Business Service Management

Business Service Management describes the emerging discipline dedicated to the IT-enabled management of services as corporate assets. Business Service Management deals with the service orientation of the organisation and the provisioning and use of business services. The term business service describes an autonomous transformational capability that is offered to and consumed by external or internal customers for their benefit. The prefix ‘business’ stresses that such a service has a market value, requires the ability to be managed internally as a corporate asset and that its implementation is technology-agnostic. While business services (or so called capabilities) have attracted the attention of many vendors and organisations, a lack of understanding of the activities required for the successful management of such business services remains a critical issue. In order to fill this gap, a framework consisting of Service Lifecycle Management, Service Value Management, Service Relationship Management and Service Enablement is proposed. This Framework has the potential to provide organisations with the much needed guidance in their attempts to convert current IT-driven service initiatives into successful service-centric business models.

Are East Asian companies benefiting from western board practices?

Since the Asian crisis, East Asian nations have strived to introduce corporate governance codes, directing companies how to best improve their corporate governance practices. However, these codes have not been universally accepted by East Asian companies. This study examines the adoption of major board-related corporate governance recommendations by large nonfinancial companies in seven East Asian nations and investigates whether improvements in these board governance mechanisms have been associated with increased operating performance and market value. The results indicate that family-owned companies started with worse board governance and have been least likely to improve their board governance since the crisis. Overall, bigger, faster growing, non-family-owned companies with less concentrated ownership have been more likely to improve their board governance. Splitting of the positions of Chairman and CEO, creation of audit and nomination committees and improvements in overall board governance were found to have a positive relationship with subsequent operating performance and/or market value.

Valuation methods for resident funded retirement villages in Australia : a practitioner's perspective

Designed for independent living, retirement villages provide either detached or semi-detached residential dwellings with car parking and small private yards. Retirement village developments usually include a mix of independent living units (ILUs) and serviced apartments (SAs) with community facilities providing a shared congregational area for village activities and socialising. Retirement Village assets differ from traditional residential assets due to their operation in accordance with statutory legislation. In Australia, each State and Territory has its own Retirement Village Act and Regulations. In essence, the village operator provides the land and buildings to the residents who pay an amount on entry for the right of occupation. On departure from the units an agreed proportion of either the original purchase price or the sale price is paid to the outgoing resident. The market value of the operator’s interest in the Retirement Village is therefore based upon the estimated future income from Deferred Management Fees and Capital Gain upon roll-over receivable by the operator in accordance with the respective residency agreements. Given the lumpiness of these payments, there is general acceptance that the most appropriate approach to valuation is through Discounted Cash Flow (DCF) analysis. There is however inconsistency between valuers across Australia in how they undertake their DCF analysis, leading to differences in reported values and subsequent confusion among users of valuation services. To give guidance to valuers and enhance confidence from users of valuation services this paper investigates the five major elements of discounted cash flow methodology, namely cash flows, escalation factors, holding period, terminal value and discount rate. Whilst there is dissatisfaction with the financial structuring of the DMF in residency agreements, as long as there are future financial returns receivable by the Village owner/operator, then DCF will continue to be the most appropriate valuation methodology for resident funded retirement villages.

Resident-funded retirement village valuations : complications with the application of the DCF

Retirement village assets are different from traditional residential assets due to their operation in accordance with statutory legislation. Designed for independent living, retirement villages provide either detached or semi-detached residential dwellings with car parking and small private yards with community facilities providing a shared congregational area for village activities and socialising. In essence, the village operator provides the land and buildings to the residents who pay an amount on entry for the right of occupation. On departure from the units an agreed proportion of either the original purchase price or the sale price is paid to the outgoing resident. As ongoing levies are typically offset by ongoing operational expenses the market value of the operator's interest in the retirement village is therefore predominantly based upon the estimated future income from deferred management fees and capital gain upon roll-over receivable by the operator in accordance with the respective residency agreements. Given the lumpiness of these payments, there is general acceptance that the most appropriate approach to valuation is through discounted cash flow (DCF) analysis. There is however inconsistency between valuers across Australia in how they undertake their DCF analysis, leading to differences in reported values and subsequent confusion among users of valuation services. To give guidance to valuers and enhance confidence from users of valuation services this paper investigates the five major elements of DCF methodology, namely cash flows, escalation factors, holding period, terminal value and discount rate.

