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"Nothing is as simple as we hopeit will be...."
Jim Horning
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Micro and Macro
Economics
Lecturer:
Nissim Ben-Aharon
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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
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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
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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
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Reading
Harris N .(2001) Business Economics.
Butterworth Heinemann, Oxford
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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
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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
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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!
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Evaluation : (Weighting %)
Assignments 20%
Group presentation 20%
Mid Term Quiz's ( 3 ) 20%
Final Exam 40%
100%
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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
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Group Presentation
Analyze strategic the market using:
Porter's five forces model
4P
B.C.G. portfolio matrix
S.W.O.T.
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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?
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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!
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Emails:
Lectureremail
Code: bhms2009
Students emils
Before printing the presentation please think of
the environment!
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Issues fundamental to business
economics
A business must use its resources efficiently.
Resources
Labor
Capital
Entrepreneurs
Land
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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.
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Basic economic conceptsBasic economic concepts
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Producer
goods
Business outputs
Goods
services
Businesses
Consumer
goods
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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.
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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
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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.
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The Entrepreneur
Would you like to hear a story from a
TOP guys who was really
totally
WRONG?.....
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Who said it?...
I think there is a world market for maybe five
computers.
Thomas Watson, chairman of IBM , 1943
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"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
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640 Kilobyte should be enough memory for
anybody (1981)
Bill Gates
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Who would ever need such a silver disc?..
Jan Timmer, top manager in
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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.
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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.
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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 )
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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
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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
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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?......
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Historic cost is 12SFR
The opportunity cost a 25 SFR
Total cost 37 SFR
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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.
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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.
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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
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Business organizations
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.
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Business organizations
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.
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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
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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.
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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?...
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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.
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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.
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Industrial sectors
Tertiary sector provision of services to
businesses as well as final consumers.
service sectors:
Insurance, government, tourism, banking ,retail, education, social services.
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Summary
Issues fundamental to business economics
Basic economic concepts
Business outputs
The cost of using resources
Microeconomics and macroeconomics
Business organizations
Industrial sectors
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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