Budgeting Process and Performance Analysis of Vershire

Budgeting Process and Performance Analysis of Vershire Company Description and Background Vershire Company is a diversified packaging corporation with various large divisions. Its most prominent segment; the Aluminum Can division, is one of the largest manufacturers of aluminum beverage cans in the United states. This case focuses on the budgeting process and performance analysis of Vershire. A major concern of the company is pleasing the customers as most of their buyers have several suppliers on hand, meaning that Vershire can be easily replaced if the customers expectations on quality, cost or service are not met. As a result, efficiency and low costs are top priorities to the company. The main problem of Vershire is that they are treat plants as profit centres instead of expense centres, which is an inefficient measurement of performance for manufacturing plants. Questions Vershire Companys Planning System Strengths: Divisional managers submit reports to predict outlook on sales and capital requirements five years forward as a part of the strategic planning process. This demonstrates the companys preparedness for future event predictions and its ability to formulate long term goals Sales forecasting are formulated at the corporate level and then sent to the divisional managers for analysis and fine tuning. This promotes more realistic and accurate numbers as the managers understand and know how each line functions personally Before the submission of budget plans, controller staff from the head office visits each plant to analyze the current operations and gives the opportunity for plant managers to explain their situation and reasoning behind their numbers, improving accuracy and usability of these documents Weakness: Corporate headquarters make fundamental assumptions such as new products, new plants, inventory carry overs, forward buying, and packaging trends, even though divisional managers are responsible for managing the division which lowers the accuracy of the forecast and decrease efficiency due to necessary corrections during review All division lines use the same method of forecasting regardless of size, which impedes on the accuracy due to the different customer base, products and demands each line possesses District managers determine the sales budgets rather than the plant managers even though it is the responsibility of the plant managers to achieve the goal and is tied to their performance report Vershire Companys Controlling System Strengths: Divisional managers are given full control over their own business with exceptions to the raising of capital and labour relations which are centralized at head office. This allows the opportunity for divisional managers to make necessary decisions that is specific to achieving their own objectives Quick and easy communication between various levels within the organization as there are few tiers in the division Consistent effort in meeting the companys budget as large unfavourable variances are to be made aware of on a daily basis by plant managers and variance analysis sheets are prepared monthly Weaknesses: Vershire focuses on profit for measuring the plant managers performance and to determine bonuses. This analysis tool is not efficient as there are other contributing factors to determine the effectiveness of plant managers May Divisional General Managers formulate preliminary report summarizing the outlooks for sales, income and capital requirements for the next budget year and evaluates trends anticipated for the two subsequent years for corporate management Rationale: Divisional General Managers possesses the most knowledge about their own region and is more equipped to create these documents. It also provides a rough idea of where areas of productions can be improved Central Market Research staff develops a more formal market assessment, examining the next budget year in detail and the following two years in general terms Rationale: Uses the information provided by the divisional managers to produce a more refined and detailed market analysis Central Market Research staff develops separate sales forecasts for each division and a combined forecast for the entire company Topics such as economic conditions and their impact on customers and market share for different products by geographical area are taken into account Fundamental assumptions are made to price, new products, changes in particular accounts, new plants etc. in order to produce forecast Rationale: Promotes uniformity in the formulation in all sales forecasts, determine areas for improvement, assesses areas where market share can grow, and ensures that overall corporate sales forecasts were both reasonable and achievable Divisional Managers compile their own sales forecast from bottom up with input from District Sales Managers to be submitted for review by the Vice President of Marketing Rationale: To review of the head offices sales forecast and mark any changes and additional investments needed. District Managers inputs are utilized as theyre most familiar