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Flashcard 1432549723404

Tags
#citychef #complete-guide-of-food-delivery-service
Question
Restaurant takeout. Seamless and GrubHub, which merged in 2013, are essentially mobile platforms that connect [...]. They pay the services a commission.
Answer
consumers with local restaurants for takeout delivery


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Restaurant takeout. Seamless and GrubHub, which merged in 2013, are essentially mobile platforms that connect consumers with local restaurants for takeout delivery. Restaurants pay the services a commission. Unlike smaller competitor DoorDash, GrubHub does not have its own fleet of delivery vehicles, but that may be changing soon. In response to b

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The (almost) complete guide to food delivery services major-players
range from $10 – $15 per dinner, and the services offer varying degrees of customization. Smaller players such as Marley Spoon, PeachDish, Home Chef, Gobble offer a spin on the same model and may have more limited delivery areas. <span>Restaurant takeout. Seamless and GrubHub, which merged in 2013, are essentially mobile platforms that connect consumers with local restaurants for takeout delivery. Restaurants pay the services a commission. Unlike smaller competitor DoorDash, GrubHub does not have its own fleet of delivery vehicles, but that may be changing soon. In response to big competitors such as Uber and Amazon, who also have designs on the food delivery market and have the logistical manpower to be far more agile than most restaurants, GrubHub is rolling out its own fleet in a few test markets. Prepared food delivery. Companies such as Munchery , Sprig, Maple and SpoonRocket prepare their own gourmet meals, often tapping into celebrity chef mojo (Momofuku’s Davi







Flashcard 1434977701132

Tags
#italian #italian-grammar
Question
The verb mood used to express uncertainty is the [...], which has, as the indicative, a full range of tenses.
Answer
subjunctive


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e use most in speaking and writing is the indicative mood. Within this mood is a full range of tenses: present mangio ‘I eat’; past ho mangiato ‘I have eaten’; future mangerò ‘I will eat’; etc. The verb mood used to express uncertainty is the <span>subjunctive, which also has a full range of tenses. See Subjunctive.<span><body><html>

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Flashcard 1436157349132

Tags
#costs #finance #investopedia
Question

Implicit costs are not [...]in a financial system.

Answer
traceable


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costs arise based on what has actually been purchased as opposed to implicit costs that arise based on what has actually been given up other than money. Explicit costs have a paper trail and provide audit documentation. Implicit costs are not <span>traceable in a financial system. While management will utilize explicit costs when viewing business operations, implicit costs are only utilized in decision-making or choosing between multiple alternatives. </sp

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Explicit Cost Definition | Investopedia
hased are examples of explicit costs. Although the depreciation of an asset is not an activity that can be tangibly traced, depreciation expense is an explicit cost because it relates to the cost of the underlying asset that the company owns. <span>Explicit Costs vs. Implicit Costs Explicit costs arise based on what has actually been purchased as opposed to implicit costs that arise based on what has actually been given up other than money. Explicit costs have a paper trail and provide audit documentation. Implicit costs are not traceable in a financial system. While management will utilize explicit costs when viewing business operations, implicit costs are only utilized in decision-making or choosing between multiple alternatives. Opportunity Costs Explicit costs are used in the computation of opportunity costs. An opportunity cost is the total value of an item forgone. It is calculated by adding the explicit and







Flashcard 1438162488588

Tags
#analyst-notes #cfa-level-1 #corporate-finance #introduction #reading-35-capital-budgeting
Question
Project classifications:
  • Replacement projects.
  • Expansion projects.
  • [...]
  • Others.
Answer
Regulatory, safety and environmental projects.


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e cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. <span>Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These proj

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Subject 1. Capital Budgeting: Introduction
ood capital budgeting decisions can be made). Otherwise, you will have the GIGO (garbage in, garbage out) problem. Improve operations, thus making capital decisions well-implemented. <span>Project classifications: Replacement projects. There are two types of replacement decisions: Replacement decisions to maintain a business. The issue is twofold: should the existing operations be continued? If yes, should the same processes continue to be used? Maintenance decisions are usually made without detailed analysis. Replacement decisions to reduce costs. Cost reduction projects determine whether to replace serviceable but obsolete equipment. These decisions are discretionary and a detailed analysis is usually required. The cash flows from the old asset must be considered in replacement decisions. Specifically, in a replacement project, the cash flows from selling old assets should be used to offset the initial investment outlay. Analysts also need to compare revenue/cost/depreciation before and after the replacement to identify changes in these elements. Expansion projects. Projects concerning expansion into new products, services, or markets involve strategic decisions and explicit forecasts of future demand, and thus require detailed analysis. These projects are more complex than replacement projects. Regulatory, safety and environmental projects. These projects are mandatory investments, and are often non-revenue-producing. Others. Some projects need special considerations beyond traditional capital budgeting analysis (for example, a very risky research project in which cash flows cannot be reliably forecast). LOS a. describe the capital budgeting process and distinguish among the various categories of capital projects; <span><body><html>







Flashcard 1438259481868

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question
Assumptions of capital budgeting are (middle one):
  • The [...] should be [...] against a project
Answer
opportunity cost

charged


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ncing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. <span>The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured o

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Subject 2. Basic Principles of Capital Budgeting
Capital budgeting decisions are based on incremental after-tax cash flows discounted at the opportunity cost of capital. Assumptions of capital budgeting are: Capital budgeting decisions must be based on cash flows, not accounting income. Accounting profits only measure the return on the invested capital. Accounting income calculations reflect non-cash items and ignore the time value of money. They are important for some purposes, but for capital budgeting, cash flows are what are relevant. Economic income is an investment's after-tax cash flow plus the change in the market value. Financing costs are ignored in computing economic income. Cash flow timing is critical because money is worth more the sooner you get it. Also, firms must have adequate cash flow to meet maturing obligations. The opportunity cost should be charged against a project. Remember that just because something is on hand does not mean it's free. See below for the definition of opportunity cost. Expected future cash flows must be measured on an after-tax basis. The firm's wealth depends on its usable after-tax funds. Ignore how the project is financed. Interest payments should not be included in the estimated cash flows since the effects of debt financing are reflected in the cost of capital used to discount the cash flows. The existence of a project depends on business factors, not financing. Important capital budgeting concepts: A sunk cost is a cash outlay that has already been incurred and which







Flashcard 1438446914828

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

The decision about which projects to undertake in the future will depend purely on estimates of [...] This is a forward-looking exercise.

Answer
each project's NPV.


