EC3203Sample Q汇总.docx
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EC3203Sample Q汇总.docx
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EC3203SampleQ汇总
DEPARTMENTOFECONOMICS
UniversityCollegeCork-NationalUniversityofIreland,Cork
BScFinanceIV
Diploma(BusinessandFinancialEconomics)I
Diploma(FinancialEconomics)I
EC3203EconomicsofCorporateStrategy
2012/1326/03/13ModuleNote:
8/2013
Lecturer:
Ms.JanePowerRoomEC1.34ArasnaLaoi
Telephone:
(021)4902986E-mail:
jane.power@ucc.ie
StructureoftheSummerExamination
Fromsixlongquestionsyouwillberequiredtoanswerfourquestions.Eachquestionwillreceiveequalmarks.
Theinstructionswhichwillappearonyouexampaperaredetailedinthetableoverleaf.
Theexamisworth80%oftheoverallmarksforthecourse.
Usethequestionsdetailedbelowoneachtopicasaguideinrevisingthecoursematerialaswellasthesamplequestionsattheendofeachtopic.Pastexampapersarealsoagoodsourceofsamplequestionswhichcanbeusedtorevisematerial.
ExamInstructions
Pleasereadcarefully–youarerequiredtoanswer4outof6questions.
ALLQUESTIONSCARRYEQUALMARKS.
Seeoverleaf.
RevisionQuestions
Topic1:
IntroductiontotheBusinessEnvironment
A1.
(a)
Discussthevariousstakeholdersanorganisationmayneedtotakeintoaccountwhenformulatingitscorporatestrategyandhowthesestakeholderscaninfluencedecisionmakingintheorganisation.
StakeholderisdefinedbyFreemanas“anygrouporindividualwhoisaffectedbyorcanaffecttheachievementofanorganization’sobjectives”.Inaddition,stakeholdersaredividedintoseveralparts,includesbankinstitutions,shareholders,suppliers,buyers,managers,employeesandgovernment.Somedifficultiesarisewhentheinterestsofindividualsandstakeholdersorgroupsofstakeholdersareinconflict.Soorganizationsshouldtakethemintoaccountwhenformulatingitscorporatestrategy.
Thesestakeholderswillhavedifferentdeterminantsofpowertoinfluencedecisionmakingintheorganization.Bankinstitutionswillhaveproblemofshareholdingorloaninvolvement.Shareholdershavefullvotingsharesandblockingshareholdingthatmakeexternalpressuredifficult.Furthermore,numberofsuppliersandsubstitutionsandsupplierpotentiallyundertakethevaluealsohaveimpactonmanufacturedecisionmaking.Inaddition,buyersalsohavepowerofsellingpriceorbackwardintegrationtomakeinfluencesellingdecisionmaking.Intermsofmanagers,theyarelikelytothinkaboutprofitversusindustryandtradeoffshareholderandotherstakeholders.Employeeswillinfluencedecisionmakingrelyonpresenceofworkersrepresentationonsupervisoryboardandworkerscooperative.Atlast,government,aspolicymaker,willsupportforfavouredindustriesandencourageregistrationforsharesinfirms.
(b)
Profitmaximisationisasimplisticviewoftheobjectivesofafirmandisnotreflectiveofthewayinwhichcompaniesactuallyoperate.Doyouagreeordisagreewiththisstatement?
Arealternativemodelsmorereflectiveofthewayinwhichcompaniesactuallyoperate?
Discuss.
Idisagreewiththispointofview.Profitmaximizationisthegoalofmanagers,anditisalsotheexpectationofshareholders,whichmeanstheywillgainmoreshares.Butmanagerswillcomeupwithtaskandplanningtomakeprofitmaximizationcometrue.Inthissituation,manydetailswillbeseenintheoperationoffirms.Forexample,howtheytrainingtheiremployment,howtheyupdatetheirproductivechaintodeveloptheirproductivities.Andallofthesebehavioursareaimtoachievetheprofitmaximization.Theseprocesseswillbereflectedinthedailyoperationoffirms.Consequently,profitmaximizationisnotonlyaobjectiveoffirms,butisareflectiveofthewayinwhichcompaniesactuallyoperate.
A2.
(a)
Firmsthatoverestimatethewillingnessofconsumerstotradeoffpriceforqualityriskoverpricingtheirproductsandeitherlosingmarketsharetocompetitorsorneverbecomingaviablecompetitorintheirownright?
Illustratethisusinganexamplebymappingthetrade-offbetweenpriceandquality.
Theabovefigureshowsthattheeconomicsofthefirm’smarketandthefirm’spositioninthatmarketdeterminethefirm’sprofitability.AndtheamountofvaluethefirmcreatescomparedtocompetitorsdependsonitscostandbenefitsFrameworkforCompetitiveAdvantagepositionrelativetocompetitors.Firmsthataresuccessfulincreatingmorevaluethancompetitorswillattainanadvantagedpositioninthemarketrelativetocompetitors.
(b)
“Competitionamongfirmscanbeenvisagedasprocesswherebyfirmsbidforconsumersonthebasisofconsumersurplus”Discuss
Consumersurplusisthenetbenefitacustomerderivesfromconsumingagood.Itistheexcessofwhatapersonispreparedtopayforagoodoverwhatthatpersonactuallypays.
