Notes, summaries, assignments, exams, and exercises for Economics for Vocational training

Three Types of Foreign Direct Investment (FDI)

Foreign Direct Investment can be categorized into three main types:

• Market Seeking: FDI is driven by the desire to be closer to customers. Proximity reduces transportation costs and potentially tariffs. Firms weigh the benefits of FDI against exporting, where production is concentrated in one location.
• Efficiency Seeking: Upstream and downstream products are manufactured in different locations, leveraging factor intensity and factor prices. This strategy aims to optimize production costs.
• Resource Seeking: FDI provides access to scarce resources. Output from resource-seeking FDI is seldom sold in the host country market.

Consequences of FDI for Host Countries

FDI can have several effects on host countries,...

1. Stages of International Market Research

1. Pre-selection of Favorable Markets
2. In-Depth Market Research in Target Country
3. Investment Research

2. Environments to Analyze in Initial Market Research

Economic, cultural, legal, technological, and political environments.

3. Economic Environment Analysis: GDP and Per Capita Income

Analysis of key macroeconomic figures.

GDP: Measures the value of final goods and services produced in a country, indicating its wealth and purchasing power.

Per Capita Income: Directly determines the market's purchasing power.

4. Main Trade Barriers

• Licenses: Required for importing/exporting specific products in certain countries.
• Tariffs: Taxes on imported products.
• Quotas: Limits on the quantity or value of imported products.
• Taxes:

• No training or processes/standardization

• Frederik Taylor: Scientific Labour

• Conduct scientific studies of each job

• Match workers to jobs they're suited for

• Cooperate with workers

• Divide work between workers and managers (i.e. managers don't do the same jobs workers do)

• 'One right way' to do any task, no teamwork

• Fordism: Based on electricity, moved from craft production to mass production

• System based on standardization

• Minimize costs rather than maximize profits

• Vertical integration

• Fayol's 14 Principles of Management: Early theory of management

• Division of work: Dividing work of organization among people to make departments

• Balancing authority and responsibility: Right to give orders shouldn'

Core Accounting Equation Elements

Understanding the fundamental components of a business's financial position:

• Assets: Resources owned by the business that have future economic value, such as cash, land, and equipment.
• Liabilities: Obligations or debts owed to external parties, including loans and accounts payable.
• Equity: The owners' residual claim on the assets after deducting liabilities, comprising common stock and retained earnings.
• Revenue: Income generated from the primary operations of a business, typically from sales of goods or services.
• Dividends: Distributions of a company's earnings to its shareholders.
• Accounts Receivable (A/R): Money owed to the company by customers for goods or services that have been delivered but not yet paid for.

After-Sales Service

It is the set of mechanisms and tasks that the organization uses after the sale is done in order to obtain total customer satisfaction. It is an important source of information and should be considered as an investment. It is easier to sell new products to a satisfied customer than finding new customers.

Advantages:

• It provides greater customer satisfaction.
• It improves the image of the company.
• It improves direct knowledge of the market.
• It involves potential customer loyalty.
• It implies a likely increase in sales.

Disadvantages:

• It involves certain costs.
• It needs to be controlled.
• It can cause a possible increase in the number of claims.
• It implies a greater demand for service and quality.
• It causes more staffing needs.

Types of After-

Corporate Culture

Corporate culture identifies how a company behaves and adapts to change. It's a style of thinking, living, and acting, projecting the corporate image externally.

Corporate image is how a company is perceived. Through this, users recognize the image, the products, and the company's character and values. It's the image personality pattern. This image includes:

• Logo
• Style Guide
• Design and Decoration
• Company Uniforms

Marketing

Marketing is the set of activities a company performs to satisfy consumer needs, always considering the financial aspect.

Market Study

A market study is a research process to obtain informed data about factors that affect the company. These variables are:

• Controllable non-competition environment (economic, political,

Salary and Work Regulations

Salary

Salary compensates employees for their work. Employers are obligated to pay at least the minimum wage established by law.

Payment Methods

• Money: The most common payment method.
• In Kind: Goods or services provided as compensation.

Wage Rates

• Unit time
• Work unit
• Mixed system

Payment of Wages

Wages must be paid on the agreed date, within working hours or immediately after, at the workplace. Employees are entitled to advances.

Workday and Working Hours

The workday refers to the number of hours an employee works within a specific period. The work schedule specifies when an employee must work each day.

Normal Working Hours

• The maximum workday is 40 hours per week.
• Shift workers successively occupy the same jobs, following a specific

English Finance Vocabulary

Mastering financial terminology is essential for professional communication. Below is a comprehensive list of terms used in accounting and finance.

Core Accounting and Finance Terms

• Assets (Activos/Bienes): Anything owned by a company, such as cash, buildings (edificios), and machines (máquinas).
• Expenditure (Gasto): The money that a company spends.
• Cost Accounting (Contabilidad de costos): Determining the unit cost of a manufactured product, including indirect costs.
• Liabilities (Pasivo): Money that a company will have to pay to someone else.
• Income (Ingresos): The money that a company receives from supplying goods or services.
• Bookkeeping (Libro de contabilidad): Recording transactions (purchases and sales) in ledgers.

Functions of Financial Markets

Price Determination

• When a company has assets listed in a financial market, it can determine their worth.
• Investors can ascertain the value of their investments.
• Markets offer liquidity for investors' assets.

Financial Assets Characteristics

Liquidity

Ease with which an asset can be converted into cash.

Return and Liquidity Relationship

• If an asset is very liquid, the return asked by investors is very low.
• When assets are less liquid, investors demand higher returns.

Risk

The probability of not recovering the principal or the coupons.

Rating agencies analyze the risk associated with issuers.

Types of Financial Markets

Primary Markets

These markets facilitate the issuance of new securities. Investors pay for the assets to the...

Market Fundamentals

Price: the amount of money required to buy something.

Sale: an exchange of money for goods.

Consumer: a person who makes a purchase.

Spending: the act of using money for purchases.

Trend: a general course of action that repeats.

Elasticity: the effect of a change in one variable on another.

Supply: to provide something.

Determine: to have an effect on an outcome.

Supply and Demand Dynamics

Supply: The available amount of steel is low this year.

Quantity: What amount did the factory produce?

Goods: These products for sale are too expensive.

Surplus: Low sales created an extra amount of wheat.

Downturn: Many jobs were lost during the decrease in economic activity.

Demand: The amount wanted by customers for coats increases in the winter.

Corporate