with sales (more accurate estimates) Vice President of Marketing reviews consolidated sales forecasts and submits it to corporate level No changes are made unless the district manager agreed who is originally responsible for the forecast Rationale: Ensures the forecasts accurately reflects both the knowledge of the district manager and the vice president of marketing Process is repeated on the corporate level (approval from District Manager if needed) until budget figures are approved and become a fixed objective Rationale:Ensures that all levels of the company is agreement to the calculated figure and that the budget is sufficient to achieve company goals Overall sales budget is translated and broken down according to the plants from which finished goods would be shipped and sent to Plant Managers Rationale: Sales budget are sent to these plants as they are the ones to generate revenues Plant Managers then categorized the budget according to price, volume and end use Once categorized, the plant managers budget for gross profit, fixed expenses and pre-tax income Can request help for the Industrial Engineering Department to develop cost reduction plans Rationale: All cost standards and cost reduction targets are developed by the Industrial Engineering, therefore, it makes sure that numbers consistent and reasonable for input Before the submitting budgets, controller staff visit each plant and review plans with managers (usually takes half a day) until it is finalized and sent to Division Head Office Rationale: Gives opportunity for plant managers to reason their figures September Division Head office looks over budget and may return it to Plant Manager if discrepancy is found Will ask plant manager to looks for any additional savings if the budget is not quite in line with expectations When it is finalized, the budget will be sent to the Chief Executive Officer Rationale: Due to the plant manger having direct experience with the plants operations, it is necessary for them to make any changes for savings December Chief Executive Officer makes any modifications to the final budget if needed until it is sent it to the Board of Directors for final budget approval Final review and ensures that budget is appropriate for corporate goals Plant managers should not be fully responsible for profits as they arent able to control all aspects of the products profitability. Since profit is calculated from revenue subtract expenditures, plant managers should only be responsible for expenses, a measure that they can control. This includes direct material and labour, variable manufacturing overhead and fixed overhead budget. Revenues are usually controlled by the sales department; which possesses control over the price, sales mix, and delivery schedules of products. Also, since the sales managers opinion is always favoured over the plant manager due to satisfying the customer, it negatively affects the plant managers ability to control profit and efficiency in output costs. In Exhibit 2, the evaluation system focuses on the profits of Vershire which includes revenues and expenses. Since plant managers have no control over the revenue aspect of products, the information provided does not properly evaluate the efficiency and effectiveness of the plant. Factors such as variances in sales price, sales mix, and sales volume are solely handled by the sales department with no input from plant mangers, making results unreliable and irrelevant. In Exhibit 3, the individual plant level reports give a more detailed insight of the variances shown in Exhibit 2. Once again, it does not provide an accurate representation of the plants performance as it includes variables that are uncontrollable by the plant manager such as sales. Regarding divisional level reports, the comparative profit performance analysis focuses on net sales while the comparative manufacturing efficiency analysis compares varying sized plants that produce different products together, making it another unreliable and inaccurate source of analysis. Some changes I would recommend for Vershire company are to redesign how bonuses are given to plant managers as the current measurement mechanisms do not accurately reflect performance, improve comparisons of manufacturing efficiency between different plants due to the varying size and product offering of each plant and improve communication across the tiers in order to minimize error corrections and time for budget reviews. Possible solutions include organizing meetings to include all managers and corporate levels to discuss about the companys performance, relate managers performance with cost reduction measures to determine bonuses, and develop a universal measurement unit to fairly compare plants together. Conclusion In conclusion, Vershire Company should reconfigure its measurement mechanisms in order to truly analyze the performance levels of the company and begin treating its manufacturing plants as expense centres rather than profit centres. Therefore, Vershire can gather more accurate and reliable information to use for achieving objectives.

