Free Essay

A Look Into the Economics of the Shipping Business

In: Business and Management

Submitted By uniquemai
Words 1872
Pages 8
2010

GUC – MBA 1st Term
Cairo - Egypt

Business Economics
Research Paper
A look into the Economics of the shipping business.

Mai Hamed

12/27/2010

Table of Contents

List of Figures ................................................................................................................................................ 3 List of Tables ................................................................................................................................................. 3 Introduction to NNC Business Activity .......................................................................................................... 4 Backward and Forward Market .................................................................................................................... 8 The freight market .................................................................................................................................... 8 The sale and purchase market .................................................................................................................. 9 The New Building market.......................................................................................................................... 9 The demolition market ............................................................................................................................. 9 Supply and demand Functions in the shipping market .............................................................................. 10 The Demand Functions: .......................................................................................................................... 10 The Supply Functions .............................................................................................................................. 11 Freight Supply and Demand .................................................................................................................... 12 Price Elasticity of Demand .......................................................................................................................... 14 Market Structure of Wheat Transport into Egypt....................................................................................... 16 NNC Scale of production ............................................................................................................................. 16 References .................................................................................................................................................. 17

2|Page

List of Figures

Figure 1 Bulk Carriers .................................................................................................................................... 5 Figure 2 Container Vessel ............................................................................................................................. 6 Figure 3 Passenger Vessel ............................................................................................................................. 7 Figure 4 Backward and Forward markets of the shipping industry .............................................................. 8 Figure 5 Supply – Demand in Freight Market ............................................................................................. 12 Figure 6 Inelastic Freight Demand Schedules ............................................................................................. 15

List of Tables
Table 1 Ten Variables in the Shipping Market Model ................................................................................. 10

3|Page

Business Economics – Research Paper
Introduction to NNC Business Activity
Founded in 1981 in accordance with the Law No. 43 of 1971 enacted the investment of Arab and foreign money and the free zones and amendments with a capital of $ 50 million. National Navigation Company is a leading shipping company in the transfer of bulk and general Cargo in Egypt, and between the various ports of the world. NNC operates tankers and other types of vessels and shipping carriers, besides leasing its own vessels. In August 2003 was the merge of the Egyptian Company for Maritime Transport in the National Navigation Company.

4|Page

National Navigation Company's fleet consists of 13 vessels, as follows:  8 dry bulk tankers with total capacity of 480,000 tons

The company transfers about 8 million tons of dry bulk and general cargo a year on its owned and leased vessels to the Egyptian ports in addition to various ports in the world.

Figure 1 Bulk Carriers

5|Page

Container vessel Its capacity is 3000 containers of cargo.

Figure 2 Container Vessel

General cargo vessels The company has two general cargo vessels of 12,825 tons capacity each. They operate on the navigational line Alexandria / Mediterranean ports / ports in northwest Europe

6|Page

Passenger Ships The company owns two passengers vessels that operate on the line of the Suez / Safaga / Jeddah / Suez

Figure 3 Passenger Vessel

The company in July 2007 made a contract with the Korean shipyard STX SHIPBUILDING located in South Korea to build 6 dry bulk carriers   4 tankers load 81 000 tons each and 2 tanker tonnage of 58,000 tons of cargo each

7|Page

Backward and Forward Market
The international shipping industry can be divided into four closely related shipping markets, each trading in a different commodity: the freight market, the sale and purchase market, the new building market and the demolition market. These four markets are linked by cash flow and push the market traders in the direction they want.

Backward Market

Forward Market Sale & Purchase Market

New Building Market

NNC
Ship owner

Freight Market Demolition Market

Figure 4 Backward and Forward markets of the shipping industry

The freight market
The freight market consists of ship owners, charterers and brokers. They use four types of contractual arrangements: 1. the voyage charter, 2. the contract of affreightment, 3. the time charter and 4. The bareboat charter. Ship owners contract to carry cargo for an agreed price per tonne while the charter market hires out ships for a certain period. A charter is legally agreed upon in a charter-party in which the terms of the deal are clearly set out.

8|Page

The sale and purchase market
In the sale and purchase market, second-hand ships are traded between ship owners. The administrative procedures used are roughly the same as in the realestate business, using a standard contract. Trading ships is an important source of revenue for ship owners, as the prices are very volatile. The second hand value of ships depends on freight rates, age, inflation and expectations.