Mortgagee sale obligations tightened

The enactment of the Property Law (Mortgagor Protection) Amendment Act 2008 (Qld), means that the obligations of a mortgagee exercising power of sale or a receiver selling have been substantially tightened in Queensland. Background As explained in the explanatory notes accompanying the legislation, with current global economic and financial circumstances, there were concerns about the position of mortgagors when mortgagees exercised their powers of sale. The objective of the amending legislation was to protect the interests of mortgagors by strengthening the statutory provisions relating to the duty of the mortgagee exercising power of sale to take reasonable care to ensure the property is sold at market value. The amending legislation was urgently passed without any consultation process.

A human capital framework : designed for convergence

The 21" century business environment is dominated by unprecedented change across a broad spectrum of social, economic, technological and cultural factors (Nowotny, Scott & Gibbons 2001). Among these, two broad trends -economic globalisation and rising knowledge intensity (Hart 2006)have come to distinguish organisational life. Under the weight of these transformational influences, the developed world, it seems, has arrived at a transformational moment. The far-reaching effects of the global financial crisis and its shadowy twin: the threat of a double dip recession, continue to exert an unsteadying influence on global and corporate finances. Growth in developed economies has slumped, share prices have declined, the market value of corporations has slipped and unemployment rates, in the vast majority of developed economies, have risen. Gross domestic product (GDP) growth has retreated from the strong growth experienced in the late 1990s to negative growth in 2009 and a sluggish and unsteady recovery in 2010. In response, the reach of Government in terms of its participation in markets has been extended, bringing with it the need to transition to new governance and regulatory arrangements. Ongoing concerns regarding the pace and sustainability of the recovery remains a front-of-mind concern with bailouts, buybacks, borrowings and BP dominating news services: 'We are witnessing the reweaving of the social, political and economic fabric that binds our planet, with long-term consequences that are as or more profound than those of the industrial era' (Tapscott & Williams 2006, p. 59).

Sensors for missions

An onboard payload may be seen in most instances as the “Raison d’Etre” for a UAV. It will define its capabilities, usability and hence market value. Large and medium UAV payloads exhibit significant differences in size and computing capability when compared with small UAVs. The latter have stringent size, weight, and power requirements, typically referred as SWaP, while the former still exhibit endless appetite for compute capability. The tendency for this type of UAVs (Global Hawk, Hunter, Fire Scout, etc.) is to increase payload density and hence processing capability. An example of this approach is the Northrop Grumman MQ-8 Fire Scout helicopter, which has a modular payload architecture that incorporates off-the-shelf components. Regardless of the UAV size and capabilities, advances in miniaturization of electronics are enabling the replacement of multiprocessing, power-hungry general-purpose processors for more integrated and compact electronics (e.g., FPGAs). Payloads play a significant role in the quality of ISR (intelligent, surveillance, and reconnaissance) data, and also in how quick that information can be delivered to the end user. At a high level, payloads are important enablers of greater mission autonomy, which is the ultimate aim in every UAV. This section describes common payload sensors and introduces two examples cases in which onboard payloads were used to solve real-world problems. A collision avoidance payload based on electro optical (EO) sensors is first introduced, followed by a remote sensing application for power line inspection and vegetation management.

