ECO 1002 Lecture Notes - Lecture 3: Demand Curve, Marginal Cost, Stock Market

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ceruleanhippopotamus105

28 Sep 2016

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Chapter 3: something in a lower price you would typically buy more / vice versa, higher price supply would go up / vice versa. Ex: gas was high a couple of years ago then became lower over these recent years in this country. 2 years ago price was 100, now it"s around 25 for a barrel. Supply went up so there was a surplus on this cheap oil (international surplus) They wanted to lower prices so they had to lower production to compensate. Saudi arabia didn"t stop the output of the large amount of oil because the. Us was producing more barrels of oil and they wanted to put them out of business. Bonds are getting less than what they have bought for, first time in lifetime. Market: arrangement that enables buyer and sellers to get info and do business together. They do this and get to an equilibrium price.

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Consider the following excerpts:

Excerpt 1:

Saudi Arabia is ramping up efforts to lure international companies and revive Crown Prince Mohammed bin Salman's plans for an economic makeover after foreign investment fell to a 14-year-low in 2017.

The moves include plans to create two investment funds totalling over $18 billion for the government to enter into ventures with foreign companies, said people familiar with the matter. The kingdom is also pouring billions into entertainment-industry partnerships and working with SoftBank Group's Vision Fund to bring technology firms to Saudi Arabia.

The first modern Saudi bankruptcy law is due to soon come into effect. The government has also drawn up a law on public-private partnerships, the first step toward the sale of billions of dollars in state-owned assets that the government hopes will attract foreign investment in big infrastructure projects.

Prince Mohammed is trying to shift the economy away from oil and toward industries that provide growth and jobs for Saudis. The first steps toward economic reform included cutting subsidies and adding taxes to narrow the budget deficit.

He has introduced social reforms such as allowing women to drive and opening cinemas. He has also forged an alliance with the Trump administration and shifted the kingdom into a more firm posture against Iran. But some of his economic plans have so far stalled.

The Saudi economy contracted last year, largely as a result of lower oil prices, and only emerged from recession in the first quarter of this year. The prospect of years of low oil prices helped spark Prince Mohammed's calls for economic reform, though prices have rallied in recent months.

Also worrying some investors was the detention of Saudi business leaders last fall in what the kingdom said was an anticorruption crackdown. The charges weren't aired publicly and some businessmen remain jailed; the government has moved to collect over

Saudi officials have said the crackdown should assure investors that the kingdom is serious about securing a stable rule of law, and the crown prince sought to win more American business on a nearly three-week visit to the U.S. this spring.

Excerpt 2:

Saudi Arabia's premier business conference opened as scheduled Tuesday, missing the star power of Western executives who cancelled over a Saudi journalist's death but packing a surprise: an unexpected visit from Crown Prince Mohammed bin Salman.

The event, the Future Investment Initiative, once again served as a forum for promoting Saudi investment and Prince Mohammed's modernization plans. But the gathering was stripped down from last year's inaugural session as the kingdom wrestled with corporate and diplomatic fallout in the wake of allegations that the Saudi government was involved in Jamal Khashoggi's Oct. 2 death in the Saudi consulate in Istanbul.

"Everybody is talking about it," said Henry Fernandez, chief executive of MSCI Inc., a U.S.-based markets-index compiler, speaking of Mr. Khashoggi's death. Despite that, he said the conference remained focused on engagement [with Saudi Arabia], not divestment...

The reaction to Mr. Khashoggi's death threatens to derail Prince Mohammed's plan to re-engineer the kingdom's economy to make it less reliant on oil income. The event is the prince's most visible effort to attract international investments by presenting the country as a business-friendly place that embraces new technologies

The event drew more than 3,000 investors, business leaders and advisers, according to the event app, but attendees also estimated hundreds had withdrawn. Many Western dropouts were replaced by representatives from Russia, Asia and the Arab world.

Among those who remained, French oil giant Total SA's CEO, Patrick Pouyanne, showed up alongside regional investment bank heads. Lucid Motors Inc., a California-based electric vehicle maker in which Saudi Arabia has committed to invest $1 billion, showcased the only prototype of its planned first car in the hotel's lobby.

Shahid Kazi, chief executive of Dubai-based consultancy ValuStrat, said Western executives who cancelled may have put a dampener [on the event] and may have disappointed people. But I wouldn't say it [the event] isn't useful. The Saudis are all here. That's who we really want to meet.