The New Building market
The new building market deals with transactions between ship owners and ship builders. Contract negotiation can be very complex and extend beyond price. They also cover ship specifications, delivery date, stage payments and finance. The prices on the new building market are very volatile and sometimes follow the prices on the sale and purchase market.

The demolition market
On the demolition market ships are sold for scrap. The transactions happen between ship owners and demolition merchants, often with speculators acting as intermediaries.

9|Page

Supply and demand Functions in the shipping market
The shipping economy is enormously complex, so the first task is to simplify the model, by singling out those factors that are most important. For this report, 10 factors have been selected as being particularly important: five affecting Demand and five affecting Supply.

Demand 1. The World Economy 2. Seaborne commodity trades 3. Average Haul 4. Random Shocks 5. Transport Costs

Supply 1. The World Fleet 2. Fleet Productivity 3. Ship Building Production 4. Scrapping and Losses 5. Freight Revenue

Table 1 Ten Variables in the Shipping Market Model

The Demand Functions:

1. The World Economy Business cycles determine short – term cycles in sea trade. Regional development cycles determine medium to long – term trends in sea trade. 2. Seaborne Commodity Trades Crude Oil – Oil products – Iron Ore – Coal – Grain – Containers. 3. Average Haul Average Distance cargo shipped. 4. Random Shocks Example: A financial crisis. 5. Transport Costs Driven up and down by the market

10 | P a g e

The Supply Functions

1. World Merchant Fleet Deliveries increase fleet and scrap reduces it. Operating costs rise as ships grow older. 2. Fleet Productivity Affect the shipping investor’s decisions toward: 3. Ordering (Ship building deliveries) which is affected by banks’ lending policies. And 4. Scraping (scrapping and losses) which is affected by government regulatory policies. 5. Freight Revenue – driven up and down by the market.

11 | P a g e

Freight Supply and Demand
$ Per ton 44 D S

28 15 6 Cargo Quantity / Tonne Miles per Year
Figure 5 Supply – Demand in Freight Market

Explanation The world economy, through business cycles and regional growth trends determines the broad volume of goods traded by sea. Developments in particular commodity trades may modify the growth trends (e.g. development in the steel industry may influence the iron ore trade), as may changes in the average haul over which the cargo is transported. The final demand for shipping services measured in ton miles (i.e. the tonnage of cargo multiplied by the average haul). The use of ton miles as a measure of demand is technically more correct than simply using the dead weight of cargo ships required, since it avoids judgment about the efficiency with which ships are used. That belongs more properly to the supply side of the market. Turning to the supply side, in the short term, the world merchant fleet provides a fixed stock of transport capacity. When demand is low only part of this fleet may be trading and some ships will be laid up, or used for storage. The fleet can be increased by new building and reduced by scrapping. The amount of transport
12 | P a g e

this fleet provides also depends on the logistical efficiency with which ships are operated – in particular, speed and waiting time. For example; a fleet of tankers steaming at 11 knots and returning from each cargo voyage in ballast carries less cargo in a year than the same size fleet of bulk carriers steaming at 14 knots and carrying a back haul for all or part of its journey. This efficiency variable is generally referred to as “Fleet Productivity” and is expressed in cargo ton miles per dwt (dead weight) per annum. Finally the policies of banks and regulators have an important impact on how the supply side of the market develops.

13 | P a g e

Price Elasticity of Demand
Will market demand be very responsive or very unresponsive to a change in a freight rate? Both are possible and consistent with a downward sloping relationship between rates and cargo quantities. The demand for dry cargo tonne miles (multiplication of tones carried over a distance in nautical miles) is a derived demand. The principal underlying the estimation of price elasticities for derived demands are: 1. The value of the own price elasticity of demand for the final good. 2. The existence of close substitutes 3. The proportion of the total final price which transport constitutes.

Since NNC is a major transporter of Wheat into Egypt, let’s take Wheat as our transported good.

