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

Evaluate and Select Suppliers

The most important duty of purchasing is the right to evaluate and select suppliers. This is what purchasing personnel are trained to do.

The selection decision in sourcing teams requires that members reach a consensus in selecting suppliers.

Review Specifications

The authority to review material specifications is also within purchasing’s span of control.

Purchasing should also lead or coordinate negotiations with suppliers. This means that purchasing retains the right to control the overall process, act as an agent to commit an organization to a legal agreement, and negotiate a purchase price.

E-Procurement and the Procure-to-Pay Process

We examine in detail the purchasing process, which includes all the steps that... Continue reading "Procurement: Supplier Selection and Purchasing Process" »

Key Negotiation Terminology

• Opening Point: This is the figure you give for a particular variable when you first state your position.
• Target Point: This is the figure for a particular variable that you would find satisfactory.
• Reservation Point: This is your limit for a particular variable. You cannot go beyond this point.
• BATNA: This is your Best Alternative To a Negotiated Agreement. In other words, it is what you will still have if the negotiation fails.
• Deadlock: A situation where there is no solution, because neither side can move.

Understanding Financial Terms & Payments

Types of Payments

• Tip: To thank someone for their services (for example, a waiter).
• Commission: To an agent or salesperson.
• Charge: For a service (electricity, postage).
• Fees:

Essential Economic Terms and Definitions

• 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: The transition to new manufacturing processes in Europe and the US, in the period from about 1760 to sometime between 1820 and 1840.
• Labor Force: The number of people who are employed plus the unemployed who are looking for work.
• Labor Force Participation Rate: The 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

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" »

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. __________

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