Ch1. Economic Activity D PDF

Ch1. Economic activity D Monday, 9 September 2024 13:47 Definitions Term Definition Management A range of decisions associated with the acquisition, allocation, and integrat certain economic activity. Key: making decisions in a condition of uncertaint Economic...

Ch1. Economic activity D Monday, 9 September 2024 13:47 Definitions Term Definition Management A range of decisions associated with the acquisition, allocation, and integrat certain economic activity. Key: making decisions in a condition of uncertaint Economic Actions that involve the production, distributions and consumption of goods activity Economic Activity People -> needs -> goods and services -> economic activities -> management Economic activity depends on needs, goals and values. They differ across cultures, Socio-eco - Needs: dissatisfaction due to the lack of something. - Goals: what people aim to achieve - Values: what is important to the life of people Maslow hierarchy of the needs: father of positive psychology Abraham Maslow developed a theory of psychological health predicted on fulfilling innate h tion of resources (human, physical, financial, etc) required to perform a ty. s and services within a society. Involves onomic conditions and evolve overtime. human needs in priority. Type of needs: Natural Social Product of human biology Product of self and social interaction - Radical: fundamental to society ex. Justice and freedom - Non-radical: belonging, friendship Essential/Primary Non-essential/secondary Natural + certain social needs Social needs influenced by imitation, fashion, expectation Economic Activity involves transformation (physical like manufacturing, logical like banks an organizations and individuals) and complementary activities (institutional design, organizatio management). Circular flow model where money flows in two directions: from producers to workers as wa m nd spatial like transportation), transactions (to buy input and sell output; link onal and Human Resources management, accounting and information ages and from consumers to producers as payment for products. Goods: Primary goods Non-essential goods Remarks Satisfy essential needs Satisfy non-essential needs - Complimentary goods Substitute goods Need both to satisfy need Need one to satisfy There are brands that produce bo needs (machine and capsules). *if same company produces both Competition may be a positive or Gusto, competition of capsules a Companies that produce substitu Differentiable goods Commodities Produces add differentiating No differentiating In differentiable goods, choice features in the good features PRICE COMPETITION that redu prices. In commodities, price determin only strategy is price lowering, oligopoly may also occur to fix market. Consumer goods Industrial Goods For final use or consumption - Used to produce other Focuses on the buyer B2C (Business to consumer) goods Differences in type of relations B2B (business to many. Direct vs. indirect relatio business) Marketing: B2C can use differe a malfunction results in a cost t Change: more difficult to keep be fulfilled while consumer pre oth complimentary goods. Ex. Hp printers (print and ink) or Dolce Gusto h, may sell printer at low price and overprice (gain larger profit margin) ink. r negative aspect. Then, brand loyalty has a major role. In the case of Dolce add value to the machine because it is compatible to multiple capsules. ute goods can share costs. e is guided by differentiating features and determine the price. AVOID uces your profit margin. So you can earn market share without lowering nes choice as the consumer doesn’t hold preference between goods. Your risk of price war (the most efficient wins). Ex. Ryanair. However, collusive prices amongst competitors. It becomes a free but not competitive ship: consumer are millions so distributors are needed, firms are not that onship. ent tools while B2B is much more technical, transparent and professional as to the firm. up with B2C compared to B2B as firms usually have a series of needs tor eferences and taste varies all the time and considerably more. B2C (Business to consumer) goods Differences in type of relations B2B (business to many. Direct vs. indirect relatio business) Marketing: B2C can use differe a malfunction results in a cost t Change: more difficult to keep be fulfilled while consumer pre Disposable goods Durable goods Used once Used multiple times During economic recession, it i expensive and represent a larg demand also varies overtime. W will only buy if the one they cu Individual Consumption Collective consumption Use or consumption by single Use or consumption by Risks for collective consumptio individuals many individuals at the Calculating the amount o same time Who the people are, dep Public goods Private goods Goods that are both non- Non.excludable: no efficient wa excludable and non-rivalrous Non-rivalrous: consumption by in consumption (not the ones Ex. National security, fresh air, produced by gov) INDIVIDUALS AND BUSINESS The role of individuals in business: - Owners: Provide resources to start a business. Manage the business or hire employee - Employees: responsible for work within a business - Customers: Buy goods/services Business activities: - Management: acquiring, developing and using resources (including people) - Marketing: 4Ps (product, price, place/distribution and promotion) - Finance: obtaining and effectively using money for business operations. Owners provid ENTREPRENEURS, NON-PROFIT AND GOVERNMENT Definitions Term Definition Entrepreneur Individual that risks its time, effort and wealth to develop a innovative Non-profit business Organizations that may provide goods or services but do not have the f ship: consumer are millions so distributors are needed, firms are not that onship. ent tools while B2B is much more technical, transparent and professional as to the firm. up with B2C compared to B2B as firms usually have a series of needs tor eferences and taste varies all the time and considerably more. is better to be a disposable goods company as durable goods are more ger portion of a household’s income. Also, they are usually less needed. The What people stop buying is goods they already have (during recession they urrently have breaks). on of demand has a risk, as misuse has a high cost. pend on people’s behavior ay to exclude people from using it. y a consumer doesn’t prevent the consumption by another. culture es. de financial resources either by borrowing or attracting investors. product for profit. fundamental purpose of earning profits Term Definition Entrepreneur Individual that risks its time, effort and wealth to develop a innovative Non-profit business Organizations that may provide goods or services but do not have the f Role of government: - Preserves competition - Protects consumers, employees and the environment trough laws and regulations. - Minimizes disruptive effects of economic fluctuation and reduce unemployment - Spur growth so consumers buy more goods and producers hire more workers Characteristics of non profit: - Are private and not allowed to distribute profits or assets - May pursue private interests of participants (eg. Trade associations), sell products or s - Need skill for management, marketing and finance - May have employees, volunteers or a combination of them Mini case study Raos-Sovos 1. Why are Rao’s sauces so successful? Quality, marketing (premium), image (restaurant) testimonials, accessible luxury, variety, secret recipes (lack of patent), exclusivity (lack consumers due to inflation and pandemic (substitutes for a restaurant). 2. What are the most important business activities performed by Sovos? Pump money in can buy them.  product for profit. fundamental purpose of earning profits services (universities) or provide public goods (philanthropic foundations). ), availability (stock), continuity (brand loyalty), authenticity, awards and of supply to meet high demand). Also, there was a huge influx of new nto marketing so people know about them, and widen distribution so people