Wheat itself is an input; it is used in making of bread and pasta. Bread and pasta are price inelastic. Wheat movements from major exporting regions such as North America have to go by sea; air transport is a very expensive alternative. Historically and former studies suggest that freight rates are about 5% of the final price of most traded commodities. Conclusion is that, taken as a whole, market demand is likely to be extremely inelastic with respect to changes freight rates.

14 | P a g e

$ Per ton

D2 D1

D3

Cargo Quantity / Tonne Miles per Year
Figure 6 Inelastic Freight Demand Schedules

The above figure represents different volumes of demand, generated by higher and higher levels of economic activity, industrial production, or world trade volumes. A fall from D2 to D1 would represent a decline in tone miles demanded, or cargo tones moved. A rise or shift of the demand schedule from D2 to D3 would represent the long term expectation. In some periods of the demand cycles, the demand schedule will be shifting rapidly out to the right, reflecting boom conditions. In other years, it will be hardly shifting at all; and perhaps even decline.

15 | P a g e

Market Structure of Wheat Transport into Egypt
NNC competes with several other competitors – up to 12 competitors in winning the tender that the Egyptian General Authority for Supply Commodities (GASC) issues for the transport of the Wheat Supply into Egypt imported from several parts of the world. It is fair to say that NNC operates in a monopolistic competition market where the 12 companies give their tender and the company with the lowest price wins the contract. Other companies competing with NNC are: Clarksons Egypt and Ibramar

NNC Scale of production
NNC currently holds a tonnage capacity of 510692 through its fleet of 13 vessels. In 2007 the company made a deal with STX Building in South Korea to build new 6 bulk carriers which will increase the capacity of NNC to 989208 and change its scale of service.

16 | P a g e

References
1. http://www.mfti.gov.eg/english/affiliates/np/gasc/gasc.htm 2. http://books.google.com.eg/books?id=tfsC6RUDn2QC&pg=PA136&dq=suppl y+and+demand+in+shipping+market&hl=ar&ei=jkQYTfPSFca1hAeqstG4Dg& sa=X&oi=book_result&ct=result&resnum=1&ved=0CCQQ6AEwAA#v=onepag e&q=supply%20and%20demand%20in%20shipping%20market&f=false 3. http://www.pfri.uniri.hr/~bopri/documents/06bshipSupplyDemand2_000.pdf 4. NNC - Commercial Affairs Documents

17 | P a g e…...

Similar Documents

Free Essay

Business of Economics

...|The Business Environment | | | |Karron Lay | |February 2, 2013 | BUSINESS IN THE ECONOMY To understand how a business affects the economy we must first understand the meaning of what a business is by definition. A business is “an organization or enterprising entity engaged in commercial, industrial or professional activities”. (Investopedia, 2013) A business or firm produces the products or services that consumers need, want, or desire. Most businesses or firms operate for profits, which is “the financial reward that comes from starting and running a business”. (Kelly & McGowen, 2012) When a business is not making a profit they are operating at a loss. This could be due to the amount of funds that a business or firm must cover such as their expenses to produce products or services. If the business or firms expenses are more than the profits, then business or firm is operating at a loss. If a business is running at a loss it could be due to......

Words: 1602 - Pages: 7

Premium Essay

Economic Shipping Company

...Additive property of NPV rule One of the important attractions of NPV rule is its additive property. It can be stated as NPV(X+Y)=NPV(X)+NPV(Y) Let us look at a one period case of cash flow stream X. A person invests X0 now and expects to receive X1 one period later. The NPV of this investment would be: NPV=-X0+PVX1 Under equilibrium, the market forces would ensure that the NPV is zero. Hence, PVX1=X0. We know that, r=(X1-X0)/X0 The Capital Asset Pricing Model states that: r=rf+β.(rm-rf) As X0 is known with certainty, we can rewrite β as {covariance(X1,rm)/Variance(rm)}/X0. Defining {covariance(X1,rm)/Variance(rm)} as λ(X1), r=rf+ λ(X1).(rm-rf)/X0 PVX1=X1/(1+r) PVX1=X1/(1+rf+ λ(X1)/X0) That is, PVX1. (1+rf+ λ(X1)/X0)=X1 Noting that PV=X0, we can simplify this expression as, PVX1={X1- λ(X1)}/(1+rf) ……….. (1) NPVX1=PVX1-X0={X1- λ(X1)}/(1+rf)-X0 Let us now look at two different cash flow streams, X and Y. NPV(X)= ={X1- λ(X1)}/(1+rf)-X0 NPV(Y)= ={Y1- λ(Y1)}/(1+rf)-Y0 It is evident that NPV(X+Y)=NPV(X)+NPV(Y) If you recall, we tried to capture the risk premium using σ as the measure of risk in one of our earlier sessions. Once you learn the Capital Asset Pricing Model, you would know that the measure of risk is not σ but β. Now look at expression (1). PVX1={X1- λ(X1)}/(1+rf) There are two components on the RHS: {X1}/(1+rf) { λ(X1)}/(1+rf) The second term is the adjustment for risk. The expected cash flow......