Shelleys Frankenstein and Austens Mansfield Park as Vehicles for Social Comment :: comparison compare contrast essays

Shelley's Frankenstein and Austen's Mansfield Park as Vehicles for Social Comment It has been often noted that the Romantic writers of English literature were rebelling against the established positions and views of society. Most of the Romantic artists were indigenes of the well-established middle class and they were swiftly tiring of the self-serving political depredation perpetrated by the hands of the upper class. The Romantics were flouting convention, thumbing their noses and calling for radical and widespread reform not only in governmental politics, but within the politics of their own trade--creativity and art. Their myriad of works are clear evidence of this. Contumely against established society was found mostly in the poetical works of the day. However, much social commentary found its way into seemingly unlikely novels. Two such novels are Mary Shelly's Frankenstein and Jane Austen's Mansfield Park. Both of these novels are clever repositories for social commentary and judgment. The overwhelming social judgment by Austen and Shelly was an intolerance for class distinction. Though they were hardly deluded enough to posses Utopian ideals, they nevertheless felt that a society with very little class distinction and especially without class-specific opportunity and quality of life was indeed attainable. Given that Karl Marx formulated many of his socialist ideals as a result of his exposure to the conditions of working class Englishmen, one might venture to say that the Romantic artists were forerunners of the socialist ideal, though perhaps this is a stretch. However, neither Austen nor Shelly saw socialism as an antidote to class distinction, or if they did, it did not find its way into their novels. They were quick to show, though, that a class blending could occur that was acceptable to all. In fact, such a theme is clearly prevalent in many sections of both Mansfield Park and Frankenstein. For example, in Frankenstein, Shelly describes the acceptance of a lower class individual into an upper class family. Justine is a lower class servant who is taken into the Frankenstein family to alleviate the dire straits into which she has fallen. However, the Frankenstein's do not view her as a servant in the typical, expected sense. Rather, in a letter to the maniacal, creature-creating

