Is that possible to earn abnormal return on current Market efficiency?

Market efficiency is a hypothesis which was formulated by Eugene Fama in 1970. This hypothesis consists of three market form of efficiency such as strong, semi and weak form of market efficiency.  According to the EMH, as prices respond only to information available in the market, and because all market participants are privy to the same information, no one will have the ability to out-profit anyone else. In other words, investors are not able to earn abnormal profits though the fundamental and technical analysis. 

In efficient markets, prices become not predictable but random, so no investment pattern can be discerned. A planned approach to investment, is cannot be successful in a strong form of efficient market. This random walk of prices, commonly spoken about in the EMH school of thought, results in the failure of any investment strategy that aims to beat the market consistently. 

Volkswagen emission scandal

Let's discuss the current popular issue with the efficiency market hypothesis!

The emission scandal of Volkswagen was unfold in the early of September and this causes  a big chaos to the company. This scandal caused a significant financial impact to the company in order for them to win back the trust of customer and the sizable amount of fine from Environmental Protection Agency (EPA). 

The scandal has caused the shares price of vw to fall tremendously of 35.65%

Short fall of shares price for vw could be the indication of the semi-strong or strong form in efficiency market hypothesis? In my opinion, the majority of investors generally able to access with information speedy. Can we get to earn the abnormal profit in this semi-strong form of efficiency market  beside of the legal insider trading?

Digby Jones: The New Troubleshooter

Every single business in the word will tend to have a cycle of downturn in the process of expanding of business. During this tough period, company possible to be facing numerous of issue which tentatively causes a significant lose and may be led to close down of the business. While, one of the well-know furniture manufacturer "Hereford" was facing various of challenges which causes a huge financial lose in the business. Hereford is a small medium-sized organization which is a family-owned company with over 40 employees. Few major problem which had been pointed out by Digby Jones on the business management and strategy in Hereford during the visit of the factory.

One of the significant issue by Hereford is the excessive of product range from the factory. The managing director intended to have to company from manufacture, importing and independence retailing which have been lead to a unproductive and inefficient of the furniture business. In order to create value to the company, it required a workable strategy in today's competitive market. For instance, the excessive of product range of Hereford should be cutting down in order to minimize the huge cost of production incurred for the business. Furthermore, it is essential for a company well branded their own product which able to communicate with their customer. Branding it's product allow the company to create identity for themselves in the today's market which able to create public awareness and consumer will have a better vision of the product.

Besides, the poor organization structure of Hereford also created a big chaos on the company management. The employees of Hereford were not align with the managing director, this issue was raised because of the lacking of planning skills in the upper level of management. A better planning in the organization management will lead to a clear vision and direction to the operation team which allowing the company to be more efficient and productive in their production. Moreover, a strategic planning may also enhancing the morale of the employees which led to a better working environment for Hereford.

Last but not least, apart from a better strategy of cutting down product range and a finer planning on manufacture process, Hereford should be also concerned on manage the cash of the company. Forecasting of company financial statement is does always bring numerous of advantage to the business. Thus, creating value to company is not stand alone by finance or strategy itself. All the other elements such as company finance, communication among organization and etc are crucial for manager to create greater value to the company which allowing them to sustain in this competitive business words.