unit 11 - 12 - 13 - 14 - 17

Advertising

is a means of communication with the users of a product or service. Advertisements are messages paid for by those who send them and are intended to inform or influence people who receive them, as defined by the Advertising Association of the UK.

The Purpose of Advertising - informative advertising

creates awareness of brands, products, services, and ideas. It announces new products and programs and can educate people about the attributes and benefits of new or established products.

The Purpose of Advertising - Persuasive Advertising

tries to convince customers that a company's services or products are the best, and it works to alter perceptions and enhance the image of a company or product. Its goal is to influence consumers to take action and switch brands, try a new product, or remain loyal to a current brand.

The Purpose of Advertising - Reminder Advertising

reminds people about the need for a product or service, or the features and benefits it will provide when they purchase promptly.

Advertising campaign

A time-limited set of ads - campaigns may run across different media, and for one month or ten years, but can be categorized together as they are the execution of a central idea

Product Placement

The practice of paying for a branded product to be used by a character in a movie - e.g James Bond driving a BMW Z3

Product Positioning

Establishing the market niche of a product - which may not be as the brand leader - and advertising to the appropriate segment of the audience

loss leader

a popular product sold with no profit, in order to attract customers to a store

redeemable coupon

a certificate offering consumers a price reduction on a particular product

purchasing cycle

the average length of time between a consumer's repeat purchases of the same product

industrial buyer

someone who purchases goods or services that will be used in the production or supply of other goods or services

point-of-sale advertising

Advertising is done at the place where a product is sold .

pros and cons of marketing

* Pros 
* Increase revenue : one of the significant positive characteristics of advertising is that it can lead to an increase in sales and revenue.
* Market expansion : with advertising, a manufacturer or company sustains its position in existing markets and expands its business in new ones
* Cons
* Increase the cost of marketing : there are times when the campaign produces a favorable result, thus bringing good cash flow and at the same time, if the results are not favorable, it can end up increasing the marketing costs for the company
* Creates monopoly : big companies tend to create their monopoly over market, thus affecting consumers and other small players

marketing vs advertising - marketing

is the systematic planning, implementation, and control of a mix of activities intended to bring together buyers and sellers for the mutually advantages exchange or transfer of products or services

marketing vs advertising - advertising

* Is only one component of the overall marketing process
* It is the most expensive part of all marketing part




6. \

Deposit

to place money in a bank; or money placed in a bank

liquidity

available cash, and how easily other assets can be turned into cash

collateral

anything that acts as a security or guarantee for a loan

a mortgage

a type of loan used to purchase or maintain a home, land, or other types of real estate.

overdraft

Something that occurs when you make a purchase with your debit card or write a check for an amount that exceeds your checking account's available balance.

a current account

an account at a bank against which checks can be drawn by the account depositor; a checking account

a savings account

a deposit account that generally earns higher interest than an interest-bearing checking account.  It lists the number of certain types of transfers or withdrawals you can make from the account each monthly statement cycle

a deposit account

a bank account maintained by a financial institution in which a customer can deposit and withdraw money.

solvency

When banks have enough money to cover potential losses.

maturity date

This is the date of expiration for the contractual obligation of a financial instrument.

A bank is a financial intermediary 

whose core activity is to provide loans to borrowers and to collect deposits from savers. In other words they acts as intermediaries between borrows and savers.

clearing system

a set of arrangements in which debts between banks are settled by adding up all the transactions in a given period and paying only the net amounts needed to balance inter-bank accounts.

Retail or personal banking

relates to financial services provided to consumers and is usually small-scale in nature

Commercial banks

are the major financial intermediary in any economy. They are main providers of credit to the household and corporate sector and operate the payments mechanism

Investment bank 

mainly deal with companies other large institution and they typically do not deal with retail customers

Statement of profit or loss 

the gross profit and profit from operation of the company, includes details of how the profit from operations is split up between dividends to shareholders and retained earnings

Statement of financial position

 the net worth or equity of the company. This is the difference between the assets and liabilities

Statement of profit or loss - income statement

is a document that records the income of a business and all costs incurred to earn that income over a period of time

purpose of income statement

\+ be used to measure and compare the performance of a business over time or with others firm, and ratios can be used to help with this form of analysis

\+ actual profit data can be compared with the budgeted profit levels of the business

+ bankers and creditors of the business will need the information to help decide whether to lend money to the business 

Statement of financial position (Balance sheet)

* Records the net wealth or shareholders’ equity of a business at one moment in time 

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=> value of a business’ assets and liabilities at a particular time

trading account

shows how gross profit (or loss) has been made from the trading activities of the business.

