McDonald's warns of revenue drop

McDonald's`s--one of my favorite fast-food brand,which I know big mac meal is 3.89 with large coke,large fries and a big mac burger.

Even though the whole world economy downturn,but MC does`t be affected that much.Because they have lower price and good market share and market size all over the world.

MC is elastic,it has more competitors, KFC is a good example,so if their price is lower than KFC,they will gain more.People are likely to buy cheaper goods during the crisis when the two fast-food companys produced same food.

But from the latest figure shows that there is 1.4% sales rise in FEB 2009 but compared with an increase of 11.7% in February 2008,it may tell us something.....

Experts said as the US currency is stronger and the commodity costs will squeeze its first-quarter,so we know there is a little rise in FEB 2009 but can`t compared with 2008...

After all,MC still is one of the famous brands is the world,we can image MC will do a good work during downturn when other brands have financial problems

ECO unit 1 review:YED

DEFINATION:the responsiveness of the demand for a product when a chenge in income



Formula:YED:%change in demand/%change in income

normal goods:have positive income elasticity

1. normal luxury:income elasticity is grerter than 1 YED>1


2. normal necessity:income elasticity is less than 1 YED<1

Inferior goods:have negative income elasticity

ECO review:tax ......demand

From the chart we can obviously see that when the demand for a product is elastic,and we draw the supply curve with tax.The supply price is higher(p1-p2),producers pay more,and quantity for this product is lower than before(q1-q2)


In this case,when the demand for the product is inelastic,supply price is higher with tax (p1-p2).Consumers pay more,and the quantity for this product is decreased,but not as same as when the demand is elastic.

ECO unit1 review:PED

Defination:the responsiveness of the demand for a product following the changing of the price.

PED=0(perfect inelastic)
It tells us whenever the price increase or decrease,the demand for this product doesn`t change.

PED=1 (perfect elastic)(unit elastic)

whenever the demand for a product change,the price of the product doesn`t change

PED:0-1 (inelastic)

From the chart we know if price increase(p3-p2),the retailers gain more....however,if the price fall(p2-p3),retailers lost more.

PED>1(elastic)
if the price increase(p3-p2) retailers lost more,price decrease(p2-p3) retailers gain more.

Formula:PED=%change in demand/%change in price

WHAT WILL AFFECT PED?

1. Any substitutes?
2. Period of time
3. Taste
4. Peak and off-peak demand
5. Income
6. Inflation
7. Economy growth
8. TAX

WHAT IF INCOME GOES UP?

the demand curve might shift to the right from d-d1,the price will increase from p0-p1.

EURO......same conclusion

The European Central Bank (ECB) has cut its key interest rate to 1.5% from 2.0%, the lowest since it started setting euro rates in January 1999.

As US and UK...Euro zone has also be affected by whole world economy crisis,as we can see from he chart,the interest rate of Euro zone has fallen down to 1.5%.It looks probably different from UK,but essentially,they are same....

1999,when Euro interest rate started setting to 2000,the interest rate has moved up from 2.5-4.5%,this situation might tell us that Euro is stronger that US dollar....Euros become more competitive.It has positive circumstance.

And from the start of the 2006 to end of the 2007 the interest rate had increase again...from 2-4%(SAME AS UK)

But from 2008-2009, it had jumped rapidly and incredibly....the economy crisis became more dangerous for a country`s economy...especially for capitalist countries and developed countries...

"Reduce interest rate"more and more countries which has been impacted by economy crisis and credit crunch is using this economy policy to help native economy and hope it will gradually recover ...but it`s not depends on the government, UK has published the policy before EURO ZONE,but it`s not efficient...more people are still waiting for what will happen next....

Fortunately,the economist said that such problems will be come over,moreover,the economy will recover and increase....

Canada 0.5%

Canada's central bank has cut its key interest rate from 1% to 0.5%, a record low.

Incredible......I even can`t believe it.Before I saw this news,I knew than UK economy has been impacted deeply,and in order to recover from economy crisis,and to encourage demand, government published more and more acceptable policy...one of those is to dercease the interest rate to 1%.

