Key Economic Concepts: GDP, GNP, Market Structures, Pricing
Key Economic Indicators
a) Gross Domestic Product (GDP)
Gross Domestic Product (GDP) is a measure of the total value of all goods and services produced within a country’s borders during a specific time period, typically a year. It represents the economic output of a nation and is commonly used as an indicator of the country’s overall economic health and size. GDP takes into account the value of final goods and services produced in various sectors of the economy, including consumption, investment,
Read MoreIntegration and Supplier Relationships in Purchasing
What is Integration?
Integration is the process of bringing together different groups, functions, or organizations to work together to achieve organizational goals.
Internal Integration in Purchasing
- Operations: Material requirements, performance feedback.
- Quality Assurance: Supplier evaluation, supplier development.
- Engineering: Technology used.
- Accounting & Finance: Cost reduction, buying decisions, budget.
- Legal & Safety: Intellectual property, safety in the workplace.
- Marketing: Marketing agencies,
Investment Strategies: Bonds, Stocks, and Short-Term Financing
Bonds
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How do I return the invested capital?
- Amortization of Capital: The total or partial cancellation of the debt that the bond issuer owes to the investor.
- Revenue Payment: Relates to the interest paid on the bonds, known as coupons.
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What risks are associated with bonds?
- Price Risk: Buying the bond at one price and selling it when the price is lower.
- Inflation Risk: The interest does not cover inflation.
- Liquidity Risk: When you want to sell the bond, no one wants to buy it.
- Default Risk: Failure
Stock Beta and Purchasing Power Parity: Market Analysis
Stock Beta: A Measure of Volatility
Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock’s beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk
Read MoreUnderstanding the Budget Cycle: Development, Execution, and Control
The budget cycle refers to the period during which the following steps are studied and determined:
Period of Development and Approval of the Budget
It is crucial to prepare the budget well in advance of its start date or duration, ensuring it is completed before the beginning of the financial period for which it is intended.
A budget formulated for a future period of one year typically requires a minimum of six months of advance preparation. This is because preparing a budget necessitates detailed
Read MoreMarket Structures and Labor Dynamics: Key Concepts
Market Structures: Types and Characteristics
Markets can be broadly classified into two main categories:
- Perfect Competition: Characterized by a large number of buyers and sellers, where no single company can influence the product’s price. This is because each company’s output is negligible compared to the overall market.
- Imperfect Competition: In this scenario, sellers have some degree of control and can influence the prices of the products they sell. Imperfect competition is further divided based