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

Advantages of Strategic Alliances

Technology Exchange

This is a major objective for many strategic alliances. Many breakthroughs and major technological innovations are based on interdisciplinary and/or inter-industrial advances. As a result, it is increasingly difficult for a single firm to possess the necessary resources or capabilities to conduct its own effective R&D efforts. This is further perpetuated by shorter product life cycles and the need for companies to stay competitive through innovation. Some industries that have become centers for extensive cooperative agreements are:

• Telecommunications
• Electronics
• Pharmaceuticals
• Information Technology
• Specialty Chemicals

Global Competition

There is a growing perception that global battles between... Continue reading "Strategic Alliances: Advantages, Risks, and Partner Selection" »

Fixed Costs

Expenses that do not change as a function of the activity of a business, within the relevant period.

Price-Elastic Demand Curve

When the price goes down a little, volume increases significantly. When the price goes up a little, volume decreases significantly. Many grocery items are price elastic.

Price-Inelastic Demand Curve

Volume does not change much, even with significant price changes. Products like critical raw materials, electricity, and heart pacemakers are price inelastic.

Tactical Pricing

Tactical pricing is the ongoing stream of pricing decisions the firm makes daily.

Pricing Toolkit

A set of pricing tactics for the firm to change a product's price.

Vision

A description of an ideal future state; an impressionistic picture of what... Continue reading "Key Business Concepts: Pricing, Control, and Performance" »

The Depression led to a loss of confidence in the economic future and major political changes. In the 1932 presidential election, Franklin D. Roosevelt (Democrat) swept to a landslide victory over Herbert Hoover (Republican). FDR argued that the Depression was due to faults in the capitalist economy and proposed government intervention to remedy the situation. FDR had been confined to a wheelchair since an attack of polio in 1921, and his long battle to rebuild his career had deepened his empathy with human suffering. He was the first president of the radio age and understood the importance of transmitting confidence.

The New Deal programs (1933-39) aimed to stabilize the economy, regulate commercial institutions, create internal demand, and... Continue reading "The New Deal Era: Government Intervention and Economic Stabilization" »

GNP/GDP 4 elements:

Developing Export Strategy

Companies develop this strategy when customers in other countries request their goods.

Step 1: Identify a Potential Market

A company should conduct market research and analyze the results. Example: ART BRZ

Step 2: Match Needs to Abilities

Determine whether the company can meet the needs of the market. Example: Air conditioning

Step 3: Initiate Meetings

Build trust and develop a cooperative environment among all parties. Example: Arizona Companies

Step 4: Commit Resources

Allocate the company's human, financial, and physical resources to the project.

Export/Import Financing

1. Open Account

Export/Import financing where an exporter ships merchandise and later bills the importer for its value. Example: MGT briefcase

2. Advance Payment

Export/... Continue reading "International Business Strategies: Exporting, Financing, and Entry Models" »

Inflation and Deflation

Inflation is an increase in prices, reducing purchasing power. It occurs when the price of goods and services rises faster than salaries. Consequently, demand falls, leading to reduced production and a decrease in GDP.

Deflation is when prices fall more than wages. This leads to increased demand, increased production, and a rise in GDP.

World Trade Dynamics

World Trade Without Restrictions

• Higher prices
• Fewer consumer choices

World Trade With Restrictions

• Protection of national defense and citizen health
• Protection against dumping. Dumping occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.
• Potentially lower prices for consumers

Business Markets & B2B Buying Behavior

Understanding Business Markets

Business buyer behavior refers to the buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

Business buying process is the process where business buyers determine which products and services are needed to purchase, and then find, evaluate, and choose among alternative brands.

Market Structure & Demand

Business Decision Process Characteristics

• More complex
• More decision participants
• More professional purchasing effort
• Buyer and seller more dependent

Supplier development is the systematic development of networks of supplier-partners to ensure an appropriate and dependable... Continue reading "Business Markets & B2B Buying Behavior Explained" »

Fundamentals of Markets and Exchange

Defining Business and Market

A business is a specialized unit that coordinates the production of goods and services.

A market is a place where buyers and sellers meet to facilitate the exchange of products and services.

Key Elements of a Market

We identify three important elements in a market:

1. Sellers: Normally businesses, who produce products or services in order to sell them in exchange for money. They usually sell them to final customers, but also to other businesses.
2. Buyers: Normally families, although companies can also buy from other companies. Buyers acquire goods and services with money in order to satisfy their needs.
3. Products and Services: Goods, both tangible and intangible, that are exchanged between

Types of Taxes

• Income Tax: A percentage of individual earnings filed with the federal government.

• Corporate Tax: A percentage of corporate profits taken as tax by the government to fund federal programs.

• Sales Tax: Taxes levied on certain goods and services.

• Property Tax: Based on the value of land and property assets.

• Tariff: Taxes on imported goods, imposed to strengthen domestic businesses.

• Estate Tax: A rate applied to the fair market value of a property at the time of death.

Understanding Tax Fraud

Tax fraud involves failing to pay the government (e.g., town council, provincial government) the taxes corresponding to income or benefits obtained during a specific period.

• Tax Evasion: Involves concealing income (either domestically or in other countries,

Incoterms: Understanding Responsibility and Risk in International Trade