Profit or loss account

calculates three profit figures: profit from operations (or operating profit); profit before tax; profit for the year

Appropriation account

shows how the profit for the year is distributed between the owners, in the form of dividends to company shareholders and as retained earnings.

Revenue

is the amount a company receives from selling goods and/or providing services to its customers and clients.

Gross profit

is net sales minus the cost of goods sold. It reveals the amount that a business earns from the sale of its goods and services before the application of selling and administrative expenses.

Net profit

the profit made by a business after all costs have been deducted from sales revenue. It is calculated by subtracting overhead costs from gross profits

Overheads/expenses

are expenses of the business that are not directly related to the number of items made or sold. These can include rent and business rates, management salaries, marketing costs and depreciation.

Operating profit

also prefer to operating income or income from operations => total income of a company for a given period after paying all related operating expenses and before taking into account interest, taxes,….

Operating income

 also referred to as operating profit or earnings before interest and taxes => amount of revenue left after deducting the operational direct and indirect costs from sales revenue

Operating expenses

are the ongoing costs of running the business and may include items such as rent, employee payroll, depreciation, inventory costs, and marketing expenses.

Retained earnings

 are the accumulated portion of a business’ profits that are not distributed as dividends to shareholders but instead are reserved for reinvestment back into the business

COGS (Cost of goods sold )

is the cost of producing or buying in the goods actually sold by the business during a time period.

Depreciation

the fall in the value of a fixed asset over time.

Amortization

is the process of incrementally charging the cost of an intangible asset to expenses over its expected period of use => shifts the asset from balance sheet -> income statement

Accrued expense

also known as accrued liabilities => refer to an expense that is recognized on the books before it has been paid

Prepaid expense

goods or services paid for upfront where the company expects to use the benefit within 12 months. => a future expense that company has paid for in advance

Assets

are those items of value which are owned by the business,; they may be fixed (non-current) or short-term current assets.

Non- current assets

Land, buildings, equipment and vehicles are non-current assets and owned by the business for more than one year.

Current assets

Cash, inventories (stocks) and accounts receivables (debtor customers who owe money to the business) are only held for short periods of time and are called current assets. They are owned by a business and used within one year.

Liabilities

are debts owned by the business.

Non- current liabilities

are long-term debts owned by the business which do not have to be repaid within one year.

Current liabilites

are short-term debts owned by the business which must be repaid within one year, for example overdraft and accounts payable (suppliers/creditors owned money by the business)

International trade

Purchase, sale, or exchange of goods and services across national borders.

Free trade

a trade policy that does not restrict imports or exports, It can also be understood as the free market idea applied to international trade.

Protectionism

the economic policy of restraining trade between nations, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations designed to discourage imports, and prevent foreign take-over of local markets and companies.

Trade barriers

Government laws, regulations, policies or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products.

Tariff

a duty or tax levied upon goods transported from one customs area to another, for either protective or revenue purposes. Tariffs raise the prices of imported goods, thus making them generally less competitive within the market of the importing country, unless that country docs not produce the items so tariffed.

Quota

Restriction on the amount (measured in units or weight) of a good that can enter or leave a country during a certain period of time.

Absolute advantage

Ability of a nation to produce a good more efficiently than any other nation

comparative advantage

Inability of 2 nation to produce a good more efficiently than other nations, but an ability to produce that good more efficiently than it does any other good.

An infant industry

a new industry, which in its early stages experiences relative difficulty or is absolutely incapable of competing with established competitors abroad.

A strategic industry

an industry which is essential for the promotion or stabilization of the growth of the locality in which that industry is situated.

Business cycle model

a model showing the increases and decreases in a nation's real GDP over time, this model typically demonstrates an increase in real GDP over the long run, combined with short-run fluctuations in output.

Expansion

the phase of the business cycle during which output is increasing

Recession

the phase of the business cycle during which output is falling

Depression

a deep and prolonged recession

Peak

the turning point in the business cycle between an expansion and a his dan the to contraction; during a peak in the business cycle, output has stopped increasing and begins to decrease.

