...1. For OPEC to act in accordance with this model, what fundamental change in OPEC would have to occur? What factors prevent it? First of all, all OPEC members must agree on the desired output level and price. The initiative for price and output decisions has to be turned to some assigned cartel authority and all members have to comply with this body. Therefore, the OPEC members can no longer make any independent price and output decisions on their own. An important attribute of this model is the absence of disputes among the cartel members on the basis of the optimal price and output for each member. However, several factors will prevent this form of cartel of taking place in the OPEC. First of all, each OPEC country maintains control over its own production and there are serious doubts that the OPEC members would want to assign the price and output decisions to some central authority. Secondly, even side payments to high-cost producers from low-cost producers to induce the former to reduce their production are impractical because they are so costly to negotiate and enforce. Finally, the OPEC nations have traditionally eschewed any production controls, viewing their production decisions as sovereign national matters. 2. Why is this form of cartel likely to be the most durable? This form of cartel maximizes the joint profits of its members and is completely insulated from internal cheating tendencies. Members may disagree as to the cartel's assignment of profit shares, but...
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...Course: - Edexcel HND in Business Module: - Business Environment Assignment Prepared by: Lecturer: Mr Term: Sepember-December2012 Course Start date: September2012 (Birmingham Central Campus) Introduction: This Assignment is about Business Environment and I have to complete the flowing tasks for the purpose of the assignment: Task 1 1. Types of Business Organisations, their purposes: There are three main types of Organisation in UK A) Private sector organisations. B) Public sector organisations. C) Voluntary sector organisations. The main types of Business organisation in the Private Sector is: The Sole trader: A sole trader is a business that is owned by one person. It may have one or more employees. It is the most common form of ownership in the UK. (e.g. Window cleaning, and Plumbing, etc.). Nowadays lots of people are setting up their own businesses by creating small web-based companies working from home. The Partnership: In a partnership, partners are personally liable for the debts of the business, although partners in a limited partnership (not to be confused with a limited liability partnership) who play no part in the management of the business, may have a limit on their liability set out in the Partnership Deed.. Companies: are owned by shareholders that each contributes a stock of money into a central pool. This pool of...
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...Foreign Direct Assessment: Analyzing the Mobility of FDI Models in Emerging Markets Kyle Himmelwright & Damian Zaccaria, Villanova Business School In this article, the authors will explore foreign direct investment in emerging markets. Applying a two prong investment model, they’ll assess three emerging Southeast Asian marketplaces; Indonesia, Thailand, and Malaysia. Additionally, they’ll explore the impact a variety of explicit and implicit factors have on the outcome. The research will indicate which of the three markets has the most potential for investment. Keywords: Foreign Direct Investment (FDI), emerging markets, investment, economic factors, growth, defense Foreign direct investment (FDI) plays a prominent and growing role in the global marketplace. FDI is defined as an investment made by a company or entity based in another country. The investment provides the firm with an opportunity to access new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing (Goingglobal.com 2015). Accurately assessing marketplace factors is essential when evaluating whether to invest in a foreign market, especially when it comes to making decisions requiring foresight and conviction. “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.” Rupert Murdoch’s quote concisely illustrates the current state of the global marketplace; it simply isn't as big as...
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...MRC 1513 ECONOMIC ANALYSIS WORKSHOP 1A Question 1: Although managerial economics is based primarily on microeconomics, explain why it is also important for managers to understand macroeconomics. Answer: Felda Technoplant Sdn Bhd is a subsidiary of Felda Holdings Berhad and was established on 22 June 2005 as a management agency for FELDA settler plantations. Among its main activities is replanting estates, managing immature and mature plantations as well as providing oil palm planting materials for estate replanting purposes. Almost 90% of the replanting area is planted with oil palm and the remaining planted with rubber. Thus we are subject to risks inherent to the plantation industry. These include damage from pests, outbreak of diseases such as ganoderma, fire or natural disasters, unscheduled interruption in palm oil milling and rubber tapping operation, climate condition, downturns in the global, regional and national economies, changes in law and tax regulations affecting palm oil and rubber and the competitive needs of labour with other industry. Movement of commodity price in local and international market influence the price of Fresh Fruit Bunch (FFB) and rubber. This will affect managerial decision whether continuing the normal field operations or take certain mitigation action focusing only to harvesting work while other work activities such weeding and fertilizing being stop until the operational cost becomes more viable. As an example, in 2008 the FFB selling...