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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

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Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat







Flashcard 1439162043660

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

IRR Decision rules:

  • [...] the better.
  • ​Define the hurdle rate, which typically is [...]
  • Reject if [...]
Answer
The higher the IRR,

the cost of capital.

IRR is less than or equal to the hurdle rate.


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Decision rules: The higher the IRR, the better. Define the hurdle rate, which typically is the cost of capital. Reject if IRR is less than or equal to the hurdle rate.

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Subject 3. Investment Decision Criteria
ply the NPV formula solved for the particular discount rate that forces the NPV to equal zero. The IRR on a project is its expected rate of return. The NPV and IRR methods will usually lead to the same accept or reject decisions. <span>Decision rules: The higher the IRR, the better. Define the hurdle rate, which typically is the cost of capital. Reject if IRR is less than or equal to the hurdle rate. IRR does provide "safety margin" information. Calculate Project A's and B's IRR. Project A: -1000 + 750/(1 + IRR) 1 + 350/(1+IRR) 2 +







Flashcard 1439191928076

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

Average Accounting Rate of Return

Drawbacks:

  • It does not take into account the time value of money; the value of cash flows does not diminish with time, as is the case with NPV and IRR.
  • ARR is based on numbers that include [...]
Answer
non-cash items.


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ge is that it is very easy to calculate. Drawbacks: It does not take into account the time value of money; the value of cash flows does not diminish with time, as is the case with NPV and IRR. ARR is based on numbers <span>that include non-cash items.<span><body><html>

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Subject 3. Investment Decision Criteria
be tied up in a project and "at risk." The shorter the payback period, the greater the project's liquidity, the lower the risk, and the better the project. The payback is often used as one indicator of a project's risk. <span>Average Accounting Rate of Return (not required) This is a very simple rate of return: Its only advantage is that it is very easy to calculate. Drawbacks: It does not take into account the time value of money; the value of cash flows does not diminish with time, as is the case with NPV and IRR. ARR is based on numbers that include non-cash items. Profitability Index (PI) This is an index used to evaluate proposals for which net present values have been determined. The profitability index is determined b







#aspectos-generales #immex #mexico #modalidades #octopus

  1. Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas;
  2. Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación;
  3. Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público;
  4. Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y
  5. Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa.

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os y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. <span>Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y co

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Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre




#aspectos-generales #compromisos #immex #mexico #octopus

La autorización del Programa IMMEX se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 USD, o su equivalente MXN, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total.

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uando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. <span>Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondie

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Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre




Flashcard 1439578328332

Tags
#aspectos-generales #beneficios #immex #mexico #octopus
Question

Los bienes están agrupados bajo las siguientes 3 categorías:

  1. [...], partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos.
Answer
Materias primas


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Los bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso pr

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439581474060

Tags
#aspectos-generales #beneficios #immex #mexico #octopus
Question

Los bienes están agrupados bajo las siguientes 3 categorías:

2. [...].
Answer
Contenedores y cajas de trailers


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n a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. <span>Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investiga

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439584619788

Tags
#aspectos-generales #beneficios #immex #mexico #octopus
Question

Los bienes están agrupados bajo las siguientes 3 categorías:

  1. [...], equipo, [...], instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo.
Answer
Maquinaria

herramientas


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ías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. <span>Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación,

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







#aspectos-generales #immex #mexico #modalidades #octopus
La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada.

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rograma, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. <span>La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada.<span><body><html>

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre




Flashcard 1439590386956

Tags
#aspectos-generales #immex #mexico #modalidades #octopus
Question

  1. Programa IMMEX [...], cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas;
Answer
Controladora de empresas


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scheduled repetition interval               last repetition or drill

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Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial,

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439592746252

Tags
#aspectos-generales #immex #mexico #modalidades #octopus
Question

2. Programa IMMEX [...], cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación;
Answer
Industrial


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y> Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías d

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439595105548

Tags
#aspectos-generales #immex #mexico #modalidades #octopus
Question

3. Programa IMMEX [...], cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público;

Answer
Servicios


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e una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX <span>Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opi

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439597464844

Tags
#aspectos-generales #immex #mexico #modalidades #octopus
Question

4. Programa IMMEX [...], cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa.

Answer
Albergue


statusnot learnedmeasured difficulty37% [default]last interval [days]               
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realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX <span>Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cu

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439599824140

Tags
#aspectos-generales #immex #mexico #modalidades #octopus
Question

5. Programa IMMEX [...], cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa.

Answer
Terciarización


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ión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX <span>Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Progra

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439602183436

Tags
#aspectos-generales #immex #mexico #modalidades #octopus
Question
La SE podrá aprobar de manera simultánea un [...], de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos.
Answer
Programa de Promoción Sectorial


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La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa baj

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







#aspectos-generales #immex #mexico #modalidades #octopus
Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada.

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span>La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada.<span><body><html>

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre




Flashcard 1439606115596

Tags
#aspectos-generales #immex #mexico #octopus
Question
Vigencia:
La vigencia de los Programas IMMEX estará sujeta [...] y con [...]
Answer
mientras el titular continúe cumpliendo con los requisitos previstos

las obligaciones establecidas en el Decreto.


statusnot learnedmeasured difficulty37% [default]last interval [days]               
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scheduled repetition interval               last repetition or drill

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Open it
Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto.

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







Flashcard 1439610834188

Tags
#aspectos-generales #compromisos #immex #mexico #octopus
Question

La autorización del Programa IMMEX se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a [...] USD, o su equivalente MXN, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total.
Answer
500,000


statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
La autorización del Programa IMMEX se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 USD, o su equivalente MXN, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total.

