aim of this thesis is to find out how much changing the user interface of one of these three e-procurement programs will affect to overall efficiency in asset accounting. As an addition will be introduced project framework which can be used in future projects and which help to avoid certain steps in the development process. At the moment data needs to be inputted manually with many useless mouse clicks and data needs to be searched from many various resources which slow down the process. Other organization has better tools at the moment than the myOrders system which is under investigation Research was started by exploring the main improvement areas. After this possible defects were traced. Suggested improvements were thought by exploring literature which has been written from usability design and research. Meanwhile also directional calculations from the benefits of the project were done alongside with the analysis of the possible risks and threats. After this NSN IT approved the changes which they thought was acceptable. The next step was to program them into tool and test them before releasing to production environment. The calculations were made also from implemented improvements and compared them to planned ones From whole project was made a framework which can be utilized also to other similar projects. The complete calculation was not possible because of time schedule of the project. Important observation in the project was that efficiency is not improved not only by changing the GUI but also improving processes without any programming. Feedback from end user should be also listened more in development process. End-user is after all the one who knows the best how the program should look like.

Pricing anomalies in the Finnish stock market

The aim of this thesis is to examine whether the pricing anomalies exists in the Finnish stock markets by comparing the performance of quantile portfolios that are formed on the basis of either individual valuation ratios, composite value measures or combined value and momentum indicators. All the research papers included in the thesis show evidence of value anomalies in the Finnish stock markets. In the first paper, the sample of stocks over the 1991-2006 period is divided into quintile portfolios based on four individual valuation ratios (i.e., E/P, EBITDA/EV, B/P, and S/P) and three hybrids of them (i.e. composite value measures). The results show the superiority of composite value measures as selection criterion for value stocks, particularly when EBITDA/EV is employed as earnings multiple. The main focus of the second paper is on the impact of the holding period length on performance of value strategies. As an extension to the first paper, two more individual ratios (i.e. CF/P and D/P) are included in the comparative analysis. The sample of stocks over 1993- 2008 period is divided into tercile portfolios based on six individual valuation ratios and three hybrids of them. The use of either dividend yield criterion or one of three composite value measures being examined results in best value portfolio performance according to all performance metrics used. Parallel to the findings of many international studies, our results from performance comparisons indicate that for the sample data employed, the yearly reformation of portfolios is not necessarily optimal in order to maximally gain from the value premium. Instead, the value investor may extend his holding period up to 5 years without any decrease in long-term portfolio performance. The same holds also for the results of the third paper that examines the applicability of data envelopment analysis (DEA) method in discriminating the undervalued stocks from overvalued ones. The fourth paper examines the added value of combining price momentum with various value strategies. Taking account of the price momentum improves the performance of value portfolios in most cases. The performance improvement is greatest for value portfolios that are formed on the basis of the 3-composite value measure which consists of D/P, B/P and EBITDA/EV ratios. The risk-adjusted performance can be enhanced further by following 130/30 long-short strategy in which the long position of value winner stocks is leveraged by 30 percentages while simultaneously selling short glamour loser stocks by the same amount. Average return of the long-short position proved to be more than double stock market average coupled with the volatility decrease. The fifth paper offers a new approach to combine value and momentum indicators into a single portfolio-formation criterion using different variants of DEA models. The results throughout the 1994-2010 sample period shows that the top-tercile portfolios outperform both the market portfolio and the corresponding bottom-tercile portfolios. In addition, the middle-tercile portfolios also outperform the comparable bottom-tercile portfolios when DEA models are used as a basis for stock classification criteria. To my knowledge, such strong performance differences have not been reported in earlier peer-reviewed studies that have employed the comparable quantile approach of dividing stocks into portfolios. Consistently with the previous literature, the division of the full sample period into bullish and bearish periods reveals that the top-quantile DEA portfolios lose far less of their value during the bearish conditions than do the corresponding bottom portfolios. The sixth paper extends the sample period employed in the fourth paper by one year (i.e. 1993- 2009) covering also the first years of the recent financial crisis. It contributes to the fourth paper by examining the impact of the stock market conditions on the main results. Consistently with the fifth paper, value portfolios lose much less of their value during bearish conditions than do stocks on average. The inclusion of a momentum criterion somewhat adds value to an investor during bullish conditions, but this added value turns to negative during bearish conditions. During bear market periods some of the value loser portfolios perform even better than their value winner counterparts. Furthermore, the results show that the recent financial crisis has reduced the added value of using combinations of momentum and value indicators as portfolio formation criteria. However, since the stock markets have historically been bullish more often than bearish, the combination of the value and momentum criteria has paid off to the investor despite the fact that its added value during bearish periods is negative, on an average.

