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

Causes and Effects of Monopoly Power

Introduction

The goal of the present study is to analyze the causes and effects of the monopoly power of companies.

Causes of Monopoly Power

• Incentives for companies to have monopoly power:
• High levels of benefit leading to investment in Research and Development
• Economies of Scale
• Efficient production and success

Effects of Monopoly Power

• Less competition and higher prices
• Allocative inefficiency and diseconomies of scale
• Lower prices to suppliers

Conclusion

Monopolies generally lead to higher prices and are more inefficient. However, may be the best outcome for some industries with substantial economies of scale. This investigation has a number of limitations to be considered in evaluating its findings.

Problems and

Entrepreneurial Personal Traits

Strong Need for Achievement (McClelland, 1965)

• Need for accomplishing something important to them.
• Actively seeking out opportunities and taking responsibilities.

Risk-Taking Propensity (Begley and Boyd, 1987)

• Medium, calculated risk-takers.
• Avoid high and low risk situations.
• Ability to evaluate risk on a defined prospect.

Locus of Control (Rotter, 1966)

• Desire to be in control of their own fate.
• High internal LOC.
• The achievement of a goal is dependent on their own behavior.

Tolerance of Ambiguity (Schere, 1982)

• To have an open mind.
• Being responsive to changes.
• No need to know all superficial details.
• To have a flexible attitude.

Desire for Autonomy (Birley and Westhead, 1993)

• High need for independence.
• Smith (1967) noted a

INCOTERMS

Series of predefined commercial terms published by the International Chamber of Commerce intended to communicate the tasks, costs, and risks associated with the transportation and delivery of goods.

EXW:

Places minimum responsibility on the seller, who merely has to make the goods available suitably packaged. The buyer is responsible for loading the goods into a vehicle and all export procedures.

FCA:

Very flexible rule that is suitable for all situations where the buyer arranges the main carriage. The seller is responsible for export clearance. The buyer assumes all risks and costs after the goods have been delivered at the named place.

FAS:

Seller delivers goods, cleared for export, alongside the vessel at a named port. Risk transfers... Continue reading "Understanding INCOTERMS: A Guide to International Trade" »

Marketing: The Activity, Set of Institutions, and Processes for Creating, Communicating, Delivering, and Exchanging Offerings That Have Value for Customers

Marketing is the process of creating, communicating, delivering, and exchanging offerings that have value for customers and clients. In order for marketing to occur, there are several key factors:

• Two or more parties with unsatisfied needs
• Desire and ability to satisfy these needs
• A way for the parties to communicate
• Something to exchange

Environmental Factors

• Social (cultural changes)
• Economic (Macroeconomics)
• Technological (changing technology)
• Competitive (Alternative forms)
• Regulatory (laws regulate competition)

4Ps: Product, Price, Promotion, and Place

The 4Ps are essential elements of the marketing... Continue reading "Understanding Marketing: Key Concepts and Strategies" »

The Basic Economic Problem

The basic economic problem concerns allocating scarce resources to satisfy unlimited needs and wants.

Economic Agents

Economic agents include individuals or households, firms (private businesses), and the government (public sector). Private firms aim for profit, while the public sector provides services like education and healthcare.

Goods and Services

Goods are physical items produced, bought, and sold. Services are non-physical provisions paid for by customers.

Needs vs. Wants

Needs are essential goods and services for survival. Wants are non-essential goods and services desired by economic agents.

Factors of Production

Factors of production are resources needed to produce goods or services:

• Land: Natural resources.
• Labor:

Assessing Readiness to Internationalize

To assess readiness to internationalize, consider the following:

1. Analyze Organizational Readiness

   Examine business strengths and weaknesses relative to international business by evaluating key factors such as appropriate financial and tangible resources, relevant skills and competencies, and commitment by senior management to international expansion.

2. Assess Product/Service Suitability

   Systematically assess the suitability of the firm's products and services for foreign markets. Evaluate the degree of fit between the product or service and foreign customer needs.

Bargaining Power & Entry Mode Selection

A high-control entry mode is likely to be selected when:

• The host government strongly desires to attract

Canvas Model

Customer Segments

A company supplies products and services to one or several customer segments. Who are the customers? (Proveedores)

Value Propositions

Why should our customers buy our products (or services)? Which outstanding benefits do customers get? Do we fulfill their real needs?

Channels

Value propositions (not just products) are delivered to customers through several channels: communication, distribution, sales, etc.

Customer Relationships

What kind of long-term relationships does the company establish with the customer segment? How?

Revenue Streams (Income)

Revenue flows (i.e., money) represent the money customers would pay for the business's products or services.

Key Resources

Key resources encompass everything the company needs to... Continue reading "Understanding the Canvas Model and Marketing Plan" »

Key Macroeconomic Concepts Explained

Core Definitions

Net Taxes (T): Taxes – (government transfer income and interest payments)

Inventories (INV): Goods produced but not yet sold.

The Basic Macroeconomic Equation

The basic equation of macroeconomics represents total spending in the economy:

GDP = C + I + G + (X-M)

Where:

• C = Consumption
• I = Investment
• G = Government Spending
• X = Exports
• M = Imports

Understanding GDP and Related Measures

Concepts Related to GDP

• Final Sales of Domestic Product: GDP – change in inventories.
• Gross Domestic Purchases: GDP – (X-M).
• Gross National Income (GNI): Formerly known as Gross National Product (GNP). Takes an ownership approach instead of a geographic approach to define the production of a nation. Example: how to count

External Analysis: To detect Opportunities and Threats

Internal Analysis: To discover Strengths and Weaknesses

PEST Analysis: used by organizations to discover, evaluate, organize, and track macro-economic factors which can impact on their business now and in the future

Political • Change to the political system very often forces business to change its approach. Economic • Changes in the market conditions, such as the presence of new competitors, or simply changes in the economy. Social • Changes in society or culture, such as demographic change, Technological • Technological innovation can force changes in production techniques

SWOT: done to try to access the CURRENT & FUTURE situation of a product, brand, business… (at the beginning... Continue reading "Strategic Analysis and Planning for Business Growth" »

Chart of Accounts

This system codifies business transactions with an account number and name. Accounts are hierarchically ordered:

• Groups (1 digit): Seven primary categories.
• Subgroups (2 digits): Subdivisions within groups.
• Accounts (3 digits): Specific items within subgroups.
• Subaccounts (4 digits): Detailed breakdown of accounts.

Group Examples:

1. Basic Financing
2. Non-Current Assets
3. Inventories
4. Trade Payables and Trade Receivables
5. Financial Accounts
6. Purchases and Expenses
7. Sales and Income

Static vs. Dynamic Financial Views

Net Worth (Static Vision)

• Economic Structure: Assets
• Financial Structure: Liabilities and Equity
• Balance Sheet: Fundamental accounting identity (end of period)

Net Income (Dynamic Vision)

• Resource Generation: Revenues
• Resource Consumption: Expenses
• Income