Notes, summaries, assignments, exams, and exercises for Economics for Primary education

Types of Strategic Alliances

• Non-equity alliances

  They do not imply participation in the capital of the strategic partner.

• Equity alliances

  There is participation of at least one company in the capital of the strategic partner. There may also be cross holdings. A specific type is corporate venture capital.

• Joint ventures

  The companies involved in the alliance form a new entity, of which they are all owners (in equal or different percentage).

Main Risks Associated with Strategic Alliances

• Opportunistic behaviors

  To acquire all the necessary resources/capabilities in a short time without providing all the promised resources/capabilities. They are more common when contracts fail to anticipate them and/or incorporate mechanisms that dissuade them.

• A company

… Δ Qd Y1

EY = --------- × ---------

Δ Y Q1

…perfectly (or infinitely) elastic:

the extremely elastic situation of demand or supply where quantity changes by an infinite amount in response to any change in price; horizontal in appearance

perfectly inelastic:

the highly inelastic case of demand in which a percentage change in price, no matter how large, results in zero change in the quantity; thus, the price elasticity of demand is zero; vertical in appearance

(relatively) elastic:

the percentage change in quantity demanded is greater than the percentage change in price; measured price elasticity of demand is greater than one (in absolute value)

(relatively) inelastic:

the percentage change in quantity demanded is less than the percentage...

Tax Deductions: An International Comparison

Income Tax Imposition

Income tax is imposed on gross income minus deductible expenditures. Generally, you cannot use expenses from one category of income to offset profits belonging to another. Expenses related to business activity may have specific deductions, while employment income often has standard deductions. Personal expenditures are generally not deductible. Mixed business and personal expenses are generally not deductible unless specific rules apply. For example, the UK does not allow deductions for mixed expenses. However, some countries like Australia, Sweden, and France allow deductions upon apportionment.

Specific Deductible Expenses

Commuting Expenses

Travel from and to work is generally...

Economic Indicators and Financial Concepts

• Interest rate: Cost of borrowing.
• Exchange rate: Price of currency.
• Inflation rate: General increase in prices.
• Labour force: Number of people working.
• Tax incentives: Government fiscal benefits.
• Government bureaucracy: Administrative systems.
• Gross Domestic Product (GDP): Total economic output.
• Unemployment rate: Percentage of people without jobs.
• Foreign investment: Capital from overseas.
• Balance of trade: Net difference between imports and exports.
• Equity stake: Ownership interest or venture capital.
• Recession: Economic downturn.
• Shares: Units of ownership in a company.
• Debt: Money owed.
• Stock market: Exchange for trading shares.
• Forecast: To predict future trends.
• Profit margin: The difference between revenue and

Limitations of Quantitative Easing and Nonconventional Monetary Policy

Zero Lower Bound and Deflation

While quantitative easing (QE) and other nonconventional policies can be employed when short-term interest rates reach the zero lower bound, they are not a cure-all. When the economy faces deflationary conditions, designing effective policies becomes challenging due to the increased uncertainty surrounding their outcomes. Additionally, nonconventional policies like QE are more complex to implement, making it harder to effectively stimulate the economy.

Reserve Demand and Federal Funds Rate

If the actual demand for reserves exceeds the estimated demand, the actual reserve demand curve will shift to the right. If the gap is significant, the demand...

Advertisement

Item of publicity to promote a product or service in newspapers, magazines, on TV, etc.

Advertising Agency

Marketing services firm that assists companies in planning advertisements.

AIDA

Attention, Interest, Desire, Action - the aim of all advertising.

Benefit

Advantage of a product or service.

Billboard

Signboard or wooden structure used to display advertising posters.

Broadsheet

Newspaper printed in a large format.

Campaign

Organised course or plan of action.

Circulation

Average number of copies of newspapers or magazines sold over a period of time.

Classified Ads

Small advertisement in newspapers or magazines divided into categories.

Commercial

Advertisement on radio or television.

Coupon

Part of a printed advertisement to be used to order goods...

Compensation is considered a most important factor in workers' decisions to change companies.

1. Compensation Concepts and Components

Compensation is often the most direct motivational factor, encompassing:

1.1. Maslow's Hierarchy of Needs and Motivations (1943)

• Salary
• Social Benefits
• Status
• Recognition
• Promotion

1.2. McClelland's Theory of Three Employee Needs (1962)

• Achievement
• Affiliation
• Power

1.3. Herzberg's Dual-Factor Theory (1968)

• Hygiene Factors: (neutral or demotivating)
• Motivating Factors: (motivational)

1.4. Motivation Factors (Juan A. Pérez López, 1993)

• Salary
• Social Benefits
• Status
• Recognition
• Promotion
• Service

Other Compensation Elements:

• Vacation Days
• Company Expenses
• Health Coverage
• Company Pension Fund
• Company Car
• Flexible Timetable

2. Determining Factors

Marketing Strategy

Deals with pricing, selling, and distributing a product.

Market Development

A company or business unit can:

• Capture a larger share of an existing market for current products through market saturation and market penetration.
• Develop new uses and/or markets for current products.

Operations and Financial Strategy

Financial strategy examines the financial implications of corporate and business-level strategic options and identifies the best financial course of action. The management of dividends and stock price is an important part of a corporation’s financial strategy.

Purchasing Strategy

Deals with obtaining raw materials, parts, and supplies needed to perform the operations function, including:

• Multiple sourcing
• Sole sourcing
• Parallel

Understanding Terms of Trade (TOT)

TOT Definition and Calculation

The Terms of Trade (TOT) is an economic indicator that measures the relative prices of a country's exports in relation to its imports. It quantifies the amount of imports a country can obtain per unit of its exports.

The formula for calculating TOT is:

TOT = (Average Price Index of Exports / Average Price Index of Imports) x 100

Interpreting Changes in Terms of Trade

Changes in the TOT indicate shifts in a country's purchasing power in international trade:

• TOT Improves / More Favorable: This occurs when export prices rise relatively to import prices. The country is then able to exchange the same amount of exports for a greater quantity of imports. This generally signifies an increase

Consequences of Eliminating Export Tax on Cashew Nuts

By eliminating the export tax on raw cashew nuts, it was believed that removing trade barriers would alleviate poverty by increasing the price farmers would receive. Several industrialists who purchased factories opposed the elimination of the export taxes on cashew nuts. The advice failed because the World Bank did not completely analyze the consequences of lifting the export tax barrier. They applied economic theory without considering if the theory would be pertinent in light of the development history of Mozambique. Some consequences were that workers and farmers lost their jobs.

Capital According to De Soto

1. Describe the definition of capital according to De Soto. Why in the non-Western