A simulation model of the optimal maintenance strategy: conceptual agent-based approach

In this Master’s thesis agent-based modeling has been used to analyze maintenance strategy related phenomena. The main research question that has been answered was: what does the agent-based model made for this study tell us about how different maintenance strategy decisions affect profitability of equipment owners and maintenance service providers? Thus, the main outcome of this study is an analysis of how profitability can be increased in industrial maintenance context. To answer that question, first, a literature review of maintenance strategy, agent-based modeling and maintenance modeling and optimization was conducted. This review provided the basis for making the agent-based model. Making the model followed a standard simulation modeling procedure. With the simulation results from the agent-based model the research question was answered. Specifically, the results of the modeling and this study are: (1) optimizing the point in which a machine is maintained increases profitability for the owner of the machine and also the maintainer with certain conditions; (2) time-based pricing of maintenance services leads to a zero-sum game between the parties; (3) value-based pricing of maintenance services leads to a win-win game between the parties, if the owners of the machines share a substantial amount of their value to the maintainers; and (4) error in machine condition measurement is a critical parameter to optimizing maintenance strategy, and there is real systemic value in having more accurate machine condition measurement systems.

Modelling flexible asset management in industrial maintenance companies and networks

The tightening competition and increasing dynamism have created an emerging need for flexible asset management. This means that the changes of market demand should be responded to with adjustments in the amount of assets tied to the balance sheets of companies. On the other hand, industrial maintenance has recently experienced drastic changes, which have led to an increase in the number of maintenance networks (consisting of customer companies that buy maintenance services, as well as various supplier companies) and inter-organizational partnerships. However, the research on maintenance networks has not followed the changes in the industry. Instead, there is a growing need for new ways of collaboration between partnering companies to enhance the competitiveness of the whole maintenance network. In addition, it is more and more common for companies to pursue lean operations in their businesses. This thesis shows how flexible asset management can increase the profitability of maintenance companies and networks under dynamic operating conditions, and how the additional value can then be shared between the network partners. Firstly, I have conducted a systematic literature review to identify what kind of requirements for asset management models are set by the increasing dynamism. Then I have responded to these requirements by constructing an analytical model for flexible asset management, linking asset management to the profitability and financial state of a company. The thesis uses the model to show how flexible asset management can increase profitability in maintenance companies and networks, and how the created value can be shared in the networks to reach a win-win situation. The research indicates that the existing models for asset management are heterogeneous by nature due to the various definitions of ‘asset management’. I conclude that there is a need for practical asset management models which address assets comprehensively with an inter-organizational, strategic view. The comprehensive perspective, taking all kinds of asset types into account, is needed to integrate the research on asset management with the strategic management of companies and networks. I will show that maintenance companies can improve their profitability by increasing the flexibility of their assets. In maintenance networks, reorganizing the ownership of the assets among the different network partners can create additional value. Finally, I will introduce flexible asset management contracts for maintenance networks. These contracts address the value sharing related to reorganizing the ownership of assets according to the principles of win-win situations.

The pricing of industrial services

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Transfer pricing documentation differences in Finland and China - Case company study

This Master’s Thesis deals with the topic of transfer pricing documentation in Finland and China. The goal of the research is to find what kind of differences exist in a single case company’s transfer pricing documentation when following Chinese or Finnish transfer pricing regulations. The study is carried out as a case study research. The theoretical framework consists of information from different transfer pricing topics and transfer pricing documentation regulations in China and Finland. The main research material was the case company’s transfer pricing documents with the support of open discus-sion with one of the case company’s employees. The study compared the 2009 and 2010 documents. The 2009 document was done based on the Finnish method while the 2010 document was based on the Chinese documentation principles. The conclusion made is that the content of the documents was heavily similar, while the main differences come in the way the content is presented and the level of detail used in the documents.

