Homework Questions for Week 5. How Amazon’s Shipping Empire is Challenging UPS and FedEx

Written answers to any given question should be between 1-5 sentences or phrases. There is not always a right or wrong answer to a question. I may ask for a student’s opinion or informed/reasoned guess. You need not write in complete sentences

Homework Questions for Week 5
How Amazon’s Shipping Empire is Challenging UPS and FedEx
• In your own words, define the phrase “vertical integration.”
• Given the details in the article, would you say that Amazon is becoming more vertically integrated? If so, why? If not, why not?
• What factors led Amazon to make the strategic decision described in the article?
The New, Improved Keiretsu
• In your own words, define the term “arms-length transaction.”
• In an arms-length transaction, why are most transactions “adversarial.” In other words, why might buyers and sellers have contrary goals in a typical arms-length transaction?
• In a keiretsu, are buyer-supplier relationships adversarial? Are they at arms-length?
• What benefits come from the types of buyer-supplier relationships described in the article?
Grocers Absorb Rise in Food Prices to Keep Customers from Straying
• What is the producer’s price index (PPI)? –“the food portion of the PPI”
• What is the consumer price index (CPI)? 
• Why does the author conclude that price increases for food were largely absorbed by grocers?
Derivatives Overview: Hedging with OptionsOnly reading highlight part!!!!!
• In your own words, define the word “hedging” (in its financial meaning)..
• What is a derivative? How does it get its name?
• What is an option?
• What is a call option? 
o What is a price ceiling?
o How can a purchasing firm use a call option to establish a price ceiling for their supplies?
• What is a put option? 
o What is a price floor?
o How can a selling firm use a put option to establish a price floor for their product?
What Americans will- and won’t – pay for avocados
• What is the difference between price elastic and price inelastic goods?
• According to the author, are avocados price elastic or inelastic goods?
• In the year prior to the article, what had been happening to the demand for avocados?
• Why do the prices of peanuts and almonds go up together? 
• Why can peanuts take some of the price pressure off almonds?
• Explain the way that the supply of avocados in the United States changes. Does it immediately move to reflect changes in price/demand? Why or why not?
• The author writes that if consumers are bothered by the price of avocados they need only wait and the price should fall. Why does the author think that?
Jury Orders Newegg to Pay $2.3 Million in ‘Patent Troll’ Case
• What is TQP Development? 
o What names has it been given?
o What are its assets? 
o Does it engage in R&D? 
o How does it make money?
• Do you agree with the outcome of this particular case? Why or why not?
The Yen Takes a Toll on Nintendo, but With a Twist – WSJ
• In recent years, what percent of Nintendo’s revenue is generated outside Japan?
• Describe Nintendo’s strategy for converting foreign currencies into yen. How does the company justify this strategy?
• Describe Nintendo’s losses described at the top of page 2. If you were an investor in Nintendo, should you be worried about the long term consequences of these losses? Justify your answer.
Firms urged to pay into fund for Bangladesh factory victims
• How many Bangladeshis worked in the garment industry when the article was published? 
• To where do most of these garments go?
• Describe the accident that happened. How many people died? How many were injured?
• Several NGOs want Western clothing retailers to compensate some of the victims from the factory collapse. On what grounds are they seeking compensation? 
• What argument are they making?
o Do you agree with that argument? Why or why not?