Depiction of Africa in Heart of Darkness :: Heart Darkness essays

Depiction of Africa in Heart of Darkness Chinua Achebe believes that Joseph Conrad's Heart Of Darkness is racist based on Conrad's descriptions of Africa and it's people. Achebe, author of Things Fall Apart, stresses Conrad's depiction of Africa as the antithesis of Europe and civilization, and the animal imagery present throughout the novella. Heart of Darkness, written in 1899 during the period of British Imperialism, concerns a British trading company and their expedition into the Congo for ivory. The African natives are treated brutally by the Europeans, and despite Conrad's casual condescension towards the Africans, one cannot help feeling resentment at the unnecessary cruelty they must endure. The novella stands as a document against the imperialist practices -- Conrad was quite liberal for the time. The natives are referred to as "savages" several times throughout the story, but Conrad is not using any particularly strong words for the time. The European audiences who would be reading would not find anything racist about it. By today's more sensitive standards, such deference is more serious, but turn-of-the-century England was sure to expect far harsher. Educated people reading Conrad's novel should understand the differences between the past and the present, and be forgiving of his language. The deeper the expedition progressed into the center of the continent, the more isolation was felt by the crew. In a sense, Central Africa IS the antithesis of Western Europe -- it lacks not only the hectic urban structures but also the Social Darwinist attitudes of the time. It is in this remote environment that man must face his true self without any illusions, and the darkness of the human soul is apparent. The uncivilized environment may mock western civilization's refinement, but this is not derogatory towards the jungle, but rather an eye-opener to the European audience. By exhibiting the deeds of the Europeans, their portrayal becomes so negative that they become the savages. Conrad clearly is sympathetic to the plight of the Africans, and any racial epithets, if not accepted by progressives of the time, are not meant as attacks directed at the natives. It should be obvious that Conrad is on their side -- or is this "undermined by the mindlessness of its context and the pretty explicit

Dimensions Of Negotiation

Negotiation has been an intensely studied and researched topic in the fields of business, politics and psychology since past many years. The importance of negotiation stems from the fact that it is an inter-personal process of communication that involves the principle of direct approach to individuals. With increasing recognition of communication as a premier engaging strategy in conflict resolution and ensuring smooth organizational affairs, a critical parameter for success and growth in today’s environment, negotiation has gained considerable emphasis and focus.Although negotiation is a part of communication strategy, today it has emerged as an independent communication system with its own processes and life cycle. The major dimension of negotiation include, negotiation as a process of conflict management, negotiation as a inter-personal process, architecting the process of negotiation, and third party negotiation. Among these , the two major dimensions of negotiation are co nflict management and third party intervention.Negotiation and conflict management . Negotiation, as a part of managing conflict, requires interested parties to trade proposals for settlement that include, out of court settlements, business contracts, collective bargaining contract etc (Womack, 1990, 32). As Womack further elaborates, generally the process of negotiation proceeds through motives that are both competitive and cooperative.The approach of communication in the entire process of negotiation is concerned with the messages that are transferred among negotiators and the concerned parties. Communication intervenes in the process of negotiation through its both verbal and nonverbal forms and constitutes the entire base on which the goals and terms of the bargain are negotiated. Communication plays the central role in not only developing the relationship among the parties in conflict, but also in determining its direction.It is also central in every form of bargaining process, whether the bargaining is done for organizational form of conflict management, involves conflict resolution, negotiation on legal agreements or for negotiation in inter-group an intra group conflict. The entire role of communication in negotiation processes and strategies is quite vast and it ranges from defining the conflict issues, selection and implementation of strategies to presenting and defending the viable alternatives and finally helping in reaching on a solution (Womack, 1990, 35).In several studies on communication research, especially those involving game theory, communication was not considered central to the process of negotiation. Experiments showed that even when bargainers and negotiators resorted to communication, it was more for threatening than cooperating and collaborating. Womack quotes Deutsch (1969) to inform that back in 60s communication was considered as an unreliable approach in settling conflicts through negotiations.Moreover, there were fears that poor communication forms could result in misinformation, errors and possible negative outcomes. There was an additional perception that owing to competitive natures of negotiations, effective and open channels of communication were not possible. Some of these findings hold valid in disputes, particularly that are distributive in nature and concern with business and marketing segment, it has been nonetheless observed that where the goal is to achieve integrated goals, a problem solving approach works in excellent way.Womack (1990) further cites Lewicki, Weiss and Lewin, (1988), Fisher and Uri (1981), Lewicki and Litterer (1985) and Walton and Mckersie (1965) to state that negotiator resort to using multiple formal and informal communication channels to redefine the issues, present analysis of causes that offer difficulties in resolving the conflict and finally, through sharing of information and assessment of needs, help to identify the complete range of possible alternatives and solutio ns that are acceptable to mutual interests and needs of each party in the deal.These approaches lead to negotiation strategies that involve greater participation by conflicting parties, positively contributing to the increased chances of success in reaching settlement through more alternate solution.Some of the communication strategies adopted during negotiations on the group and organization levels in managing conflict include use of fantasy themes, interpretive themes, and stories and rituals that provide scapegoats to the involved parties and give them external reasons to come out with excuses, reasons and justifications to accommodate each other’s behavior, thereby preventing the chances of negotiations being stalled (Womack, 42).It is of first importance that a mediator should present a completely neutral and unbiased image before the conflicting parties to win their confidence and trust in the ability of mediator to help in achieving possible outcome in conflict. The co mmunication skills of mediators should present them as individuals free of gender, racial or ethnic biases. Along with this, successful mediation also requires listening skills on part of the mediator. It helps mediator to understand the current position of each party in the conflict as well inspire them with confidence in the neutrality of the mediator.