Original toplevel document

Decreto IMMEX
iladora de Exportación (Maquila) y el que Establece Programas de Importación Temporal para Producir Artículos de Exportación (PITEX), cuyas empresas representan en su conjunto el 85% de las exportaciones manufactureras de México. <span>ASPECTOS GENERALES Definición: El Programa IMMEX es un instrumento mediante el cual se permite importar temporalmente los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación, sin cubrir el pago del impuesto general de importación, del impuesto al valor agregado y, en su caso, de las cuotas compensatorias Beneficiarios: La Secretaría de Economía (SE) podrá autorizar a las personas morales residentes en territorio nacional a que se refiere la fracción II del artículo 9 del Código Fiscal de la Federación, que tributen de conformidad con el Título II de la Ley del Impuesto sobre la Renta, un solo Programa IMMEX, que puede incluir las modalidades de controladora de empresas, industrial, servicios, albergue y terciarización, siempre que cumplan con los requisitos previstos en el Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación (Decreto IMMEX), publicado en el Diario Oficial e la Federación el 1 de noviembre de 2006. Beneficios: El Programa IMMEX brinda a sus titulares la posibilidad de importar temporalmente libre de impuestos a la importación y del IVA, los bienes necesarios para ser utilizados en un proceso industrial o de servicio destinado a la elaboración, transformación o reparación de mercancías de procedencia extranjera importadas temporalmente para su exportación o a la prestación de servicios de exportación. Estos bienes están agrupados bajo las siguientes categorías: Materias primas, partes y componentes que se vayan a destinar totalmente a integrar mercancías de exportación; combustibles, lubricantes y otros materiales que se vayan a consumir durante el proceso productivo de la mercancía de exportación; envases y empaques; etiquetas y folletos. Contenedores y cajas de trailers. Maquinaria, equipo, herramientas, instrumentos, moldes y refacciones destinadas al proceso productivo; equipos y aparatos para el control de la contaminación; para la investigación o capacitación, de seguridad industrial, de telecomunicación y cómputo, de laboratorio, de medición, de prueba de productos y control de calidad; así como aquéllos que intervengan en el manejo de materiales relacionados directamente con los bienes de exportación y otros vinculados con el proceso productivo; equipo para el desarrollo administrativo. Modalidades: Programa IMMEX Controladora de empresas, cuando en un mismo programa se integren las operaciones de manufactura de una empresa certificada denominada controladora y una o más sociedades controladas; Programa IMMEX Industrial, cuando se realice un proceso industrial de elaboración o transformación de mercancías destinadas a la exportación; Programa IMMEX Servicios, cuando se realicen servicios a mercancías de exportación o se presten servicios de exportación, únicamente para el desarrollo de las actividades que la Secretaría determine, previa opinión de la Secretaría de Hacienda y Crédito Público; Programa IMMEX Albergue, cuando una o varias empresas extranjeras le faciliten la tecnología y el material productivo, sin que estas últimas operen directamente el Programa, y Programa IMMEX Terciarización, cuando una empresa certificada que no cuente con instalaciones para realizar procesos productivos, realice las operaciones de manufactura a través de terceros que registre en su Programa. La SE podrá aprobar de manera simultánea un Programa de Promoción Sectorial, de acuerdo con el tipo de productos que fabrica o a los servicios de exportación que realice, debiendo cumplir con la normatividad aplicable a los mismos. Tratándose de una empresa bajo la modalidad de servicios, únicamente podrá importar al amparo del Programa de Promoción Sectorial las mercancías a que se refiere el artículo 4, fracción III del presente Decreto, siempre que corresponda al sector en que sea registrada. Vigencia: La vigencia de los Programas IMMEX estará sujeta mientras el titular de los mismos continúe cumpliendo con los requisitos previstos para su otorgamiento y con las obligaciones establecidas en el Decreto. Plazos de permanencia: Los bienes importados temporalmente al amparo de un Programa IMMEX, podrán permanecer en territorio nacional por los plazos establecidos en el artículo 108 de la Ley Aduanera. Para las mercancías comprendidas en los Anexos II y III del Decreto IMMEX, cuando se importen como materia prima, el plazo de permanencia será hasta por doce meses. Tratándose de las mercancías que se encuentran comprendidas en el Anexo III del Decreto IMMEX, cuando se importen como materia prima, únicamente cuando se destinen a actividades bajo la modalidad de servicios, el plazo de permanencia será de hasta seis meses. No podrán ser importadas al amparo del Programa las mercancías señaladas en el Anexo I del Decreto IMMEX. Compromisos: Para gozar de los beneficios de un Programa IMMEX se deberá dar cumplimiento a los términos establecidos en el Decreto en la materia. La autorización del Programa se otorgará bajo el compromiso de realizar anualmente ventas al exterior por un valor superior a 500,000 dólares de los Estados Unidos de América, o su equivalente en moneda nacional, o bien, facturar exportaciones, cuando menos por el 10% de su facturación total. Reportes: El titular de un Programa IMMEX deberá presentar un reporte anual de forma electrónica, respecto del total de las ventas y de las exportaciones, correspondientes al ejercicio fiscal inmediato anterior, a más tardar el último día hábil del mes de mayo, conforme al formato que mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior dé a conocer la Secretaría de Economía. Adicionalmente, la empresa con Programa IMMEX deberá presentar la información que, para efectos estadísticos, se determine, en los términos que establezca la SE mediante Reglas y Criterios de Carácter General en Materia de Comercio Exterior. Para mayor información sobre este programa comunicarse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Repre







#immex #mexico #octopus #operacion #trámites


Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio.

Los interesados podrán realizar los siguientes trámites:
A) Programa Nuevo.

Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente:

  1. Certificado de firma electrónica avanzada del SAT.
  2. Registro Federal de Contribuyentes activo.
  3. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes.

Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación:

  1. Copia certificada del acta constitutiva de la sociedad y, en su caso, de las modificaciones a la misma.
  2. Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa IMMEX, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. Tratándose de arrendamiento o comodato, se deberá acreditar que el contrato establece un plazo forzoso mínimo de un año y que le resta una vigencia de por lo menos once meses, a la fecha de presentación de la solicitud.
  3. Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación.
  4. Poder Notarial correspondiente (original o copia certificada y copia simple); o exhibir copia del Registro Único de Personas Acreditadas (RUPA).
  5. Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del programa.
  6. Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación** (Decreto IMMEX), escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada.
  7. Carta de conformidad de la(s) empresa(s) que realizarán el proceso de submanufactura donde manifiesten bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original)
  8. Adicionalmente para la modalidad de Programa IMMEX Controladora de Empresas, presentar:
  • - Actas de asamblea de accionistas, en las que conste la participación accionaría de la sociedad controladora y las controladas (original y copia).
  • - Los asientos certificados del libro de registro de accionistas (copia).
  • - La documentación a que se refieren los puntos 1, 2 y 5 de este apartado, además de presentar la copia de la cédula de identificación fiscal Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y
  • - Los contratos de maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de maquila en el que deberán establecerse las obligaciones contraídas, tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del programa solicitado, debidamente protocolizados ante Notario (original y copia), y
  • - La autorización como empresa certificada (copia), otorgada por la Secretaría de Hacienda y Crédito Público.
  • 9. Adicionalmente para la modalidad de Programa IMMEX de Terciarización, presentar:
  • - Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización, donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías
...

