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

Customer Service

Importance

One of the objectives of a company is customer loyalty and customer satisfaction.

It is more expensive to get new customers than to keep those you have.

Principles of Customer Service

• Customers are the most important individuals.
• The company depends on customers (not the other way around).
• Companies exist because customers exist; customers are our "work".
• Customers seek a good or service that should be provided.
• Customers are not a number; they must be treated with respect.
• The customer is the backbone of the company.

Customer Service Department

The entire staff should be involved in providing adequate customer care.

They don't only handle complaints, but also gather information through claims or suggestions.

It should provide:

Equity

Equity is the residual interest in the assets of a company after deducting all its liabilities. It represents the financing resources that are not borrowings.

Components of Equity:

• All contributions made by owners
• Reserves, share premiums & equity instruments
• Retained earnings, prior losses & profit/loss of the period
• Grants, subsidies, donations, and bequests received
• Valuation adjustments & hedging transactions

The Balance Sheet: A Fundamental Accounting Identity

The Balance Sheet represents the fundamental accounting equation:

USES OF FUNDS = SOURCES OF FUNDS

This equation highlights that a company's assets (uses of funds) are financed by either its liabilities or equity (sources of funds).

Static vs. Dynamic Vision of Financial Statements

While...

Impact of Entrepreneurial Firms in Today's Economy

4.1 Global Entrepreneurship Monitor (GEM) by Babson College

Provides an annual assessment of the entrepreneurial environment of 42 countries.

Entrepreneurs lead to growth by:

• Entering and expanding existing markets
• Creating entirely new markets by offering innovative products
• Increasing diversity and fostering minority participation in the economy

4.2 The Most Impacting: The Gazelles (High Tech Growth Firm)

A “Gazelle” (high growth companies) is a business establishment with at least 20% sales growth in each year for five years, starting with a base of at least $100,000 in annual sales.

• Gazelles as leaders in innovation
• Produce twice as many product innovations per employee as do larger firms
• Have

Enterprise Location

The location of a business is usually considered when the business is first setting up. We may come across two kinds of problems: location and dimension. First, we should research the market and see if our product has any demand or interest, and analyze the level of competition. Then, we should analyze raw materials’ supply, the job market, the cost of the land where the business will be located, transportation facilities, government influence and laws, facilities for investing and acquiring money, and finally, the region's economic development.

Enterprise Structures

Holding

The parent company buys the shares of the subsidiaries or branches, so the parent is the owner. The parent makes the most important decisions because,...

Lack of Homogeneity of Costs Allocated to Sections

Activity-Based Costing (ABC) systems shift the focus from cost centers to activities, and from activities to cost drivers. An activity is defined as a group of operations or tasks necessary to produce its outputs. An activity should have variables that measure the units of output and performance. The concept of the center of analysis as a mere cost pool is replaced by the concept of activity, which requires the participation of several sections or departments to be completed.

A cost driver measures the output of an activity and is also the cost-assignment unit. It allows the assignment of the activity cost to a cost object as a function of the amount of the driver. Causality should be the criterion...

Fiscal Contract

= C+Output baj IS no camb cdo baja i Islm, baja Ms= sube i+no inicial en Y I spending dpnd en i. aument G=baja I Cambios Ms no afect price level short run LM comb i+Y mantien eq n financ mrk. Reduct consumr confidnc=left shift is curv I spending dpnd output= baja i Aggregate supply relation, current Plevel dpnd expectd pric level Fixed IS curve: baj i sube I CB=opn mkt purchase bonds=lm abajo Real supply=stock € medid n bns,no $ ISLM,baja G, baja gradual i+Y AS: baj output,baja unemployment,baja nominl wage,baja P. I no dpnd i =baja Ms no camb output CB compr bons y aument T y baja i Xpansionry: sube Pbons baja i Aument (c), ppcion € persns quiern en moned baja money multiplier Contract: bajn bons,sub i CB open market sale...