But Canada government published this policy,so what might happen in the future?

Demand:as the interest rate goes down to 1%,it is more likely to encourage consumers to expend more money on goods and services.Furthermore lower interest rate might also encourage people to take a short or long-loan to start a business(might not )or pay for the mortgage.In conslusion,the aggregate demand will shift to the right....

EXCHANGE RATE:the main key point---exchange rate, the related to the interest rate,if the interest rate goes down, the exchange rate might fall,therefore it is cheaper for the exporters and more expensive to the importers,it may have a balance of payment surplus(if other factors are equal,the GDP will increase???maybe ...we will talk about it later...)

I/X:as for the import and export.Firstly let`s think about import,because of the low interest rate,people are more likely to buy....but we don`t know whether it is made in China or someoneelse...

G.S:reducing interest rate also will affect the government spending to increase the financial support like subsidy to the small businesses,help car industry or nationalise the bank...(like Uk)

TAXATION:the VAT tax will fall ....encourage consumers...and tariffe,another kind of tax,might reduce...to fit for the demand...

SAVING:definitely will goes down...

AFTER ALL...let`s think about GDP?will it increase?

IF interest rate...fallen,

government spending increase(if others keep equal):GDP increase

consumption increase(if others kep equal):GDP increase

investment increase(.....):GDP increase

export>import(...):GDP increase

BUT!

IF interest rate ...fallen

the taxation decrease,government gain less from tax,the government spending decrease(...):GDP decrease

investment might not support the CAN`s economy because it`s risky,and can even get profit...

investment fallen(...):GDP decrease

HSBC announced 12bn share sale

Europe`s biggest bank-HSBC announced to have 12bn share sale

Why HSBC made this decision?

As the whole world economy downturn...some of the banks have suffered from it,and it`s prolonged problem.More banks found out more ways to solve it,such as got subsidy from the government,sold share to the government and may bought it back after the crisis or merge...

But in this case,HSBC asked to sale shares which might not happen in other banks .The reason is HSBC is Europe`s biggest bank,it has basic number of people who has account in HSBC which might deteminate HSBC made this decision.After HSBC start to sell its shares, more and more people might buy it rapidly and buy as much as they can afford,therefore HSBC can get more financial support and be in an positive circumstance.

Also,get more financial support means become competitive,therefore it has more possibility to resist suck economy crisis

So....it might be a good decision....

Northern Rock

Rock to revive mortgage lending.....
which might be a good news to UK economy.
In order to get extra money from the taxpayer,Rock has revived the mortgage lending.
Rock also published the 1.4bn loss for 2008.

Is it effective and efficient?we don`t know, but it is a part of the government policy
It might be a good news to consumers recovering from crisis especially,Northern Rock`s consumers.
But the treasury also need to provide an extra 10bn in taxpayer money to the bank...

ECO summary:exchange rate

EXCHANGE RATE:the value of a currency in terms of what it can buy of other currencies.

WHAT FACTORS MIGHT AFFECT EXCHANGE RATE?
-the price of /demand for imported goods and services
-the price of /demand for exported goods and services
-aggregate demand
-the growth of real income output in the short term
-the rate of inflation
-employment/unemployment

WHAT IF STERLING VALUE GOES DOWN?
-import price goes up
-consumer price index
-export does goes up
-strong AD -inflation

STRONG POUND?
-low import price,more import
-high export price,less export
-less inflation
-strong PPP

ECO summary：ECONOMIC GROWTH

Long term economic growth requires:



-increase productivity



-improvements in production technology







INCREASE AD:



-higher consumer expending



-increase government capital investment



-increase government spending in goods and services and reduce tax



-increase export



-reduce import expending







SUPPLY-SIDE:



-higher productivity



-increase input



increase labour supply



increase stock capital input



-technological advances



innovation and invention



reduce unit cost






higher AD and a rise in LRAS

short term changes in sras

RISING AD

ECO summary：balance of payment

what are included:
-trade in goods
-trade in services
-investment income from UK overseas assets
-transfer of money between people and government
trade goods -transfer of money =comprises the current account

actual GDP>potential GDP:positive output gap
actual GDP
AD:C+G+I+（X-M)

EXpenditure reduction:
-higher interest rate
-higher tax

Half time business homwork

Market mapping:selecting the key variables that differentiate the brands within a market and then plotting the position of each one

Market segmentation: analyse the market the identify different types of consumers

Brand positioning: The distinctive position that a brand adopts in its competitive environment to ensure that individuals in its target market can tell the brand apart from others.


Advertising elasticity:measures the extend to which change in ADspending affect demand (%change in demand /% change in ADspending)

Cash flow: the difference between incashflow and outcashflow

Loss leader:product sold at less than cost to attract consumer to a product range

Adverse variance: this is a change from a budgeted figure that leads to lower than expected profit

Net profit margin: net profit which is a percentage of the sales revenue

Organisation structure:the relationship between different people and functions within an organisation

Off the job training:away from the place of work

On the job training:learning by doing the job

Person specification:which kind of person the company will employ

Induction:is an introductory training programme designed to familiarise new recruits

Empowering employees:person who has the power to do the job

Job enrichment:is where the job is expanded vertically by giving the worker more responsibility

Job enlargement:expanding the number of tasks completed by an employee

Capacity utilisation:is the percentage of a firm`s total possible production level that is being reached

Rationalisation:reorganising resources to cut costs

Quality control:this is based on inspection of the product or a sample of products

Quality assurance:this is a system of agreeing and meeting quality standards at each stage of production to ensure consumer satisfaction

Productivity:output per person per a period of time

Product portfolio analysis:analysing the existing product mix to help develop a balanced range of goods and services

Price taker:a firm which sets its prices at the same or similar level to those of the dominant firm in the industry

Deep recession

"The governor of the Bank of England, Mervyn King, has warned that the UK is "in a deep recession" in 2009 and said rate cuts may no longer work"

The governor of the Bank of England ,MERVYN KING today said the UK is in a deep recession...
Which is a big hurt to UK businesses.....

In my opinion,it is a even worse news compared with interest rate declined to 1%....
From the chart we can see that 2009 is the worst year,because in this year output might touch the lowest point(-6%)...which means this year for UK economy is the most difficult year ever...

So,what will it impact business...
During the recession,some business might merge,because they strong company has more probability to keep alive...but it doesn`t fit for small businesses..some of the small businesses might bankrupt...therefore powerful company may merge small businesses as they want get benefit from it...for instance,they might consider that merge a small business might reduce their raw material or have good business idea and feature produts.

The structure of the organization might be recombined:they might have
-tall structure with a narrow span of control:the advantage of using this structure is subordinates might be more promotional...the productivity might increase

-flat structure with a wide span of control: the advantage are it will reduce overhead costs(total cost)and there will be more delegation and more responsibility it also is good for the company in such awful conditions

Even the unemployment rate is high,but I think it should be a good opportunity to big company,because they can employ some workers with low salary,so it also causes reducing total cost

Government support:In this situation,government may not help any of the small businesses,it`s risky,however the banks might be asked to sell shares to the government,it is a way government support the banks

Shareholders:shareholds might get loss ....

tourism:people may stay at home instead of going abroad....

X/M:import might expensive,export might cheap....

But the forcast said that this situation will recover from 2010....is it ture?....

Interest Rate:1%

Yesterday, Bank of England published the latest Interest Rate....cut 0.5% to 1%.

It reveals UK is suffering the deeply strike from RECESSION....

From the chart we can see that 1% is the lowest point ever since 1951.Interest Rate never below than 2%.But because of the recession,credit crunch,high rate of unemployment and economy crisis,UK economy become depressed...

That also affects consumers confidence.As credit crunch,people lose their confidence to borrow money,small business can`t get loan from the bank,some of them bankrupted for can`t can finance immediately....Big celebrated companies have to close a few of their multiple shops in order to reduce the fixed cost,and keep gain profit.Some of them,such as BMW,Starbucks reduce their workers to decrease the costs....