Different Theoretical Approaches Essay

Examine how the different theoretical approaches have explained the changes that the family has historically gone through. The family is a universal institution present in every society throughout the world. For many, the family seems a familiar and comfortable institution, but this can appear in many different forms. A particular type of family is the ‘nuclear’ family; this consists of parents and children living together in the same household. The ‘conventional nuclear’ family comprises of a married man and woman with their biological children living together, this type of family is often dubbed ‘the cereal packet family’ where the male is the breadwinner and the female a homemaker. Another family type is the ‘extended’ family which includes all kin beyond the nuclear family e.g. Grandparents, Aunts or Uncles etc. Other family types include; Patriarchal families, Reconstituted or (step) families and Loan Parent Families, all of wh ich are alternatives to the traditional nuclear family. The family has been the focus of study for many different sociologists, all of which can be criticized in some form.Throughout this essay I am going to examine how the different theoretical approaches explain how family structures and the roles of individuals within them have changed in relation to each of the historical stages that Western society is said to have developed through. There is an underlying assumption amongst sociologists that ‘hunter-gatherer’ bands were the first forms of society. Although these were large communal groups the structure of the ‘nuclear’ family was seen to be present within them. In order to survive the need for team work was essential and therefore separate conjugal roles were necessary. Female mobility was limited due to the impact of child birth and child rearing so they were responsible for gathering nuts and berries from the land whilst the male role was go and hunt for food. Anthropologists studying ‘hunter-gathere r’ societies still in existence today such as The Hadza from Tanzania support this view and speculate this was once the way of life in every society. Functionalist Gary Lees believed the nuclear family unit was optimal within ‘hunter-gatherer’ societies as they needed to be mobile in order to move around and search for food. Marxist sociologist Friedrich Engels argued that because the means of production was owned communally then the family as such did not exist. He refers to this an era of ‘primitive  communism’ characterised by promiscuity. There were no rules limiting the number of sexual relationships so therefore society was in effect ‘the family’. (Holborn, 2004) Feminist sociologists tended to agree with the Marxist view but saw the roots of traditional conjugal roles such as childbirth and child-rearing as a disadvantage to women. The next stage in the development of society is referred to as the ‘pre-industrial’ stage. This stage of history saw a shift towards agricultural based societies. William Goode (1963) believed that the extended family was only appropriate with in this type of society due to the amount of Labour intensive work needed to be carried out. Functionalist Talcott Parsons agreed with this because the extended family system had more people available to carry out the wide variety of functions required. (Owens, n.d.) A study entitled ‘Family and community in Ireland’ (1968) Arensberg and Kimball found that kinship ties were still extremely strong but the basic unit was that of the extended family. They believe that the traditional Irish farming family is a ‘patriarchal extended family, due to considerable authority of the male head; the family is patrilineal because property is passed down the male family line. This has been criticised by Peter Laslett who examined parish records which provided evidence to indicate that in fact only 10% of pre-industrial families included kin beyond the nuclear family. (Owens, n.d.). Michael Young and Peter Wilmott conducted a study attempting to trace the development of the family from pre-industrial England to the 1970s. They suggest the family develops through four stages, they described the first stage family as one that works together as a unit of production; husband, wife and unmarried children work together as team. Materialist feminist Sylvia Walby believed that economic relations and inheritance of property were a major source of female disadvantage. The period of industrialisation is associated with urbanisation and the growth of factory based industry. Talcott Parsons argued that the family is ‘structurally isolated’ because relationships with other kin are a matter of choice and as the nuclear family contained the basic roles of mother, father and children needed to carry out the essential functions then the extended family of pre-industrial times was no longer required. He believed the family had emerged due to a process structural differentiation society had gone through and due to development of more specialised institutions there are fewer functions  needing to be perform ed by the family and therefore the family ceases to become an economic unit of production. (Holborn, 2004) However other sociologists such as Michael Anderson (1971) believed that industrialisation actually increased the need for extended family because as people moved into towns they moved in with relatives in order to find comfort and security. Community studies of working class neighbourhoods in the twentieth century such as Dennis et al’s study of a Yorkshire mining village (1956) and Jeremy Tunstall’s study of Hull trawler men (1962) all featured similar conclusions of extended family life and support. (Owens, n.d.) Wilmott and Young referred to this as their Stage two families which began with the industrial revolution. In this stage families cease to be a unit of production and become employed as individual wage earners. They believe due to low wages and high unemployment families extended their nuclear networks to include extended family networks, this provided them financial security against hardship. They believed this was the tie between mother and married daughter they used as a defence due to the conjugal bond within the nuclear family being so weak, due to the males in the relationship choosing to spend more time away from the family unit. Some people have argued that as industrialisation and modernisation proceeded, kinship-based society and the extended family broke up and the nuclear family emerged as the dominant form. This family has often been referred to as ‘the cereal packet family’. The role of father also saw a shift towards a more family based role and the conjugal bond was strong. Post-industrial times have seen a decline in factory based industry and a rise in people choosing to work within the service sector. The big question now is whether or not the ‘family is in decline?’ Patterns of family life have changed dramatically over recent years. One reason for this is the rise in divorce rates as changes to laws have meant that it is much easier for people to get divorced than it was in the past, also a change in attitude has meant that there is no longer the social stigma around attached with divorce. The development of the state and a rise in women workers means that women no longer have to rely on a male for financial support. Feminist Germaine Greer sees divorce has been good for women as they no longer have to accept living in an unhappy marriage. In conclusion I believe that there has been a widespread change in family structures over time, but I believe this is due more due to cultural changes  and a more widespread knowledge and acceptance of the different types of family that exists. Bibliography Holborn, H. a., 2004. Sociology themes and perspectives. 6th ed. s.l.:Harpercollins. Owens, R., n.d. Families and Households -Changing Structure. Sociology factsheet.

