Applied Medical Resources Corporation: The Shareholder Value Myth

Monopolies and oligopolies often use anti-competitive practices, which can have a negative impact on the economy. This is why company mergers are often examined closely by government regulators to avoid reducing competition in an industry.

Over the years, firms have increasingly been maximising shareholder value. However, Steve Denning, a former director of the World Bank, author of six leadership and management books and columnist for Forbes, disagrees. His article “The Origin of the ‘World’s Dumbest Idea’: Milton Friedman”, was published on June 26, 2013 on Forbes, debates against Friedman’s argument that the social responsibility of corporations is to make money for its shareholders. The main issue here is whether the maximisation of shareholder value as the guiding principle of executives is detrimental to the corporation. Although Denning has exhibited valid points in his argument, his lack of citation, biased view on most arguments and his tone has dampened the credibility

Businesses are not only faced with competition within the industry they operate in. They also face competition from businesses in other industries.

Antitrust laws are meant to protect competition in markets. They try to ensure that all individuals have an “equally opportunity in honest competition.” Early in the nation’s history, there was widespread fear of the dangers of monopolies and other restrictions on competition. In 1890, Congress passed the Sherman Antitrust Act to prevent limits on competition caused by private parties. Thus the main goal of antitrust law is to preserve “economic freedom” and a “free-enterprise system.” Specifically, it attempts to preserve “the freedom to compete” for businesses. In a practical sense, antitrust laws are seeking to prevent burdens on competition in the marketplace.

The main purpose of antitrust laws is to promote competition in the markets by preventing monopolies. They also protect consumers and other businesses from unfair business practices and collusion among companies. The thought behind this is that consumers are hurt when monopolies exist because they have fewer choices, the price is likely to be higher, and the services being provided may not be very good. Turmoil in the national economy during the 1870’s and 1880’s necessitated the development of trust that would stabilize individual industries. This would later

There are many models of market structure in the field of economics. They include perfect competition on one end, monopoly on the other end, and competitive monopoly and oligopoly somewhere in the middle. In this paper, we will focus on the oligopoly structure because it is one of the strongest influences in the United States market. Although oligopolies can also be global, we will focus strictly on the United States here. We will define oligopoly, give key characteristics important to the oligopoly structure, explain why oligopolies form, then give an example of an oligopoly in today’s economy. Finally, we will discuss the benefits and costs in this type of market structure.

One law, which helps protect businesses and promotes fair competition for the benefit of the consumers, is the US Anti-Trust law. This law is comprised of three different acts: The Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914. The first role these acts perform is to restrict the formation of cartels which would perform outside of the guidelines of the government and there for not be bound by there laws. The second role these acts perform is to ensure no single business entity can perform a certain level of mergers and acquisitions, which would essentially turn them into a monopoly and reduce competition. Overall, the antitrust laws are constantly debated for their overall functionality and efficiency in protecting the fair business practices of the United States. [2] “One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of

Since colonial times, monopolies have been present in the United States’s economy. But as always, with time comes change, and that situation directly applies to the monopolies in this country. A monopoly is defined as the exclusive control of a commodity or service in a particular market, or a control that makes the manipulation of prices possible. Monopolies had a negative impact on the United States due their unfairness to consumers and laborers, they don’t allow for innovation, and they stifle all competition.

It creates equal and fair pricing. The economy would be tyrannical without competition, that is why they made a policy to destroy any monopolies from forming because if they were able to form and take over that area of the market and raise prices outrageously to whatever they feel would make them as much profit as possible while not raising too many suspicions. However if there is a monopoly they would be able to raise the prices however high they want because there is no other companies selling that same product at a cheaper price. Competition creates fair prices because take for example two gas stations right across the street from each other. They are both getting solid business until one decides to lower the price of his gas ten cents. The other gas station notices twice as many cars at the other one and decides to lower his fifteen cents. This just keeps going on until they have to stay in a certain range so they can still make a profit, but this is how competition stabilizes the economy. Competition also makes companies come out with new and innovative ideas to grab that portion of the economy. In other economy's where there is communism they don’t create products to the best of their ability or try to create new things as they are all getting paid the same so there is no incentive for employers or employees to work harder. Competition is what makes the U.S come out with the latest technology, latest cars, phones, and anything you can think of. An example of a big time monopoly was John D Rockefeller, he was able to control everything, prices, products, elections it just creates solo dominance in the market which is not good. We need different products in the economy and different versions of products for every different person and every different cause for wanting that product. The U.S economy is number second in the world now which is why we are so great and have so many varieties of products. This

There will always be someone else trying to sell your product for less money. Many monopolies are enforced by government. One example would be operating a cab in New York City. You would need a government issued medallion. The number of medallions are fixed which develops profits for initial owners. The profits are not because of talents or resources, instead these profits come by the absence of government enforcement of the medallion requirement. The government enforcement of monopolies is an attempt to solve market failure. An example would be New York City enforcing the medallion rules because they are under the assumption that if they don’t restrict cabs, there would be a lot more traffic jams in the city. When government enforcement of monopolies is appointed for the well-being of subset being granted a monopoly instead of the well-being of society, that is when greed steps in. But monopolies can also improve welfare. For instance, a drug company developing new heart medication will pay lots of money in research and development for perfecting the drug without selling anything to achieve revenue. It anticipates that it will sell under a patent over some period of time and cover the development cost. If you take away the monopoly it takes away the motivation to produce better drugs. So if markets are not competitive then greed isn’t really a problem. It is only a

Applied Medical has grown from its humble beginnings twenty years ago to a quarter billion dollar company by implementing an unconventional, vertically-integrated business model that has catapulted the company to be world leader in the laparoscopic trocar market.

The purpose of antitrust laws is to both promote and protect competition. They aren’t designed to go after big companies simply because they are bigger or more successful than others in their industry. They aren’t anti-market or anti-business. They are intended to be just the opposite, in fact. They are meant to promote successful market economics through the assurance of healthy competition while keeping abuses of the system in check that could overrun the market.

Hospital information systems were designed primarily for administrative purposes to ensure that all charges were billed and collected correctly [9]. Today application of information technology in Healthcare domain has emerged as a new multi-million dollar industry. Huge investments are being made by many government and private organizations to produce health related tools. Similarly a lot of revenue is being generated by those IT organizations, which are related to healthcare. Top company of 2003 “GE Healthcare” founded in 2000 has annual revenue of $2.7 billion. And the 100th company “MED 3000 Inc.” (Founded in 1985) has $7.3 million annual revenue

Ohmeda’s ineffective sales strategy for large urban hospitals was a serious problem. Market share for anesthesia equipment among urban hospitals with >700 beds) was just 22.7%, significantly lower than all other segments. At 39.8%, market share for urban hospitals with 500 – 699

“Corporate finance theory, teaching and the typically recommended practice at least in the US are all built on the premise that the primary goal of a corporation should be the maximization of shareholder value.”