Cours de Mathématiques de Spé
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Cours de Mathématiques de Spé


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EconomicsCuthbert YoulldieDecember 7, 2008Chapter 1Ten Principles of EconomicsEconomy The word economy comes from a Greek word for "one who managesa household"Society and scarce Resources The management of Society’s ressources isimportant because resources are scarce.Scarcity implies choice and choice implies cost.Scarcity means society has limited resources and therefor cannot productall the goods and services people wish to have.Economics Economics is the study of how society manages its scarce resources.In order to begin to understand economics, you must rst understandthe concept of scarcity and the two branches of study within economics :microeconomics and macroeconomics.Macroeconomics Looks at the total output of a nation and the way thenation allocates its limited resources of land, labor and capital.Microeconomics Looks at similar issues but on the level of the individ-uals and companies.Economist study They study :1. How people make decision2. How people interact with each other3. The forces that a ect the economy as a whole1Principles 1. People face trade-o s2. The cost of something is what you give up to get it3. Rational people think at the margin24. People respond to incentives5. Trade can make everyone better o 1Substitution.2O res promotionnelles.16. Markets are usually a good way to organize economic activity7. Governments can sometimes improve economic outcomes8. They standend of living depends on a country’s production9 ...



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Chapter 1
Ten Principles of Economics
Economy The word economy comes from a Greek word for ” one who manages a household Society and scarce Resources The management of Society’s ressources is important because resources are scarce. Scarcity implies choice and choice implies cost.
Scarcity means society has limited resources and therefor cannot product all the goods and services people wish to have. Economics Economics is the study of how society manages its scarce resources. In order to begin to understand economics, you must first understand the concept of scarcity and the two branches of study within economics : microeconomics and macroeconomics. Macroeconomics Looks at the total output of a nation and the way the nation allocates its limited resources of land, labor and capital. Microeconomics Looks at similar issues but on the level of the individ-uals and companies. Economist study They study : 1. How people make decision 2. How people interact with each other 3. The forces that affect the economy as a whole Principles 1. People face trade-offs 1 2. The cost of something is what you give up to get it 3. Rational people think at the margin 4. People respond to incentives 2 5. Trade can make everyone better off 1 Substitution. 2 Offres promotionnelles.
6. Markets are usually a good way to organize economic activity 7. Governments can sometimes improve economic outcomes 8. They standend of living depends on a country’s production 9. Prices rise when the government prints too much money 10. Society faces a short-run trade-off between inflation and unemploy-ment Monopoly A monopoly is a market structure in which there is only one pro-ducer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted to high costs or other impediments, which may be economic, social or political. Oligopoly 1.1 Exam questions What do you understand by the term globalisation ? Globalisation is one company in many different countries all around the world. It’s the idea to expend internationaly. It is also the idea to try and have the same marketing concept through out the world. To be a truly global company is not very easy to do : Marketing concept 5P’s : Product Price Place Promotion Packaging What did Yoshikasu Kawana, group director of Nissan Motor Com-pany, mean when he said, ”we have to globalise and to globalise we must localise”. It is necessary for the survival of th company to globalise. But when a company globalises, it must think of the local market. It may be necessary to change or alter. For example, McDonald are very good at localiz-ing. They try to suit the most of local population. McDonald, in India, don’t sell beef. What are the benefits/drawbacks of being a global player ? An ad-vantage : with size you can create an economies of scale (the most you produce, the cheaper is the unit) Cheaper labour cost (production man/hour). Taxes are are fiscal advantages in other countries. Disadvantage : Your name or image could be affected by a problem in one of the country you are. (for example, Starbuck kill the competition into expanded their coffee).
You could expand too quickly and loose control (Example : Burger King in France did not control their expansion) You don’t study the new market carefully (Example : Carefour, in Japan, they lost a lot of money. Japanese goes to local shops.) A change of government could affect your company.
Why do companies get involved in International Business ? Chain of supply. Opportunistic response. (you see an opportunity and you respond to it) Mature domestic market. Product cannot be sold on domestic Market. (if you don’t have the right to sell) Additional volume / economics scale. Following customers. Defensive purposes. (you attack a competitive on a foreign market before a competitor attacks you) Shareholders.
