Econ 3: Wage Determination and Equality
Here's a teaching resource suggested by one of our colleagues who attended the Wow Economics CPD event in Birmingham last week. We were discussing a resource called the Average Wage game (available as an individual download from this website) which asks students to categorise occupations into those jobs with pay above the national average and those below the national average (as per the latest available statistics from the Office of National Statistics, November 2012).
One delegate suggested that they had used a similar resource which starts by asking students to rank occupations in an order which reflects their relative value to society (ignoring, initially, any notion of wages or pay). Having ranked the occupations from the 'most' to the 'least' valuable, the teacher then shows the students the average wage paid to people working in those occupations and leads a discussion on how many of the most 'valued' occupations pay among the least wages.
This is a fantastic starter activity to initiate conversations about wage determination and equality of pay. You may also find this as a good discussion point over the coming weeks when introducing some A2 concepts to AS students.
Click on this link to download the Tutor2u version of this resource developed directly from our delegate's suggestion.
The Wow Economics event has its last airing this Wednesday in London. An all-new version of the resource-packed day will be advertised soon in time for the new academic year.
Top 50 Business Ideas - FT Special
The Financial Times website has published a new special report on their selection of 50 Top Business Ideas. I am linking below to the supporting video content which might be of interest to teachers and students who want to explore which ideas have made it into the final choice!
read more...»Paul Ormerod: Trouble at the Co-op Bank
IT’S not all fun and games at the Co-op Bank. Just over a month ago, the bank was serious about acquiring 632 branches from Lloyds. Now its debt has been downgraded six notches to junk status, and veteran HSBC banker Niall Booker has been brought in as replacement chief executive after Barry Tootell resigned.
Inquests have begun, and it is only human nature to look for a scapegoat other than the large amount lost on the bank’s new IT system. Management has delved into its hat, and, hey presto, here is the old Britannia Building Society, merged with the Co-op in 2009. It is, we are solemnly told, the bad debts on the Britannia’s commercial property portfolio which are the problem.
Unit 3 Micro: Vodafone and Corporation Tax
The political controversy over corporate tax avoidance from many of the world's biggest transnational businesses is unlikely to go away anytime soon. Google, Amazon and Starbucks and Apple have all come under intense scrutiny.
Unit 3 Micro: Debt Rises at Network Rail
Network Rail is a state owned business whose debts are backed up by government. Network Rail owns and operates the UK's railway infrastructure. Their stated objective is "Building a safer, smarter, bigger, greener network – every day."
It is achieving rising
revenues but remains heavily reliant on state subsidy -
there is plenty of applied business economics in this article if you read through. It runs a network
creaking under capacity constraints - passenger numbers are growing well ahead of forecast. 529 million more passenger journeys per year have been completed on time compared to 2002 but Network Rail faces problems over failing to meet tougher punctuality targets.
Unit 3 Micro: Business Economics Key Term Glossary
Mainly designed for A2 micro students taking exams in business economics
read more...»World of Business - Peter Day on the BBC Web Site
I am delighted that one of my radio 4 heroes Peter Day is starting a new page on the BBC news website. Peter has always had a happy nap for understanding the dynamics of change in business and markets, expect plenty of revealing and thoughtful insights linking to his radio 4 work including World of Business. Click here to access his new page
Unit 3 Micro: Businesses Prospering During the Depression
This is a cross posting from the Business Studies Blog
It is now six years since the global financial crisis triggered a prolonged downturn in economic activity. The UK economy, like other developed economies, has struggled to escape from a period of stagnant economic growth.
However, despite the weak economy, many UK firms have succeeded in significantly growing their revenues and profits.
Here are three examples of such businesses. Their strategies for success are different – but there are also some similarities.
Can you compare and contrast these three – and also identify some other businesses that have enjoyed similar success despite the tough economic environment?
You might also consider:
- What factors have driven revenue growth at each of the three businesses?
- Has their growth strategy been one or organic or external development?
- To what extent has their growth been driven by international expansion?
- Do you think their recent success can be sustained?
- What factors might that continued success depend on?
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Cover to Cover - Ten Stories from the FT
An overnight flight to Hong Kong afforded me the luxury of reading the FT from cover to cover instead of the standard daily flick through ahead of a day of lessons. Here are some stories that caught my eye linked to relevant business/market/economic issues of the day! I have linked to some non-FT sources because of their pay-wall.
read more...»Unit 3 Micro: Mergers and Acquisitions Update
Some examples here of recent merger and acquisition activity - students might want to consider the types of business integration on display in these examples:
read more...»Unit 2 Macro: The Great Productivity Puzzle
GDP per hour – labour productivity – in the UK remains lower than at the beginning of the recession in 2008. A special session at the Royal Economic Society on Friday 5 April held jointly by the Centre for Economic Performance (CEP) and Institute for Fiscal Studies (IFS) investigated the causes of this mystery. It was also the subject of radio 4 In Business - click here
See also: the Job Rich Depression (The Economist)
Unit 3 Micro: Small firms and innovation
The success of small firms is crucial to hopes of a sustained recovery in the UK economy and the government is keen to promote innovation within small and medium sized enterprises with a range of tax incentives including the Patent Box. The Patent Box system allows companies to apply an effective 10 percent preferential rate of corporation tax to profits attributable to patents and is introduced from April 2013.
