Notes, summaries, assignments, exams, and exercises for Economics for Competitive examination

Improvement methods:

1. Lean manufacturing is a system for maximizing product value. Six Sigma is a problem-solving methodology that uses its collection of tools to fix a specific project over a specific time period. All Six Sigma’s resources are targeted on this one project until the problem is fixed. While Lean Manufacturing encourages daily, general improvements, Six Sigma demands data-based, specific improvements for specific projects.

Six sigma:

Set of techniques and tools for process improvement. Their strategies seek to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes.

The 6 Sigma method thus poses as a fundamental principle:...

Understanding the Product

A Product is anything that can be offered to satisfy a need or want.

A Product Manager understands the product and defines its best strategy.

Defining Product Strategy involves assessing external and internal performance, competitive situation, and the product's position within the overall product portfolio.

Product Attractiveness Factors include price-value, features, quality, and service mix.

Product Levels

Products can be understood at five distinct levels:

• Core Benefit: The fundamental benefit or service the customer is truly buying.
• Basic Product: The actual product features, design, quality, and packaging.
• Expected Product: The set of attributes and conditions buyers normally expect when they purchase this product.
• Augmented

Systems:

Since its inception, the EFQM Model has provided a blueprint for organisations across and beyond Europe to develop a culture of performance and innovation. Allows organisations to embrace change, drive performance and evolve for the future. Here are just some of the Model benefits:

• Define your purpose:

Purpose is the lifeblood of any organisation. Without it, there is no reason to serve. The new EFQM Model places an unparalleled emphasis on the importance of purpose, vision and agile strategies to organisations if they are to create sustainable value.

• It helps create your culture:

The new EFQM Model is an innovative culture creator, valuing core quality beliefs and shared goals at the heart of organisations whilst allowing them to remain...

Value Chain

Primary Activities

These activities relate directly to the physical creation, sale, maintenance, and support of a product or service.

• Inbound Logistics: All processes related to receiving, storing, and distributing inputs internally.
• Operations: Transformation activities that change inputs into outputs sold to customers. This is where operational systems create value.
• Outbound Logistics: Activities that deliver your product or service to your customer, including collection, storage, and distribution systems. These can be internal or external to your organization.
• Marketing and Sales: Processes used to persuade clients to purchase from you instead of competitors. The benefits you offer and how well you communicate them are sources of value.

Efficiency Ratios

Inventory Turnover

Determines if sales are sufficient to turn over or utilize inventory effectively. It indicates whether too much or insufficient inventory is being purchased.

Assets Turnover

A higher Assets Turnover Ratio (ATR) suggests that the company's management is utilizing its assets efficiently to generate sales.

Receivables Turnover

A higher receivables turnover indicates that a company is more efficient than its competitors in collecting its accounts receivables.

Profitability Ratios

Return on Sales (RoS)

"For every dollar sold, the company earns x profit." Measures operational efficiency.

Return on Equity (RoE)

"For every dollar invested by shareholders, the company earns x profit." Measures profitability relative to shareholders'...

The Buying Decision Process: Stages

These are the operating phases involved in a new buying situation. In repurchase scenarios, whether modified or direct, some of these stages are reduced or omitted.

1. Identification of the Problem

Someone within the company becomes aware of a problem or need that can be met by purchasing a good or service. This realization occurs through internal or external stimuli.

2. General Need Description

This stage involves describing the general characteristics, required quantity, and timing of the need.

3. Product Specification

The buying organization decides and specifies the optimal technical features of the product. Sometimes, a team is assigned to conduct a value analysis, carefully studying the most important components...

International Market Selection: A Systematic Approach

Expansive Approach

Firms gradually move into international markets, starting with markets similar to their domestic market. This approach reduces perceived risk and information requirements.

• Lower cultural distance: increased confidence
• Lower costs associated with unfamiliar markets

Screening Approach

Involves systematically filtering the global market using criteria to identify the most suitable market for the firm.

Aim: Identify the market with the greatest marketing opportunity.

Stages of Screening Approach

Stage 1: Initial Screening

Objective: Identify national markets for further analysis.

Stage 2: Analysis of Potential Sales for an Industry in Country

Consider:

• Forecast of future sales
• Minimum scale
• Transport

2

Who can provide rail services?

Only companies licensed by the Ministry. Revised every five years, the license must be registered and valid in the EU. Companies must provide traction and be registered as S.A.s when required. Except for the operator RENFE, applicants must demonstrate the financial capacity to meet obligations for 12 months and must employ professional, liable staff. RENFE has six months to apply for the license and two years to approve personnel.

Material and service providers must obtain a security certificate in advance (issued by ADIF or another entity authorized by law) covering movement, safety and material characteristics.

Special tax regime and economics

What does it cost to be a railway undertaking (RU)? Businesses must...

Advantages of International Trade

• Comparative Advantage: Specializing in goods with a lower opportunity cost increases economic welfare for all nations. Free trade allows countries to focus on their comparative advantage.
• Increased Exports: Beyond consumer benefits, firms exporting goods gain significant economic welfare. Lower tariffs on exports boost job creation and economic growth.
• Economies of Scale: Specialization allows industries with high fixed costs to benefit from economies of scale, leading to lower average costs, reduced consumer prices, and greater firm efficiency.
• Increased Competition: International trade forces domestic firms to compete with foreign entities, incentivizing cost-cutting and efficiency while preventing domestic monopolies