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

Microeconomic Market Structures

Oligopoly

An oligopoly is a market structure characterized by a few suppliers. The size of each company is relatively large compared to the total market supply. In an oligopolistic market, each bidder can significantly affect the price by varying its supply. The product is often homogeneous, meaning oligopolistic firms compete with each other, as their products are identical. There are also barriers to entry, similar to a monopoly, where production takes place in large companies that require substantial investment, making it difficult for new companies to enter.

Profit Maximization

Firms maximize their benefits when marginal revenue (MR) matches marginal cost (MC).

Firm Agreements (Collusion)

If one oligopolistic company... Continue reading "Economic Fundamentals: Market Structures & Inflation" »

Remuneration and Social Security in Spain

Assessing In-Kind Compensation

Housing:

• 10% of the property's rateable value.
• 5% over the revised rateable value (effective from January 1, 1994).
• 5% over 50% of the wealth tax value if no rateable value exists.

Vehicle:

• Delivery: Purchase cost, including taxes.
• Use: 20% of cost and charges, or if not owned, the market value of a new equivalent vehicle.

Other In-Kind Payments:

• Loans with sub-legal interest rates: The difference between the actual and legal interest.
• Meals, lodging, travel, and tourism: Employer's cost, including taxes.
• Insurance premiums and fees: Employer's cost, including taxes.
• Worker's study costs: Employer's cost, including taxes.
• Pension plan contributions and liabilities: Full amount.
• Other:

Capital Investment Defined

Capital Investment refers to the financial operations, accurate determination, and actual capitalization of a business or investment, or the placement thereof. This concept is supposed to have a current or future value. Time plays an important role in financial matters because it determines the possibility that a sum of money today can be placed at interest until maturity, thus gaining an income.

Understanding Present Value & Net Present Value

Transaction discount, calculated using simple and compound interest, allows us to clearly observe the definitions of the following key financial concepts:

Present or Current Value

Present or Current Value is the capital invested in a particular financial transaction. In a discount... Continue reading "Essential Financial Terms: Capital, Value, and Simple Interest Explained" »

Demand: The quantity of a good or service that consumers are willing and able to purchase at a given price and time. Factors influencing demand include:

1. Price of the Good: Changes in price can increase, decrease, or maintain demand.
2. Prices of Other Goods:
   • Substitutes: Demand increases when the price of a substitute good rises.
   • Complements: Demand decreases when the price of a complementary good rises.
   • Independent: Demand is unaffected by changes in the price of other goods.
3. Consumer Income:
   • Normal Goods: Demand increases with higher income.
   • Inferior Goods: Demand decreases with higher income.
4. Consumer Tastes and Preferences: Popularity increases demand.

Supply: The quantity of a good or service that producers are willing and able to sell at a given price... Continue reading "Understanding Market Demand, Supply, and Competition" »

Understanding Corporate Dimension and Growth

Defining Corporate Dimension

The magnitude or size of a business is primarily defined by its production capacity.

Distinguishing Dimensions

• Dimension of the Factory or Farm (Techno-Economic Unit): Refers to the installation size for a particular product.
• Global Dimension (Economic and Financial Decision Unit): Represents an integrated set of factories, warehouses, and other assets.

Dimension and Market Demand

Every company must offer the market the required quantity of its product. Therefore, if there are changes in demand, the production capacity should be reviewed and adjusted accordingly.

Criteria for Business Dimension Classification

Different criteria are used to classify firms by their dimension, leading... Continue reading "Business Dimension, Growth, and Competitive Advantage" »

Ikea

Strategy: Actions managers take to attain firm’s goals. Strategies focus on profitability (rate of return on invested capital) and profit growth (% increase in net profits over time). How to Increase Firm’s Profitability: Value must be created by consumer. Value creation measured by difference between price charged and cost of production. 2 strategies: Differentiation and low cost. Strategic Positioning: To maximize profitability firm must be efficient, configure internal operations, have the right organization structure (all must be consistent). Value Creation Activities: 1 Primary activities (creating, marketing and delivering product to buyers and providing support after-sale). 2 Support Activities (provides inputs that allow primary... Continue reading "Ikea Strategy: Global Expansion and Profitability" »

The Marketing Plan

Stage 1: Situation Analysis

This stage involves a rigorous and exhaustive study of the external and internal business environment.

External Analysis

Macroeconomic Factors

• GDP
• Private consumption
• Investment
• General price level
• Level of unemployment
• Interest rates
• Demographic changes
• Ethical and psychosocial aspects

Porter's Competitive Forces

A detailed analysis of competitive forces within the industry.

Market Analysis

Structure of the Market

• Status of the relevant market, including:
  • Size of the offer
  • Manufacturers
  • Types of products offered
  • Trademarks
  • Market shares
• Competitors
• New entrants
• Substitute products

Nature of the Market

• Status and development of segments
• Typology and profile of existing segments
• Competitors by segment and their shares
• Changes

Product Policy

Product is everything that is offered in a market to satisfy a need, benefiting the company. A product has three levels: commodities, the actual product, and augmented product attributes.

Product-Related Attributes

These include quality and design.

The Brand

A combination of images, words, and graphics intended to identify a product. There are family and individual brands, trademarks of the manufacturer or distributor.

The Package

Wrapping dedicated to keeping the commodity safe and also serves to make the product more attractive to the consumer.

The Label

A tool providing product information.

Price Policy

The price is the number of monetary units that must be paid to acquire a unit of the product. Formulas for pricing include:

• Prices based

Globalization and Economic Factors

Globalization encompasses economic globalization (global business), the economy of communication and knowledge. Two key factors drive this: new knowledge production and communication (innovation), and the Internet as a new form of organization.

It should adapt the fundamentals of business function.

Internet's Impact on Companies:

• Better communication with foreign entities (cheaper, faster, and improved economic management and operation).
• Greater choice of investment and financing (no frontiers thanks to the Internet).
• Increased labor productivity (flexible working relationships).

Interconnection Between Companies and Institutions:

• Improved customer relationship provider (intensifies and facilitates communication).