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

Economic Integration

• Free Trade Area: In such an area, trade barriers amongst member countries are removed, but they keep their own barriers with third countries. In this situation, countries still need customs to check that no product from a third country is passed as a product from the union. For example, Mexico and the United States are in the NAFTA, but the United States has a higher tariff on rice coming from India. It could go through Mexico if there were no customs between Mexico and the United States.
• Customs Union: Members not only remove trade barriers amongst them but also adopt a common set of external barriers. That way, it is not necessary to have customs inspections at the borders.
• Common Market: Members not only remove trade barriers

Government Financial Reporting

Governments combine blended components into both fund and government-wide (GW) statements.

Chapter 8- NPV

Opportunity Cost of Capital: expected rate of return given up by investing in a project

Net Present Value: Present value of cash flows minus initial investment--> difference between value and cost.-->reflects time value of money

Risky dollar worth less than safe one

Capital Budgeting Decision: is concerned with finding out investments that maximize value of the firm

IRR: the discount rate at which project NPV = 0 --> accept project if IRR is greater than opportunity cost of capital

Payback Period- time until sum of project cash flows equals the initial investment--> accept if payback period is less than some specified number of years

Discounted Payback Period - Accept project if discounted payback period is less than some... Continue reading "Maximizing Firm Value Through Investment Analysis" »

Core Economic Concepts

Microeconomics: Households and Firms

Microeconomics is the study of the economic system from the perspective of households and business firms.

Macroeconomics: System Performance

Macroeconomics is the study of the overall performance of the economic system.

Economic Growth (EGR)

Economic growth means that the economy is moving towards its full potential output. This is beneficial for the economy because it signifies that people are working and goods are being sold, which in turn stimulates the economy further by creating more jobs. Economic growth is typically presented as the percentage increase in Real GDP.

Gross Domestic Product (GDP) Definition and Measurement

GDP is the total market value of all the final goods and services... Continue reading "Understanding Key Economic Indicators and Finance Terms" »

Governments must combine their Discretely presented component units into both the fund and the Government-wide statements. F

 A related organization is a Contractual arrangement whereby two or more participants agree to Carry out a common activity and share its risks and rewards. F

 A primary government can impose Its will on a potential component unit if it has the authority to Modify or approve the unit’s budget. T

 The comprehensive annual financial report (CAFR) is divided into three main sections: the Table of contents section, the auditors’ report section, and the Financial section. F

The typical audit is designed to Cover all... Continue reading "In-depth financial statement analysis" »

ALOS: Average Length of Stay

Total occupied room nights/total bookings

Attrition

Difference between the number of rooms reserved compared to the number of rooms used

Booking Curve

An important tool for yielding that provides a visual representation of the pickup, number of bookings, availability, and yielding capacity of the hotel over time

Pick Up

No. of reservations between today & day of arrival

Contract

>30 nights + large volume

Group

>10 rooms, contract, deposit

• Corporate: Negotiated rate for a block with a specific company
• Association/Convention: Negotiated rate for a block with trade, professional, philanthropic association
• Government: Negotiated rate for a block with a qualifying government agency

Transient

Ind & groups

• Retail: Market

1. Perspectives of Marketing

Marketing is viewed through two primary lenses: Philosophy and Technique.

2. The Marketing Mix

The concept of the marketing mix was first introduced by Neil Borden.

3. Marketing Orientation

Not all companies are marketing-oriented; organizations can be either Sales-oriented or Marketing-oriented.

4. The 4 Ps vs. The 4 Cs

From a customer's point of view, the 4 Ps of marketing (Product, Price, Place, Promotion) evolve into the 4 Cs (Customer value, Cost, Convenience, Communication).

5. Sales Management Decisions

Sales management includes the following key areas:

• Strategic decision-making
• Selection and training
• Motivation
• Supervision and compensation of the sales team

6. Marketing Department Structure

Marketing departments are typically... Continue reading "Marketing Fundamentals: Strategies, Products, and Pricing" »

One of the advantages of licensing is: licensees have considerable autonomy.

Pollo Campero, a chicken restaurant chain: franchising.

Prior to the economic crisis of 1997-1998, South Korea's TRUE

Saab markets two luxury car models, country concentration/market segment concentration

Sony entered into a strategic partnership TRUE Starbucks' relentless pursuit of TRUE

Successful GSPs create win-win situations, mission

Tata Motors (India) acquired Jaguar (UK).

The agreements that allow McDonald's franchisees franchising

The alliance between GE T, The driving force T, The South Korean government has recently F

The disadvantages of joint venturing can Joint ventures allow partners to achieve synergy.

The failure of partnership between Great T, The joint venture... Continue reading "Global Strategic Alliances and Joint Ventures in Business" »

Economic Indicators and Financial Concepts

• Interest rate: Cost of borrowing.
• Exchange rate: Price of currency.
• Inflation rate: General increase in prices.
• Labour force: Number of people working.
• Tax incentives: Government fiscal benefits.
• Government bureaucracy: Administrative systems.
• Gross Domestic Product (GDP): Total economic output.
• Unemployment rate: Percentage of people without jobs.
• Foreign investment: Capital from overseas.
• Balance of trade: Net difference between imports and exports.
• Equity stake: Ownership interest or venture capital.
• Recession: Economic downturn.
• Shares: Units of ownership in a company.
• Debt: Money owed.
• Stock market: Exchange for trading shares.
• Forecast: To predict future trends.
• Profit margin: The difference between revenue and

National Income Accounting

National income accounts: an accounting framework measuring current economic activity based on the amount of economic activity that occurs during a period of time, which can be measured in terms of the amount of output produced, income received by producers of output, and the amount of spending by the ultimate purchasers of output.

Product approach: measures economic activity by adding the market values of goods and services produced, excluding any goods and services used in intermediate stages of production. The value added is the value of its outputs minus the value of the inputs it purchases from other producers.

Income approach: measures economic activity by adding all income received by producers of output.

Expenditure