Man & Merchandising Purchasing

Define “trade exchange”. Why is it useful?

• A tool for securing valuable assets

• A form of “barter network”

• Allows business members to operate outside the cash economy

What is a “barter network”?

• A system where people or businesses exchange goods or services directly with one another without using money.

• Instead of paying cash, participants trade what they have for what they need.

True or false: “barter network can help creating exchange networks”

True!

How does trade exchange/barter network works?

1. Members join the network (individuals or businesses).

2. Each member lists what they can offer (skills, goods, services).

3. Members trade with others inside the network.

4. Many networks use trade credits instead of cash:

How does “trade credits” works?

• You earn credits when you provide something.

• You spend credits to receive something from someone else.

What are some benefits of a trade exchange?

• Saves money

• Uses unused skills or excess goods

• Helps small businesses

• Encourages cooperation

• Securing assets = more money to invest in growth

Explain what a “market” is?

• A composition of systems, institutions, procedures, social relations whereby parties engage in exchange

• Rely on sellers offering their goods/services (including labour) to buyers in exchange for money

True or false: “market is the process by which the prices of goods and services are established”

True!

Explain “marketing”

• Activities that a company undertakes to promote the buying/selling of a product/service.

What are some examples of marketing?

• Advertising

• Selling

• Delivering products to consumers or other businesses.

What are some purposes of marketing?

• Draw in more customers

• Maintain relationships with customers

• Ensure business profitability by matching the company’s products/services to customers needs.

What are the 4Ps (marketing mix)?

• Product

• Price

• Place

• Promotion

What is the main purpose of marketing mix?

• Help businesses plan, promote, and sell products effectively.

• Help businesses design an effective marketing strategy by offering the right product, at the right price, in the right place, with the right promotion.

Explain how “product” is used in marketing. What are factors that a business have to consider?

Ensure the business offers the right product that satisfies customer needs

• Quality

• Design

• Features

• Branding

• Packaging

Explain how “price” is used in marketing. What are factors that a business have to consider?

Set a price that is acceptable to customers and profitable for the business

• Pricing strategy

• Profit

• Discount

• Payment method

Explain how “place” is used in marketing. What are factors that a business have to consider?

Make a product available at the right location and time

• Distribution channel

• Logistics

• Accessibility

• Inventory

Explain how “promotion” is used in marketing. What are factors that a business have to consider?

Inform, persuade, and remind customers about the product

• Advertising

• Sales promotion

• Public relations

• Social media

What are the 4 market structures?

• Perfect competition (most competitive)

• Monopolistic competition

• Oligopoly

• Monopoly (least competitive)

Define “perfect competition markets”

• A type of market structure where many sellers and many buyers trade identical products, and no single firm can influence the market price.

• The most competitive type

What are some characteristics of the “perfect competition markets”?

• Large number of firms

• Selling identical products

• Freedom of entry and exit

• Consumers and producers have perfect knowledge about the market

What is the best example of “perfect competition market”?

Agricultural markets (e.g. rice, corn, vegetables)

Explain the following graph of perfect competition

• Horizontal line = the selling price/MR/AR/demand set by the market (businesses can’t change them)

• U-shaped = cost curve (MC = cost of making 1 more unit, AC = cost per unit)

• Where MC meets the price line = the quantity needed to be produced to make the most money.

How do you know whether the firm experience profit or loss?

• Profit = price above ATC

• Normal = price touches ATC

• Loss = price below ATC

What are the 3 non-perfectly competitive markets?

• Monopolistic competition market (กึ่งแข่งขันกึ่งผูกขาด)

• Pure monopoly market (ผูกขาดอย่างแท้จริง)

• Oligopoly market (ผู้ขายน้อยราย)

Define “monopolistic competition market”

• A market structure which combines elements of monopoly and competitive markets.

• Many sellers, but products are slightly different.

What are some characteristics of the “monopolistic competitive market”?

• Many firms

• Freedom of entry and exit

• Firms can differentiate their products

• Inelastic demand curve (they can set prices)

• Make normal profit in the long run

• Make supernormal profit in the short term

What is the best example of “monopolistic competitive market”?

• Restaurant

• Clothing brands

Define “oligopoly market”

• A market dominated by a few large firms, none of which can keep the others from having significant influence.

What are some characteristics of the “oligopoly market”?

• Few sellers

• High barriers to entry

• Firms are interdependent

• Price wars may occur

What is the best example of “oligopoly market”?

• Airlines

• Mobile networks

• Car manufacturer

Define “pure monopoly market”

• A market with only one seller and no close substitutes.

• Only one company is the single source for a product.

• Rarest type of market structure

• There must be barriers preventing competitors from entering the market

What are the 3 types of barriers in monopoly market? (Hint: LEC)

• Legal barrier

• Control of resources

• Economies of scale

What are some characteristics of the “monopoly market”?

• Single seller

• Unique product

• High barriers to entry

• Firm is a price maker

What is the best example of “pure monopoly market”?

• Electricity authority

• Water supply

True or false: “Government CANNOT intervene in market pricing”

False!

(Government can control the prices of certain items)

Define “international trade”

• The exchange of capital, goods, and services across international borders/territories.

• Consists of 2 key processes: importation & exportation

What is a “free trade agreement (FTAs)”?

An agreement between two or more countries to reduce or remove trade barriers so they can trade more easily with each other.

Give 3 examples of “trade barriers”

• Tariffs (import taxes)

• Quotas (limits on imports)

• Trade restrictions

Give 2 real-world examples of “free trade agreements”.

• ASEAN Free Trade Area (AFTA)

• EU Free Trade Agreements

• USMCA (USA–Mexico–Canada)

• Thailand–Australia FTA

What is the opposite concept of FTA?

“Trade protectionism” or “Economic isolationism”

What are the advantages of FTA?

• Cheaper imported goods

• More product variety

• Increased exports

• More jobs

• Stronger economic cooperation

What does “import” and “export” means?

• Import = Buying goods or services from another country.

• Export = Selling domestic goods or services to another country.

What does “GDP” stand for? Explain the term

• “Gross Domestic Product”

• National income

• The total value of all final goods and services produced within a country during one year.

• Measures the size of a country’s economy.

How to calculate GDP?

Look at the photo!

What are the 4 factors that help “decrease imports” but “increase exports”

• Taxes and quotas

• Subsidies (เงินอุดหนุน)

• Trade agreements

• Currency devaluation