Communications Essay

1. What is an implication, in general, and what are specific implications of the presence of the U.S. flag, Constitution, and Bill Of Rights in all the classrooms at the University of Arizona? a. A general definition of an implication is an assumption that can be inferred from a given scenario that is not obviously specified. The US flag, Constitution, and Bill of Rights are all important symbols of freedom in the United States. The Bill of Rights contains the first ten amendments to the Constitution that preserve the liberties and freedoms prevalent in the United States. The Constitution sets forth the structure of the government we created after rebelling against the British monarchy. The US flag contains a representation of the original 13 colonies that rebelled against the British monarchy as the stripes and the current 50 states as the stars, this representation holds a strong symbol of Americanism. A specific implication of having the U.S. flag, Constitution and Bill of Rights in all University of Arizona classrooms is to help remind students of the freedoms that are available to them in the United States. These symbols of personal freedom promote one’s ability to be an outspoken individual, go against the grain in everything they do, and maintain an individual spirit. 2. Problems in business, government, and relationships are frequently blamed on a lack of communication or a failure to communicate properly. Use the Tubbs communication model on page 9 of your Human Communication textbook to diagnose a communication problem and suggest a recommendation for fixing the problem. a. Tubbs’ communication model involves two communicators and contains three main components of communication: the messages, interference, and the channel. Communication problems can exist across all three components of Tubbs’ communication model. Messages can be intentional and unintentional, when we send an unintentional message we give a message that we didn’t intend to and will usually not find out about the error until we receive feedback from the receiver. Communication problems in channels can occur when sending a message through the wrong channel, each channel serves a primary purpose and sending the wrong message through a channel can lead to a breakdown in communication. Interference is what causes a sent message to become misunderstood or missed completely, usually due to a distortion in the message or the receiver becoming distracted. A fairly common problem that has become more prominent in communication since the rise in popularity of electronic messaging is the inability to relate sarcasm, irony, or other emotions effectively. Usually when someone says something sarcastic it can be taken as a serious statement and the receiver can view the sender as ignorant or senseless. To fix this the person either has to relate the message through a more emotionally efficient channel, such as a telephone call, or include a signifier that allows the person to realize the text should be taken as sarcasm, such as including the tag /sarcasm afterwards. 3. What subject matter is at the heart of the field of communication? To answer this question, imagine that a friend or family member asked you what ‘communication’ as an academic subject was about. How would you respond to that person so that they had a clear understanding? a. Communication has changed a great deal over the last 2400 years but has always maintained a primary center to its study while adding more and more elements. In ancient Greece, Socrates and Plato used communication (then called Rhetoric) as a means to discover the truth and draw it out of their students. Aristotle took Plato’s view and expanded onto it that truth is not always absolute and humans must therefore ascertain the â€Å"probable† truth. These early understandings still hold relevant today and create a framework for the contemporary study of human communication. At the heart of communication is the need for understanding, the need for people to be able to help others understand what they’re saying and understand what others are saying. With this need for understanding Plato stated that rhetoric would be used to promote falsehood over truth while Aristotle saw that either falsehood or truth could be promoted and it is the duty of the citizen to use rhetoric to defend the truth. Communication covers the central topic of providing information to other people through multiple channels in an efficient and effective manner. As communication progresses it will continue to hold its central subject matter while adding more and more relevant areas of interpretation. 4. How was the ancient Greek city-state of Athens involved in the history of communication? What connections exist between communication in ancient Athens and communication in the world today? a. Athens was home to the three scholars who created the two primary views to what we currently know as communication. Socrates, Aristotle and Plato provided a strong foundation for the study of communication while coming from two different views of rhetoric. Socrates and Plato were credited to creating the view of â€Å"Divine Truth† which sought to use reasoning and dialogue to â€Å"draw out† knowledge and understanding. Where as, Aristotle viewed that truth is all around in the environment and must be taken in through the senses. Much of what Socrates, Aristotle and Plato put into communication (rhetoric) is still valid today; Aristotle stated communication is â€Å"purposive† and can be evaluated on whether they accomplish their purpose. Socrates demonstrated a strong relationship between communication that would result in the discovery and appreciation of truth and beauty; this gave a precedent to the value of ethics in communication. Each view puts value into a different way of viewing the truth that surrounds us every day; one sees that there is truth in everything and it’s up to the individual to find that truth while the other views that truth is dependent on the person and can change depending on a persons view. These two views from ancient Athens will continue to lead the study of communication and help shape the continued understanding of the field.

Micro Economics Essay Example | Topics and Well Written Essays - 1000 words - 2

Micro Economics - Essay Example ducts as good ones, buyers would take the quality to be uncertain and accordingly base their decisions on the average quality of the products leading to a decline on the average willingness to pay. As a result the products which were actually of good quality would not receive their deserved prices and would thus be driven out of the market and the market would be filled up with the worse quality products or â€Å"lemons†. Akerlof demonstrated his point by using the example of the market of used cars. Suppose there are both good quality used cars as well as bad or defective ones, i.e, the lemons, on offer in the market and the consumer is not able to infer before hand which type is being offered to him by any particular seller. He therefore assumes it to be of average quality and is prepared to pay equal to the price of the average quality used cars. The owner of a good quality car therefore will not get the deserved high price for it as the customer has no way of knowing that it is in quality higher than the average. Therefore this good quality car shall be withdrawn from the market and so will be all other good quality cars, leading to a fall in the average quality of cars in the market. As a result of this downward revision of average quality, moderately good cars shall also fail to earn sufficiently high prices and will thus be withdrawn. Recurrence of this mechanism finally leads to a situation w here only lemons are on offer in the market. To assess the validity of this proposition Bond (1982) attempted to empirically test it. In particular, the paper attempted to test the proposition that good products are driven out by bad products in the market for used pickup trucks. The amount of maintenance required on a particular truck was taken to be the measure of quality with the â€Å"lemons† being identified as used trucks that require significantly greater maintenance compared to the average. If the Akerlof argument is valid, then in this set up the result should