The Impact of Electrical Capacity Market Mechanisms on Capacity Mobility and End Use Customer Pricing

Potential impacts of electrical capacity market design on capacity mobility and end use customer pricing are analyzed. Market rules and historical evolution are summarized to provide a background for the analysis. The summarized rules are then examined for impacts on capacity mobility. A summary of the aspects of successful capacity markets is provided. Two United States market regions are chosen for analysis based upon their market history and proximity to each other. The MISO region is chosen due to recent developments in capacity market mechanisms. The PJM region neighbors the MISO region and is similar in size and makeup. The PJM region has had a capacity market mechanism for over a decade and allows for a controlled comparison of the MISO region’s developments. Capacity rules are found to have an impact on the mobility of capacity between regions. Regulatory restrictions and financial penalties for the movement of capacity between regions are found which effectively hinder such mobility. Capacity market evolution timelines are formed from the historical evolution previously summarized and compared to historical pricing to inspect for a correlation. No direct and immediate impact on end use customer pricing was found due to capacity market design. The components of end use customer pricing are briefly examined.

Value based pricing and marketing of marine engines

Objective of the thesis is to create a value based pricing model for marine engines and study the feasibility of implementing such model in the sales organization of a specific segment in the case company’s marine division. Different pricing strategies, concept of “value”, and how perceptions of value can be influenced through value based marketing are presented as theoretical background for the value based pricing model. Forbis and Mehta’s Economic Value to Customer (EVC) was selected as framework to create the value based pricing model for marine engines. The EVC model is based on calculating and comparing life-cycle costs of the reference product and competing products, thus showing the quantifiable value of the company’s own product compared to competition. In the applied part of the thesis, the components of the EVC model are identified for a marine diesel engine, the components are explained, and an example calculation created in Excel is presented. When examining the possibilities to implement in practice a value based pricing strategy based on the EVC model, it was found that the lack of precise information on competing products is the single biggest obstacle to use EVC exactly as presented in the literature. It was also found that sometimes necessary communication channels are missing and that there is simply a lack of interest from some clients and product end-users part to spend time on studying the life-cycle costs of the product. Information on the company’s own products is however sufficient and the sales force is capable to communicate to sufficiently high executive levels in the client organizations. Therefore it is suggested to focus on quantifying and communicating the company’s own value proposition. The dynamic nature of the business environment (variance in applications in which engines are installed, different clients, competition, end-clients etc.) means also that each project should be created its own EVC calculation. This is demanding in terms of resources needed, thus it is suggested to concentrate on selected projects and buyers, and to clients where the necessary communication channels to right levels in the customer organization are available. Finally, it should be highlighted that as literature suggests, implementing a value based pricing strategy is not possible unless the whole business approach is value based.

Value added KPI service delivery with quality function deployment: Multiple case study in asset & real estate management

The aim of this study is to investigate value added service concept for an asset and real estate management case company. The initial purpose was to recognize the most value adding key performance indicators (KPIs) information delivered for its customers, real estate investors with value added service. The multiple case study strategy included two focus group interviews with five case interviews in total. Additionally, quality function deployment (QFD) was used in order to form up the service process. The study starts with introduction and methodology explaining the demand for the thesis study. The subsequent chapter presents the theoretical background on real estate management KPIs in four main points of views and quality function deployment from the service development point of view. The chapter also defines research gap for the case study. According to the case study interviews, the most favored KPIs to deliver for the clients are income maturity of lease agreements and leasing activity. These KPIs and quality characteristics are translated into the QFD. In total, the service QFD explains the service planning, process control, and action plan phases.

