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Micro and Macro Economics 1

Micro and Macro Economics 1

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"Nothing is as simple as we hope it will be....

"

Jim Horning

Micro and Macro Economics
Lecturer: Nissim Ben-Aharon

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 

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

Course outcome:
y Apply the theory of supply and demand to the

hospitality industry

y Analyze how changes in the industry and the

economy may effect the demand for and supply of hotel products apply to hotels in the industry

y Evaluate what sort of competitive pressures

y Evaluate how a hotel can react to competition

Reading
Harris N .(2001) Business Economics.
Butterworth Heinemann, Oxford

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

Quizs 
Starts at 9 o'clock  Students who are late can¶t 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 , don¶t mark a v sign

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!

Evaluation : 
Assignments  Group presentation  Mid Term Quiz's ( 3 )  Final Exam

(Weighting %)
20% 20% 20% 40% 100%

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

Group Presentation
Analyze strategic the market using:  Porter's five forces model  4P  B.C.G. portfolio matrix  S.W.O.T.

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?

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 only 4. Quality of the presentation 5. Answering questions!

Emails: 
bhmsteach@gmail.com

Lecturer email 
2009bhms@gmail.com

Code: bhms2009 Students emils Before printing the presentation please think of the environment!

Issues fundamental to business economics 
A business must use its resources efficiently.
Capital Labor Land

Resources

Entrepreneurs

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.

Basic economic concepts

The Economy
Sell goods & services Pay for services of factors of production Provide factors of production Demand goods & services

Economics:
The study of how the resources land, labor, capital and enterprise are uses or allocated by the country to meet its demands for goods , services and ideas, now and in the future.

Business outputs
Consumer goods

Goods
Producer goods

Businesses

services

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 or household.

Sort the business outputs:

Goods (costumers/producers), Services , Ideas , Externalities
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, McDonalald¶s meal, patent, plastic bottle, insurance.

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 the other resources most efficiently to produce the output of goods or services.

The Entrepreneur
Would you like to hear a story from a TOP guys who was really totally WRONG?.....

Who said it?...
³ I think there is a world market for maybe five computers.´ 

Thomas Watson, chairman of IBM , 1943 

"there is no reason for any individual to have

a computer in his home.³ ( 1977 ) 

Kenneth Harry Olsen co-founded Digital

Equipment Corporation (DEC) Digital Equipment Corporation was a pioneering American company in the computer industry 

³ 640 Kilobyte should be enough memory for

anybody ³ ( 1981 ) 

Bill Gates 

³ Who would ever need such a silver disc?..´ 

Jan Timmer, top manager in

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 80¶s the Apple || computer, was going public and became a huge success. 

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 80¶s the company almost bank robed at the mid 90¶s. 

At 1997 Steve Jobs join apple as an advisor,

and after 5 month nominate as CEO, and he began restructuring the company¶s product line and reduction of many apple¶s products.  Today the company consider as on of America¶s Most Admired companies with unique products such as the Mac, iPOd, iPhone«  The Market cap is 80 billion US dollars with 35,000 employees. ( 2008 )

Farther reading:
³The trouble with Steve Jobs´ http://money.cnn.com/2008/03/02/news/copmpanies/elk ind_jobs.fortune/index.htm ³ Why Steve Jobs is Apple¶s Most Important Product´ http://www.fastcompany.com/blog/brendancollins/keeping-it-clean/why-steve-jobs-apples-mostimportant-product

The cost of using resources 
Historic cost = the cost of using resources 

The opportunity cost = cost of using the alternative

resource  Total cost = historic cost + The opportunity cost

In that case..
Every Monday evening I am going to the cinema to see a movie at the cost of 12 SFR. At the same time I could go to the Rod House and have a glass of wine at the cost of 25 SFR. What is Historic cost , The opportunity cost and the Total cost?...... 

Historic cost is 12 SFR  The opportunity cost a 25 SFR  Total cost 37 SFR

Microeconomics and Macroeconomics 
Microeconomics ± small, microeconomics

looks at an individual business and how it behaves. 

Macroeconomics ± large, analyses the

economy as a whole, both nationally, and internationally.

Business organizations 
Limited liability companies ± business owned

by shareholders who have limited legal liability.  The companies could be private or public limited liability ( Plc ).  A Plc could be taken over.( 51% shares )  A Plc has the advantage of being able to issue new shares.

The top ten 2008 ( in America )
Rank 1 2 3 4 5 6 7 8 9 10 Company Wal Mart Stores Exxon Mobil Chevron General Motors ConocoPhollips General Electric Ford Motor Citigroup Bank of America AT&T Revenues 378,799 372,824 210,783 182,347 178,558 176,656 172,468 159,229 119,190 118,928, Profits 12,731 40,610 18,688 -38,732 11,891 22,208 -2,723 3,617 14,982 11,951

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.

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.

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 small Ferrari and a new hause 

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. 

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 Mercedes and WHY?...

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.

Industrial sectors 
Secondary sector ±create a finished, usable

product. Process the output of the primary sector. Many of these industries consume large quantities of energy and require factories and machinery to convert the raw materials into goods and products. Divisions of this sector include: Automobile, Brewing, Chemical , Textile, Metal work Tobacco and ect.

Industrial sectors 
Tertiary sector ± provision of services to

businesses as well as final consumers. service sectors: Insurance, government, tourism, banking , retail, education, social services.

Summary« 
Issues fundamental to business economics  Basic economic concepts  Business outputs  The cost of using resources  Microeconomics and macroeconomics  Business organizations  Industrial sectors

Next week assignment 
Find a charismatic CEO and write what did

he/she do that made the company a success. ( not more than half a page ) 
What are the business outputs in the tourism

industry ( Example ) 
Give 2 examples for microeconomics

influences at the tourism industry. 
Give 2 examples for macroeconomics

influences at the tourism industry.

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