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

International Finance Fundamentals

Three Reasons International Finance is Special:

• Political Risk: Foreign expropriation, unstable regimes, and tariffs.
• Exchange Rate Risk: Currency value changes significantly affect cash flows.
• Market Imperfections: Barriers, taxes, and information gaps.

Multinational Corporation Goals:

• Maximize global shareholder value, not just domestic.

Currency Depreciation Effects:

• ↓ Currency → Exports ↑, Imports ↓.

Currency Appreciation Effects:

• ↑ Currency → Exports ↓, Imports ↑.

Understanding Financial Contagion:

• Economic crises spread to other countries (e.g., Greek debt crisis, Asian currency crisis).

Evolution of Global Monetary Systems

Bimetallism (Pre-1875):

• Both gold and silver backed currencies.
• Problem: Gresham’s

Unit 3: Financial Consolidation Methods

Global Integration (Consolidation)

• Non-current investments: 0
• Share capital and reserves: Parent company only
• Profit/loss: % Parent + (% Subsidiaries × Profit of subsidiaries)
• External shareholder: % Remaining purchase × (Share capital B + Reserves B + Profit/loss B)
• Goodwill: Price paid - (Share capital B × % B)
• Non-controlling interest: % Remaining purchase × (Share capital B + Reserves B + Profit/loss B)
• Non-current assets: Goodwill + PPE (A and B)
• Investment in A: 0 (due to consolidation)

Proportional Integration (Joint Ventures)

• Non-current investments: 0
• PPE, Current Assets, Liabilities, and Profit/loss: Parent + (Subsidiary × % Purchased)
• Share capital and reserves: Parent company only
• Negative differences

Target Marketing: Definition and Strategies

Target marketing is the process of identifying specific consumer segments to focus marketing efforts on. This strategic approach allows businesses to tailor their products, messages, and strategies for maximum impact. Key strategies include:

• Undifferentiated Marketing: A mass-market approach, treating the entire market as one segment.
• Differentiated Marketing: Targeting multiple market segments with distinct offerings for each.
• Concentrated Marketing (Niche Marketing): Focusing on a single, specific market segment.
• Micromarketing: Tailoring products and marketing programs to the needs and wants of specific individuals or local customer segments.

Market Positioning and Competitive Advantage

Market positioning...

Sustaining a Competitive Advantage

A competitive advantage must not only be created but also sustained over time. Sustaining a competitive advantage depends on several factors:

• Barriers to Imitation: Obstacles that prevent competitors from reproducing a competitive advantage. Examples include protected knowledge (patents, brands, etc.) and accumulated experience.
• Competitor's Ability to Imitate: The ease with which rivals can replicate a competitor's advantage.
• Industry Dynamism: As an industry undergoes more changes, competitive advantages tend to become more transitory.

Generic Competitive Strategies

The primary generic competitive strategies are Cost Leadership and Differentiation Strategy.

Cost Leadership Strategy

A company achieves a cost advantage...

Glovo's Primary Activities: Core Value Creation

• Inbound Logistics

  Glovo partners with local restaurants, stores, and service providers to secure a steady supply of goods available for delivery. This involves managing relationships and ensuring that partners have the necessary infrastructure to fulfill orders efficiently.

• Operations Management

  Glovo’s operations include the processing and coordination of orders through its app, from customer selection to payment and order dispatch. The company uses algorithms to optimize delivery routing, reduce wait times, and ensure efficient order batching, contributing directly to its value proposition of fast delivery.

• Outbound Logistics and Delivery

  As a delivery service, outbound logistics are critical. Glovo’s

Debt Sustainability Factors

Debt sustainability is influenced by several key economic variables:

• Primary Deficit or Surplus: Deficits reduce sustainability by increasing borrowing, while surpluses enhance it by allowing for debt reduction.
• Interest Rates: As interest rates increase, sustainability decreases because debt becomes harder to manage.
• Economic Growth Rates: Higher growth rates increase the flow of money into the economy, making it easier to handle debt.
• Population Growth Rates: A larger population expands the government's tax base, generating more revenue to manage debt.

The Taylor Rule

The Taylor Rule is defined by the formula: i = πt + rt + aπ(πt - πt*) + ay(yt - yt^p).

Components of the Taylor Rule

• i: Nominal interest rate set by the

Mastering Post-Sale Customer Engagement

Achieving Repeat Sales

Repeat sales are earned by consistently demonstrating the ability to add value in diverse ways.

Responding to Post-Sale Customer Expectations

• Ensure your customer strategy is on target.
• Focus on diligent follow-through and follow-up activities.
• Regularly reexamine your product strategy.

Understanding Customer Attrition

Regaining a lost customer can be four to five times more expensive than retaining a current, satisfied customer.

Main Causes of Customer Attrition:

• Poor service
• Product dissatisfaction
• Price considerations

Key B2B Service Behaviors

1. Diligence: Persistence in service delivery.
2. Information Communication: Transparent and timely sharing of relevant updates.
3. Inducements: Offering incentives

Accounting 1:

Car Expenses

Owning a car brings freedom, but it also comes with responsibilities. The costs involved with buying a car are more than just the purchase price. A young person needs to know how much they can afford to pay:

• For one-off expenses, such as: purchase price, stamp duty & transfer of registration fee (where applicable).
• For annual and ongoing expenses, including: registration, compulsory car insurance, optional car insurance, loan repayments (if applicable), fuel, parking, car maintenance, & car servicing (for periods not covered by warranty if applicable).

Car Insurance

Car insurance can cover the cost of your car if you damage it, it is stolen, or if anyone is injured. If there is an accident involving your car, you...

Fundamentals of Markets and Exchange

Defining Business and Market

A business is a specialized unit that coordinates the production of goods and services.

A market is a place where buyers and sellers meet to facilitate the exchange of products and services.

Key Elements of a Market

We identify three important elements in a market:

1. Sellers: Normally businesses, who produce products or services in order to sell them in exchange for money. They usually sell them to final customers, but also to other businesses.
2. Buyers: Normally families, although companies can also buy from other companies. Buyers acquire goods and services with money in order to satisfy their needs.
3. Products and Services: Goods, both tangible and intangible, that are exchanged between

Conception of the Corporation

Legal fiction: nexus of contracts; pool of capital. // Legal entity: social and economic organism; purposeful organization.

Origins of the Corporation

Private agreement among property owners to pool and increase capital. // Created by lawmakers to encourage investment in long-term, large-scale projects needed by society.

Functions of the Corporation

Maximize wealth for shareholders. // Provide goods and services; provide employment; create opportunities for investment; drive innovation.

Responsibilities to Society

None (fictional entities can’t have responsibilities). // Fulfill business purpose and act as a good corporate citizen.

Ethical Standards

Unclear: whatever shareholders want, or obey law and avoid fraud or collusion....