micro and macro economics 1

8/8/2019 Micro and Macro Economics 1

1/54

"Nothing is as simple as we hopeit will be...."

Jim Horning


2/54

Micro and Macro

Economics

Lecturer:

Nissim Ben-Aharon


3/54

Today's objectives

Introduction to the course

Know each other

Understand the learning outcomes and the

content of the course

Understand how you will be assessed and

why


4/54

Understand what business economics is and

why it is needed

Identify the difference between micro and

macro economics

Identify the different types of resources

Describe the different types of business

organizations


5/54

Course outcome:

y Apply the theory of supply and demand to thehospitality industry

y Analyze how changes in the industry and theeconomy may effect the demand for andsupply of hotel products

y Evaluate what sort of competitive pressuresapply to hotels

y Evaluate how a hotel can react to competitionin the industry


6/54

Reading

Harris N .(2001) Business Economics.

Butterworth Heinemann, Oxford


7/54

Course details:

y Understand a range of economic terms

used in the media and how these

factors relate to the hotel industry

y Predict how the demand for hotel and

airline products by different groups of

consumers will be effected by price

changes for these products


8/54

Quizs

Starts at 9 o'clock

Students who are late cant take it later

No papers or books on the table

Writing with pen only

After checking the exams , bring them back

No cellular phones on the table

No exchanging calculators

No translators on the table

At a multiple choice exam, circle the right

answer , dont

mark a v sign


9/54

H.W.

Will be done alone!

Answer only to the question asked and

without additional information

Printed

References if needed

Will be delivered until the end of the first hour.

Late papers will not be received!


10/54

Evaluation : (Weighting %)

Assignments 20%

Group presentation 20%

Mid Term Quiz's ( 3 ) 20%

Final Exam 40%

100%


11/54

Group presentation WEEK 4

Choose an international company.

Background of the business ( age, products )

Define in your own words what is the company

strategy ( beside maximizing profits ) What are the business resources

Who are the business competitors

which markets the company addressing.( who are

the clients ) What are the business advantages

Where could the business expand


12/54

Group Presentation

Analyze strategic the market using:

Porter's five forces model

4P

B.C.G. portfolio matrix

S.W.O.T.


13/54

Group Presentation

Choose a product from your firma.

Explain about the product.

In which stage your product in the life cycle.

Why is it?

What are the complementary and the

substitute goods for your product?


14/54

Group Presentation - grading

Before you will present you will print one

copy for me with the full name of the member

of the group

You will be graded on:

1.Clarity of the language

2. Logical presentation

3. Presenting. Power point as help tool only4. Quality of the presentation

5.Answering questions!


15/54

Emails:

[email protected]

Lectureremail

[email protected]

Code: bhms2009

Students emils

Before printing the presentation please think of

the environment!


16/54

Issues fundamental to business

economics

A business must use its resources efficiently.

Resources

Labor

Capital

Entrepreneurs

Land


17/54

Issues fundamental to business

economics

Investing money in new capital.

Long term plans to achieve its objectives.

Growth across national.

Products must be priced competitively

,quality, marketed effectively and distributed

as efficiently as possible.


18/54


19/54

Basic economic conceptsBasic economic concepts


20/54


21/54


22/54

Producer

goods

Business outputs

Goods

services

Businesses

Consumer

goods


23/54

Business outputs

Goods ( costumer / producer)

Services - non physical items.

Ideas intellectual property which can also

be bought and sold.

Externalities cost or benefit that occurs as a

consequence of either production by

business or consumption by individual orhousehold.


24/54

Sort the business outputs:

laptop, movie, bulldozer, education, medicine,opera, book, over fishing, inventing an math

algorithm, glasses, planting trees, printing

machine , resistor , T.V. broadcast, train ,

commercial slogan, formula 1 car, Boeing

airplane, jeans, McDonalalds meal, patent,

plastic bottle, insurance.

Goods (costumers/producers),

Services ,Ideas ,Externalities


25/54

Resources

Land includes also what is found on and in it.

(forests, minerals, fish in the sea). Employing the

land called rent.

Labor the part of the population who work and

receive wages.

Capital machinery, factories, computers etc.

( Business have to set money a side to replace

capital as it wears out or becomes obsolete ).

Enterprise expertise that provide to combine theother resources most efficientlyto produce the output

of goods or services.


26/54

The Entrepreneur

Would you like to hear a story from a

TOP guys who was really

totally

WRONG?.....


27/54

Who said it?...

I think there is a world market for maybe five

computers.

Thomas Watson, chairman of IBM , 1943


28/54

"there is no reason for any individual to have

a computer in his home.(1977 )

Kenneth Harry Olsen co-founded Digital

Equipment Corporation (DEC)Digital Equipment Corporation was a pioneering

American company in the computer industry


29/54

640 Kilobyte should be enough memory for

anybody (1981)

Bill Gates


30/54

Who would ever need such a silver disc?..