Still, there were signs that the gathering was off to an inauspicious start.

Last year, Western attendees arriving here were whisked to a luxurious airport lounge serving Arab coffee and dates. On Monday night, they lined up for passport control like everyone else.

The conference's website appeared to be hacked and was unavailable for hours Monday. Meantime, the World Economic Forum, which runs the eponymous event in the Swiss resort of Davos each year, formally objected to the gathering's nickname, Davos in the Desert.

Investors have divested more than $720 million from the Saudi stock market since Mr. Khashoggi's disappearance. The stock market, known as the Tadawul, is down about 4% since then.

What motives might drive technology and entertainment companies to invest in Saudi Arabia?

What are the risks associated with FDI in Saudi Arabia?

Why is the Saudi government so active (reform, conferences, risk-sharing) in bringing FDI back to Saudi Arabia?

purpletoad352

Xerox: Adapting to the Turbulent Marketing Environment Xerox introduced the first plain-paper office copier more than 50 years ago. In the decades that followed, the company that invented photocopying flat-out dominated the industry it had created. The name Xerox became almost generic for copying (as in Xerox this for you). Through the years, Xerox fought off round after round of rivals to stay atop the fiercely competitive copier industry. Through the late 1990s, Xerox's profits and stock price were soaring. Then things went terribly wrong for Xerox. The legendary company's stock and fortunes took a stomach-churning dive. In only 18 months, Xerox lost some $38 billion in market value. Its stock price plunged from almost $70 in 1999 to under $5 by mid-2001. The once-dominant market leader found itself on the brink of bankruptcy. What happened? Blame it on change or rather on Xerox's failure to adapt to its rapidly changing marketing environment. The world was quickly going digital, but Xerox hadn't kept up. In the new digital environment, Xerox customers no longer relied on the company's flagship products' standalone copiers to share information and documents. Rather than pumping out and distributing stacks of black-and-white copies, they created digital documents and shared them electronically. Or they printed out multiple copies on their nearby networked printer. On a broader level, while Xerox was busy perfecting copy machines, customers were looking for more sophisticated document management solutions. They wanted systems that would let them scan documents in Frankfurt, weave them into colorful, customized showpieces in San Francisco, and print them on-demand in London even altering for American spelling. This left Xerox on the edge of financial disaster. We didn't have any cash and few prospects for making an, says current Xerox CEO, Ursula Burns.The one thing you wanted was good and strong leaders that were aligned and could get us through things and we didn't have that. Burns didn't realize it back then, but she would one day lead the company she began working for as a summer intern in 1981. In fact, Burns almost left the company in 2000, but her colleague and friend, Anne Mulcahy, became CEO and convinced her to stay. Burns was named a senior vice president and was then charged with cleaning the house. The Turnaround Begins Task number one: Outsource Xerox's manufacturing. An often criticized and unpopular move, outsourcing was critical to Xerox's cost-saving efforts. Burns oversaw the process in a way that preserved quality while achieving the desired cost benefits. And she did so with the blessing of Xerox's employee union by convincing the union that it was either lose some jobs or have no jobs at all. With the restructuring of manufacturing, in only four years, Xerox's workforce dropped from 100,000 employees to 55,000. Although this and other efforts returned Xerox to profitability within a few years, the bigger question still remained: What business is Xerox really in? To answer this question, Xerox renewed its focus on the customer. Xerox had always focused on copier hardware. But we were being dragged by our customers into managing large, complex business processes for them, says Burns. Before developing new products, Xerox researchers held seemingly endless customer focus groups. Sophie Vandebroek, Xerox's chief technology officer, called this dreaming with the customer. The goal, she argued, was involving [Xerox] experts who know the technology with customers who know the pain points. . . . Ultimately innovation is about delighting the customer. In the process, Xerox discovered that understanding customers is just as important as understanding technology. What Xerox learned is that customers didn't want just copiers; they wanted easier, faster, and less costly ways to share documents and information. As a result, the company had to rethink, redefine, and reinvent itself. Xerox underwent a remarkable transformation. It stopped defining itself as a copier company. In fact, it even stopped making standalone copiers. Instead, Xerox began billing itself as the world's leading document management technology and services enterprise. The company's newly minted mission was to help companies be smarter about their documents. This shift in emphasis created new customer relationships, as well as new competitors. Instead of selling copiers to equipment purchasing managers, Xerox found itself developing and selling document management systems to high-level information technology managers. Instead of competing head-on with copy machine competitors like Sharp, Canon, and Ricoh, Xerox was now squaring off against information technology companies like HP and IBM. Although it encountered many potholes along the way, the company once known as the iconic copier company became increasingly comfortable with its new identity as a document-management company. Building New Strengths Xerox's revenue, profits, and stock price began to show signs of recovery. But before it could declare its troubles over, yet another challenging environmental force arose the Great Recession. The recession severely depressed Xerox's core printing and copying equipment and services