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Open it
Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente: Certificado de firma electrónica avanzada del SAT. Registro Federal de Contribuyentes activo. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes. Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación: Copia certificada del acta constitutiva de la sociedad y, en su caso, de las modificaciones a la misma. Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa IMMEX, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. Tratándose de arrendamiento o comodato, se deberá acreditar que el contrato establece un plazo forzoso mínimo de un año y que le resta una vigencia de por lo menos once meses, a la fecha de presentación de la solicitud. Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación. Poder Notarial correspondiente (original o copia certificada y copia simple); o exhibir copia del Registro Único de Personas Acreditadas (RUPA). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del programa. Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación** (Decreto IMMEX), escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada. Carta de conformidad de la(s) empresa(s) que realizarán el proceso de submanufactura donde manifiesten bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original) Adicionalmente para la modalidad de Programa IMMEX Controladora de Empresas, presentar: - Actas de asamblea de accionistas, en las que conste la participación accionaría de la sociedad controladora y las controladas (original y copia). - Los asientos certificados del libro de registro de accionistas (copia). - La documentación a que se refieren los puntos 1, 2 y 5 de este apartado, además de presentar la copia de la cédula de identificación fiscal Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y - Los contratos de maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de maquila en el que deberán establecerse las obligaciones contraídas, tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del programa solicitado, debidamente protocolizados ante Notario (original y copia), y - La autorización como empresa certificada (copia), otorgada por la Secretaría de Hacienda y Crédito Público. 9. Adicionalmente para la modalidad de Programa IMMEX de Terciarización, presentar: - Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización, donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original). - La(s) empresa(s) que solicite(n) el programa bajo la modalidad de Terciarización, deberá(n) contar con la autorización como empresa certificada otorgada por la Secretaría de Hacienda y Crédito Público. 10.- Las empresas del sector textil y confección que soliciten la autorización del Programa IMMEX para la importación temporal de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar a su solicitud la siguiente documentación: I.- Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. II.- Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. El programa IMMEX.EXE puede obtenerse en la siguiente dirección de Internet: www.economia.gob.mx/?P=777 o directamente en las ventanillas de atención al público, presentando cuatro discos magnéticos de alta densidad o un CD. Ampliación de Programa. Llenar la solicitud en el programa IMMEX.EXE y presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. Ampliación de Programa IMMEX para producto no sensible. Las empresas del sector textil y confección que soliciten la ampliación de un Programa IMMEX para la importación temporal por primera vez de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar la siguiente documentación. Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. Ampliación de Programa IMMEX para productos sensibles. Las empresas que soliciten la ampliación para importar mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo II del Decreto IMMEX, deberán presentar anexo a su solicitud, la siguiente documentación. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la Tarifa Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción : en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura y fracción arancelaria y unidad de medida, de conformidad con la Tarifa. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. Ampliación de Programa IMMEX subsecuente de productos sensibles. En el caso de solicitar una ampliación subsecuente para la importación temporal de mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE) que se indican en el Anexo II del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, presentar anexo a su solicitud: I. Escrito en formato libre en el que especifique, datos de la mercancía a importar: fracción arancelaria y unidad de medida, de conformidad con la Tarifa, y volumen máximo a importar en el año y su valor en dólares. II. Reporte firmado por el representante legal de la empresa, en donde se indique: - Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el - Anexo II del Decreto IMMEX. - Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno - Volumen de las mermas y desperdicios correspondientes a los procesos industriales - Cantidad de cada material, en términos de la unidad de medida de conformidad con la Tarifa, utilizada en los procesos productivos, indicando el porcentaje de mermas. Ampliación de Programa IMMEX para el registro de actividades de servicio. No se requiere documentación anexa a su solicitud. Ampliación de Programa IMMEX de monto determinado a empresas del sector textil-confección. Las empresas del sector textil y confección que importen mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los capítulos 50 a 63 y subpartida 9404.90 de la citada Tarifa (fabricación de insumos textiles, confección de productos textiles y prendas de vestir), podrán ampliar el monto para la importación temporal de esas mercancías, presentando un escrito libre, de acuerdo a lo siguiente: I.- Para las empresas a que se refiere la fracción I de la regla 3.4.8 del Acuerdo por el que la Secretaría de Economía emite reglas y criterios en materia de comercio exterior, podrán justificar de entre los dos siguientes: Aprovechamiento de capacidad instalada ociosa, incluyendo, en su caso, el de las empresas que realicen actividades de submanufactura, o Ampliación de la capacidad instalada propia o, en su caso, de cada una de las empresas que realicen actividades de submanufactura. II.- Para las empresas que se refiere la fracción II de la regla 3.4.8, deberán especificar el porcentaje de utilización adicional de capacidad ociosa o de ampliación de capacidad instalada para los próximos 6 meses. Modificación de Programa. Registro de empresas submanufactureras: Escrito libre donde se formula la petición, indicando los siguientes datos de la empresa a registrar

