Gratification: the elimination of a craving or a desire to seek relief from a perceived or real depravation

• Uses of Value System/Network :

  The ‘make or buy’ decision – which activities to do ‘in-house’ and which to outsource.

  Understanding cost/price structures across the value system.

  Identifying ‘profit pools’ .

  Partnering – deciding who to work with and the nature of these relationships.

The economic factors of production are labour (employment), land/nature and capital

Existence needs are the needs that are necessary to secure human life, such as food, clothing and basic shelter

needs that are necessary to secure human life: Existence needs

A variety of different needs which are not immediately necessary for life. Instead, the goal is to achieve or exceed a general standard of living: Elective needs

Elective needs are a variety of different needs which are not immediately necessary for life. Instead, the goal is to achieve or exceed a general standard of living.

Need: Feeling that something is missing

Want: Need aligned with will to act on it

Demand: Want becomes operational in the market

Supply: A firm supplies goods to the market

Production: A firm produces economic goods.

INDIVIDUAL NEEDS: Each individual decides when and in what order to satisfy given needs

Collective needs :The more individuals who want to satisfy similar needs, the greater the problem for society.

Free Goods : Unlimited Free Eg. Air, sunlight, sand,

Economic goods: Limited availability (scarce) Not free Eg. Food, Cars, consulting services.

Tangible goods : Goods that can be touched Eg. Food, Cars.

Intangible : goods Goods that cannot be touched Eg. Consulting services.

Consumer goods: Used by households (consumers)

Capital goods :Used by enterprises

Services Goods : are consumed as they are produced

Rights Legally is a secured right to produce (or sell) a particular good (under a particular

Perishable: The service relevant resources are assigned for service delivery during a definiteperiod in time.

Cocreated: Product that is created by working with one or more others service, provider

Simultaneous: Services that are are rendered and consumed during the same period of time.

Unique: A service that is one-time generated, rendered and consumed and can never be exactly repeated.

value added: the amount by which the value of an article is increased at each stage of its production, exclusive of initial costs

Value Chain : the categories of activities within an organisation, which, together, create a product or service.

The value chain consists of five primary activities (which are directly concerned with the creation or delivery of a product or service) and four support activities (which help to improve the effectiveness or efficiency of primary activities).

• Uses of Value Chain : A generic description of activities, Identifying activities where the organisation has particular strengths or weaknesses, Analysing the competitive position of the organisation, identifying sources of sustainable competitive advantage, Looking for ways to enhance value or decrease cost in value activities (e.g. outsourcing)

• A value system is the network of organizations and the value producing activities involved in the production and delivery of an offering.

  Economics is about managing scarce resources to meet unlimited needs.

  Minimum principle (Minimization): A given result achieved with the lowest possible use of resources

  Maximum principle (Maximization): Produce the maximum possible result with a given allocation of resources.

  An economic agent is an individual, a group of individuals or an organization constituting an economic centre of decision/action.

• A market economy essentially consists of the interaction between economic agents on free markets

• A the simplest level we can identify three types of markets where these agents interact. • The market for goods and services • The Labor market • The Capital marke

• Microeconomics : studies the behaviour of individual economic units … that play a role in the functioning of the economy. It explains how these units make economic decisions.

• Macroeconomics: deals with aggregate economic quantities such as the level of growth of national output, the evolution of employment or inflation. It is essentially concerned with the equilibrium of the economy as a whole.

• State intervention can sometimes improve the outcome of the market. Two main reasons : • Effectiveness (efficiency) • Promote social justice (equity)

• we can distinguish between two economic systems: Market Economy (Capitalism, liberalism) Planned Economy (Communism, Collectivism)

• markets are an efficient means of organizing economic activity

  Primary sector: utilization of earth’s natural resources such as land, water, vegetation, raw materials and minerals

  Secondary sector: add value to natural resources by transforming raw materials into valuable products

• Tertiary sector: include both production and exchange, the production involves the provision of services that are consumed exchange involves trade, transport and communication facilities that are used to overcome distance

  Sole enterprise: One-man businesses usually engage in trade, manufacturing or commerce business and have no legal personality , this legal structure is often chosen by young entrepreneurs wanting to establish a small business on their own.

• General partnership: two or more natural persons who together form a corporation to run a trade, manufacturing, or other commercial business. All partners are jointly liable, with no limitations towards the company's creditors.

• Limited liability company (GmbH/Sàrl): a company with an own legal entity formed by at least one or more individuals or companies with a predetermined capital (nominal capital). Each partner participates by paying in an initial share of the capital. The partner's liability is limited to the predetermined nominal capital.

• Public limited company, Ltd (AG/SA): a corporation with a legal entity whose liabilities are covered exclusively by its own assets. The base capital, determined in advance, is divided into shares. HEG Genève - International Business Management 02-3

• Goods can be classified according to their use, consumer goods eg food, clothes their durability eg capital goods, the degree of completion, Finished goods: – ready to be sold to the end-user customer, Semi-finished goods: – more work needed before being sold to the end-user customer and affinity (relationship) goods

• Input = raw material

• Transformation = process

• Output = final good