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

Vertical Integration

The process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company's or entity's power in the marketplace.

Horizontal Integration

Much more common and simpler than vertical integration, Horizontal integration (also known as lateral integration) simply means a strategy to increase your market share by taking over a similar company. This take over / merger / buyout can be done in the same geography or probably in other countries to increase your reach.

Merger

An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning... Continue reading "Business Strategies: Integration, Mergers, Acquisitions & More" »

Network Economics and the Information Sector

Network Effects

Network effects occur when the value of a network increases as the number of users increases. A prime example is Facebook. Networks consist of nodes (e.g., firms, individuals) connected by links (e.g., roads, railway lines, cables).

Network Externalities

Network externalities arise when a decision-maker doesn't bear the full cost or receive the full benefit of their actions within a network. This leads to sub-optimal market outcomes.

The Choice of Standards

Autarky Value

Autarky value refers to the value a customer derives from a product when no one else uses it, meaning there's no network effect.

Synchronization Value

Synchronization value is the additional value gained when a product format... Continue reading "Network Economics and the Information Sector: A Comprehensive Guide" »

Marketing functions

Searching for business opportunities

The first function of marketing is to search for, identify and analyze business opportunities that may exist in the market. This search for business opportunities is generally carried out through market research to identify and analyze needs, problems, desires, changes and trends in the market that may represent an opportunity.

Market targeting and segmentation:

The second function of marketing is to segment and select markets. Firstly, the total market that exists for the product to be offered is segmented or divided into different homogeneous markets (groups of consumers with similar characteristics), taking into account variables such as location, age range, gender, socio-economic level,... Continue reading "Marketing Functions: Business Opportunities and Market Segmentation" »

The Gold Standard: A Historical Overview

The gold standard is a monetary system in which money is freely convertible into a fixed amount of gold. It evolved from the variety of commodity money there was before the development of paper money and fractional reserves banking. It started to function in 1871. As we know, this century was characterized by globalization and an increase in international trade. Therefore, all trade imbalances between nations were settled with gold. The main priorities of the government were to maintain gold reserves and exchange rate stability.

The Trilemma of the Open Economy

If you had the Gold Standard you had fixed exchange rates and unrestricted capital mobility but Not Monetary Autonomy. As a result, countries always... Continue reading "The Gold Standard: History, Impact, and Challenges" »

Policy as Institutional Output

• Governments bestow legitimacy, universality, and mandatory policies.
• The characteristics of government organizations and institutions influence the types of public policies embraced by officials.
• Certain issues, problems, and interest groups have more weight than others in government.

Process Model

• It conceives the political process as a series of political activities: identification of the problem, establishment of the agenda, formulation, legitimation, implementation, and evaluation.

Group Theory Model

• Policies are the efforts of groups to influence and modify public policies.

Theory of the Elite

• Public policy reflects the interests and values of the elite rather than the demands of the people.
• Change in public policy

Executive Summary

Corporate Social Responsibility (CSR) is a way of managing companies based on the management of the impacts that their activity generates on their customers, employees, shareholders, local communities, the environment, and society in general.

Introduction to CSR Practices

This report will examine different ways a company practices CSR, focusing on three key pillars:

• Employment & Community (People)
• Environmental Protection (Planet)
• Ethical Business Growth (Profit)

Employment and Community Engagement

Companies must pay attention to factors affecting the well-being of everyone, not just their employees, in areas where the company has its plants and offices.

Collaboration with local sports, cultural, or economic activities can improve... Continue reading "Corporate Social Responsibility: Impact & Strategy" »

• Finding and Satisfying Customer Needs and Wants

• Converting Customer Needs into Wants

• Advertising Promotional Activities (50% off, 2x1)

• Maintaining Loyal Customers

• Persuading Customers

Promotional Activities

Businesses use promotional activities to inform customers (potential) especially advertising, and intend to persuade them that something they want is a need. (Turning wants into needs)

• Customer Base: Group of customers that companies sell to.

• Market: All customers and consumers who are interested in buying a product and have the financial resources to do so.

• Target Market: A particular group of consumers at which a product or service is aimed. It is identified by the company to be potential clients and consumers can be individuals or businesses.

CHAPTER 9: MERGERS AND ACQUISITIONS

1. The Basic Forms of Acquisitions

• Merger or Consolidation
• Acquisition of Stock
• Acquisition of Assets

Merger vs. Consolidation

Merger

• One firm is acquired by another
• Acquiring firm retains name and acquired firm ceases to exist
• Advantage – legally simple
• Disadvantage – must be approved by stockholders of both firms

Consolidation

• Entirely new firm is created from combination of existing firms

Acquisition

A firm can be acquired by another firm or individual(s) purchasing voting shares of the firm’s stock

• Tender offer – public offer to buy shares
• Stock acquisition
  • No stockholder vote required
  • Can deal directly with stockholders, even if management is unfriendly
  • May be delayed if some target shareholders hold out for more

Forms of Business Organization

Sole Proprietorship

Introduction and Definition

Introduction, Definition

Characteristics

• Single ownership
• No separate legal entity
• Less legal formality
• Unlimited liability
• Secrecy
• Flexibility
• Risk
• No sharing of profit or loss

Advantages

• Easy to form and wind up
• No profit sharing
• Better control
• Secrecy
• Flexibility
• Personal touch

Disadvantages

• Unlimited liability
• Limited capital
• Lack of managerial expertise
• Lack of continuity

Joint Stock Company (JSC)

Joint Stock Company Overview

• Introduction
• Definition
• Features
• Advantages
• Disadvantages
• Types of companies
• Incorporation of JSC
• Legal documents
• Management

Memorandum vs. Articles of Association

• Definition
• Main object
• Subject matter
• Obligation
• Registration
• Significance
• Relationship
• Provision
• Legal status

Private