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

Nike and Corporate Social Responsibility

Nike came under fire from critics who alleged: corporate social responsibility.

Nokia's Reversal of Fortune

Nokia's reversal of fortune at the hands of Apple and Google TRUE

IKEA's CSR Initiatives

One of the Corporate Social Responsibility (CSR) initiatives by IKEA's primary carpet T

Forces Restraining Global Business

One of the forces restraining the growth of global business. TRUE

Potential Drawbacks of Regional Cost

One of the potential drawbacks of a regional cost can be prohibitive.

Global Success and Competencies

Organizations in order to be globally successful must be competencies.

Primary and Secondary Stakeholders

Primary stakeholders include all of the following except: media.

Secondary shareholders include... Continue reading "Global Business and Corporate Social Responsibility" »

Topic 4: World Trade Organization (WTO)

Trade barriers are measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services.

Effect of Trade Barriers

• Cause a limited choice of products and, therefore, would force customers to pay higher prices and accept inferior quality.
• Generally favor rich countries because these countries tend to set international trade policies and standards.
• Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency, which can be explained by the theory of comparative advantage.

Legal and Illegal Trade Barriers

Illegal barriers: Violate international agreements and rules.

Legal barriers: Do not violate... Continue reading "World Trade Organization: Trade Barriers and Regulations" »

Compensation

Rewards earned by employees in return for their labor

Direct Financial Compensation

Consisting of pay received in the form of wages, salaries, bonuses, and commissions provided at regular and consistent intervals

Indirect Financial Compensation

Including all financial rewards that are not included in direct compensation and understood to form part of the social contract between the employer and employee such as benefits, leaves, retirement plans, education, and employee services

Equity Theory

States that a person’s motivation is in proportion to the perceived fairness of the rewards he or she receives for the amount of effort he or she exerts, and that this is also compared with what others receive. According to the theory, individuals

The Labor Market: Topic 5

History of Labor Market Regulation

Post-WWII: The Golden Age of Collective Bargaining

Following World War II, Europe and the USA experienced a golden age of collective bargaining.

• The Golden Rule: The increase in wages must keep pace with the increases in productivity.

Labor Regulation in Spain

The Spanish labor market evolved significantly, moving from the dictatorship era to the Moncloa Pacts and the subsequent Estatuto de los Trabajadores (Workers' Statute).

The International Labour Organization (ILO)

Spain joined the ILO in 1951. Founded in 1919 and controlled by the UN, the ILO addresses employment and labor relations. It is a tripartite governance structure composed of government representatives, unions, and employers.... Continue reading "Global Labor Market Dynamics: History, Theories, and Welfare Models" »

GATT: Characteristics

• Provisional: Born with the hope of ratifying the Havana Charter.
• Flexibility: The agreement has adapted to circumstances and trade problems at every moment.
• Pragmatism: A trade agreement where rules are interpreted with ease. Parties have reached negotiated solutions, avoiding the politicization of conflicts.
• Limits: A legal instrument agreed upon between sovereign States.

GATT: Principles

• Most-Favored-Nation (MFN): Every member must treat every other member as it treats its most-favored trading partner.
• Equal Treatment: Imports are given similar treatment in the domestic market as domestically produced goods. This principle prevents counteracting the benefits of the MFN principle.
• General and Progressive Reduction of Tariffs:

The Market

Producer and Consumer Markets

The market is the space where sellers and buyers meet to achieve their objectives. In consumer markets, the consumer buys the product for consumption. However, when products are sold for use in the production process, this is known as a producer market.

Market Segmentation, Targeting, and Positioning

Definition of Segmentation

Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively.

Segmentation Methods

A market segment is a group with similar needs and wants. There are various ways in which a market may be segmented, including:

• Geographic Segmentation: This focuses on the impact of factors such as the location of customers

Chapter 1 & Chapter 2

◦The production possibilities curve shows the maximum quantity of goods and services that can be produced when the existing resources are used fully and efficiently.

Chapter 3

Demand Curve/ Supply Curve

1. Movement along the curve (Change of Quantity Demanded/ Quantity Supplied): Price of this product (Demand Law / Supply Law)

• Demand is the amount of a product that people are willing and able to purchase at each possible price during a given period of time.
• The quantity demanded is the amount of a product that people are willing and able to purchase at one, specific price.

Law of Demand

As price of a good rises, consumers buy less. As price of a good falls, consumers buy more. Depicts the inverse quantity-price relationship... Continue reading "Understanding Demand and Supply in Economics" »

Global Product Structure: Advantages

• Global vision
• Resource leverage
• Strategic focus
• Simplicity
• Accountability
• Standardized product introductions
• Enhanced speed and decision quality
• Self-contained product development and introduction
• Development of talent
• Low interference from other divisions

Disadvantages

• Limited cooperation, communication, and sharing of information between divisions
• Costly to maintain
• Duplicated functions

International Division Structure

Focus: Focuses on domestic business by shifting all foreign operations into a semi-independent division. This structure evolved out of the growing scope of international activities and a realization that foreign markets often offered the most promising growth opportunities.

Characteristics of International

Question 2 Analysis

(a)(i) Calculating Average Cost

Total costs = €1300

No. of kilos = 130

Average cost per kilo = €1300/130 = €10

(a)(ii) Calculating Profit

Total Revenue (TR)= 130 x €30 = €3900

Total Cost (TC) = €1300

Profit (TP or P)= €3900 -€1300 = €2600

(a)(iii) Identifying Variable Costs

B Variable costs

(a)(iv) Explaining Variable Costs

Variable costs change as production changes. For example, more sugar is needed as more sweets are produced.

(a)(v) Calculating Fixed Costs

Fixed costs = rent + insurance = €500 + €50 = €550

(a)(vi) Explaining Fixed Costs

Variable costs vary with output, so when output is zero, no variable costs are incurred.

(a)(vii) Limitations to Firm Growth

Lack of finance is the most important limitation to... Continue reading "Cost Analysis, Market Structures, and Business Growth in the Confectionery Industry" »

Axioms Determining Indifference Curve Shape

Six fundamental axioms determine the shape and properties of indifference curves:

1. Completeness: Individuals can compare and rank any two market baskets (A or B, or indifferent between A and B).
2. Transitivity: Guarantees the logical consistency of the ordering among any set of market baskets (If A is preferred to B, and B is preferred to C, then A is preferred to C).
3. Non-Satiation (More is Better): Market baskets with higher quantities (q) are always preferred.
4. Continuity: Market baskets in the same indifference set are distributed continuously.
5. Strict Convexity: Indifference curves are always strictly convex with respect to the origin of coordinates.
6. Smoothness: Indifference curves are smooth, lacking any