Competitionamongfirmsinamarketcanbethoughtofasaprocesswherebyfirms,throughtheirpricesandproductattributessubmitsurplus‘bids’toconsumers.Andconsumerschosetheproductofferingofthefirmwhichoffersthegreatestconsumersurplus.Thesteepnessofanindifferencecurveindicatesthetrade-offbetweenpriceandqualityaconsumeriswillingtomake.
ValueCreated=Consumersurplus+Producersurplus:
=(B–P)+(P–C)
=B–C
B–C<0⇒Therewouldbenopricethattheconsumerswouldbewillingtopayfortheproductthatwouldcoverthecostsoftheresourcesthataresacrificedtomaketheproduct.
B–C>0Doesnotimplythatafirmwillmakepositiveeconomicprofit.
Inorderforafirmtoearnpositiveeconomicprofitsinaindustryinwhichcompetitionwouldotherwisedriveeconomicprofitabilitytozerothefirmmustcreatemoreeconomicvaluethanitsrivals.ItmustgeneratealevelofB–Cthatitscompetitorscannotreplicate.
Topic2:
TheScopeoftheFirm
A3.
(a)
Distinguishbetweenhorizontalandverticalintegration.
Giveexamplesofeach.
Thehorizontalintegrationisthedevelopmentintoactivitieswhichareconcernedwithafirm’soutputs.Italwaysconcentrateonseveralindicators,suchasthesizeofmarketwhichfirmserves,andthereareseverallargeorsmallfirmscoexist,etc.
Ontheotherhand,verticalintegrationisinasupplychainareunitedthroughacommonowner.Usuallyeachmemberofthesupplychainproducesadifferentproductorservice,andtheproductscombinetosatisfyacommonneed.Andtheverticalchainbeginswiththeacquisitionofrawmaterialsandendswiththesaleoffinishedgoodsorservices.
(b)
Thefirmemergesasameansofeconomisingontransactionscosts.Explainhowafirmtradesofftechnicalandagencyefficiencywhendefiningtheboundariesofitsorganisation.RefertoWilliamson’smodelinyouranswer.
ThefirmcanuseWilliamson’smodeltosetdecisionmakingabouttradingofftechnicalandagencyefficiency.
Verticalaxismeasuresdifferencesbetweencostsofusinginternalorganizationandcostsofusingthemarket.
Horizontalaxismeasuresassetspecificity-theextenttowhichassetsareusedtomeettherequirementsofonecustomer.
Cmeasuresthedifferencesintechnicalefficiencybetweenintegration(CI)andmarket(Cm)production.Cispositiveforanylevelofassetspecificity.Anddeclineswithincreasingassetspecificity.
Gmeasuresdifferencesintransactioncostsbetweeninternalproduction(Gi)andboughtin(Gm).Gispositiveforlowlevelsofassetspecificity.Gisnegativeforhighlevelsofassetspecificity
Thenwegotaformula:
T=C+G.
IfTisnegativethenverticalintegrationispreferred.ThefirmwillbelocatedtotherightofpointK*.
A4.
(a)
Themainreasonthatfirmsdiversifyistoachieveeconomiesofscope.Discuss.
Economiesofscopeareconceptuallysimilartoeconomiesofscale.
Whereaseconomiesofscaleforafirmprimarilyreferstoreductionsintheaveragecost(costperunit)associatedwithincreasingthescaleofproductionfora singleproducttype,
economiesofscopereferstoloweringtheaveragecostforafirminproducing twoormore products.
Thetermandtheconcept'sdevelopmentareattributedtoPanzarandWillig.Here,economiesofscopemakeproductdiversificationefficientiftheyarebasedonthecommonandrecurrentuseofproprietaryknow-howoronanindivisiblephysicalasset.Forexample,asthenumberofproductspromotedisincreased,morepeoplecanbereachedperunitofmoneyspent.Atsomepoint,additionaladvertisingexpenditureonnewproductsmaybecomelesseffective.Relatedexamplesincludedistributionofdifferenttypesof products,productbundling,productlining,andfamilybranding.
Ifasalesforcesellsseveralproducts,itcanoftendosomoreefficientlythanifitissellingonlyoneproduct.Thecostofitstraveltimeisdistributedoveragreaterrevenuebase,socostefficiencyimproves.Therecanalsobesynergiesbetweenproductssuchthatofferingarangeofproductsgivestheconsumeramoredesirableproductofferingthanwouldasingleproduct.Economiesofscopecanalsooperatethroughdistributionefficiencies:
itcanbemoreefficienttoshiparangeofproductstoanygivenlocationthantoshipasingletypeofproducttothatlocation.
Furthereconomiesofscopeoccurwhentherearecostsavingsarisingfrombyproductsintheproductionprocess.Anexamplewouldbethebenefitsofheatingfromenergyproductionhavingapositiveeffectonagriculturalyields.
Acompanythatsellsmanyproductlines,sellsinmanycountries,orbothwillbenefitfromreducedrisklevelsasaresultofitseconomiesofscope.Ifoneofitsproductlinesfallsoutoffashionorifonecountryhasaneconomicslowdown,thecompanywilllikelybeabletocontinuetrading.
Notalleconomistsagreeo
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