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

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Big Five Personality Dimensions and Business Phases

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Big Five Personality Dimensions (Vecchio, 2003)

  1. Need for Achievement (importance of parental influences)
  2. Need for Autonomy
  3. Locus of Control: Internal (control of own destiny)/ External (others control my destiny)
  4. Risk Taking Propensity
  5. Entrepreneurial Self Efficacy (ESE)

PHASE 1: Start Up

Pitfalls

  1. The owner works for free.
  2. Less attention to financial aspects.
  3. Everybody feels responsible, no one is responsible.
  4. Too much excitement. Down to earth!

Skills

  1. Accounting skills
  2. Leadership skills
  3. Capability to slow down

PHASE 2: Steadying the Ship

Pitfalls

  1. Less attention for management of the company.
  2. Conflicts among managers and departments.
  3. Working in the company instead of working at the company.

Skills

  1. Managerial skills
  2. Able to analyze changes in the business environment

PHASE

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Channel Behavior and Marketing Strategies Explained

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Channel Behavior

Channels are behavioral systems made up of real companies and people who interact to accomplish their individual and collective goals. Sometimes they work well, and sometimes they don't. Disagreements over goals, roles, and rewards generate channel conflict.

Types of Channel Conflict

  1. Horizontal Conflict: Among firms at the same level of the channel. Example: Between different car dealers of the same brand or between different franchisees.
  2. Vertical Conflict: Among firms at different levels of the channel. Example: Between franchisor and franchisees, or between producer and wholesaler.

Channel Organization

For the channel as a whole to perform well, each member's role must be specified, and channel conflict must be managed. Conventional

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Evolution of Industrial Systems: Global Models and the Spanish Case

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The Productive System

Technology

R&D, equipment acquisition, human capital management, capital design, relational capital (material + immaterial). Codified Knowledge (applicable and accessible), American model, complex product. Tacit knowledge, long time to learn, can separate, Japanese model, traditional manufacturing.

Industrial Policy

  • Vertical: Identifies important sectors and encourages growth.
  • Horizontal: Identifies market failures and intervenes with minimal distortions (e.g., renewable energies).
  • Competition Policy: Protects customers, controls monopolies and oligopolies (state).

Post-War Industrialization

Bretton Woods Period (1970)

  • ISI (Import Substitution Industrialization): Industrial policy, protectionism, public enterprises (consumption,
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La Gran Depresión: La peor crisis del sistema capitalista

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Industry of consumer goods financed by loans

industry of consumer goods financed by loans. As a result of intense speculation, the New York Stock Exchange - the main indicator of the world economy - was overvalued.Immersed in a cycle by which shares were bought with the hope of reselling them at a higher price, much of the middle class in the US was involved in stock market investments.



The crash of the New York Stock Exchange

As a consequence, many firms had to close down and dismiss their workers.Before long, industrial production drastically declined. Unemployment affected almost all social classes. Many firms were ruined, but workers, employees and technicians were the most affected because unemployed workers did not collect any unemployment

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Economic Concepts and Definitions

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GDP

GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.

Industrial Revolution

Transition to new manufacturing processes in Europe and the US, in the period from about 1760 to sometime between 1820 and 1840.

Labor Force

Number of people who are employed plus the unemployed who are looking for work.

Labor Force Participation Rate

Labor force participation rate refers to the number of people available for work as a percentage of the total population.

Cyclical Unemployment

Cyclical unemployment is a factor of overall unemployment that relates to the regular ups and downs, or cyclical trends in growth and production, that occur within the business cycle.

Inflation

Inflation is a sustained... Continue reading "Economic Concepts and Definitions" »

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Venture Capital Funds and ADRs: Investing and Trading Insights

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VENTURE CAPITALS Funds

Goal: Invest in start-up/young companies with high growth potential and depend on the stage at which capital is provided (early-stage firms demand higher returns)

Formative-stage financing:

firm is in process of being formed and is financed with ordinary/convertible preferred shares. Management retains control.

Financing steps:

  1. Angel investing: “idea stage”, so funds are used to transform the idea into a business plan and to assess market potential
  2. Seed-stage financing: supports product development and/or marketing efforts including market research
  3. Early-stage financing: firms move towards operation but before commercial production and sales occur

Later-stage financing: funds are used for the initial expansion of a company

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Layoff Criteria: Balancing Seniority and Performance

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Criteria for Dismissal

Clear criteria for dismissal are essential for ensuring consistent and fair layoff decisions. The two primary criteria used are seniority and employee performance.

Seniority

Seniority, the length of time an employee has been with the firm, is the most common layoff criterion. In unionized workforces, layoff decisions are typically based on seniority, as stipulated in labor contracts.

Performance

When performance is used as a layoff criterion, companies can retain top performers and eliminate weaker ones. However, performance levels must be clearly documented to avoid legal risks associated with discrimination or arbitrary judgments.

Compensation System

Internal vs. External Equity

Equity pay addresses perceived fairness within... Continue reading "Layoff Criteria: Balancing Seniority and Performance" »

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Financial Intermediation and Depository Institutions: A Quiz

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CHAPTER 3

Financial Intermediation and Depository Institutions

Quiz

1. ____________ is the process by which individual savings are accumulated in depository institutions where the funds are then loaned out to consumers or invested in businesses.

  1. Savings/investment
  2. Financial intermediation
  3. Contractual savings
  4. Mortgage banking

Answer: b

2. Contractual savings organizations provide all of the following services with the exception of __________.

  1. Collecting premiums on insurance policies
  2. Accepting deposits or savings from individuals and then lending these pooled savings to businesses.
  3. Providing retirement benefits and insurance against major financial losses.
  4. Collecting employee or employer contributions from pension fund participants.

Answer: b

3. __________

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Business Objectives, Growth, and Economic Policies

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Business Objectives

  • Business Survival
  • Profit
  • Returns to Shareholders
  • Growth of the Business
  • Market Share
  • Service to the Community

Objectives of Public Sector Organizations

  • Financial: Meet profit targets set by the government.
  • Service: Provide service to the community and meet quality targets set by the government.
  • Social: Create employment.

Stakeholder Groups

  • Owners
  • Government
  • Community
  • Customers
  • Managers
  • Banks
  • Workers

Stages of Economic Activity

  • Primary: Extraction of Earth's natural resources.
  • Secondary: Manufacturing of primary resources.
  • Tertiary: Providing a service.

Business Growth

Internal growth or external growth (takeover or a merger with another business):

  • Horizontal Integration: When one firm merges with or takes over another one in the same industry at
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Financial Accounting: Expense Methods, Assets, Depreciation, Inventory, Liabilities

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Nature of Expense vs. Cost of Sales Method

There are two primary methods for presenting expenses in financial statements:

  • Nature of Expense Method: This method presents gross output, such as revenue and changes in inventories generated during a period, along with the corresponding expenses. Expenses are categorized according to their nature (e.g., salaries, rent, utilities).
    • Advantages: Provides information on the nature of the costs required to run the business.
    • Disadvantages: Does not provide information on the costs incurred for specific activities like production or research and development.
  • Cost of Sales Method: This method presents the revenue generated in a period and the corresponding expenses for production, as well as expenses for other
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