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...Set 105 Environmental Scanning/Industry Analysis – 1 1. What external environmental variables should be scanned? In conducting an external environmental scan, focus should be drawn to two environmental variables: • Societal environment (macro-environment) – This is the general environment in which the business organization operates. It is characterized by those variables on which the business has no control. It does not directly touch on the short run activities of the firm but can, and often do influence its long-run decisions. • Task environment (micro-environment) – This is the industry within which the business organization operates. This environment is characterized by various players and stakeholders who affect a business enterprise, and are also affected by it. 2. According to Porter, what determines the level of competitive intensity in an industry? According to Porter, the level of competitive intensity is determined by 5 basic competitive forces namely: (1) Threat of new entrants to a market (2) Bargaining power of suppliers (3) Bargaining power of customers or buyers (4) Threat of substitute products and (5) Degree of competitive rivalry 3. What should be scanned in the task environment? There should be an analysis of relevant elements in the task environment such as: (1) Competitors (2) Suppliers (3) Regulators (4) Strategic Partners (5) Labor and (6) Customers. 4. Discuss how a development in a corporation’s societal environment can...
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...An Assignment on Money Market and Labour Market in context of Bangladesh Course Instructor: Abdul Jalil Chowdhury SUBMITTED BY: Zinat Mahal Roll No.: 1328 Departmental of Training for BCS (Economic) cadre Officers NAPD, Ministry of Planning, Nilkhet, Dhaka-1205 Introduction Bangladesh is a developing country in where money market and labour market are two of the most important issues of economics that determine long run development of a country. The GDP and infrastructural development of a country depend largely on the successful and efficient money market and labour market. Financial sector is considered to be playing a crucial role in facilitating efficient allocation of resources and improving productivity of investment. Although the direct effect of financial institutions on the real economy is less clear, the indirect impact of financial market is essentially critical (Herring et al., 1991). Mobilization of savings, managing risks and facilitating exchange of goods and services are the functions of financial sector that connect households, firms and governments for their own purposes. An efficient financial system can be of great use for the poor through boosting the growth of the economy and reducing the financial risks by creating an enabling environment to ensure easy access to financial services for all. Money Market A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded...
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...use of feedback, decision making and human relation etc. Miller (1983) defines entrepreneurship as a multidimensional concept encompassing a company’s action relating to innovation and risk taking and proactive measures.Innovation and risk-taking has an important place in entrepreneurship. Schumpeter (1994) described role of entrepreneurship as tendency of company to engage in and support new ideas, novelty, and experimentation that may result in new products, services. Risk taking describes the nature of entrepreneur. A.H. Cole has explained entrepreneurship as, “the purposeful activity of an individual or group of associated individuals, undertaken to initiate, maintain, or earn profit by production and distribution of economic goods and services. According to Heggins, “Entrepreneurship is meant the function of seeking investment and production opportunity, organize an enterprise to undertake a new production process, raising capital, hiring...
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...THE COST OF CAPITAL, CORPORATION FINANCE AND THE OF INVESTMIENT In the business world we make investment for two main reasons or either of them that can be for the maximization of our profite from a business or it can be for the maximaization of the market value of the assets. Businesses generally aquire the assets if the perceives that the particular asset can help in increasing the profit of the organisation. According to the theory the acquisition of the asset can help to increase the profit only if the returns arising due to that asset are more than the interest costs arising due to that asset. On the individual level when we are cosidering the purchase of any asset we should also consider the risk factor associated with that asset. Profit maximization and value maximization they both have more or less same meanings and implications. But if the case is of uncertainity then the profit maximization has no meanings, it remains meaningless for the investors. When the situation is uncertain then in that case the market value maximization becomes the basis for the theory of investment, if this notion is kept in mind then every time when we are going to make a decision to invest or not we should simply keep one thing in our mind that can be the basis of the decision, that is if we aquire the particular asset will it help to increase the value of the firm’s share? If in response of this question we comes on this point that yes it will result in increase in the value of the firm’s...
