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

Telemarketing

It is a marketing action in which the telephone is used as the communication channel. It is aimed at contacting clients for commercial purposes, sales, or improving corporate image. It is part of a sales strategy of a company

Applications

1. Commercial applications: the goal here is to make a sale. How?

• Locating potential customers

• Arranging interviews for the sales team

• Keeping track of previous contacts

• Teleshopping

• Generating new sales of a product or a related one to the same customer (cross-selling)

• Renewing subscriptions (magazines, etc)

• Communicating new offers

• Attracting new customers

• Reactivating “silent” customers

• Follow-up, keep track of commercial offers received through postal mail or e-mail

2. Marketing applications, to gather information

Application of Multistage Games: The Entry Game

This scenario explores the strategic interactions between a potential entrant (Firm A) and an existing firm (Firm B) in a market. Firm B can choose to engage in a price war (play hard) or share the market (play soft). Despite the threat, Firm B has no incentive to play hard as it would earn less profit. The Nash equilibrium predicts Firm A entering the market and Firm B playing soft.

Managerial Decision Making with Risk-Averse Consumers

Criteria for Assessing Risk and Information Asymmetry

Managers employ various tactics to address risk-averse consumers, such as lowering prices, offering free samples, and utilizing advertising, particularly comparison advertising. Joining chain stores can also be... Continue reading "Managerial Economics: Key Concepts and Applications" »

Markowitz Model Assumptions

Harry Markowitz was the first to investigate financial markets in this way. He developed the theory of portfolio selection based on the best conditions for the placement of capital in a situation of uncertainty.

Investor Motivation & Portfolio Goals

Markowitz focuses his work on defining the factors that motivate the investor when investing. It is based on the utility function of the investor that depends on the profitability he wants to obtain and the risk he can assume. What it intends is to compose an optimal portfolio of securities for an investor, this being the best possible among all those that can be formed. It will be a search for a portfolio where performance is maximized for a given risk or vice versa.... Continue reading "Markowitz Portfolio Theory Explained" »

Chapter 1: Introduction to Economics

1. Scarcity

What do economists mean when they state that a good is scarce?

d. The amount of the good that people would like exceeds the supply freely available from nature.

2. Economic Choice and Competitive Behavior

Economic choice and competitive behavior are the result of:

d. scarcity.

3. Marginal Cost

Joe and Ed go to a diner that sells hamburgers for $5 and hot dogs for $3. They agree to split the lunch bill evenly. Ed chooses a hot dog. The marginal cost to Joe then of ordering a hamburger instead of a hot dog is:

$1.

4. Opportunity Costs

The expression, "There's no such thing as a free lunch," implies that:

c. opportunity costs are incurred when resources are used to produce goods and services.

5. Economic Way

Financial Ratios for Long-Term Analysis

Solvency Ratio

• Solvency: Total Assets / Total Liabilities

Asset Structure Ratios

• Fixed Assets / Total Assets: Fixed Assets (or Non-Current Assets) / Total Assets
• Current Assets / Total Assets: Current Assets / Total Assets
• Current Assets / Non-Current Assets: Current Assets / Non-Current Assets
• Working Capital / Non-Current Assets: Working Capital / Non-Current Assets

Financial Structure Ratios

• Liabilities / (Equity + Liabilities): Liabilities / (Equity + Liabilities)
• Equity / (Equity + Liabilities): Equity / (Equity + Liabilities)
• Current Liabilities / (Equity + Liabilities): Current Liabilities / (Equity + Liabilities)
• Permanent Resources / (Equity + Liabilities): Permanent Resources / (Equity + Liabilities)

Permanent

-(management accounting) the application of principles of accounting and financial management to create, protect, preserve, and increase value so as to deliver that value to stakeholders of profit note for profit enterprises both public and private.

(balance sheet) about shows the financial position at a point in time as one accounting period ends and another one starts. The main elements of the balance sheets are assets, liabilities, and equity.

(budget) is a financial plan. It can be seen as a statement of financial effect expected from the resource conversion process that the business has planned.

(globalization) - it is an extension of internationalization in the sense that most aspects of the production or service are performed and integrated... Continue reading "Financial Management and Accounting Principles" »

5) Family Business Survival Strategies

A study indicates that family businesses often struggle to survive across multiple generations. However, there are four key strategies that can increase their chances of longevity:

Establish Strong Governance

Creating a solid governance framework is essential. This includes attracting and retaining top talent while maintaining a clear separation between the family and the business itself.

Preserve "Family Gravity"

Identify and empower key family members who can align everyone's interests and drive the pursuit of common goals. These individuals serve as motivators and role models within the family and the business.

Early Talent Identification and Development

Invest in developing the skills and potential of family... Continue reading "Strategies for Success in Family Businesses and Modern Organizational Structures" »

E-Marketing Fundamentals

Marketing Segmentation

• Geographic Segmentation: Dividing a market based on location.

• Demographic Segmentation: Dividing a market based on demographic variables.

  • Uses age, gender, family size, income, education, religion, or ethnicity.

• Psychographic Segmentation: Dividing a market based on psychological attributes.

  • Various social classes, personalities, or approaches to life.
  • Includes: Segmentation using customer behavior.

Applying to Internet Commerce

Internet commerce applies segmentation by:

1. Collecting user profiles.
2. Performing automatic analysis (e.g., personalization and classification).

Data sources for user profiles and analysis include:

• User input (e.g., user profile).
• Previous transactions.
• Other sources (e.g., from partner

What is Wall Street?

It is the American stock market.

How the Stock Market Works

To set up a company, you need capital. This capital is raised from investors (called shareholders because, in return, the investors own a share in the company), who then get their money back either through receiving dividends on the shares or through selling their shares. Investors buy and sell their shares on the "stock market."

How Shares Work

The value of shares is higher when the company is successful. When more people buy rather than sell shares, their price goes up. But when it is the other way around, the price falls.

Causes

Speculation

Investment on the stock market was attractive during the economic boom since the economy was doing well and people... Continue reading "Wall Street Crash of 1929: Causes and Market Collapse" »