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

The Industry Life Cycle

1. New Industries

New or reformed industries emerge from technological innovations in products or services, shifts in manufacturing, new consumer needs, or economic and sociological changes. Examples include online men's fashion.

• Characteristics: High initial costs due to low production volumes, slow demand growth, high risk, low customer loyalty, and low entry barriers.
• Pioneer Advantages: Positioning, building customer loyalty, and establishing reference technology.
• Strategies: Reduce uncertainty through technology consolidation, build industry structure, cooperate with stakeholders, maintain rigorous financial policies, and ensure operational flexibility.

2. Growing Industries

Industries such as employment services and computer... Continue reading "Understanding the Four Stages of the Industry Life Cycle" »

Features of Ltd Companies

• Ownership: Usually small to medium-sized companies owned by a small group of people or family members.
• Capital: A share capital of usually £50,000.
• Investment: Private investors are attracted to issue shares.
• Transferability: Shares in Ltds cannot be sold without the authorization of other shareholders.
• Naming: Must include the suffix 'Ltd' after the company name.

Features of Plc Companies

• Capital Raising: Can raise huge amounts of capital by issuing shares to the general public.
• Liquidity: Once issued, shares are traded on the stock exchange, making them more attractive to investors as they are easier to offload.
• Administration: Higher administrative costs and a significant loss of privacy.
• Scrutiny: Under constant research

Why is the Purchasing Activity Becoming More Important to Global Firms?

Over the past three decades, increasing global competition has caused a dramatic increase in the outsourcing of materials. Firms are demanding the best value for all components used in finished products. Parts that were produced in-house as a matter of corporate policy are now being purchased from suppliers around the world. For a typical manufacturing firm, the share of finished product cost that is represented by purchased parts (as opposed to in-house) can range from 40-60%. As a result, purchasing is becoming a key success factor, and the current movement towards even greater international trade will only increase its importance.

What are the Tasks and Goals of Purchasing?

Product: Core Marketing Mix Element

A product is a good or service that satisfies a need. Without a defined product, it's impossible to effectively implement strategies for price, distribution, or promotion.

Key Elements of a Product

• Product Attributes

  These are the specific characteristics of a product, such as its color, quality, size, and design.

• Brand Identity

  A brand is a name, term, symbol, or design (or a combination of these) that identifies a company's product and differentiates it from competitors.

  • Unique Brand: A single brand used for all of a company's products.
  • Multiple Branding: Several distinct brands for different product lines or market segments.
  • Private Label: Products manufactured by one company but sold under another company's brand

1. Volatility of Returns

- Small company stocks

2. Christine's Return

P0= $42.40, P1= $38.20, Divd= 1.4%

- [(38.20-42.4)/42.4] + 0.014 = -8.51%

3. Scott's Annual Return

200 shares, P0= $48, n= 4 months, dividend= $0.22

HPR= -0.120

- Annual return= (1-0.120417)^(12/4)-1 = -31.95%

4. Annualized Return

Annual returns: 15%, 12%, -18%, 2%, 37%, n=5

- Standard deviation= 20.03%

5. Stock Return Range

Stock return= 14.6%, standard deviation= 19.2%, two-thirds of the time?

- -4.6% to 33.8%

6. Forecasting Returns

Historical dollar-weighted... If you want to forecast, the best:

- Arithmetic average return

7. Jeanette's Future Value

Investment= $12,000, n=4, arithmetic average= 8.72%, geometric average= 8.43%

- FV= 12,000(1+0.0843)^4 = $16,587

8. Black Stone's Geometric Average

Reasons to Use Derivatives

• Hedging: Mitigates risks related to interest rate, stock price, exchange rate, and commodity price volatility.
• Speculation: Utilizes high leverage for potential huge returns, though it remains extremely risky.

Types of Derivative Assets

Derivatives exist on a wide variety of assets:

• Options: Trade on individual stocks, market indexes, metals, interest rates, and futures contracts.
• Forward and Futures Contracts: Trade on agricultural commodities (wheat, live cattle, precious metals like gold and silver), energy (crude oil, gas, and heating oil), foreign currencies, U.S. Treasury bonds, and stock market indexes.
• Swap Contracts: Trade on interest rates, foreign currency, and other assets.

Market Structures

• Listed Derivatives:

CNPC Strategic Planning for Mozambique Natural Gas

According to Porter’s Five Forces, the degree of competition in an industry depends on five fundamental competitive forces. Determining the totality of these forces generates the industry's ultimate profit potential, measured by long-term returns on invested capital. However, not all companies operating in the industry have the same potential for return. Corporations differ in their potential for profit insofar as they are more or less apt to manage the ensemble of forces that characterise the industry. When a market presents an agent that orders all industries along a supply chain, the introduction of competition is hampered. In the case of the Mozambique natural gas industry, CNPC has shown... Continue reading "CNPC Strategy and Competitive Analysis in Mozambique Gas" »

What is a Business Plan?

A Business Plan is a Written Document that details proposed venture: Describes the current status, expected needs and projected results of a new Business /Covers the project’s research and development, manufacturing, management, marketing, critical risks, financing and milestones or timetable

Demonstrates a road map of where the venture is aimed to reach and how the entrepreneur proposes the route it will reach by.

Elements of a Business Plan:

Sec 1: Executive Summary: summary or brief statement of a longer report or proposal about the project for the reader to be acquainted with without reading the full details Sec 2: Business Description: Is the key element of a full business plan (how to make profit), ranges between... Continue reading "Understanding Business Plans, Marketing, and Financing" »

Selling Externally

Just as employees must “sell” ideas internally, entrepreneurs with plans based on new business models must sell them to other parties, such as investors or potential collaborators.

Technique Nº 4: Prototyping

It's a methodology for exploring different possibilities until a truly good one emerged. It's a central part of an inquiry process that helps participants gain a better sense of what is missing in the initial understanding of a situation.

Prototyping is a powerful tool for developing new, innovative business models. Like visual thinking, it makes abstract concepts tangible. In recent years, in business discipline, it has gained traction in areas such as process design, service design and even organization and strategy... Continue reading "Innovative Business Model Techniques: Prototyping and Storytelling" »

Defining International Marketing

International Marketing can be defined as the tasks involved when a company introduces a product into a foreign market. It includes the multinational process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

The Role of an International Marketer

The work of an international marketer is mainly concerned with:

a) Adapting the marketing mix to enter a market in another country.

Controllable Factors in International Marketing

Controllable factors in international marketing are:

c) Promotion and Price.

Understanding Ethnocentrism

Ethnocentrism can simply be defined as:

d) The notion that people