Trough

the turning point in the business cycle between a recession and an expansion; during a trough in the business cycle, output that had been falling during the recession stage of the business cycle bottoms out and begins to increase again.

Recovery

when GDP begins to increase following a contraction and a trough in the business cycle; an economy is considered in recovery until real GDP returns to its long-run potential level.

potential output

the level of output an economy economy can achieve when it is producing at full employment; when an economy is producing at its potential output, it experiences only its natural rate of unemployment, no more and no less.

Growth trend

the straight line in the business cycle model, which is usually upward-sloping and shows the long-run pattern of change in real GDP over time

positive output gap

the difference between actual output and potential output when an economy is producing more than full employment output; when there is a positive output gap, the rate of unemployment is less than the natural rate of unemployment

negative output gap

the difference between actual output and potential output when an economy is producing less than full employment output; when there is a negative output gap, the rate of unemployment is greater than the natural rate of unemployment and an economy is operating inside its PPC

Unemployment rise during the recession

because the aggregate supply is typically more than the aggregate demand so there is less of need for employees and fewer goods and services are being produced so business began laying off workers to save money.

Difference between

recession vs depression : recession is when an economy is on a more gradual decline while depression is when an economy is on a steep downturn, more than a recession

When producing beyond its production possibilities curve 

 it is likely experiencing an expansion where unemployment is significantly decreasing and inflation is increasing. This is typically an unsustainable period leading the peak where the economy starts slowly receding

Comparative advantage can arise because of

differences in labor productivity.

Countries differ in their resource endowments, and a given country may

enjoy a comparative advantage in products that intensively use its most abundant factor of production.

 Industrial countries may have a comparative advantage

in products requiring a large amount of skilled labor. 

Developing countries may have a comparative advantage

in products requiring a large amount of unskilled labor.

Comparative advantage in a new good initially

resides in the country that invented the good. Over time, other nations learn the technology and may gain a comparative advantage in producing the good.

 In some industries, consumer preferences for

differentiated goods may explain international trade flows, including intraindustry trade.

Government restrictions on foreign trade

are usually aimed at protecting domestic producers from foreign competition.

 Import restrictions may

 save domestic jobs, but the costs to consumers may be greater than the benefits to those who retain their jobs.

the difference between international trade and free trade

* International trade refers to the exchange of goods and services beyond national borders. If entails the sale of exports and imports .
* Free trade means that international trade can take place without any forms of protection, i.e. barriers to international trade

Identify three methods of trade protection that a country could use.

Tariffs, quotas, subsidies for domestic firms, administrative restrictions and boycotts

 **Explain two benefits of free trade**

* Allows a country to specialize in what it is best at producing \[11, thus improving economic efficiency.
*   No tariffs charged or quotas imposed on exports/ imports \[1\], so encourages international trade and cooperation.
*   Increased competition can force firms to reduce costs (lower prices) and/or increase their productivity.

two disadvantages of international trade.

* Domestic firms can go out of business if products from foreign firms are more competitively priced and/or of better quality, which can lead to domestic unemployment.
*   International trade may allow the import of harmful products, which adversely affects the economy and the well-being of a country's people.

 two reasons why countries might decide to trade with each other.

*   It is often cheaper to import products than to produce them domestically, e.g. Sweden could, in theory. grow its own pineapples and bananas but it would be more economical to purchase these from overseas countries such as Thailand, the Philippines and India.
*   International specialization and trade can benefit consumers as there is more competition, leading to more choices and improved quality of products.
*   Employment opportunities can also arise from international trade and greater volumes of output.

Advocates of "fair trade," or the creation of a level playing field, call for

 import restrictions as a means of lowering foreign restrictions on markets for domestic exports.

   The national defense argument

 in favor of trade restrictions is that protection from foreign competition is necessary to ensure that certain key defense-related industries continue to produce.

The infant industries argument

in favor of trade restrictions is to allow a new industry a period of time in which to become competitive with its foreign counterparts.

A tariff

is a tax on imports or exports.

Tariffs

are an important source of revenue in many developing countries.

Quotas

are government-imposed limits on the quantity or value of an imported good