Notes, summaries, assignments, exams, and problems for Economics

Strategic Management Frameworks

1. Corporate Strategy

I. Ansoff Growth Matrix (1957)

I.1 Market Penetration

Increasing sales volume in the market where the company currently operates. This is appropriate when:

• The sector is in a growth phase.
• There are unsatisfied market niches.
• The industry is in decline, causing competitors to exit.
• Market leaders are satisfied and not competing for greater market share.

I.2 Market Development

Introducing existing products into new markets. This is appropriate when:

• New distribution channels are available.
• The company has excess production capacity.

I.3 Product Development

Developing new products or new uses for existing products. This is appropriate when:

• Product life cycles are short.
• Customer preferences are changing

Business Concept and Purpose

A business concept is an entity that combines the factors of production to obtain goods and services that satisfy needs and obtain benefits.

Purpose

• Social: To satisfy needs.
• Economic: To obtain gain.

Key Elements of a Business

Technical Capital

Technical capital includes all those elements required for the development of business activity. Certain items may last long in the business, such as machinery and computers, while others are often short-lived, such as goods sold.

Human Capital

• Employee: One who serves in exchange for wages.
• Employer: The person or persons who control and direct the business.
• Owner: The individual who creates the company, bringing their capital to achieve profitability.

Core Business Functions

• Commercial:

1.) Delta bonds issued 300,000 in 90 days and 18% but only needs the funds for 70 days over can invest in vn that pays 17% for which it must pay 1.5% commission on what is chasing the cost of bonds for the company?
300,000 * 0.18 = 54,000
54,000 * (90/360) = 13,500

300,000 * 0.17 = 51,000
51,000 * 0,015 = 4,500

13.500-2.833 = 10,667 +4,500 = 15,167 costs

2.) Bank x gives us a loan at 20% payable within 1 year while the bank and we paid the same amount to 19% payable in advance which of the 2 banks charge us the lower effective tax rate?

20/100 = 0.2 = 20% nominal rate = 20% effective rate
19/100 = 0.19 = 19% nominal rate effective rate = 19 / (100-19) = 0.23 = 23%

3.) Effective rate for a loan of 600,000 to be paid within 1 year with a...

Business Concept

A company is a collection of items, organized and coordinated by management, designed to meet objectives while operating under conditions of risk.

Location Factors

• Market Demand: Consider the local interest in your product.
• Raw Materials: Assess material quality, cost, and availability.
• Labor Market: Evaluate potential employees, expertise, labor costs, and legal considerations.
• Infrastructure and Transport: Consider transport accessibility and connections with other businesses.
• Utilities: Evaluate the availability and cost of essential utilities like electricity, water, and telephone lines.
• Construction and Land Costs: Remember that prices vary by location.
• Legislation: Understand relevant tax, commercial, and social regulations.
• Investment

The International Business Environment

Introduction to the Global Business Landscape

A New Competitive Landscape

• Less clear sectoral barriers.
• Differences between industries and services are less precise (making sector classification difficult).
• Advances in logistics, computer design, and communications.
• Opening of global markets.

Two Key Determinants

• Globalization.
• Balancing Technology and Information Communication Technology (ICT).

Consequences of the New Environment

• Strong increase in competition: Presents both threats and opportunities.
• Differences in the cost of inputs, leading to relocation and redesign of production processes.
• Rise of multinational enterprises (MNEs), including smaller firms, not just large corporations.
• Mergers and acquisitions (

Basic Economic Definitions

Economics: The study of how societies use scarce resources to produce valuable goods and services and distribute them.

Efficiency: Effective use of society's resources in satisfying people's wants and needs.

Microeconomics: Concerned with the behavior of individual entities such as markets, firms, and households.

Macroeconomics: Concerned with the overall performance of the economy.

Inputs: Commodities or services that are used to produce goods and services.

Outputs: The various goods and services that result from the production process.

Factors of Production and Markets

Factors of Production: Land, labor, and capital.

Production Possibility Frontier: Shows the quantity of goods that can be efficiently produced by an economy....

Chapter 3: Project Preparation and Evaluation

Pre-Investment

This stage determines the amount to be invested, and the project will be evaluated by measuring its profitability.

• Project Profitability: Measures the profitability of the business, regardless of who undertakes it.
• Investor Profitability: Measures the return on equity for the investor if they carry out the project.

Project Classification

A) According to the Objective of the Study:

• Project profitability
• Investment
• Capacity to pay for the project

B) According to the Type of Investment:

• Creation of a new business
• Modernization project:
  • Internalization
  • Externalization
  • Replacement
  • Expansion
  • Abandonment

Social Assessment of Projects

Compares the benefits and costs that a particular investment may have on...

Foreign Exchange Market and Exchange Rate Determination

Demand for Euros

Variables Affecting the Demand for Euros:

• Real Exchange Rate:
  • Nominal Exchange Rate: An increase in the nominal exchange rate (euro appreciation) makes European exports more expensive, reducing their demand and thus the demand for euros. A decrease (euro depreciation) makes exports cheaper, increasing demand for euros.
  • Domestic Prices (European Prices): An increase in European prices makes European goods more expensive relative to foreign goods, reducing exports and thus the demand for euros. A decrease in European prices makes exports cheaper, increasing demand for euros.
  • Foreign Prices: Higher foreign prices make foreign goods more expensive, increasing demand for European

Factors Influencing Price Determination

Base or list price: Refers to the unit price of the product at its point of production or resale. It does not reflect discounts, freight charges, or other adjustments, including allocation for a price leader.

Setting a price for an established product is generally less difficult than pricing a new product.

Estimating Demand

Key steps include:

1. Determine if there is a market-expected price.
2. Estimate potential sales volume at various price points.

Note:

• This is usually expressed as a price range rather than a specific amount.
• Intermediaries should be considered; it is easier to promote products if they align with their pricing expectations.
• Setting a price much lower than market expectations can lead to lost sales.

Value: The Ability to Satisfy Human Desire

Value is the ability to satisfy a human desire. For example, the use value of water quenches thirst and extinguishes fire.

A commodity is defined as a use value when exchanged for another use value. For instance, if a farmer produces a jug of milk for their family's consumption, it is not a commodity. But if they exchange it for butter, then it is.

Value is defined as a property change of use values that attain the status of merchandise.

Exchange Value

The exchange value of a commodity is its ability to be exchanged for quantities of other goods. It is measured by the quantity of other goods it can be exchanged for under balanced market conditions. Thus, the exchange value of a jacket could be eight shirts....