Words: 354 - Pages: 2

Premium Essay

Business Economics

...Business Economics ABC Complete Kitchens, Inc. will look at the economic factors that may influence the plant’s operations and legal considerations. The organization will focus on the economic considerations before making any long term financial decision or any decision regarding the acquisition of capital. ABC Complete Kitchens Inc. will have a clearer picture as to how this can impact the operations of the new plant. ABC Complete Kitchens’ Inc. will examine two areas within economics, Macroeconomics’ and Microeconomics’ and some of their factors with a section on legal considerations. Macroeconomics The study of total effects of choices that individuals, businesses and governments make on the domestic and global economy . Macroeconomics is one of the most important elements of national policy and used as the foundation if any decision regarding taxation or monetary policy concerns. Decisions regarding the balance of payments and interest rates are related to the overall macroeconomics situation of the country. There are many factors used to described macroeconomics and here are a few; Gross Domestic Product, Unemployment Rates and Price Index. Gross Domestic Product (GDP) The GDP is the market value that recognizes the goods and services produced within a period of time, usually this is over a one year period. The GDP is used as an indicator within macroeconomics to show the country’s standard of living. If a country is showing increased improvement and......

Words: 1311 - Pages: 6

Premium Essay

Business Economics

...KELLER GRADUATE SCHOOL OF MANAGEMENT MBA - PROJECT PAPER 1 NAME: - BOCKARIE LANSANA COURSE NAME: - BUSINESS ECONOMICS COURSE NUMBER: - GM545 FALL SESSION B-JANUARY-FEBRUARY 2011 Email address:-lans58@yahoo.co.uk 2. EHTICAL ISSUES IN BUSINESS One of these issues is the over reporting and under reporting of net income. The company management seeks to show that every quarter the net income of the business has grown. In order to show this they adopt unethical means and or illegal means in the operation and financial reporting system. One such method is the indiscriminate use of stock options for employees that enable companies to take employment costs off balance sheet and inflate earnings. This method will reduce the equilibrium price and increase equilibrium quantity for this company's products and services. The reason for this is that the wage is bill shown lower than what it actually is. This causes the supply curve to shift to the right. With an increase in supply, if the firm is a monopoly or an oligopoly or a monopolistic competition, there will be a decline in the price of the product of the firm. In case the firm is operating in perfect competition, there will only be an increase in the quantity the company sells in the market. The scenario described above indicates that there is a shift in the supply curve, in other words the costs are shown to be lower than what they actually are. The supply curve shifts to its right......

Words: 1064 - Pages: 5

Premium Essay

Business Economics

...Chapter 15, Question 14 According to the Bureau of Economic Analysis, one of the major limitations of national income accounts is that it ignores the importance of nonmarket production in the household, for example, meal preparation, cleaning, laundry, and childcare. Therefore, when these activities are ignored in the market, the value of production is overstated due to the decline in nonmarket production. Another limitation is the gray market and illegal activities, such as production and distribution of marijuana or gambling, which can be significant sources of support in economies but are not included. Government services that are not subject to a market test will be worth less than they cost, even though cost is used as a measure of value. Another misleading image of the representative resident’s well being is the unequal distribution of per capita income. In order to provide a better image of the economy, the NIPA has to adjust its account for various environmental considerations to keep our economies on a sustainable development path, replace conventional macroeconomic indicators with measures of welfare, and guarantee that a wide range of environmental and social impacts will be taken into accounts as we make decisions about economic growth or development towards consideration of other forms of well being. Chapter 25, Question 7 Free trade between countries does not exist; however it does exist among the 50 states of the United States because the U.S.......

