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

Understanding Insurance Risk

Risk is involved in any situation in which some kind of loss or misfortune is possible. These can include:

• Financial: Loss of savings due to catastrophe.
• Physical: Health, welfare, or inability to secure income.
• Material: Home, vehicle, or property.

What is Insurance?

Insurance: Provides compensation for loss and spreads the cost of sharing risk.

When to Purchase Insurance

Purchase insurance when the probability of loss is small but the cost of loss is devastating. For example, restaurants typically don't insure plates because the loss is small, whereas Florida houses are often not insured due to the high probability of hurricanes.

Key Insurance Terminology

Premiums: Periodic payments for an insurance policy.

Insurance Policy:

Brand Awareness and Advertising Strategies

Brand Awareness: How present is your brand in the market? Is it recognized by the public?

Brand Image: What image do you project to your customers?

Brand Loyalty: Dedication to purchasing the same product or service repeatedly, now and in the future, from the same brand, regardless of a competitor's actions or changes in the environment.

Brand Stretching: When a company tries to launch products outside its core group. Example: Zara / Zara Home.

Announcement vs. Advertisement: An announcement is an act of announcing or giving notice, while an advertisement is a commercial solicitation designed to sell a commodity, service, or similar (marketing).

What Makes a Good Advertisement?

A good advertisement is:

• Clever
• Powerful
• Catchy
• Inspiring
• Uses

MANAGING INPUTS

Optimal production process: Right mix of input+Efficient procurement +Optimal usage = Firm operates on the cost function and not above it.

Transaction costs => Excess costs on the actual amount paid to the input supplier. Play a crucial role in determining optimal input procurement.

Include: Costs of searching for a supplier, Costs of negotiating, Other expenditures

Transaction costs à General in nature – Eg. Transportation costs

Specialized investment – an investment that cannot be recovered in another trading relationship.

Specialized investments increase transactions costs because they lead to: Costly bargaining, Underinvestment, Opportunism

Spending on machine to test some device.

Types of specialized investments: 1. Site... Continue reading "Optimal Input Procurement and Transaction Costs in Business" »

Business Name - A name or title under which a person or entity conducts a business.

Business Domain - A business's website address or URL on the internet that gives you an online identity or brand. It's a valuable part of your business identity and is an important marketing tool that can help customers find and identify with your business.

Trade Practices Legislation - The business owner must comply with trade practices legislation when establishing his or her business. The Competition & Consumer Act 2010 (Cwlth) is a federal law that specifies what business behavior is acceptable in relation to a wide range of issues.

Business Tax Compliance - A means by which governments finance their expenditure by imposing charges on citizens and corporate... Continue reading "Essential Business Compliance: Key Aspects for Success" »

1.2 Organization of the Single Supervisory Mechanism (SSM)

The SSM comprises the ECB and the National Competent Authorities of the participating Member States. The ECB is responsible for the effectiveness and consistency of its operations.

For the organization of the supervisory function, credit institutions have been classified as "significant" and "less significant". The criteria for this classification are based on the size of each institution, its economic importance, the volume of its operations, and whether it receives financial assistance. In Spain, many institutions are integrated into 12 groups classified as significant. Smaller-sized banks, saving banks, and rural saving banks have been classified as less significant.

The ECB supervises... Continue reading "Organization of the SSM and Banco de España" »

Working Capital

Working capital is equal to current assets minus current liabilities.

Liquidity Ratios

Current Ratio

The current ratio is equal to current assets divided by current liabilities.

Quick Ratio (Acid-Test)

The quick ratio (acid-test) is found by dividing the most liquid current assets (cash, marketable securities, and accounts receivable) by current liabilities.

Accounts Receivable Turnover

The accounts receivable turnover is found by dividing net credit sales (if not available, then total sales) by the average accounts receivable.

Average accounts receivable is typically found by adding the beginning accounts receivable to the ending accounts receivable and dividing by 2.

Average Collection Period

The average collection period is found by... Continue reading "Financial Ratio Analysis" »

The 7Ps of Marketing

1. Product

A product, whether tangible goods or intangible services, is offered to customers to satisfy their needs. Market research helps businesses determine the right products to produce and sell, impacting customer perception and business success.

2. Price

Price is the amount required to purchase a product. Determining price involves considering factors like cost, customer willingness to pay, value, and utility. A balanced price avoids negatively impacting demand or profitability.

3. Place

Place ensures the right product reaches potential buyers at the right location and time. Effective distribution strategies focus on accessible locations for target consumers.

4. Promotion

Promotion encompasses marketing communication used... Continue reading "7Ps of Marketing: Enhance Your Business Strategies" »

Business Concepts

What is a Business?

A business is an organization that strives for a profit by providing goods and services desired by its customers.

Goods

Tangible items manufactured by businesses.

Demographics

Baby Boomers

Baby boomers are people born during the demographic post-World War II baby boom, approximately between the years 1946 and 1964.

Generation X

Please provide information about Generation X.

Generation Y

Please provide information about Generation Y.

Economic Systems

Capitalism

Economic system based on competition in the marketplace and private ownership of the factors of production.

Communism

Economic system characterized by government ownership of virtually all resources, all markets, and economic decision-making by the central government.... Continue reading "Introduction to Business Concepts" »

Promotion: The Key to Increased Sales

The final and crucial factor that helps to increase sales and marketing effectiveness is promotion. Promotion is the method of communication by which the marketer provides information about the product. It includes advertisements, personal selling, word-of-mouth publicity, etc. For example, the Apple iPhone is promoted on TV, social media, etc.

E-commerce Pricing Strategies

Many online retail businesses use one of three popular strategies to set product prices: cost-based, competitor-based, and value-based.

Cost-Based Pricing

Cost-based pricing, or as it is sometimes called, cost-plus pricing, may be the most popular pricing model in the retail industry. Its greatest advantage is simplicity. It permits a store,... Continue reading "Effective Marketing Strategies and Pricing Models" »