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

Corporate External Growth Strategies

Economic Conditions

Labor shortages

Lack of market growth

Vertical Growth

Achieved by taking over a function previously provided by a supplier or distributor.

Horizontal Integration

The degree to which a firm operates in multiple geographic locations at the same point in an industry’s value chain.

Vertical Integration

The degree to which a firm operates vertically in multiple locations on an industry’s value chain, from extracting raw materials to manufacturing to retailing.

Forward Integration

Assuming a function previously provided by a distributor.

Backward Integration

Assuming a function previously provided by a supplier.

Horizontal Growth

Expansion of operations into other geographic locations and/or increasing...

International Pricing Policies

• Pricing Policy Variables: Country, product type, competitive conditions, and active marketing efforts all influence pricing.
• Objectives: Pricing serves as an active marketing instrument and a static element in business decisions. Greater control often leads to greater achievement, and the complexity of the process increases with the number of countries involved.

Gray Markets and Price Differences

• Gray Markets: Price differences between markets, exceeding transportation costs, create opportunities for gray markets.
• Illicit Distribution: Importers buy products and sell them to distributors illegally. Exclusive distribution is used to maintain retail margins and quality image.

Pricing Methods

• Full-Cost Pricing: Each unit

Unit 1.6: Growth and Evolution

Economies of Scale

• The long-run average costs fall as more output is produced.
• The idea of getting bigger is cheaper.
• When the costs of a business go down as the business grows.

Internal Economies of Scale

• Purchasing: The price is lower if you buy in large quantities.
• Financial: Big businesses are seen as less of a risk than smaller businesses.
• Managerial: They have specialized managers in the different areas which brings costs down as efficiency rises.
• Technical: Only big businesses can afford to buy the best technology, which in the long run brings down costs.
• Marketing: Large-scale businesses are the ones who can afford and spread the cost of the most effective and expensive types of marketing.

External Economies of Scale

• Consumers:

Human Resource Management (HRM)

HRM is a management function with a specific focus on people. It's not an exact science, as human behavior can be unpredictable. The primary goal of HRM is to guide individual and group behavior by considering both individual characteristics and the environment.

Individual Characteristics

• Personality: This is largely unchangeable and influences how individuals interact with others and their work.
• Motivation: This is complex and influenced by both internal and external factors, such as salary. HRM plays a crucial role in maintaining employee motivation, as it directly impacts performance.
• Competence: This encompasses knowledge (acquired through education and training), abilities (inherent skills), and experience (gained

Differences Between Products and Services and Marketing Plan Considerations

What are the major differences between products and services, and how must these differences be taken into consideration when preparing your marketing plan?

The Four Key Differences Between Products and Services

1. Intangibility

• While products are tangible, services are intangible (they cannot be touched or tested before purchase).
• Buyers look for evidence of quality by drawing inferences from the place, people, equipment, communication material, symbols, and price.
• Service marketers must transform intangible services into concrete benefits. This requires choosing strong brand elements (logos, symbols, characters, and slogans).
• All aspects of the service delivery process can

Entrepreneurial Personal Traits

Strong Need for Achievement (McClelland, 1965)

• Need for accomplishing something important to them.
• Actively seeking out opportunities and taking responsibilities.

Risk-Taking Propensity (Begley and Boyd, 1987)

• Medium, calculated risk-takers.
• Avoid high and low risk situations.
• Ability to evaluate risk on a defined prospect.

Locus of Control (Rotter, 1966)

• Desire to be in control of their own fate.
• High internal LOC.
• The achievement of a goal is dependent on their own behavior.

Tolerance of Ambiguity (Schere, 1982)

• To have an open mind.
• Being responsive to changes.
• No need to know all superficial details.
• To have a flexible attitude.

Desire for Autonomy (Birley and Westhead, 1993)

• High need for independence.
• Smith (1967) noted a

Alternative Business Financing

Alternative business financing has become an issue of great importance in the wake of the recent financial crisis. The crisis led to a reduction in bank credit for companies, which has allowed alternative forms of financing to emerge. Alternative financing is used to finance companies and individuals beyond banks. It is particularly attractive for SMEs and individuals.

In the past, in Spain, the sources of funding were basically from banks, with easy access and fast processing. Thanks to these facilities and good interest rates, bank financing was consolidated over other loans. As a consequence, before the beginning of the crisis, we found a situation where the weight of bank financing was predominant.

With the outbreak...

Objectives:

• To facilitate trade under fair conditions
• To keep products of unsatisfactory quality out of the market
• To guide production to meet consumer demand
• To guarantee a high quality level of inspections with independence, integrity, and high efficiency
• To support Spanish exports

Benefits of Having SOIVRE Certification:

• Provides confidence to products that obtain it
• Makes products more trustworthy in front of buyers
• In many cases, products with SOIVRE certification will not have to pass through an inspection to enter certain territories

What SOIVRE Checks:

• If the lot is compliant with EU marketing standards
• Documents (identity/marking: origin, classification, amount, dispatcher)
• Physical check according to risk analysis
• Reduced inspection for goods from

Understanding Vertical Integration Strategy

Vertical integration is a strategy used by a company to gain control over its suppliers or distributors in order to increase the firm’s power in the marketplace, reduce transaction costs, and secure supplies or distribution channels. This strategy is one of the major considerations when developing corporate-level strategy.

The important question in corporate strategy is whether the company should participate in one activity (one industry) or many activities (many industries) along the industry value chain. For example, a company must decide if it only manufactures its products or if it will engage in retailing and after-sales services as well.

Forward Integration: Controlling Distribution

Forward integration...

Dimensions of Corporate Social Responsibility

Philanthropic (Good Citizen)

Ethical (Be Ethical, Right from Wrong)

Legal (Obey the Law)

Economic (Be Profitable)

5 Barriers to Sustainable Consumer Behavior

• Lack of Awareness & Knowledge
• Negative Perceptions
• Distrust
• High Prices
• Low Availability

Measuring Brand Equity

Contributes to positive perceptions of product quality

Qualitative (Free Association/Projective Techniques)

Quantitative (Brand Recognition Research/Brand Recall)

4 Dimensions of BrandAsset Valuator

Differentiation (Brand's Point of Difference)

Relevance (Brand Relates to You)

Esteem (How Well Regarded the Brand Is)

Knowledge (Understanding of the Brand)

Role of Social Media in Branding

• Brand Advocates/Sharing Info/Seeing Discounts/Customer Services
• Allows