Original toplevel document

Decreto IMMEX
carse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. <span>TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente: Certificado de firma electrónica avanzada del SAT. Registro Federal de Contribuyentes activo. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes. Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación: Copia certificada del acta constitutiva de la sociedad y, en su caso, de las modificaciones a la misma. Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa IMMEX, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. Tratándose de arrendamiento o comodato, se deberá acreditar que el contrato establece un plazo forzoso mínimo de un año y que le resta una vigencia de por lo menos once meses, a la fecha de presentación de la solicitud. Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación. Poder Notarial correspondiente (original o copia certificada y copia simple); o exhibir copia del Registro Único de Personas Acreditadas (RUPA). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del programa. Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación** (Decreto IMMEX), escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada. Carta de conformidad de la(s) empresa(s) que realizarán el proceso de submanufactura donde manifiesten bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original) Adicionalmente para la modalidad de Programa IMMEX Controladora de Empresas, presentar: - Actas de asamblea de accionistas, en las que conste la participación accionaría de la sociedad controladora y las controladas (original y copia). - Los asientos certificados del libro de registro de accionistas (copia). - La documentación a que se refieren los puntos 1, 2 y 5 de este apartado, además de presentar la copia de la cédula de identificación fiscal Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y - Los contratos de maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de maquila en el que deberán establecerse las obligaciones contraídas, tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del programa solicitado, debidamente protocolizados ante Notario (original y copia), y - La autorización como empresa certificada (copia), otorgada por la Secretaría de Hacienda y Crédito Público. 9. Adicionalmente para la modalidad de Programa IMMEX de Terciarización, presentar: - Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización, donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original). - La(s) empresa(s) que solicite(n) el programa bajo la modalidad de Terciarización, deberá(n) contar con la autorización como empresa certificada otorgada por la Secretaría de Hacienda y Crédito Público. 10.- Las empresas del sector textil y confección que soliciten la autorización del Programa IMMEX para la importación temporal de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar a su solicitud la siguiente documentación: I.- Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. II.- Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. El programa IMMEX.EXE puede obtenerse en la siguiente dirección de Internet: www.economia.gob.mx/?P=777 o directamente en las ventanillas de atención al público, presentando cuatro discos magnéticos de alta densidad o un CD. Ampliación de Programa. Llenar la solicitud en el programa IMMEX.EXE y presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. Ampliación de Programa IMMEX para producto no sensible. Las empresas del sector textil y confección que soliciten la ampliación de un Programa IMMEX para la importación temporal por primera vez de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar la siguiente documentación. Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. Ampliación de Programa IMMEX para productos sensibles. Las empresas que soliciten la ampliación para importar mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo II del Decreto IMMEX, deberán presentar anexo a su solicitud, la siguiente documentación. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la Tarifa Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción : en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura y fracción arancelaria y unidad de medida, de conformidad con la Tarifa. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. Ampliación de Programa IMMEX subsecuente de productos sensibles. En el caso de solicitar una ampliación subsecuente para la importación temporal de mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE) que se indican en el Anexo II del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, presentar anexo a su solicitud: I. Escrito en formato libre en el que especifique, datos de la mercancía a importar: fracción arancelaria y unidad de medida, de conformidad con la Tarifa, y volumen máximo a importar en el año y su valor en dólares. II. Reporte firmado por el representante legal de la empresa, en donde se indique: - Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el - Anexo II del Decreto IMMEX. - Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno - Volumen de las mermas y desperdicios correspondientes a los procesos industriales - Cantidad de cada material, en términos de la unidad de medida de conformidad con la Tarifa, utilizada en los procesos productivos, indicando el porcentaje de mermas. Ampliación de Programa IMMEX para el registro de actividades de servicio. No se requiere documentación anexa a su solicitud. Ampliación de Programa IMMEX de monto determinado a empresas del sector textil-confección. Las empresas del sector textil y confección que importen mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los capítulos 50 a 63 y subpartida 9404.90 de la citada Tarifa (fabricación de insumos textiles, confección de productos textiles y prendas de vestir), podrán ampliar el monto para la importación temporal de esas mercancías, presentando un escrito libre, de acuerdo a lo siguiente: I.- Para las empresas a que se refiere la fracción I de la regla 3.4.8 del Acuerdo por el que la Secretaría de Economía emite reglas y criterios en materia de comercio exterior, podrán justificar de entre los dos siguientes: Aprovechamiento de capacidad instalada ociosa, incluyendo, en su caso, el de las empresas que realicen actividades de submanufactura, o Ampliación de la capacidad instalada propia o, en su caso, de cada una de las empresas que realicen actividades de submanufactura. II.- Para las empresas que se refiere la fracción II de la regla 3.4.8, deberán especificar el porcentaje de utilización adicional de capacidad ociosa o de ampliación de capacidad instalada para los próximos 6 meses. Modificación de Programa. Registro de empresas submanufactureras: Escrito libre donde se formula la petición, indicando los siguientes datos de la empresa a registrar como submanufacturera: Nombre, denominación o razón social, Registro Federal de Contribuyentes y Domicilio fiscal y de la planta completo, anexando: Carta de responsable solidario de la empresa que realizará los procesos industriales o de servicios relacionados directamente con la operación de manufactura de la empresa con Programa IMMEX. (original y copia) Constancia de Inscripción con Cédula de Identificación Fiscal, constancia de Registro o Constancia de Inscripción al Registro Federal de Contribuyentes, correspondiente a la persona que realizará las operaciones de submanufactura (original y copia). Cambio de modalidad de programa: Escrito libre donde se formula la petición señalando el cambio de modalidad que se requiere. Adicionalmente indicar los siguientes datos de acuerdo al cambio de modalidad: Industrial, indicar los productos que se van a fabricar, así como su fracción arancelaria de acuerdo a la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación; Servicios, señalar las nuevas actividades que realizará la empresa con programa; Albergue, indicar el nombre y domicilio de las empresas extranjeras que facilitarán la tecnología a la empresa con programa, así como el material productivo a utilizar; Terciarización, indicar el nombre, Registro Federal de Contribuyentes y domicilio completo de la planta que corresponde a las empresas con las cuales va a operar; Controladora de empresas, señalar el nombre, Registro Federal de Contribuyentes y domicilio de las empresas controladas. Documentos que deberá anexar a la solicitud: Para solicitar el cambio a las modalidades de Industrial, Albergue o Servicios: Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. cuando esta información cambie en relación a la entregada originalmente (original y copia). Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación, en relación a la nueva modalidad (original y copia). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del Programa, según corresponda. (original y copia). Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada, cuando esta información cambie en relación a la entregada originalmente. (original y copia) Para solicitar el cambio a la modalidad de Controladora de Empresas, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y las controladas. (original y copia). Los asientos certificados del libro de registro de accionistas. (original y copia) la documentación a que se refiere a los puntos 1, 2 y 5 del apartado de programa nuevo, además de presentar la copia de la cédula de identificación fiscal. Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y Los contratos de Maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de Maquila en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del Programa solicitado , debidamente protocolizados ante notario. (original y copia). e) La autorización como empresa certificada (original y copia) otorgada por la Secretaría de Hacienda y Crédito Público. • Para solicitar el cambio a la modalidad de Terciarización, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). Registro de empresas a las que se prestarán servicios: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas a las que se les prestará servicios, tales como: Denominación o Razón Social. Registro Federal de Contribuyentes, Domicilio completo de planta y número de registro de programa IMMEX. No se requiere documentación anexa. Registro de empresas controladas. Escrito libre donde se formula la petición de registro de nuevas empresas controladas por la empresa controladora con Programa IMMEX, así como proporcionar Razón Social, Registro Federal de Contribuyentes, Domicilio Fiscal y de las Plantas, Monto de Exportaciones en dólares del año anterior y, en su caso número de programa de cada una de las empresas a registrar, anexar: a) Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y de las controladas (original y copia), b) Contratos que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades contraladas en relación con los objetivos del programa, debidamente protocolizados ante notario (original y copia). 7. Registro de empresas terciarizadas: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas terciarizadas a registrar: Denominación o Razón Social. Registro Federal de Contribuyentes y Domicilio completo de planta, anexar: a) Carta de conformidad de la empresa que realizará el proceso de terciarización donde manifieste bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). 8. Cambio, alta o baja de domicilios fiscal y plantas: Escrito libre donde se formula la petición, notificando el cambio, alta o baja de domicilio fiscal o plantas, indicando domicilio completo. 9. Suspensión de Programa. Si se suspenden actividades, también se deberá solicitar el trámite de suspensión temporal de los beneficios que otorga el Programa IMMEX, mediante la presentación de un escrito libre que lo exprese y explicando los motivos para su suspensión (original y copia). E) Cancelación de Programa. Si se decide dar por concluido el Programa IMMEX, se debe presentar un escrito libre que lo exprese para su cancelación (original y copia). F) Reporte Anual de Operaciones de Comercio Exterior. Únicamente a través de la página de la Secretaría de Economía: http://www.economia.gob.mx/?P=55, reporte anual. Este trámite tiene carácter de aviso, por lo que no genera respuesta de parte de la Secretaría de Economía. Control de Inventarios El titular del Programa deberá llevar un control de inventarios automatizado con la información mínima a que se refiere el Anexo IV del Decreto IMMEX. Normatividad Marco Legal Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, publicado en el Diario Oficial de la Federación el 1° de noviembre de 2006. Ley Aduanera y su Reglamento Reglas de Carácter General en Materia de Comercio Exterior. Ley Federal de Procedimiento Administrativo. Ley de Comercio Exterior y su Reglamento. Reglamento Interior de la Secretaría de Economía. Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior, y sus modificaciones. Acuerdo por el que se dan a conocer los Trámites Inscritos en el Registro Federal de Trámites Empresariales que Aplican a la Secretaría de Economía y su Sector Coordinado. Acuerdo que modifica al diverso por el que se aprueban los formatos que deberán utilizarse para realizar trámites ante la Secretaría de Economía, el Centro Nacional de Metrología, el Consejo de Recursos Minerales, el Fideicomiso de Fomento Minero y la Procuraduría Federal del Consumidor y sus reformas. Acuerdo por el que se dan a conocer los trámites inscritos en el Registro Federal de Trámites y Servicios que aplican a la Secretaría de Economía, y los organismos descentralizados y órganos desconcentrados del sector. Tratado de Libre Comercio de América del Norte. Resolución por la que se establecen las reglas de carácter general relativas a la aplicación de las disposiciones en materia aduanera del Tratado de Libre Comercio de América del Norte y sus reformas. Disposiciones TLCAN Conforme a lo establecido a partir del 2001 por el Tratado de Libre Comercio de América del Norte (TLCAN), con el fin de evitar la distorsión de las preferencias arancelarias acordadas en el marco del mencionado tratado en los países miembros, el Programa IMMEX se sujeta a lo siguiente: a) Se aplicará la fórmula establecida en el artículo 303 del TLCAN, a los insumos no originarios de América de Norte que se incorporen a un bien que será exportado a EUA o Canadá. De acuerdo con la fórmula sólo se puede exentar el menor del monto de aranceles, que resulte al comparar, el monto de aranceles de los insumos importados a México y el monto de aranceles pagados en EUA o Canadá por el producto terminado. b) El artículo 304 del TLCAN prohíbe a los países miembros de la zona de libre comercio otorgar exenciones de impuestos de importación a maquinaria y equipo condicionada a la exportación. Por consiguiente, las empresas con Programa IMMEX deberán pagar el impuesto de importación de dichos productos. Los aranceles sobre insumos, partes, componentes, maquinaria y equipo importados a México se pueden calcular en base a las tasas establecidas en los Tratados de Libre Comercio y acuerdos comerciales suscritos por México, como el TLCUE, los Programas de Promoción Sectorial y la Regla 8ª, siempre que cuente con la autorización correspondiente. Programas para productos sensibles La SE determinará aquellas mercancías (productos sensibles) que no podrán importarse al amparo de un Programa IMMEX o que para hacerlo se sujetarán al cumplimiento de requisitos específicos. Las empresas deberán apegarse a las disposiciones establecidas en el Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior. Las mercancías que no podrán importarse al amparo de un programa IMMEX son las comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE), señaladas en el Anexo I del Decreto IMMEX. Las mercancías sujetas a requisitos son las comprendidas en las fracciones arancelarias de la TIGIE, señaladas en el Anexo II del Decreto IMMEX. Para obtener la autorización para la importación temporal de los productos considerados como sensibles, los interesados deberán realizar su solicitud a través de una ampliación de Programa IMMEX, que contenga los requisitos establecidos en el Decreto, además de los siguientes datos: I. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción: en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura, y Fracción arancelaria y unidad de medida, de conformidad con la TIGIE II. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. III. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. La resolución en que la SE emita la autorización de ampliación de producto sensible para importar bajo el Programa IMMEX, contendrá al menos los datos siguientes: I. Fracción arancelaria de las mercancías a importar, de conformidad con la TIGIE; II. Vigencia de la autorización, y III. La cantidad máxima en la unidad de medida de conformidad con la TIGIE, que se podrá importar. La SE dará respuesta dentro de los 10 días hábiles siguientes a la fecha de presentación de la solicitud. Para obtener una autorización subsecuente de productos sensibles, el solicitante deberá anexar a la solicitud de ampliación lo siguiente: I. Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. II. Un reporte firmado por el representante legal de la empresa, en donde se indique: Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el Anexo II del Decreto IMMEX; Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno; Volumen de las mermas y desperdicios correspondientes a los procesos industriales, y Cantidad de cada material, en términos de la unidad de medida de conformidad con la TIGIE, utilizada en los procesos productivos, indicando el porcentaje de mermas. Procederá una nueva autorización si la empresa ha exportado al menos el setenta por ciento del volumen, de uno de los siguientes conceptos: I. El consignado por la autorización anterior, siempre que éste se hubiere ejercido en su totalidad; II. El resultante de sumar las autorizaciones emitidas en los doce meses anteriores, o III. El volumen efectivamente importado, cuando no se haya ejercido la totalidad del volumen consignado en la autorización anterior y su plazo de vigencia haya expirado. El plazo máximo de la vigencia de las autorizaciones será de doce meses. La cantidad máxima que la SE autorizará a importar será hasta por una cantidad equivalente a doce meses de la capacidad productiva instalada, conforme al reporte del contador público que haya presentado la empresa. El plazo de vigencia de las autorizaciones de ampliación y ampliación subsecuente para importar bajo el Programa IMMEX las mercancías comprendidas en el Anexo II del Decreto IMMEX será de doce meses. De conformidad con la Regla 3.4.7 del Acuerdo, se exceptúa del cumplimiento de los requisitos específicos para la importación temporal de productos sensibles aquellas empresas con Programa IMMEX que exporten la totalidad de su producción. Asimismo, podrán acogerse a este beneficio solamente cuando hayan operado conforme a dichos requisitos por un año. <span><body><html>