Standardisation of plant and machinery valuation practices in Malaysia

Plant and machinery valuation is important to every company.s annual financial reporting. It is reported under the non-current assets section, and the valuers are generally employed to provide the up to date valuation of the non-current assets valuation such as property, plant and equipment that can make up to 80% of the total assets of a company. The valuation of plant and machinery is also important for other purposes such as securing loan facilities, sales, takeover, insurance and auction. The application of 2005 International Financial Reporting Standard (IFRS) has a subsequent impact on the financial sector, as a whole. The accountants have to choose between the Historical Cost approach and Market Value approach in determining the value of the client.s assets. In Malaysia, the implementation of IFRS has a domino effect on the financial system, especially for plant and machinery valuation for financial reporting. The comparison data for plant and machinery valuation is limited unlike land and building valuation. The question of Malaysian valuer.s ability to comply with the IFRS standard keeps rising every day, not just to the accountants, but also other related parties such as financial institutions, government agencies and the clients. This is happening because of different interpretations of premise of value for plant and machinery, as well as methods been used and differences in standards of reporting among the valuers conducting plant and machinery valuation. The root of the problem lies in the lack of practical guidelines governing plant and machinery valuation practices and different schools of thought among the valuers. Some follow the United Kingdom.s RICS guidelines, whilst some valuers are more comfortable with the United State.s USPAP rules, especially on the premise of value. This research is to investigate the international best practices of plant and machinery valuation and to establish the common valuation concept, awareness and application of valuation methodology and valuation process for plant and machinery valuation in Malaysia. This research uses a combination of the qualitative and quantitative research approach. In the qualitative approach, the content analyses were conducted from the international practices and current Malaysian implementation of plant and machinery valuation. A survey (quantitative approach) via questionnaire was implemented among the registered and probationary valuers in Malaysia to investigate their understanding and opinion relating to plant and machinery valuation based on the current practices. The significance of this research is the identification of international plant and machinery practices and the understanding of current practices of plant and machinery valuation in Malaysia. It is found that issues embedding plant and machinery valuation practices are limited numbers of resources available either from scholars or practitioner. This is supported by the general finding from the research survey that indicates that there are immediate needs for practical notes or guidelines to be developed and implemented to support the Malaysian valuers practising plant and machinery valuation. This move will lead to a better understanding of plant and machinery valuation, reducing discrepancies in valuation of plant and machinery and increased accuracy among practising valuers.

Annual miles drive used car prices

This paper investigates whether the net benefits from owning a vehicle, proxied by annual miles driven, explain the price declines observed over a vehicle's life. We first model the household decision on how much to drive each of its vehicles. Then we empirically establish that variation in household annual miles across brands explains observed price declines. Furthermore, the effect of vehicle age on annual miles decisions (and consequently on market value) depends on household characteristics and the composition of the vehicle stock owned.

Urban growth dilemmas and solutions in China: Looking forward to 2030

China’s urbanization and industrialization are occupying farmland in large amounts, which is strongly driven by land finance regime. This is due to the intensified regional/local competition for manufacturing investment opportunities that push local governments to expropriate farmland at low prices while lease land at high market value to property developers. The additional revenue obtained in this way, termed financial increment in land values, can drive local economic growth, and provide associated infrastructure and other public services. At the same time, however, a floating population of large numbers of inadequately compensated land-lost farmers, although unable to become citizens, have to migrate into the urban areas for work, causing overheated employment and housing markets, with rocketing unaffordable housing prices. This, together with various micro factors relating to the party/state’s promotion/evaluation system play an essential role leading to some serious economic, environment and social consequences, e.g., on migrant welfare, the displacement of peasants and the loss of land resources that requires immediate attention. Our question is: whether such type of urbanization is sustainable? What are the mechanisms behind such a phenomenal urbanization process? From the perspective of institutionalism, this paper aims to investigate the institutional background of the urban growth dilemma and solutions in urban China and to introduce further an inter-regional game theoretical framework to indicate why the present urbanization pattern is unsustainable. Looking forward to 2030, paradigm policy changes are made from the triple consideration of floating population, social security and urban environmental pressures. This involves: (1) changing land increment based finance regime into land stock finance system; (2) the citizenization of migrant workers with affordable housing, and; (3) creating a more enlightened local government officer appraisal system to better take into account societal issues such as welfare and beyond.

