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

Payment Methods

• Online shoppers commonly use a credit card or a PayPal account in order to make payments.
• Other alternative ways:
  • Billing to mobile phones
  • Cash on delivery
  • Check
  • Debit card
  • Electronic money
  • Gift cards
  • Postal money order
  • Invoice

Product Delivery

• Downloading (for music, movies, images…)
• Drop shipping (the manufacturer ships the item directly to the consumer)
• In-store pick up (going to a real shop)
• Printing or by e-mail (ticket for a concert, cinema, etc…)

Advantages

• Convenience: Online shops are usually available 24 hours a day and many consumers have internet access both at work and at home.
• Information and reviews: Online stores give more information about the product (instructions, demonstrations, advice or how-to guides). Customers can

Production and Productivity

Production is the provision of a product to satisfy wants and needs. The process involves businesses adding value to their products. Productivity: is the outputs measured against the inputs used to create it. This is measured by: Output (over a given period of time)/Number of employees If a worker makes more products in the same amount of time, his productivity increases. Firms aim to be productively efficient to be able to make more profits and compete against their competitors.

Methods of Production

Job production: Goods are made individually, by one person. Goods are usually specialized, no two goods are the same. Usually made to order. Pros: The product meets exact requirements of the customer. The workers have... Continue reading "Understanding Production and Methods of Production" »

The Great Depression: The Longest and Deepest Economic Downturn in American History

Causes of the Great Depression

In 1929, the prevailing economic theory held that the economy possessed self-correcting mechanisms that would prevent a severe depression. However, the Great Depression defied these expectations.

• Overproduction: Some economists believed the depression was caused by an excess of goods and services.
• Lack of Investment Opportunities: Others pointed to a decline in profitable investment opportunities.
• Technological Innovation: Joseph Schumpeter argued that the failure of entrepreneurs to introduce new products contributed to the depression.
• Stock Market Crash and Bank Panics: The stock market crash of 1929 and subsequent bank failures exacerbated

Understanding Global Inequality: Thomas Piketty's Capital in the 21st Century

The Inequality Problem: R > G

Thomas Piketty's research on inequality has gained significant attention, particularly his formula r > g, where:

• r represents the return on capital (profits or interest from investments)
• g represents the overall growth of the economy

Piketty argues that over time, wealth concentrates in the hands of the wealthy few, regardless of hard work or intelligence. The actual distribution of wealth reveals higher inequality rates than commonly perceived. To combat this, he advocates for active redistribution and improved access to education.

Capitalism and Inequality

Piketty's book, Capital in the 21st Century, challenges the notion that capitalism... Continue reading "Understanding Global Inequality: A Deep Dive into Thomas Piketty's Capital in the 21st Century" »

Topic 1: Intro to FAB

Types of Businesses: Manufacturing (make & sell), Merchandising (buy & sell), Services (delivery etc.)

Business Structures: Sole Proprietorship -> owned and opened by 1 person; business is a separate entity from owner, owner is liable for debts. Partnership -> 2 to 20 partners; business is a separate entity from partners, partners are liable for debts.

Types of Partnerships: 1. General -> equal responsibility & unlimited liability. 2. Limited (Liability) -> 1 partner(s) not liable for debts beyond the agreed obligations. 3. Limited Liability Partnership (LLP) -> ≥2 partners are separate legal entities and are not liable for business debts. Business ceases if partner dies UNLESS have perpetual... Continue reading "Understanding Business Structures and Financial Fundamentals" »

Shifts toward the connected customer, from

Exclusive to inclusive à (innovation and diversity, mass markets, social media as a redefinition of how people interact)

Vertical to horizontal

à open innovation, ecosystem business, branding (value…)

Individual to social

à most personal purchase decisions will be social decisions, lack of control over marketing communication, high impact of community generated content

ATTRIBUTION MODELLING

1. Method to determine the value of different channels on marketing efforts.
2. Allows to map which channels provide the most benefit to a marketing campaign.
3. Way in which marketers assess the value or ROI of the channels that connect them to potential customers.

Goal:

• Map effects and value of a campaign’s components

Measure:... Continue reading "Shifting to the Connected Customer: Trends and Strategies" »

The Company Beta (β)

β = Cov(R_i, R_M) / Var(R_M)

Problems of Beta:

1. Betas may vary over time.
2. The sample size may be inadequate.
3. Betas are influenced by changing financial leverage and business risk.

Solutions:

1. Problems 1 and 2 can be moderated by more sophisticated statistical techniques.
2. Problem 3 can be lessened by adjusting for changes in business and financial risk.
3. Look at average beta estimates of several comparable firms in the industry.

Stability of Beta

Most analysts argue that betas are generally stable for firms remaining in the same industry, but they can change due to:

• Changes in product line
• Changes in technology
• Deregulation
• Changes in financial leverage

Using an Industry Beta

It is frequently argued that one can better estimate a firm's beta... Continue reading "Understanding Beta in Finance: Calculation, Stability, and Determinants" »

• Financial System & Economic Development: Demand for financial services comes from activities of non-financial firms (real sector). Monetary policy in development: regulate economic activity and inflation, increase supply of money leads to an increase in loanable funds, more investments, and decrease in interest rates.
• Why is development different? Highly organized, economically interdependent, and efficient functioning (spatially fragmented) money and credit markets. Consistency and uniformity in interest rates across different sectors and regions.
• Constrained by the openness of their economies. (Pegging of currencies to USD + have to trade in well-accepted currency) (impossible trilemma of free capital flow/fixed exchange rates/sovereign

Utopia sets Ethical Objectives to:

to enhance the brand's image/reputation

to build brand preference and loyalty

to avoid legal problems

to reduce the risk of negative publicity

to motivate employees

to increase profits

overall customer satisfaction.

Utopia Implements Corporate Social Responsibility Strategies

to act as a good corporate citizen. There are many benefits of CSR for Utopia:

• The image of the business and its products can be improved with a socially responsible approach. This could become an advantage, attracting new customers and loyalty from existing customers

• attracting the best motivated employees as many workers will prefer to work for and be associated with socially aware business

• socially irresponsible behavior by Utopia could lead to

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,... Continue reading "Understanding Marketing Strategies and Trends in 2023" »