Will this fresh supply-side fiscal policy prompt a significant boost to patent applications from UK firms? The evidence so far is mixed. The number of patent applications to the UK Intellectual Property Office from within the UK was just 15,370 in 2012, almost equal to the 2011 figure of 15,343. (Source: Independent, March 2013). But there has been a large rise in the number of patent applications made in the UK by foreign businesses especially in the pharmaceutical sector.
The reality is that most small businesses are too busy reinvesting their revenues back into growing their businesses rather than going through the lengthy, uncertain and often costly process of making multiple patent bids on their new product and process ideas. In a recent blog from the Wall Street Journal it was claimed that "it is almost impossible to defend software or business process innovation patents in the UK." Others are more optimistic - read this short piece from the Scotsman which claims that the Patent Box fits well with the ambition of the Scottish government to attract inward investment from high-knowledge businesses.
read more...»Stakeholder conflict - the battle over rewards of work
Investors vs Managers vs Employees - a classic example of stakeholder conflict - is to be examined in a 30-minute radio programme on Monday evening, spotted by my colleague David Wright. Radio 4's Analysis series will be looking at "...how the relative power of executives has grown and is now reflected in their own
much higher financial rewards and enhanced esteem. And if both workers and investors want to increase their influence and their share of the rewards how might they go about it?".
The programme will also look at the power that trades unions held in the 1960's and 70's, and how that power was lost. Looks like a useful half hour: BBC Radio 4 on Monday 21st January at 8.30pm.
Unit 3 Micro: Business Economics News Stories
This Scoop It Board is curated daily to add new content and commentary on market and industry news relevant to A2 micro unit 3 students.
read more...»Unit 3 Micro: Top Firms Target the Rich
The most innovative and productive firms send their exports to the world’s richest countries. That is the central finding of research by Rosario Crinò and Paolo Epifani, published in the latest issue of the Economic Journal. Their analysis of a representative sample of Italian manufacturing firms suggests that what firms produce – and how they produce it – is closely related to where they sell it.
Unit 3 Micro: Tesco Goes West - Failure in the USA
This ten minute video is ideal for students of business economics. It covers the inside story of Tesco's launch in the US under the brand name Fresh 'n Easy. Business Professor Michelle Lowe of Southampton University was given unprecedented access to the company to study their entry into the US market
read more...»Unit 2 Macro: Unemployment Rises as Hovis Factory Closes
Premier Foods is the UK's largest food manufacturer but in November 2012 they have announced the closure of two large bakeries that have - for many years - produced Hovis bread for supermarkets. The closure of the factories follows the loss of its £75m-a-year contract with Co-operative supermarkets. Hundreds of jobs are set to be lost in the spring of 2013 with damaging consequences for the local economy. What types of unemployment can you associate with these factory closures? What measures might be appropriate in addressing the extra unemployment problem that will result?
BBC news: Hovis shuts bakeries - click here
Hovis bakery worker devastated - click here
Peter Marsh - A New Industrial Revolution
Peter Marsh's talk at our Global economy conference in London on Monday challenged us to think in fresh terms about what manufacturing is and the opportunities for British businesses to make successful headway in premium and precision manufactured products in a fast-changing global environment. Here are the slides from his presentation. The FT special reprot - Making the Future is well worth tapping into - here is the link. We have also linked to some of his recent video pieces for the Financial Times
read more...»Paul Ormerod: The psychology of mergers and acquisitions
International Airlines Group (IAG), formed in January 2011 by a merger of British Airways and Iberia, is in the news. Operating losses at Iberia in the first nine months of the financial year are believed to be in excess of £200 million.
Since the start of last year, IAG’s shares are down by nearly 40 per cent. Shareholders have a right to feel disgruntled. They might, for example, reasonably raise queries about the revenue forecasting methodology of IAG, just how far out were the projections? Or they may ask how much ‘revenue synergy’ – his task specified on the IAG website – has actually been achieved by Robert Boyle, the Director of Strategy. The list can go on.
Such details of the problems are specific to the BA/Iberia merger. But the principles are general across a whole range of merger and acquisition activity amongst publicly listed companies. Twenty years ago, three American business school academics carried out a studied which transformed the approach to analysing mergers and acquisitions. There was a lot of work about the impact on share prices of an announcement of a merger, and on the value to the shareholders of the company being acquired. Julian Franks, Robert Harris and Sheridan Titman looked instead at the long-run impact on the share price of the company in the driving seat.
What they found was not good news.read more...»
Unit 3 Micro: Scoop-It on Market Structures
Matt Smith has been curating a Scoop-It collection of news stories connected to unit 3 microeconomics and specifically the economics of market structures. Click here to view it.