business, and the company's sales and the stock price tumbled once again. So in a major move to maintain its transition momentum, Xerox acquired Affiliated Computer Services (ACS), a $6.4 billion information technology (IT) services powerhouse with a foot in the door of seemingly every back office in the world. The expertise, capabilities, and established channels of ACS were just what Xerox needed to take its new business plan to fruition. The synergy between Xerox, ACS, and other acquired companies has resulted in a broad portfolio of customer-focused products, software, and services that help Xerox's customers manage documents and information. In fact, Xerox has introduced more than 130 innovative new products in the past four years. It now offers digital products and systems ranging from network printers and multifunction devices to color printing and publishing systems, digital presses, and book factories. It also offers an impressive array of print management consulting and outsourcing services that help businesses develop online document archives, operating in-house print shops or mailrooms, analyze how employees can most efficiently share documents and knowledge, and build Internet-based processes for personalizing direct mail, invoices, and brochures. These new products have allowed Xerox to supply solutions to clients, not just hardware. For example, Xerox has a new device for insurance company customers, a compact computer with scanning, printing, and Internet capabilities. Instead of relying on the U.S. Postal Service to transport hard copies of claims, these and related documents are scanned on-site, sorted, routed, and put immediately into a workflow system. This isn't just a fancy new gadget for the insurance companies. They are seeing real benefits. Error rates have plummeted along with processing times, and that means increases in revenues and customer satisfaction. Dreaming Beyond Its Boundaries Riding the combination of Xerox's former strengths and its new acquisitions, Burns and the Xerox team now have a utopian image of what lies ahead. They believe the tools and services they offer clients are getting smarter. It's not just processing Medicaid payments, says Stephen Hoover, director of Xerox's research facilities. It's using our social cognition research to add wellness support that helps people better manage conditions like diabetes. Hoover adds that the future may see a new generation of Xerox devices, such as those that can analyze real-time parking and traffic data for municipal customers, allowing them to help citizens locate parking spots or automatically ticket them when they are going too fast. Already, Xerox is market testing parking meters that are capable of calling 911 or taking photos when a button is pushed. Not all products such as these will hit the market, but Xerox now has a model that allows it to dream beyond its known boundaries. In another example of smarter tools for clients, Xerox will soon rollout Ignite, a software and Web-based service that turns its copiers/scanners/printers already in service at schools around the world into paper-grading machines. Previous automated grading technologies (such as Scantron) worked only on multiple-choice responses filled out on special forms. But Ignite will grade work where answers are written in by students even numeric math problems. The real revolutionary potential of Ignite, however, is not just in automated grading, but in taking the results and turning them into Web-accessible data that allow teachers to identify problem areas and make improvements to their techniques. Throughout this corporate metamorphosis, Xerox isn't focused on trying to make better copiers. Rather, it is focused on improving any process that a business or government customer needs to perform and performing it more efficiently. Xerox's new machines have learned to read and understand the documents they scan, reducing complex tasks that once took weeks down to minutes or even seconds. From now on, Xerox wants to be leading global document management and business-process technology and services, provider. With all the dazzling technologies emerging today, Burns acknowledges that the business services industry in which Xerox now operates is decidedly unsexy. But she also points out that these are processes that companies need to run their businesses. They do it as a sideline; it's not their main thing. But running these seemingly mundane business processes is now Xerox's main thing. Xerox provides these basic document and IT services to customers so that customers can focus on what matters most to their real businesses. Xerox's transition is still a work in progress. Over the last four years, the company's revenues are up 47 percent and profits have more than doubled. Its stock price, however, has struggled (it has yet to top $12), a sign that Xerox isn't doing as well as Wall Street thinks it should be. Part of the reason is that Xerox still relies to some extent on its copier and printer products for its success, even with its recent diversification strategy. And just as e-mail and desktop software killed photocopying, smartphones and tablets are killing inkjet and photo printers. But Xerox depends much less on such products than competitors such as Hewlett-Packard and Lexmark International do. Thus, experts predict, Xerox will rebound much more quickly than its rivals. Burns and crew are also confident that as Xerox continues its transition to a solutions provider, the seeds it has planted over the past few years will soon bear fruit. Xerox knows that change and renewal are ongoing and never-ending. The one thing that's predictable about business is that it's fundamentally unpredictable says the company's annual report. Macro forces such as globalization, emerging technologies, and, most recently, depressed financial markets bring new challenges every day to businesses of all sizes. The message is clear. Even the most dominant companies can be vulnerable to the often turbulent and changing marketing environment. Companies that understand and adapt well to their environments can thrive. Those that don't risk their very survival. Questions for discussion:

1. What microenvironmental factors have affected Xerox's performance since the late 1990s?

2. What macroenvironmental factors have affected Xerox's performance during that period?

3. By focusing on the business services industry, has Xerox pursued the best strategy? Why or why not?

4. What alternative strategy might Xerox have pursued following the first signs of declining revenues and profits?

5. Given Xerox's current situation, what recommendations would you make to Burns for the future of Xerox?

maroonskunk617

100 word answer needed from the question and artile below.

Question:

Explain whether, and if so how, you would expect laws that prohibit the buying and selling of organs to affect the overall wellbeing of society.

Article: "Should there be a market in organs?"

Some years ago, a Boston newspaper reported the story of Susan Stephens, a woman whose son needed a kidney transplant. When the doctor learned that the mother's kidney was not compatible, he proposed a novel solution: If Stephens donated one of her kidneys to a stranger, her son would move to the top of the kidney waiting list. The mother accepted the deal and soon two patients had the transplant they were waiting for.

The ingenuity of the doctor's proposal and the nobility of the mother's act cannot be doubted. But the story raises many intriguing questions. If the mother could trade a kidney, would the hospital allow her to trade a kidney for an expensive, experimental cancer treatment that she could not afford otherwise? Should she be allowed to exchange her kidney for free tuition for her son at the hospital's mediacal school? Should she be able to sell her kidney so she can use the cash to trade in her old Toyota for a new Lexus?

In many countries, including Australia, it is illegal for a person to sell their organs. In essence, in the market for organs the government has imposed a price ceiling of zero. The result, as with any binding price ceiling, is the shortage of the good. The deal in the Stephens case did not fall under this prohibition because no cash exchanged hands.

Some countries, however, have illicit markets in organs. The World Health Organizations estimates that 10% of all organ transplants, including arount 15 000 kidneys each year, involve a patient from a rich country buying an illegal organ from a citizen of a poorer nation. The temptation to the world's poorest people to sell their 'spare' organs in high. A kidney can sell for around $1500 or more in the illegal trade. This may not sounds like much to you or me. But it can be many years income to a person living in dire poverty.

Some economists believe that there would be large benefits to allowing a free market in organs. People are born with two kidneys but they usually need only one. Meanwhile, a few people suffer from illnesses that leave them wiithout any working kidneys. Despite the obvious gains from trade, the current situation is dire. In Ausralia, the average wait for a kidney transplant is 3.8 years and there are up to 50 deaths a year from people on the waiting list because a kidney cannot be found. In Europe, on average, 12 people die each day waiting for an organ transplant. If those needing a kidney were allowed to buy one from those who have two, the price would rise to balance supply and demand. Sellers would be better off with the extra cash in their pockets. Buyers would be better off with the rgan they need to save their lives. The shortage of kidneys would disappear.

Such a market would lear to an efficient allocation of resources, but critics of this plan worry about fairness. A market for organs, they argue, would benefit the rich at the expense of the oor, because organs would then be allocated to those most willing and able to pay. But you can also question the fairness of the current system.Now, most of us walk around with an etra organ that we don't really need, while some of our fellow citizens are dying to get one. Is that fair?

ECO 1002 Lecture Notes - Lecture 3: Demand Curve, Marginal Cost, Stock Market

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