The role of auditors in the Finnish limited liability companies as to solvency test in the context of asset distribution

Suomen osakeyhtiölain mukaan varoja ei saa jakaa, jos jaosta päätettäessä tiedetään tai pitäisi tietää yhtiön olevan maksukyvytön tai jaon aiheuttavan maksukyvyttömyyden. Ongelmallista on, että maksukykyä ei ole selvästi määritelty laissa tai hallituksen esityksessä. Tilintarkastuslain mukaan tilintarkastajan on siten huomautettava, jos maksukykytestiä on rikottu, mutta tilintarkastaja joutuu yleensä määrittelemään tällaiset huomauttamista vaativat tilanteet itse. Maksukykytestistä on kirjoitettu suomalaisessa yhtiöoikeuden ja laskentatoimen kirjallisuudessa melko kattavasti. Kuitenkin tilintarkastajaa koskeva näkökulma on saanut osakseen suhteellisen vähän huomiota. Tästä näkökulmasta on kirjoitettu vain joitakin korkeakoulujen tutkielmia sekä lyhyehköjä ammatillisia seminaariesityksiä. Tämän tutkielman tavoitteena on ollut koota laaja yleiskuva siitä, miten tilintarkastajat itse kokevat asemansa ja tehtävänsä yllä kuvatuissa tilanteessa. Tutkielmassa on käyty läpi aikaisempaa yhtiöoikeuden ja laskentatoimen kirjallisuudessa ja seminaariesityksissä esitettyä aineistoa. Lisäksi tutkielmaa varten tehtiin suomalaisille tilintarkastajille kohdennettu Internet-pohjainen kysely. Tutkielma selkeyttää kuvaa siitä, miten tilintarkastajat toimivat yllä kuvatussa tilanteessa ja miten he ovat sopeuttaneet toimiaan yhteiskunnan institutionaalisen asetelman muututtua. Kirjallisuuden pohjalta tapahtuva teoreettinen analyysi on yhdistetty kyselyyn siitä, miten tilintarkastajat käytännössä toimivat. Tutkimuksen perustana olevaa tietoa on analysoitu pääosin kyselytutkimuksen menetelmin, mutta myös tilastollisen tutkimuksen menetelmiä on käytetty. Tutkielman tuloksena tutkielmassa selvitetään tilintarkastajan tehtäviä maksukykytestin yhteydessä. Tuloksena voidaan myös todeta, että tilintarkastaja ei suorita varojenjaossa tarvittavan maksukyvyn arvioinnin kannalta keskeisiä tarkastustoimenpiteitä ainoastaan tilikauden päättymisen jälkeen. Päinvastoin, tällaisia tarkastustoimenpiteitä suoritetaan enemmän tai vähemmän koko tilintarkastuksen aikana. Lisäksi vaikuttaisi siltä, että tilintarkastajan oma suhtautuminen maksukykytestiin on ainakin jossain määrin merkityksellinen sen kannalta, kuinka paljon tarkastustoimenpiteitä tehdään ja kuinka paljon maksukyvystä ja siihen liittyvistä puutteista raportoidaan yhtiön johdolle.

The Forecast Performance of Model-Free Implied Volatility: Evidence from DAX Index Options

Volatility has a central role in various theoretical and practical applications in financial markets. These include the applications related to portfolio theory, derivatives pricing and financial risk management. Both theoretical and practical applications require good estimates and forecasts for the asset return volatility. The goal of this study is to examine the forecast performance of one of the more recent volatility measures, model-free implied volatility. Model-free implied volatility is extracted from the prices in the option markets, and it aims to provide an unbiased estimate for the market’s expectation on the future level of volatility. Since it is extracted from the option prices, model-free implied volatility should contain all the relevant information that the market participants have. Moreover, model-free implied volatility requires less restrictive assumptions than the commonly used Black-Scholes implied volatility, which means that it should be less biased estimate for the market’s expectations. Therefore, it should also be a better forecast for the future volatility. The forecast performance of model-free implied volatility is evaluated by comparing it to the forecast performance of Black-Scholes implied volatility and GARCH(1,1) forecast. Weekly forecasts for six years period were calculated for the forecasted variable, German stock market index DAX. The data consisted of price observations for DAX index options. The forecast performance was measured using econometric methods, which aimed to capture the biasedness, accuracy and the information content of the forecasts. The results of the study suggest that the forecast performance of model-free implied volatility is superior to forecast performance of GARCH(1,1) forecast. However, the results also suggest that the forecast performance of model-free implied volatility is not as good as the forecast performance of Black-Scholes implied volatility, which is against the hypotheses based on theory. The results of this study are consistent with the majority of prior research on the subject.