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...TEPAV – Economic Policy Research Foundation of Turkey The first company that we visited in Ankara was the Economic Policy Research Foundation of Turkey. There they presented to us the Turkish economic background, the actual economic position regarding European Union and Middle East and what are their challenges to keep the long-term competitiveness. Turkey is strategically located between Europe and Middle East and this advantage, after the policy reforms, made the country boost their economy by attracting companies that operates in both markets. The country is so well geographically located that we in a 3 hours flight you have an economic potential of 8,7 Trillions of dollars. The ground for this economic boom was the first generation reforms starting in 1980 with Price reforms and Trade and Financial liberalization. After that in 2001 they had the Banking reform, Privatized state owned companies, created Independent authorities to regulate the markets and they also adopted Fiscal and Monetary discipline. Nowadays, they are trying to move from an Efficiency-driven economy to an Innovation-driven economy, which means that they need to not only build or make goods in the country but also aggregate value to the goods produced. Investing in education is the only and long way to shift the economy from large scale transformation to high-tech. On the other hand, Turkey has a current account deficit and it is at historic high, it corresponds as 10% of GDP. The majority of the...
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...Monetary Policy Design in a DSGE Model 1. A simple model 1.1 Households The utility function of a representative household is ∞ ⎛ ξ C1−σ L1+η ⎞ Et ∑ β s ⎜ t + s t + s − t + s ⎟ 1+η ⎠ s =0 ⎝ 1−σ (1) The dynamics of the demand shock is ζ t = ζ t −1 + eζ ,t , where ξt = eζ . The consumption is t θ −1 ⎡ 1 ⎤ θ −1 composed of lots of goods. It is composed in a CES function Ct = ⎢ ∫ Ct (i ) θ di ⎥ . The i =0 ⎣ ⎦ 1 1−θ 1−θ consumer price index is P = ⎡ ∫ P (i ) di ⎤ . Then the demand function of each good is t t ⎢ i =0 ⎥ ⎣ ⎦ 1 θ ⎡ P (i ) ⎤ Ct (i ) = ⎢ t ⎥ Ct ⎣ Pt ⎦ The budget constraint is −θ PCt + Bt = Wt Lt + Π t + Rt −1 Bt −1 t The first order condition for Ct , Lt , and Bt are Ct−σ = λt Pt Lη = λtWt t λt = Rt λt +1|t After some calculation, we have the Euler equation and labor supply equation ξt +1Ct−+σ / Pt +1 1 β Rt Et =1 −σ ξt Ct / Pt ξt Ct−σ Pt 1.2 Firms (2) = Lη t Wt (3) Assume there is a type of price stickiness in the economy, that each firm has a probability φ that cannot change its price, and fixed the level as the last time. And it has a probability 1 − φ that can re-optimal its price. The problem of a firm which can re-optimal its price in time t is 1 Et ∑ (βφ ) s Λ t + s [ Pt* (i )Yt (i ) − Wt Lt (i )] s =0 ∞ ⎡ Pt * ⎤ s.t.Yt + s (i ) = ⎢ ⎥ Ct and Yt (i ) = At Lt (i ) ⎣ Pt + s ⎦ The dynamics of the technology shock is at = ρ a at −1 + ea ,t , where at = ln( At ) . The first order condition is ...
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...Financial Concepts in a Changing Business Michael Magons FIN/571 April 9, 2012 Beatrice Jones Financial Concepts in a Changing Business Guillermo Navalles’s furniture store is facing some new competition and has choices to make (University of Phoenix, 2012). These choices include competing with the new firm, absorbing or being absorbed by other firms, or changing from mainly manufacturing to distribution. Changing technologies and changes in the labor force influence decisions Guillermo needs to make to improve his business. Financial concepts associated with these types of changes are discussed here. Guillermo is compelled to make decisions about how he runs his company because of his own financial self-interest (Emery, Finnerty, & Stowe, 2007). The opportunity cost for Guillermo’s firm has changed since the arrival of new competition, and he must decide how to change his variable costs to maintain the prosperity of his company. His options include altering labor costs through automation or changing from a manufacturer to a distributor with more outsourcing (University of Phoenix, 2012). He is also displaying the behavioral principle because he is considering either copying the competition or adopting a business model that works for other furniture firms. Copying the behavior of another could work for Guillermo. The comparative advantage principle can also work with Guillermo because he can offer a patented coating that is flame retardant and...