Chapter 2
Market Entry Strategies
Exporting It is one of the easiest way to expand and to global. Historically, it’s one of the most popular. Exporting is encouraged by government. Licensing It’s the payment of of a fee or noyalty. In exchange for the use of a patent. Intel is a licensor and Dell is a licensee (because they buy Intel chip in their product) Franchising It’s the scale of a concept or idea that works. The franchiser usually control 30% of the company. Example : McDonald France (30% belongs to McDonald, and 70% belongs to another company) Contract Manufacturing Is where we get a company which manufacture a product for us. The company is good in the market, they will use another company to manufacture that product. Example : Nike Corp does not produce, only market. Management Contracting When you contract out your management to an-other companies. It is the opposite of contract manufacturing. Turnkey Operations Operations you usually do for governement. Foreign Direct Investment When you invest in another country through ac-quisitions. Strategic Alliances Are partnership that you make with oter industry. Example : One world, SkyTeam (in airline companies)
Chapter 3
Globalisation and Multinational Business
3.1 What is driving globalisation ? 1. Market Drivers Per capita income converging among industrialized notions. Convergence of lifestyles and tastes. Organizations beginning to behave as global customers. Increasing travel creating global customers. Growth of global and regional channels. Establishment of world brands. Push to develop global advertising. 2. Cost Driving Continuing push for economies of scale. Accelerating technological innovation. Advances in transportation. Emergence of newly industrialized countries with productive capa-bility and low labor costs. Increasing cost of product – development relative to market life. 3. Government Drivers Reduction of tariff barriers. Reduction of non-tariff barriers. Creation of blocs. Decline in role of governments as producers and customers. Privatization in previously state-dominated economies.
Shift to open market economies. Increasing participation of China and India in the global economy. 4. Competitive Drivers Continuing increase in the level of world trade. Increased ownership of corporations by foreign acquires. Rise of new competitors intent upon becoming global competitors. Growth of global networks making countries interdependent in par-ticular industries. More companies becoming globally centred rather than nationally centered. Increased formation of global strategic alliances. 5. Other Drivers Revolution in information and communication. Globalisation of financial markets. Improvement in business travel. 3.1.1 Questions 1. What is an MNC and give two concrete examples ? MultiNational Corporation / Company, like McDo 2. Find out the names of three MNSs that : Source clothing products from around the world Nike Source food products from around the world McDonald Source electrical goods from around the world Samsung 3. Do MNS’s help or harm ? They help : they bring money to the country They harm : they cause a lot of unemploye 4. What is meant by ”Contractual Stability”? They can pass under expertise, they can pollute the country They can be guilty of human rights abuse They would like a contract to garanted their productivity 5. Are ethical codes a good thing? It’s antiproductive It can have an effect on production 6. What are the stages of the product life cycle?
(a) Launch. (b) Growth. (c) Maturity. (d) Late maturity / Decline. 3.1.2 Diversity among MNC’s Size. The nature of the business. Overseas business relative to total business (60% of our business). Production locations (today, the main is in Asia). Ownership pattern’s. Organisational structure. Trends in Multinational investment The growth and geography of FDI 1 .
3.2 Going global to reduce costs International differences in input prices. International differences in productivity. Labour skills. Entrepreneurial and Man skills. Low-cost access to local markets. Economies of scale (the more you product, the lower the unit cost will be). Taking advantage of government policies (like taxes). 3.2.1 Going global to access new markets Increased demand. Spreading risks. Can exploit advantages over local firms. Access to local technology. 1 Foreign Direct Investment.
3.3 Business strategy in the Global Economy 3.3.1 The product life cycle and the MNC The launch phase. Multinational spread likely to be limited The growth phase. MNC likely to shift production abroad in order to retain cost com-petitiveness. Maturity. MNC increasingly seeks markets abroad as growth in home markets shows. Late maturity and decline. MNC increasingly seeks both markets and ever lower cost production.
3.4 Problems facing multinationals Language barriers. Selling and Marketing. Cultural issues. Relations with host governments. Relationships between subsidiaries. Possible diseconomies of scale. Easier if subsidiaries are non independently.
3.5 Maslow’s Hierarchy of Needs
Self Actualisation Esteem Needs Belongingness needs Safety Needs Physiological Needs Figure 3.1: Maslow’s Hierarchy of Needs
Self Actualisation Personal growth.
Esteem Needs Status achievement. Belongingness Needs Need to belong to a group. Safety Needs Security personal / financial. Physiological Needs Food / Drink / Shelter.
3.6 Strategic Analysis Strategic and day-to-day management. The components of strategic management. Strategic Analysis. Strategic Choice. Strategic Implementation. Importance of the business environment.
3.7 Porter’s five forces model The five forces : 1. The bargaining power of supplies. 2. The bargaining power of buyers. 3. The threat of potential new entrants. 4. The threat of substitutes. 5. The extent of competitive Rivaty. Factors affecting each of the forces. Limitations of the five forces model.
3.8 Valve chain analysis Nature of value chain analysis. Primary activities. Inbound logistics. Operations. Outbound logistics. Marketing and sates. Service. Secondary activities. Prouvement.
Potential entrants
Threat of new entrants
Bargaining power of supplies Bargaining power of buyers Supplies Industry Competitors Buyers
Threat of substitutes
Substitute products
Figure 3.2: Porter’s Five Forces Scheme
Technological development. Human resources management. Firm infrastructure.
3.9 Strategic Choice 3.10 Environment or Market-Based Strategy Types : Costs trader ships. Differentiation. Focus Importance of Establishing : The best of a firm’s competitive advantages. The nature of the target market. Resource-based strategy : Exploiting core competences. Defining an establishing core competencies.