The #econ3 hashtag is a great way for A2 students to follow a growing number of teachers who post ideas, links and advice on Twitter. Likewise use #econ4 for tweets focused on A2 macroeconomics.
Chocolate Passion - Grown in St Lucia, Made in Cambridge
Angus Thirwell the co-founder and CEO of Hotel Chocolat is immensely grateful to Joanne Harris and Juliet Binoche. respectively the author and star of the hit film Hotel Chocolat. The movie educated a generation of aspirational chocolate lovers in how to pronounce Hotel Chocolat and has helped millions of consumers in Britain and around the world advocate the hit chocolate retail brand without committing a pronunication faux-pas! I wonder how many satisfied customers realise that Hotel Chocolat does not exist? Perhaps they have typed the name into Trip Advisor hoping for a review of a retreat flowing with rather wonderful chocolate made from a St Lucian plantation?
read more...»The 2012 GCSE fiasco - are there parallels with the Banking crisis?
Now, tutor2U is an organisation dedicated to supporting and building communities for teachers and lecturers. So, if I post a blog that criticises the report released today by Ofqual which suggests that some teachers over-graded coursework (particularly in English) during this summer's GCSE assessments you might accuse me of bias. To paraphrase Jeremy Clarkson: "You would say that - you drive a Citroen Picasso." However, in my never-ending pursuit of trying to find examples that resonate with young students of economics, is it possible to draw parallels with what happened during the GCSE assessment this year, and the mistakes made within the banking industry that lead to the current recession?
read more...»Unit 3 Micro: Ingredients for Innovative Businesses
This new short video from the Financial Times looks at what drives innovative activity in small technology businesses. Openness, agility and collaboration are highlighted as ingredients for innovation in twenty-first century businesses in technology spaces. We visit the home of the Mozilla Foundation and the UK web start up Moonfruit
read more...»Paul Ormerod: Corporation tax: fostering the illusions of the electorate that someone else will pay
Corporation tax is very much in the news. Starbucks is merely the latest to be in the spotlight, having paid no corporation tax on more than £1billion of sales in the past three years . This became noteworthy when the Prime Minister himself declared he was unhappy with the level of tax avoidance by big corporations working in Britain.
The plain fact is that if corporation tax did not exist, it would be madness to introduce it. The tax plays to the ignorance not only of the general public, but of almost all politicians. It encourages the fantasy that there is a free lunch, that someone else will pick up the bill for the welfare state and bloated state bureaucracy.
read more...»A Living Wage part 2 - some evidence for student analysis
Jonny Clark has beaten me to it with his blog about today's news about the Living Wage - there is a rich seam of resources here for issues for study around poverty and inequality. The concept has high level support - hailed by Boris Johnson as it is "....not only morally right, but (it)makes good business sense too." and endorsed by Ed Miliband as " A really important idea". I would like to add a trio of items from the BBC website which could add evidence to student analysis - particularly as Nov 4th-10th is designated Living Wage Week , so this could make a timely topic on the return from half term!
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Unit 3 Micro: Nike Kicks Umbro into Row Z
The football business has a history of helping investors to lose money. And now it seems that the shareholders in Nike have been hit hard by an investment that simply hasn't paid off.
Paul Ormerod: If it can happen to Google, who can feel safe?
The dramatic crash in Google’s share price and the temporary suspension of trading in the company’s shares made headline news. The event was triggered by the 20 per cent year-on-year fall in profits in the third quarter of this year.
As usual, there was no shortage of explanations of why this happened – after the event! A simple search of Yahoo! Finance of more than 40 brokers shows that in the previous three months, all had recommended ‘strong buy’, ‘buy’ or ‘hold’. Not a single one classed the stock as ‘under-perform’ or ‘sell’. Indeed, over the entire previous year, Google’s share price had risen more or less continuously. The total increase had been around 30 per cent.
read more...»Economics at the movies-Bananas!
Preparing to start teaching market failure at AS, I have been looking for some new material. At the library I stumbled across the film http://www.bananasthemovie.com/, a one sided account of alleged illnesses suffered by banana workers. I plan to show a few minutes on the hope it will promote debate on merit goods/externalities. There is some good stuff on CSR on the Dole website too. Watch the trailer using the link below
West Coast Rail Line franchise decision - a fine example of Government failure
Every cloud has a silver lining! News reports out today confirmed that the original decision to award the next 15 year franchise of the West Coast Rail line to FirstGroup instead of the incumbent Virgin Rail has been rescinded and the bidding process re-opened at a potential wasted cost of £40 million (by the way, have they fixed that leaky roof at your school yet?). This may seem like a fiasco to train users and the general public alike but to us Economics teachers it's a super example of government failing to intervene correctly in a market.
read more...»Paul Ormerod: We are all better off than we think
Apple’s iPhone5 has already smashed sales records. The first day on which consumers could make purchases over the web, more than 2 million online orders were placed. Little wonder that JP Morgan has estimated that sales of the iPhone5 could add as much as 0.5 per cent to American GDP. These numbers have attracted criticism. If consumers simply buy iPhones instead of other products, it is hard to see how output could be boosted by such an amount.
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