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

Timeliness Principle

The Timeliness principle in accounting refers to the need for accounting information to be presented to users in time to fulfill their decision-making needs.

• Example: Users of accounting information must be provided financial statements on a timely basis to ensure that their financial decisions are based on up-to-date information. This can be achieved by reporting the financial performance of companies with sufficient regularity (e.g., quarterly, half-yearly, or annually) depending on the size and complexity of the business operations. Unreasonable delay in reporting accounting information to users must also be avoided.

Prudence Principle

Prudence requires that accountants should exercise a degree of caution in the adoption...

Peppers and Rogers described different steps that are involved in evaluation.

PepsiCo experienced great success in Latin America with its leverage; experience gained in one country can be used in another country.

Product placement has reached the world of live: viewers are being marketed to subliminally without their consent.

Promotions designed to increase product availability in distribution include trade sales promotions.

Red Bull has been involved in Music Academy relationship marketing, which is crucial for brand engagement.

Social couponing is one of the hottest online sales promotion trends, especially with platforms like Groupons.

Some advertisers acknowledge that, in Brazil, the market dynamics are unique.

Spoexa, a food-marketing company,...

The Money Multiplier

With just a little mathematical manipulation, we can express the real-world money multiplier (m) as a function of the required reserve ratio (RRR), the excess-reserves ratio (ER/D), and the currency-deposit ratio (C/D). To find m, all we need are the values of the C/D and ER/D ratios. (We already know that RRR = .10, or 10%.) Alternatively, we could compute m with values for C, D, and ER.

Studying the multiplier effect is crucial because, unlike what basic economics states, the money supply is not fully controlled by the Fed. Instead, the Fed does have access to the monetary base, but the multiplier effect will depend on the monetary decisions of financial institutions and the general public.

Factors Affecting the Money Multiplier

Several...

Globalization: A Shift Towards a More Integrated World Economy

Globalization of Markets

• National markets merge into a single global market.
• Trade barriers are reduced or eliminated.
• Tastes and preferences converge.
• Firms promote the trend by offering the same products worldwide.

Globalization of Production

• Goods and services are sourced from locations around the globe.
• Firms take advantage of national differences in the cost and quality of factors of production (land, labor, capital).

Benefits of Globalization

• Lower prices for goods and services
• Greater economic growth
• Higher consumer income
• More jobs

Critics of Globalization

• Job losses
• Environmental degradation
• Cultural imperialism of global media and multinational enterprises (MNEs)

Factors Driving Globalization

• Declining

Global Market Entry Strategies and Alliances

Market Entry Modes: Definitions and Characteristics

• Licensing: Represents a market entry strategy whereby a company grants rights to a foreign partner.
• Franchising: A variation of licensing.
  • Fact Check: Franchising is another variation of licensing. (T)
  • Fact Check: Franchising in a global context. (T)
  • Fact Check: Franchising is a variation of [X]. (F)
• Foreign Direct Investment (FDI): Honda's investment of $550 million in building a plant is an example of FDI. (T)
• Contract Manufacturing: Companies that use contract manufacturing may require a considerable commitment of management resources.

Licensing Strategy and Advantages

• Licensing is a contractual agreement. (T)
• Licensing as a market entry mode has several

Consumer

person who buys things or uses

Retailer

company or persona who sells directly to the public, especially through shops

Wholesaler

person or company that sells goods in large quantities to shop keepers

Manufacturer

person or organization that makes goods

Distribution

person or company that supplies goods to shops or another business

Transaction

business done between people, often involving a buyer and seller

Goods

things that are produced to be sold

Services

doing something for customers but not producing goods

Value

how much something is worth in money

Supply

quantity of goods available

Turnover

the value of the goods or services sold during a certain period of time

Margin

difference between costs and selling price

Discount

reduction in the usual price of something

Deposit

small...

The Medieval Economic Structure

Feudalism and the Agricultural Economy

During this period, society had an agricultural-based economy, combined with a feudal system. This system consisted of a king served by vassals (like dukes, counts, or barons) who gave him an oath of fealty in homage.

The Role and Regulation of Medieval Guilds

Industry revolved around guilds. These were centers of medieval "industrial" production—trade, professional, and craft organizations of Roman origin—and served as the "business units" of the Middle Ages. They functioned as a kind of exclusive union, though they were unions of masters, not workers.

Guilds regulated production and social conduct. Unlike a modern firm, the primary purpose of a guild was not first and foremost...

Government Favorability

Local > State > Federal. Government favorability has been on a decline since 2001.

Participation Correlation

• High Participation: Elections with high participation rates, a strong mayor form of government, and elections held concurrently with state and national elections.
• Large Cities: Culturally diverse cities.
• Controversial Topics: Low participation, the opposite of high participation.

Types of Local Governments

Numbers of Local Governments:

• The number of Special Districts has been on the rise.
• The number of School districts has decreased.
• The number of Municipalities, Townships, and Counties has stayed the same.

Functions of Local Governments

• Municipal: Woven throughout the others.
• County governments: Primarily for governing

Defining Competitive Territory and Boundaries in Mission Statements

• **Industry:** Companies may operate in one or multiple industries, including industrial goods, consumer goods, or services.
• **Products and Applications:** Firms define the range of products and applications they will offer.
• **Competence:** Companies identify their core competencies and leverage them.
• **Market Segment:** The type of market or customers a company targets.
• **Vertical:** The number of channel levels in which a company participates, from raw materials to distribution.
• **Geographical:** The regions, countries, or country groups in which a company operates.

Establishing Strategic Business Units (SBUs)

Companies can define themselves in terms of products or customer-satisfying...

Value and Satisfaction

The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the tangible and intangible benefits and costs to her. Value is a combination of quality, service, and price (qsp), called the customer value triad. Value perceptions increase with quality and service but decrease with price. (real value - what an enterprise is offering).

Marketing is the identification, creation, communication, delivery, and monitoring in relationship to expectations. If the performance falls short of expectations, the customer is disappointed. If it matches expectations, the customer is satisfied. If it exceeds them, the customer is delighted.

Marketing Channels

To reach a target market, the marketer uses three kinds...