Chapter 6: “What Do Firms Try to Maximize‚ if Anything?” Introduction Do firms really maximize profit? This question has been under debate since the 1940s and 1950s‚ when a wide number of mainstream neoclassical economists defended the assumption against a group of institutional economists that questioned the assumption as the norm in the industry. On the side of the neoclassical economists were Fritz Machlup and Milton Friedman‚ with institutional economists Richard A. Lester and Garnder C
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Academic Writing in English for Graduate Students‚ Spring 2014 How The effect of information asymmetry affects on business decisions Hee Jung Kang Business Department‚ Korea University Paying dividends to shareholders may benefit to some companies’ chief executive officers (CEO). It is because they receive stock options as an incentive for any dividends issuesincentives. The sShareholders of some firms vote on whether to pay dividends or to invest in valuable projects. A CEO may try to make
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Why Do Some Firms Become Global? 1. Introduction More and more companies all over the world have joined the army of firms that are running globally. Reasons of companies becoming increasingly international can vary‚while the ultimate goal of going global turns out to be growth and expansion of the company. No matter whether a firm employs staff from international labour market or looks for exploration of new markets overseas‚ corresponding strategies can contribute a great deal to diversification
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companies have identifying market segments‚ selecting one or more of them‚ and developing products and marketing programs tailored to each. If the company wants to focus their target marketing‚ they must follow the three major steps: 1. Market segmentation‚ which is dividing a market into distinct groups of buyers with different needs characteristics‚ or behaviour who might require separate products or marketing mixes. 2. Market targeting‚ which is evaluating each market segment’s
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change is only partly about the perfection of production processes in existing sectors‚ and for defined products.” Dynamic location theory allows industrial expansion by gaining more space‚ inputs‚ and new markets‚ and industry creates places for capital investment and suppliers. Moreover‚ as Schumpeter was well aware‚ technological change also means the episodic rise of whole new types of product output‚ new sectors‚ and new labor processes. Many of these innovations effectively reduce the aggregate
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consequences of competition for the pricing and output decisions of firms are most easily established in the model of pure competition‚1 which requires that 1. Potential buyers and sellers are numerous and each is so small relative to the market that individual decisions about purchases or output do not noticeably affect market demand or supply‚ nor‚ consequently‚ do individual decisions affect the market price. 2. Firms in the industry produce a homogeneous (standardized) good
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How do bacteria affect human lives? Bacteria interact and are a constant in our day to day lives‚ perhaps more than suspected. Bacteria are often thought of as bad‚ however this is untrue‚ there is also many types of ‘good’ bacteria. ‘Good’ bacteria can benefit us by simply helping our digestive system work and helping us in the process of fermentation. Bacteria are extremely helpful in the production of many things such as fuel and medicine. But bacteria directly affect our production of
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: MOST OF THE DECISIONS MADE AT MEETINGS CAN BE ATTRIBUTED TO GROUPTHINK. FROM WHAT YOU HAVE READ IN SOCIAL PSYCHOLOGY‚ HOW DOES GROUPTHINK AFFECT DECISION MAKING IN AN ORGANISATION THAT YOU KNOW? DUE: 14th JUNE‚ 2013. HOW DOES GROUPTHINK AFFECT DECISION MAKING IN AN ORGANASATION. Colman(2001) in a dictionary of psychology defines groupthink as “ a collective pattern of defensive avoidance ‚ characteristic of a group decision making in organisations in
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How do the alcohol commercials affect us? -This is the most common question when it comes to commercials today.How do the commercials affect us?;what makes us buy the product?;and the most important why do we buy it even though we know it is not going to get us anything good?Influence of these commercials is very bad and is getting worse as the ad industry is developing. -At first alcohol ads are more and more directed towards young people.In these ads producers are often promoting the idea that
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How do the economies of scale affect break-even analysis? In the video on leverage‚ leverage is compared to a fulcrum in that you need just the right balance of leverage. That would seem to indicate that there is a point where the leverage is just right and that too little leverage may be just as harmful as too much leverage. Do you think this is true? The book discusses the difference between efficiency and effectiveness. Which one do you think is the most important in business and why? Answers:
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