It is risky to bank to borrow money to some business firms ....

Now,the interest rate has fallen again to 1%,government want to increase consumer`s confidence,house price increase...people might gain confidence to UK economy..but not as much as before...VAT has decrease to 15% aims to want people take out the money from the bank,to expend...encourage people to buy in order to help UK economy...but now inflation is 3.3%,Which exceeded 2%.People can`t get confidence from the government policies....these policies are not really successful, people still looking on what will happen...

ECO short summary

GDP:gross domestic product
formula:GDP=I(investment)+C(consumption)+G(government spending)+(x(exprot)-m(import))
IF X>M:SURPLUS
M>X:DEFICIT

FACTOR COST=GDP at market price-indirect tax+subsidy
NET GDP=GDP-depreciation


HDI:human development index
-real GDP per capita at PPP
real GDP is norminal GDP after allowing for inflation

-education/literacy

-life expectancy

PPP:purchasing power parity

problems with the basket of goods:
-over a period of time the contents of the basket will change
-we must allow for weighting
the relative importance of a price change for different products

shame ON YOU!

This is Cambridge？University rank no.1 in UK？？？

Chinese PM speech AT cambridge

PODCAST

http://www.bbc.co.uk/radio/podcasts/bizdaily/

it is like a interview....talking about economic crisis...influenced to China,India...and other countries

China GDP has fallen down.....

Unemployment rate

This is the chart about china Unemployment rate from 2005-2008.The red line shows unemployment rate,and the green line shows the rate of the job which is absent

As we can see from 2005-2008 both of the lines are decreasing,but the key is red line above the green line.It may told us there are some people still waiting for a job.

But green line doesn`t change a lot.....(3%-2%)it`s like a straight line.Red line changes(6-3.9) and more and more close to green line(3-1.8%).

Also, we can have a look the UK`S unemployment rate from 2006-2008.

we can see that in 2007 is the lowest point about 5% and the highest point is in 2008...or after 2008,it`s alread touch 6.2% point which is a high rate of the unemployment....and the incredible news is unemployment people are nearly 3 million...amazing number....it might because of recession.....

Compared with two countries we can see,the unemployment rate in china is decreasing...to 3% let`s assume the population is 1.3billion 1.3*3%=3.9million and the population of UK is 60 million 60*6%=3.6million....it is a big difference....actually,China has more people don`t have job even the unemploymet rate is decreasing....as for UK, 3.6m is not a big number,but for UK is sufficient.....

which is better?!

Before......
Video games can influence on the human behaviour. Noawadays play male and female of different age, them interesting virtual life, because there thay can do what they want, no roles, no preasure from other peolpe And people become agressive after. For example female play Sims. The presence sexist stereotyping in games is hardly surprising. But it is influence on the state of mind, such as when you play you can do what you want but afterthis you want to try in the real life. There are many choices when people after game they went out and killed person or crushed something. At the real life for this you should pay, you can be arested.I think tha t after the playing games person can be change, because some of them can play all day, it is a drugs when yu try ones and cant life with out them. I think that should to influence to stop sell agressive games cwhich bring bad position. "





After I checked english mistakes and adjusted some sentences order
Video games can influence the peoples` behaviour . Nowadays, people like playing different genders in different ages in the video games,because they are addicted in virtual life and can do whatever they want without rules and pressures from other people And becoming more aggressive . For instance, girls are likely to play "Sims",the presence sexist stereotyping in games is hardly surprising,but it might influence the state of mind.When you play video games you can be whatever roles you want ,but after this you eager to try it in your real life. Here are many examples show people murdered someone else or broke up after playing game, they must be arrested and force to pay fund .I think playing games may change people personality, because some of them are happy to play video games all the days just sitting in front of the computer, it is like drugs, you can not give it up and control youself after merely try it once. I think government should intervene and ban selling aggressive video games which have negative externality. "