The role of sustainable agriculture and renewable-resource management in reducing greenhouse-gas emissions and increasing sinks in China and India

This paper contains an analysis of the technical options in agriculture for reducing greenhouse-gas emissions and increasing sinks, arising from three distinct mechanisms: (i) increasing carbon sinks in soil organic matter and above-ground biomass; (ii) avoiding carbon emissions from farms by reducing direct and indirect energy use; and (iii) increasing renewable-energy production from biomass that either substitutes for consumption of fossil fuels or replaces inefficient burning of fuelwood or crop residues, and so avoids carbon emissions, together with use of biogas digesters and improved cookstoves. We then review best-practice sustainable agriculture and renewable-resource-management projects and initiatives in China and India, and analyse the annual net sinks being created by these projects, and the potential market value of the carbon sequestered. We conclude with a summary of the policy and institutional conditions and reforms required for adoption of best sustainability practice in the agricultural sector to achieve the desired reductions in emissions and increases in sinks. A review of 40 sustainable agriculture and renewable-resource-management projects in China and India under the three mechanisms estimated a carbon mitigation potential of 64.8 MtC yr(-1) from 5.5 Mha. The potential income for carbon mitigation is $324 million at $5 per tonne of carbon. The potential exists to increase this by orders of magnitude, and so contribute significantly to greenhouse-gas abatement. Most agricultural mitigation options also provide several ancillary benefits. However, there are many technical, financial, policy, legal and institutional barriers to overcome.

Tropical river fisheries valuation: background papers to a global synthesis

This report is a compilation of five regional reviews that document the global status of tropical rivers and inland fisheries in three continents: Latin America, Africa and Asia. It explores the role of ‘valuation’ methods and their contribution to policy-making and river fishery management. From the compilation, the best estimate of the global value of inland fisheries for those three continents is US$ 5.58 billion (gross market value), which is equivalent to 19 percent of the current value of annual fish exports from developing countries (US$ 29 billion) for 2004. The compilation shows that there is a general shortage of information on inland fisheries, especially derived from conventional economic valuation methods, though information from economic impact assessment methods and socio-economic and livelihood analysis methods is more widely available. The status of knowledge about the impact of changes in river management on the value of tropical river fisheries is weak and patchy. Although the impacts of large dams on the hydrology, ecology and livelihood support attributes of tropical rivers are well-recognized, there have been only few valuation studies of these issues. The document highlights the need for further valuation studies of tropical river and inland fisheries in developing countries. It underlines how vital it is for policy-makers and other stakeholders to understand the importance of these natural resources in order to make appropriate decisions concerning their role in development policy and illustrates why capacity building in valuation should become a major priority for agencies concerned with fisheries management and policy-making.

The Annual Economic Survey of Federal Gulf Shrimp Permit Holders: Report on the Design, Implementation, and Descriptive Results for 2006