Words: 763 - Pages: 4

Premium Essay

Business Economics

...Student Full Name : Fikreselassie Betelie Geressu Student Number : R1405D135465 Course Code : MBA-608 Course Name : Business Economics Assignment : Assignment I Submission Date : 01-November-2014 Question 1: Since the recent Great Recession of 2007-2009, there has been increasing disillusionment with the free market system. Critically analyze the view that the free market system is the best and only realistic alternative for determining the allocation of resources in an economy. Solution 1: A general slowdown in economic activity, a downturn in the business cycle, a reduction in the amount of goods and services produced and sold—these are all characteristics of a recession. The recent Great Recession which officially lasted from December 2007 to June 2009 has many factors of which the main root problem is the bursting of a huge trillion dollars housing bubbles and loss of confidence by investors and the public in the strength of key financial institutions and markets. One example of this is the housing crisis morphed into a financial crisis since banks held mortgage backed securities and other assets. Irrespective of such seasonal situations, the market should be free for competition and regulate itself only based on the fair and free competition, which sets the best price for the goods and services a buyer pays for depending only on the market supply and demand. Free market system is the best and realistic, which can give the efficient and optimal......

Words: 2777 - Pages: 12

Premium Essay

Business Economics

...Business Economics Slide 1 The Intention of every business-to make money Slide 2 *Basics to becoming wealthy and remaining wealthy 1. Spend wisely 2. Create multiple sources of income (several ways to make money) 3. Invest you money to make more money 4. Pay as little taxes as possible that is legal Spend Wisely- Credit cards are a great way to keep track of expenses and keep all expenses in one place. But, you must pay them off every month or they are bad. Multiple sources of income- gives greater chance of keeping money. When money is put in different areas like a business, real estate, stock market, etc., you have a better chance of keeping your money because if one thing goes bad, you still have the other investments. *Investing-RULE of 72 Divide the % of your return by 72 = years to double money So, if you have a 15% return, then: 72/15 = 4.8 years to double this You can have $100,000 and invest it wisely and end up with $300,000 in 20 years. But of the $300,000, taxes can cost alot, so you should put your money in business. Business does not have as many taxes to be paid cause there are alot of deductions. For example: When an individual buys copy paper that cost $10, you also pay tax so it cost $12. But when a business buys it, the business can write it off for a business expense and no extra tax is paid. Must learn ways to create a passive income (Income that does not stop but continues til your death). Innovations......

Words: 1410 - Pages: 6

Premium Essay

Business Economics

...Economics Statistics Auditors are those professionals who assure that all the financial statements are prepared according to the rules and regulations of Generally Accepted Accounting Principles (GAAP) or Financial Accounting Standard Board (FASB). There are two types of auditors which are internal auditors and external auditors. Importance and difficulty level of decisions significantly differs from one profession to another. Auditors decide on the basis of available data of organization including financial statements and notes to financial statements. There are certain decisions that use statistics to solve these decisions. These decisions are selection of sample financial data from the plenty of financial data. Correctly interpret the financial data through decisions making statistics tools available to auditors. a. Auditors investigate financial statements and other financial data and control system incorporate within the organization (Hope & Langli, 2010),. Financial resources are very important among other type of resources. Auditors therefore often investigate the problems associated with financial statements. Financial data consists of large data files including salary slips, material requisition, purchase invoice, sell invoice and taxes. Therefore managers prepare financial statements which is the summary of all financial data. For an auditors, it’s very difficult to investigate financial data and therefore they select sample historical data of the......