Jan Timmer, top manager in


31/54


32/54

The story of apple

Apple Inc. is an American multinational

corporation which designs and manufactures

consumers electronics and software

products. Apple was established on 1976 by Steve

Jobs , Steve Wozniak and Ronald Wayne.

The company manufactures in the early 80s

the Apple || computer, was going public and

became a huge success.


33/54

April 1983, John Scully became CEO of

apple.

Scully divided the company to many divisions,

with a variety of computers for each market,and slowly decreasing the development

division.

From a successful company at the 80s the

company almost bank robed at the mid 90s.


34/54

At 1997 Steve Jobs join apple as an advisor,and after 5 month nominate as CEO, and hebegan restructuring the companys product

line and reduction of many apples products. Today the company consider as on ofAmericas Most Admired companies withunique products such as the Mac, iPOd,iPhone

The Market cap is 80 billion US dollars with35,000 employees.(2008 )


35/54

Farther reading:

Thetrouble with Steve Jobs

http://money.cnn.com/2008/03/02/news/copmpanies/elkind_jobs.fortune/index.htm

Why Steve Jobs is Apples Most ImportantProduct

http://www.fastcompany.com/blog/brendan-

collins/keeping-it-clean/why-steve-jobs-apples-most-important-product


36/54

The cost of using resources

Historic cost= the cost of using resources

The opportunity cost= cost of using the alternativeresource

Total cost = historic cost + The opportunity cost


37/54

In that case..

Every Monday evening I am going to the

cinema to see a movie at the cost of12SFR.

At the same time I could go to the Rod House

and have a glass of wine at the cost of25

SFR.

What is Historic cost , The opportunity cost and

the Total cost?......


38/54

Historic cost is 12SFR

The opportunity cost a 25 SFR

Total cost 37 SFR


39/54

Microeconomics and Macroeconomics

Microeconomics small, microeconomics

looks at an individual business and how it

behaves.

Macroeconomics large, analyses theeconomy as a whole, both nationally, and

internationally.


40/54

Business organizations

Limited liability companies business ownedby shareholders who have limited legalliability.

The companies could be private or publiclimited liability ( Plc ).

A Plc could be taken over.( 51% shares )

A Plc has the advantage of being able to

issue new shares.


41/54

The top ten 2008 ( in America )

Rank Company Revenues Profits

1 Wal Mart Stores 378,799 12,731

2 Exxon Mobil 372,824 40,610

3 Chevron 210,783 18,688

4 General Motors 182,347 -38,732

5 ConocoPhollips 178,558 11,891

6 General Electric 176,656 22,208

7 Ford Motor 172,468 -2,7238 Citigroup 159,229 3,617

9 Bank of America 119,190 14,982

10 AT&T 118,928, 11,951


42/54


SME A business employing 500 employees

or fewer.( small / medium sized enterprise )

May be a private or public limited company.

Sole trader A business run by one person,

although more than one person might be

employed.

Has an unlimited liability.


43/54


The partnership Typically found in the

professions such as laws, accountancy, and

architecture.Some partnerships have limited

liability , most unlimited.The least common type of business.


44/54

A story

Mr.Smith decided to open his own business

And sell shoes.

After a year the business begin to profit.

With his profits he bought himself a nice smallFerrari and a new hause


45/54

Mr.Smith decided that he want to increase

his company, and in order to raise money he

decided to go public and to with limit limited

liability.

His company new name was Mr.Smith inc.

Since he wanted to drive with his Ferrari only

at the week end , the company gave him a

new Mercedes.


46/54

Unfortunately Mr. smith did not know how to

run a big company , and after loses of 3

million dollars the company

bankrupted.

What will happen with his

House , Ferrari and Mercedesand WHY?...


47/54

Industrial sectors

The economy of a country and its businesses

are classified into three main categories:

Primary sector changing natural resources

into primary products.Covers industries as

agriculture, forestry, fishing, mining for coal ,

tin ect. Primary industry is a large sector in

developing countries.


48/54


49/54

Industrial sectors

Secondary sectorcreate a finished, usableproduct. Process the output of the primarysector.

Many of these industries consume largequantities of energy and require factories andmachinery to convert the raw materials intogoods and products.

Divisions of this sector include:A

utomobile,Brewing, Chemical , Textile, Metal workTobacco and ect.


50/54


51/54

Industrial sectors

Tertiary sector provision of services to

businesses as well as final consumers.

service sectors:

Insurance, government, tourism, banking ,retail, education, social services.


52/54


53/54

Summary

Issues fundamental to business economics

Basic economic concepts

Business outputs

The cost of using resources

Microeconomics and macroeconomics


Industrial sectors


54/54

Next week assignment

Find a charismatic CEO and write what didhe/she do that made the company a success.

( not more than half a page )

What are the business outputs in the tourismindustry ( Example )

Give 2 examples for microeconomicsinfluences at the tourism industry.

Give 2 examples for macroeconomics

i fl t th t i i d t

micro and macro economics 1

Documents