This technical memorandum documents the design, implementation, data preparation, and descriptive results for the 2006 Annual Economic Survey of Federal Gulf Shrimp Permit Holders. The data collection was designed by the NOAA Fisheries Southeast Fisheries Science Center Social Science Research Group to track the financial and economic status and performance by vessels holding a federal moratorium permit for harvesting shrimp in the Gulf of Mexico. A two page, self-administered mail survey collected total annual costs broken out into seven categories and auxiliary economic data. In May 2007, 580 vessels were randomly selected, stratified by state, from a preliminary population of 1,709 vessels with federal permits to shrimp in offshore waters of the Gulf of Mexico. The survey was implemented during the rest of 2007. After many reminder and verification phone calls, 509 surveys were deemed complete, for an ineligibility-adjusted response rate of 90.7%. The linking of each individual vessel’s cost data to its revenue data from a different data collection was imperfect, and hence the final number of observations used in the analyses is 484. Based on various measures and tests of validity throughout the technical memorandum, the quality of the data is high. The results are presented in a standardized table format, linking vessel characteristics and operations to simple balance sheet, cash flow, and income statements. In the text, results are discussed for the total fleet, the Gulf shrimp fleet, the active Gulf shrimp fleet, and the inactive Gulf shrimp fleet. Additional results for shrimp vessels grouped by state, by vessel characteristics, by landings volume, and by ownership structure are available in the appendices. The general conclusion of this report is that the financial and economic situation is bleak for the average vessels in most of the categories that were evaluated. With few exceptions, cash flow for the average vessel is positive while the net revenue from operations and the “profit” are negative. With negative net revenue from operations, the economic return for average shrimp vessels is less than zero. Only with the help of government payments does the average owner just about break even. In the short-term, this will discourage any new investments in the industry. The financial situation in 2006, especially if it endures over multiple years, also is economically unsustainable for the average established business. Vessels in the active and inactive Gulf shrimp fleet are, on average, 69 feet long, weigh 105 gross tons, are powered by 505 hp motor(s), and are 23 years old. Three-quarters of the vessels have steel hulls and 59% use a freezer for refrigeration. The average market value of these vessels was $175,149 in 2006, about a hundred-thousand dollars less than the average original purchase price. The outstanding loans averaged $91,955, leading to an average owner equity of $83,194. Based on the sample, 85% of the federally permitted Gulf shrimp fleet was actively shrimping in 2006. Of these 386 active Gulf shrimp vessels, just under half (46%) were owner-operated. On average, these vessels burned 52,931 gallons of fuel, landed 101,268 pounds of shrimp, and received $2.47 per pound of shrimp. Non-shrimp landings added less than 1% to cash flow, indicating that the federal Gulf shrimp fishery is very specialized. The average total cash outflow was $243,415 of which $108,775 was due to fuel expenses alone. The expenses for hired crew and captains were on average $54,866 which indicates the importance of the industry as a source of wage income. The resulting average net cash flow is $16,225 but has a large standard deviation. For the population of active Gulf shrimp vessels we can state with 95% certainty that the average net cash flow was between $9,500 and $23,000 in 2006. The median net cash flow was $11,843. Based on the income statement for active Gulf shrimp vessels, the average fixed costs accounted for just under a quarter of operating expenses (23.1%), labor costs for just over a quarter (25.3%), and the non-labor variable costs for just over half (51.6%). The fuel costs alone accounted for 42.9% of total operating expenses in 2006. It should be noted that the labor cost category in the income statement includes both the actual cash payments to hired labor and an estimate of the opportunity cost of owner-operators’ time spent as captain. The average labor contribution (as captain) of an owner-operator is estimated at about $19,800. The average net revenue from operations is negative $7,429, and is statistically different and less than zero in spite of a large standard deviation. The economic return to Gulf shrimping is negative 4%. Including non-operating activities, foremost an average government payment of $13,662, leads to an average loss before taxes of $907 for the vessel owners. The confidence interval of this value straddles zero, so we cannot reject, with 95% certainty, that the population average is zero. The average inactive Gulf shrimp vessel is generally of a smaller scale than the average active vessel. Inactive vessels are physically smaller, are valued much lower, and are less dependent on loans. Fixed costs account for nearly three quarters of the total operating expenses of $11,926, and only 6% of these vessels have hull insurance. With an average net cash flow of negative $7,537, the inactive Gulf shrimp fleet has a major liquidity problem. On average, net revenue from operations is negative $11,396, which amounts to a negative 15% economic return, and owners lose $9,381 on their vessels before taxes. To sustain such losses and especially to survive the negative cash flow, many of the owners must be subsidizing their shrimp vessels with the help of other income or wealth sources or are drawing down their equity. Active Gulf shrimp vessels in all states but Texas exhibited negative returns. The Alabama and Mississippi fleets have the highest assets (vessel values), on average, yet they generate zero cash flow and negative $32,224 net revenue from operations. Due to their high (loan) leverage ratio the negative 11% economic return is amplified into a negative 21% return on equity. In contrast, for Texas vessels, which actually have the highest leverage ratio among the states, a 1% economic return is amplified into a 13% return on equity. From a financial perspective, the average Florida and Louisiana vessels conform roughly to the overall average of the active Gulf shrimp fleet. It should be noted that these results are averages and hence hide the variation that clearly exists within all fleets and all categories. Although the financial situation for the average vessel is bleak, some vessels are profitable. (PDF contains 101 pages)