Words: 943 - Pages: 4

Free Essay

Business Economics

...| Peter F. Drucker is the management scholar. He is thought to be the establishing father of current management. Peter Drucker, whose life crossed the previous century (1909 – 2005), was an exceedingly instructed native of the world: an innovative soul who composed thirty-nine books including numerous fantastic chips away at business management. He was a man of numerous parts: a sharp eyewitness, a long lasting understudy, an educator, mentor of eminent corporate pioneers, and the organizer of an official school in Claremont, California, that bears his name. Peter Ferdinand Drucker was an author, management advisor and college teacher. His written work concentrated on management related writing. Peter Drucker made well known the term information specialist and is thought to have unknowingly introduced the learning economy, which viably challenges Karl Marx's reality perspective of the political economy. George Orwell credits Peter Drucker as one of the main journalists to foresee the German-Soviet Pact of 1939. Much has been said and composed of his accomplishments, but then there is a lesser-known side to Peter Drucker; that other side is the subject of this paper. He was hesitant about his own reasoning of life. He additionally emphatically protested being known as a ‘management master’ – a sobriquet frequently attached to him. As opposed to being a supplier of answers, Drucker constantly remained an examiner: his showing strategy was Socratic. What mattered most was......

Words: 3933 - Pages: 16

Free Essay

Economics and Business

...of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns. A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. The subprime crisis came about in large part because of financial instruments such as securitization where banks would pool their various loans into sellable assets, thus off-loading risky loans onto others. (For banks, millions can be made in money-earning loans, but they are tied up for decades. So they were turned into securities. The security buyer gets regular payments from all those mortgages; the banker off loads the risk. Securitization was seen as perhaps the greatest financial innovation in the 20th century.) How Will the Financial Crisis Impact on the Developing World and What Can Be Done About It? Following the US subprime mortgage crisis of 2007-2008, the world is now staggering from financial to economic crisis as many high-income economies are officially in recession. Now, having decimated Wall Street and then crippled Main Street,......

Words: 1567 - Pages: 7

Premium Essay

Business Economics

...firm 6 2.1 Market equilibrium 6 2.2 Time periods in Economics 7 2.2.1 Short run 7 2.2.2 Long run 7 2.3 Theory of Costs 8 2.3.1 Fixed cost (FC) 8 2.3.2 Variable cost (VC) 9 2.4 Shut-down decision 9 2.4.1 Short run 9 2.4.2 Long run 10 3. Monopoly market 10 3.1 Output and price level comparison of perfectly competitive and monopoly market 11 3.2 Monopolies in the economy 11 4 Inflation 11 4.1 Calculation of inflation 11 4.2 Inflation types 12 4.2.1 Type of inflation in T&T 13 5. Unemployment 13 5.1 Types of unemployment 13 5.1.1 Cyclical Unemployment 13 5.1.2 Frictional Unemployment 13 5.1.3 Structural Unemployment 14 5.1.4 Classical Unemployment 14 6 Unemployment costs to an economy 14 6.1 Costs to the individual 14 6.2 Costs to society 14 6.3 Costs to country 15 7. Conclusion 15 References 16 Appendices 17 1. Introduction Economics exists in all aspects of society and is defined in many ways. Contemporary economics textbooks have definitions including economics is the study of; the economy; the coordination process; the effects of scarcity; of human behaviour and the science of choice. These concise definitions of economics are seen to be inadequate as Economists are not generally guided by formal definitions but rather by logical or methodological views, resulting from various sources (Backhouse & Medema 2009). There are two distinct studies in economics, one being microeconomics which examines how......

Words: 2598 - Pages: 11

Free Essay

Business Economics

...website in the country. Instead it formed a joint venture with a local partner to help operate an online auction business in the country. Critics say it failed to recognise that having a strong US brand would not automatically translate to success in China. And eBay is not the only firm to struggle with transferring a successful business model overseas. Tesco reportedly spent a decade preparing for the launch of its Fresh & Easy chain on the West coast of America, with its top executives even spending time living with Californian families to observe the way they lived and ate. Yet six years after it opened, it announced it was pulling out - costing the firm a hefty £1.2bn. Similarly one of the world's best known brands, US giant Starbucks, was forced to close almost three quarters of its shops in Australia just eight years after it opened them, after it struggled to win sales from local competitors. There is also an important aspect that needs to be related to the process of internationalisation: Experience. The process of entering international markets by new ventures provides firms with knowledge that can be used to build additional value by the creation of skills (Barkema & Vermeulen, 1998; Ghoshal, 1987). According to Zahra et al. (2000) “New ventures competing in international markets, for instance, draw from multiple knowledge bases in their different business operations and learn new skills that augment current capabilities.” This perspective serves to......