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...A Short History of Economic Thought Hans-Walter Lorenz FSU Jena Winter 2012/13 Hans-Walter Lorenz (FSU Jena) A Short History of Economic Thought Winter 2012/13 1 / 93 Outline, Relevance, and Contents Outline, Relevance, and Contents Outline Very brief overview of a few dominant authors (starting around 1700 and ending in our times) Due to time restrictions: selection is to some extent arbitrary Emphasis on authors with a major influence on the development of economics Note: Empty entries are open for students’ presentations Hans-Walter Lorenz (FSU Jena) A Short History of Economic Thought Winter 2012/13 2 / 93 Outline, Relevance, and Contents Outline, Relevance, and Contents Relevance: Reasons for concentrating on the history of thought General historic interest (assumed!) Developing a sense for connections between political/technical history and the emergence of new economic ideas Many recently discussed topics in economics have ancestors in previous decades and centuries; many ‘brand-new’ approaches actually possess long beards (however often forgotten). Hans-Walter Lorenz (FSU Jena) A Short History of Economic Thought Winter 2012/13 3 / 93 Outline, Relevance, and Contents Outline, Relevance, and Contents Contents The Classics – Quesnay, Smith, Ricardo, Say, Malthus, Marx The Neoclassics – Marshall, Walras, Menger, Gossen The Keynesian Revolution The Neoclassical Synthesis and the New Classical School Strategic...
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...An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage. Jack Welch. Human Capital Theory (HCT) purports that peoples learning capacity when effectively utilised results in profitability for the individual, organisation and society at large. It underlines or seeks to explain why Human Resource Development (HRD) is beneficial not only for the individual, but for the firm and the macro-economy. The extent to which firms undertake training is important in establishing the amount of support for human capital theory. During 2001 – 2002, the Australian Bureau of Statistics reported 81% of all Australian employers provided some training for their employees. Of all employers, 79% provided unplanned or on-the-job training while 41% provided structured or specified content training. These statistics are evidence of employers approach in that training is seen as a necessity; but does management d understand the link between training and improved performance outcomes? Capital is a product that yields returns. Traditionally we associate this with investment funds, land or equipment. Taylorism emerged in the 1890’s and focused on applying science to the engineering process with a view to driving efficiencies by way of increasing productivity by refining processes or reducing inefficiencies via reduced wastage. It was not until the 1950’s that consideration was given that workers contributions could be recognised...
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...Differentiating Between Market Structures Each market is unique and differentiating between market structures is critical in understanding a company’s economic future. Market structures have distinct dealings, which define the type of structure a particular organization belongs. Determining the difference between market structures includes the number of firms, barriers a new company would have when entering this market, along with pricing and output decisions and potential for profits. Monopoly, oligopoly, monopolistic competition, and perfect competition are the four market structures. In the market space of construction and mining equipment, for more than eight decades, Caterpillar Inc. has established key growth predictions among emerging markets to provide presence across the world in more than 180 countries. “Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives” (Caterpillar, 2013). When considering the construction and mining equipment market on a global level Caterpillar along with a few other big competitors dominate this market space. Caterpillar currently holds almost 30% of the global machinery market, which put them in a competitive position with Deere and Co., Komatsu, Terex, and Cummins (Trefis, 2011). Because the number of firms controlling this market is only a few, this defines Caterpillar in the oligopoly market structure. Colander...
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...the concept of a normal return on investment related to the distinction between business and economic profit? The difference between the business profit which is useful for accounting and tax purposes and economic profit is that in economic profit, profit is calculated by revenue of the firm minus its explicit costs and implicit costs. On the other hand, business profit refers to the revenue of the firm minus the explicit or accounting cost of the firm. Now, in business accounting normal return is the minimum profit that is required to cover the expenditures of the firm’s inputs and all of the expenses associated with it. A profit will be anything greater than the breakeven profit. On the other hand, economic profit is just forgone cost estimation. Therefore, normal profit is required in business profit and not in economic profit, which is one of the differences between the two types of profits. Problem 6: Determine which of the two investment projects of Problem 5 the manager should choose if the discount rate of the firm is 20 percent. Project 2 Answer is: 450,000/1+.2 Problem 9: A women managing a photocopying establishment for 25,000 per year decides to open her own duplicating place. Her revenue during the first year of operation is $120,000 and her expenses are as follows a. Explicit cost $81,000 b. Implicit cost $35,000 c. Business profit $39,000 d. Economic profit $4,000 e. Normal return on investment $4,000 Froeb and McCann’s Chapter 3 3-2 ...
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