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

The Disruptive Innovation Model

The model is defined by three key performance areas:

• Bottom-left triangle: Underserved market segments.
• Upper-right triangle: Overserved market segments.
• Parabola: The normal distribution of performance desired by customers.

Key Insights on Innovation

• Incumbents: Companies with large resources and significant market share almost always win when competing through sustaining innovations.
• Entrants: New players frequently succeed in the bottom of the model because incumbents prioritize high-margin customers and often ignore lower-margin segments.

How Disruption Works

Disruption begins on a lower performance curve. It succeeds by offering lower costs, greater convenience, or by appealing to segments that incumbents consider... Continue reading "Disruptive Innovation Strategy: How Market Entrants Win" »

Advertisement

Item of publicity to promote a product or service in newspapers, magazines, on TV, etc.

Advertising Agency

Marketing services firm that assists companies in planning advertisements.

AIDA

Attention, Interest, Desire, Action - the aim of all advertising.

Benefit

Advantage of a product or service.

Billboard

Signboard or wooden structure used to display advertising posters.

Broadsheet

Newspaper printed in a large format.

Campaign

Organised course or plan of action.

Circulation

Average number of copies of newspapers or magazines sold over a period of time.

Classified Ads

Small advertisement in newspapers or magazines divided into categories.

Commercial

Advertisement on radio or television.

Coupon

Part of a printed advertisement to be used to order goods... Continue reading "Advertising Glossary: Key Terms and Definitions" »

Oil Price Fluctuations and Economic Impact

Oil has always been a vital commodity because a significant portion of the global economy depends on its prices and fluctuations. Throughout history, it has experienced larger fluctuations than more stable investments, such as stocks and bonds.

The Role of OPEC in Market Stability

The OPEC (Organization of the Petroleum Exporting Countries) is the primary influencer of these fluctuations in oil prices. It is a consortium made up of 13 countries that controls approximately 40% of the world's oil supply. Recently, oil prices have fallen, reaching levels around $52 per barrel. These changes in price are determined mainly by the laws of supply and demand: when supply exceeds demand, prices fall, and the opposite... Continue reading "Oil Price Volatility and Global Economic Consequences" »

The EU Single Market: Driving Economic Growth and Prosperity

The European Commission estimates that EU GDP is 1.8% higher thanks to the Internal Market. Additionally, employment is 1.46% higher, which means that around 2.5 million extra jobs have been created.

Economic Impact and Regional Cohesion

Over the last ten years, the Internal Market has increased the Union’s GDP by €877 billion. These figures are likely an underestimate of the full impact of the Internal Market. The combination of the Internal Market and cohesion policies has ensured that these benefits have not missed the poorest regions of the Community, as many feared they would. In fact, the opposite has happened, as many of these regions have actually enjoyed the highest growth

Entrepreneurship: Investment and Startup Opportunities

Entrepreneurship is the capacity and willingness to develop, organize, and manage a business venture, along with its associated risks, to generate a profit. When combined with land, labor, natural resources, and capital, entrepreneurship becomes an essential ability to succeed in an increasingly competitive global marketplace.

Identifying Market Needs and Startup Foundations

Entrepreneurs often identify unmet market needs. By conducting thorough market research, they analyze risks, consumer behavior, suppliers, and potential profitability before founding a company. These new ventures are known as start-up companies.

Startups are typically financed by their founders as they attempt to capitalize... Continue reading "Entrepreneurship and Startup Investment Strategies" »

Depreciation

Decline in value of long-term tangible assets such as buildings, furniture, or equipment. It is systematically recognized by accountants as depreciation expense over the useful lives of the affected assets.

Accrued Expense

Expenses that are recognized before cash is paid. An example is accrued salaries expense.

Book Value

Historical (original) cost of an asset minus accumulated depreciation to date.

Callable Bond

Bonds that the issuer, at its option, may pay off prior to maturity.

Amortization

(1) Systematic and periodic allocation of the costs of intangible assets to expense over their useful lives; (2) periodically transferring the discount on a note or a bond to interest expense.

Cash Equivalent

Investments securities that are for short-... Continue reading "Understanding Financial Accounting: Key Terms and Definitions" »

Wealth

An abundance of valuable possessions or money.

Plentiful supplies of a particular resource.

HDI ranking:

The rank a country has in the HDI index (Human Development Index that measures health, education, and standard of living.)

The Millennium Development Goals:

(MDGs) are the eight international development goals or targets that were established following the Millennium Summit of the United Nations in 2000 for reducing global poverty.

Infant mortality rate:

Number of babies who may die under the age of 1 per 1000 live births.

GNI per capita:

Gross national income (the total income for a country computed by taking the value of goods, services, and the money received from abroad) divided by the population of the country.

Life expectancy:

Number of... Continue reading "Understanding Wealth and Development Indicators" »

Step 1 Review the Marketing Plan

1. What product/service is being marketed?
2. What is known about the market where the brand will compete?
3. What are the brand's marketing objectives?
4. How is the marketing communication expected to contribute to the marketing objectives?

Step 2, Selecting a Target Group

1. What are the relevant target buyer groups?
- Select a primary target buyer group: Existing customers (repeat purchase) / Non-customer (trial)
- Potential target audiences in terms of brand attitudes: BL (Brand loyal), FBS (First brand switchers), OBL (Other brand loyal), OBS (Other brand switchers), NCU (Non-customers)
- Communication strategies will differ significantly, depending upon the target group.
+ If the target is primarily BL or FBS,... Continue reading "Developing a Marketing Plan for Brand Success" »

Lack of Homogeneity of Costs Allocated to Sections

Activity-Based Costing (ABC) systems shift the focus from cost centers to activities, and from activities to cost drivers. An activity is defined as a group of operations or tasks necessary to produce its outputs. An activity should have variables that measure the units of output and performance. The concept of the center of analysis as a mere cost pool is replaced by the concept of activity, which requires the participation of several sections or departments to be completed.

A cost driver measures the output of an activity and is also the cost-assignment unit. It allows the assignment of the activity cost to a cost object as a function of the amount of the driver. Causality should be the criterion... Continue reading "Activity-Based Costing: A Comprehensive Approach" »