Words: 12122 - Pages: 49

Free Essay

Business and Economics

...CALIFORNIA STATE UNIVERSITY, FULLERTON International Law for Business (Mgmt 346) Section 20579 Course Syllabus for Fall 2016 MIHAYLO COLLEGE OF BUSINESS AND ECONOMICS Professor Carl Pentis DEPARTMENT OF MANAGEMENT Office: SGMH 5385 Law Office telephone: (714)385-9682 Cell (text or call me!): (310)594-0869 Office hours: Tuesday, Thursday 5:00-5:30 pm; and by appointment School Office e-mail: cpentis@fullerton.edu Law Firm e-mail:carlpentis@gmail.com Law Firm fax: (714) 385-9682 Class day, hours and location: Tuesday and Thursday 5:30 to 6:45 p.m.; SGMH 1109 Course Description From the CSUF Catalog Prerequisite: Management 246 or equivalent. Textbook and Other Course Materials The course text is International Business Law and its Environment, by Schaffer, Agusti, Dhooge, Cengagge Learning, (9th ed. 2015). This can be an expensive textbook so you should consider purchasing the eBook at the Titan Bookstore. Also, I will provide links to PowerPoint presentations and other select added course materials on the course website. Course Mechanics and Procedures Open-Door Policy. My policy has always been “open-door.” Therefore, you should not hesitate to contact me in person or by e-mail1 or telephone. Reading. We will cover many chapters from the text during the semester. Course readings will include chapters from the text plus the assigned cases cited below. Bring your text to all class sessions since we will refer to it......

Words: 3880 - Pages: 16

Premium Essay

Business Economics

...Business Economics II Group Nº in Moodle: Surnames and names: Homework 3 (Due on April 26) Exercise 1: Analyze the specific investment case between the firms Alcoa and Essex. You can find information in the article in Moodle. The extra information found in other sources will be valued (cite the bibliography or source used). In particular, answer the following questions: a. Describe the initial relationship between the two firms and justify it in an economic sense. b. Describe the problematic (time line and more relevant facts) c. Describe the outcome of the case, consider other possible alternatives and analyze them in economic terms. Exercise 2: Soft drink industry case (Using the article in Moodle) Briefly answer: a) What is the prevailing contract in the 80s-90s between CSD and the bottlers? b) According to transaction cost theory…Why did they pass from one contract to another? Did asset specificity increase? b) What is the "fountain channel" distribution? Were there differences between Pepsi and Coke? Why? Exercise 3: A wheel manufacturer is considering to install a production plant adjacent to the car assembly factory of SEAT. The required investment is 240 million Euros and it will allow the wheel manufacturer to produce a total of 10 million wheels over the entire useful life of the production plant. The variable costs of producing each wheel are 66 Euros. The maximum price SEAT is willing to pay is 100 Euros. a) Calculate the rents......

Words: 377 - Pages: 2

Premium Essay

Business Economics

...Business Economics GM545 Chapter 3 - Everyone’s Gasoline Problem. Based on US Energy Information Administration data, annual supplied of US gasoline increases rapidly. In 2008, the United States consumed about 137.80 billion gallons (or 3.28 billion barrels) of gasoline. 1 Currently the retail gasoline prices about $2.83 per gallon after it went up to above $3.00 per gallon then dropped down. Mainly is the increasing price of crude oil where price varies within the year from $40 to $86 per barrel. Depend upon the circumstance, barrel oil could change rapidly; gasoline production and inventory are the two factors could make big impact on the price variation. Basically, there is huge demand on consuming of gasoline in US which source of supplies mainly from the Organization of the Petroleum Exporting Countries (OPEC) which has continued to produce oil to satisfy US consumers. In 1996, gasoline increased from $2.00 to $3.38 due to the Iraq-Iran’s war broke out. When Iraq and Iran’s war occurred, their capacity of producing oil were limited and reduced significantly, therefore a change in the supply determinant had triggered up the oil price of US and worldwide, as consequence, its results the supply curve shifted, increasing the price dramatically. On the demand side, U.S. is heavily depended on foreign oils. As a result, U.S. gasoline prices changed and varied accordingly to the turmoil of the world’ situation. When US consumers increase number of buyers,......

Words: 1036 - Pages: 5