#immex #mexico #octopus #operacion #trámites
Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio.

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Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD

Original toplevel document

Decreto IMMEX
carse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. <span>TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente: Certificado de firma electrónica avanzada del SAT. Registro Federal de Contribuyentes activo. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes. Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación: Copia certificada del acta constitutiva de la sociedad y, en su caso, de las modificaciones a la misma. Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa IMMEX, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. Tratándose de arrendamiento o comodato, se deberá acreditar que el contrato establece un plazo forzoso mínimo de un año y que le resta una vigencia de por lo menos once meses, a la fecha de presentación de la solicitud. Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación. Poder Notarial correspondiente (original o copia certificada y copia simple); o exhibir copia del Registro Único de Personas Acreditadas (RUPA). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del programa. Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación** (Decreto IMMEX), escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada. Carta de conformidad de la(s) empresa(s) que realizarán el proceso de submanufactura donde manifiesten bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original) Adicionalmente para la modalidad de Programa IMMEX Controladora de Empresas, presentar: - Actas de asamblea de accionistas, en las que conste la participación accionaría de la sociedad controladora y las controladas (original y copia). - Los asientos certificados del libro de registro de accionistas (copia). - La documentación a que se refieren los puntos 1, 2 y 5 de este apartado, además de presentar la copia de la cédula de identificación fiscal Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y - Los contratos de maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de maquila en el que deberán establecerse las obligaciones contraídas, tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del programa solicitado, debidamente protocolizados ante Notario (original y copia), y - La autorización como empresa certificada (copia), otorgada por la Secretaría de Hacienda y Crédito Público. 9. Adicionalmente para la modalidad de Programa IMMEX de Terciarización, presentar: - Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización, donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original). - La(s) empresa(s) que solicite(n) el programa bajo la modalidad de Terciarización, deberá(n) contar con la autorización como empresa certificada otorgada por la Secretaría de Hacienda y Crédito Público. 10.- Las empresas del sector textil y confección que soliciten la autorización del Programa IMMEX para la importación temporal de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar a su solicitud la siguiente documentación: I.- Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. II.- Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. El programa IMMEX.EXE puede obtenerse en la siguiente dirección de Internet: www.economia.gob.mx/?P=777 o directamente en las ventanillas de atención al público, presentando cuatro discos magnéticos de alta densidad o un CD. Ampliación de Programa. Llenar la solicitud en el programa IMMEX.EXE y presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. Ampliación de Programa IMMEX para producto no sensible. Las empresas del sector textil y confección que soliciten la ampliación de un Programa IMMEX para la importación temporal por primera vez de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar la siguiente documentación. Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. Ampliación de Programa IMMEX para productos sensibles. Las empresas que soliciten la ampliación para importar mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo II del Decreto IMMEX, deberán presentar anexo a su solicitud, la siguiente documentación. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la Tarifa Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción : en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura y fracción arancelaria y unidad de medida, de conformidad con la Tarifa. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. Ampliación de Programa IMMEX subsecuente de productos sensibles. En el caso de solicitar una ampliación subsecuente para la importación temporal de mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE) que se indican en el Anexo II del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, presentar anexo a su solicitud: I. Escrito en formato libre en el que especifique, datos de la mercancía a importar: fracción arancelaria y unidad de medida, de conformidad con la Tarifa, y volumen máximo a importar en el año y su valor en dólares. II. Reporte firmado por el representante legal de la empresa, en donde se indique: - Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el - Anexo II del Decreto IMMEX. - Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno - Volumen de las mermas y desperdicios correspondientes a los procesos industriales - Cantidad de cada material, en términos de la unidad de medida de conformidad con la Tarifa, utilizada en los procesos productivos, indicando el porcentaje de mermas. Ampliación de Programa IMMEX para el registro de actividades de servicio. No se requiere documentación anexa a su solicitud. Ampliación de Programa IMMEX de monto determinado a empresas del sector textil-confección. Las empresas del sector textil y confección que importen mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los capítulos 50 a 63 y subpartida 9404.90 de la citada Tarifa (fabricación de insumos textiles, confección de productos textiles y prendas de vestir), podrán ampliar el monto para la importación temporal de esas mercancías, presentando un escrito libre, de acuerdo a lo siguiente: I.- Para las empresas a que se refiere la fracción I de la regla 3.4.8 del Acuerdo por el que la Secretaría de Economía emite reglas y criterios en materia de comercio exterior, podrán justificar de entre los dos siguientes: Aprovechamiento de capacidad instalada ociosa, incluyendo, en su caso, el de las empresas que realicen actividades de submanufactura, o Ampliación de la capacidad instalada propia o, en su caso, de cada una de las empresas que realicen actividades de submanufactura. II.- Para las empresas que se refiere la fracción II de la regla 3.4.8, deberán especificar el porcentaje de utilización adicional de capacidad ociosa o de ampliación de capacidad instalada para los próximos 6 meses. Modificación de Programa. Registro de empresas submanufactureras: Escrito libre donde se formula la petición, indicando los siguientes datos de la empresa a registrar como submanufacturera: Nombre, denominación o razón social, Registro Federal de Contribuyentes y Domicilio fiscal y de la planta completo, anexando: Carta de responsable solidario de la empresa que realizará los procesos industriales o de servicios relacionados directamente con la operación de manufactura de la empresa con Programa IMMEX. (original y copia) Constancia de Inscripción con Cédula de Identificación Fiscal, constancia de Registro o Constancia de Inscripción al Registro Federal de Contribuyentes, correspondiente a la persona que realizará las operaciones de submanufactura (original y copia). Cambio de modalidad de programa: Escrito libre donde se formula la petición señalando el cambio de modalidad que se requiere. Adicionalmente indicar los siguientes datos de acuerdo al cambio de modalidad: Industrial, indicar los productos que se van a fabricar, así como su fracción arancelaria de acuerdo a la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación; Servicios, señalar las nuevas actividades que realizará la empresa con programa; Albergue, indicar el nombre y domicilio de las empresas extranjeras que facilitarán la tecnología a la empresa con programa, así como el material productivo a utilizar; Terciarización, indicar el nombre, Registro Federal de Contribuyentes y domicilio completo de la planta que corresponde a las empresas con las cuales va a operar; Controladora de empresas, señalar el nombre, Registro Federal de Contribuyentes y domicilio de las empresas controladas. Documentos que deberá anexar a la solicitud: Para solicitar el cambio a las modalidades de Industrial, Albergue o Servicios: Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. cuando esta información cambie en relación a la entregada originalmente (original y copia). Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación, en relación a la nueva modalidad (original y copia). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del Programa, según corresponda. (original y copia). Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada, cuando esta información cambie en relación a la entregada originalmente. (original y copia) Para solicitar el cambio a la modalidad de Controladora de Empresas, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y las controladas. (original y copia). Los asientos certificados del libro de registro de accionistas. (original y copia) la documentación a que se refiere a los puntos 1, 2 y 5 del apartado de programa nuevo, además de presentar la copia de la cédula de identificación fiscal. Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y Los contratos de Maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de Maquila en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del Programa solicitado , debidamente protocolizados ante notario. (original y copia). e) La autorización como empresa certificada (original y copia) otorgada por la Secretaría de Hacienda y Crédito Público. • Para solicitar el cambio a la modalidad de Terciarización, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). Registro de empresas a las que se prestarán servicios: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas a las que se les prestará servicios, tales como: Denominación o Razón Social. Registro Federal de Contribuyentes, Domicilio completo de planta y número de registro de programa IMMEX. No se requiere documentación anexa. Registro de empresas controladas. Escrito libre donde se formula la petición de registro de nuevas empresas controladas por la empresa controladora con Programa IMMEX, así como proporcionar Razón Social, Registro Federal de Contribuyentes, Domicilio Fiscal y de las Plantas, Monto de Exportaciones en dólares del año anterior y, en su caso número de programa de cada una de las empresas a registrar, anexar: a) Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y de las controladas (original y copia), b) Contratos que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades contraladas en relación con los objetivos del programa, debidamente protocolizados ante notario (original y copia). 7. Registro de empresas terciarizadas: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas terciarizadas a registrar: Denominación o Razón Social. Registro Federal de Contribuyentes y Domicilio completo de planta, anexar: a) Carta de conformidad de la empresa que realizará el proceso de terciarización donde manifieste bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). 8. Cambio, alta o baja de domicilios fiscal y plantas: Escrito libre donde se formula la petición, notificando el cambio, alta o baja de domicilio fiscal o plantas, indicando domicilio completo. 9. Suspensión de Programa. Si se suspenden actividades, también se deberá solicitar el trámite de suspensión temporal de los beneficios que otorga el Programa IMMEX, mediante la presentación de un escrito libre que lo exprese y explicando los motivos para su suspensión (original y copia). E) Cancelación de Programa. Si se decide dar por concluido el Programa IMMEX, se debe presentar un escrito libre que lo exprese para su cancelación (original y copia). F) Reporte Anual de Operaciones de Comercio Exterior. Únicamente a través de la página de la Secretaría de Economía: http://www.economia.gob.mx/?P=55, reporte anual. Este trámite tiene carácter de aviso, por lo que no genera respuesta de parte de la Secretaría de Economía. Control de Inventarios El titular del Programa deberá llevar un control de inventarios automatizado con la información mínima a que se refiere el Anexo IV del Decreto IMMEX. Normatividad Marco Legal Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, publicado en el Diario Oficial de la Federación el 1° de noviembre de 2006. Ley Aduanera y su Reglamento Reglas de Carácter General en Materia de Comercio Exterior. Ley Federal de Procedimiento Administrativo. Ley de Comercio Exterior y su Reglamento. Reglamento Interior de la Secretaría de Economía. Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior, y sus modificaciones. Acuerdo por el que se dan a conocer los Trámites Inscritos en el Registro Federal de Trámites Empresariales que Aplican a la Secretaría de Economía y su Sector Coordinado. Acuerdo que modifica al diverso por el que se aprueban los formatos que deberán utilizarse para realizar trámites ante la Secretaría de Economía, el Centro Nacional de Metrología, el Consejo de Recursos Minerales, el Fideicomiso de Fomento Minero y la Procuraduría Federal del Consumidor y sus reformas. Acuerdo por el que se dan a conocer los trámites inscritos en el Registro Federal de Trámites y Servicios que aplican a la Secretaría de Economía, y los organismos descentralizados y órganos desconcentrados del sector. Tratado de Libre Comercio de América del Norte. Resolución por la que se establecen las reglas de carácter general relativas a la aplicación de las disposiciones en materia aduanera del Tratado de Libre Comercio de América del Norte y sus reformas. Disposiciones TLCAN Conforme a lo establecido a partir del 2001 por el Tratado de Libre Comercio de América del Norte (TLCAN), con el fin de evitar la distorsión de las preferencias arancelarias acordadas en el marco del mencionado tratado en los países miembros, el Programa IMMEX se sujeta a lo siguiente: a) Se aplicará la fórmula establecida en el artículo 303 del TLCAN, a los insumos no originarios de América de Norte que se incorporen a un bien que será exportado a EUA o Canadá. De acuerdo con la fórmula sólo se puede exentar el menor del monto de aranceles, que resulte al comparar, el monto de aranceles de los insumos importados a México y el monto de aranceles pagados en EUA o Canadá por el producto terminado. b) El artículo 304 del TLCAN prohíbe a los países miembros de la zona de libre comercio otorgar exenciones de impuestos de importación a maquinaria y equipo condicionada a la exportación. Por consiguiente, las empresas con Programa IMMEX deberán pagar el impuesto de importación de dichos productos. Los aranceles sobre insumos, partes, componentes, maquinaria y equipo importados a México se pueden calcular en base a las tasas establecidas en los Tratados de Libre Comercio y acuerdos comerciales suscritos por México, como el TLCUE, los Programas de Promoción Sectorial y la Regla 8ª, siempre que cuente con la autorización correspondiente. Programas para productos sensibles La SE determinará aquellas mercancías (productos sensibles) que no podrán importarse al amparo de un Programa IMMEX o que para hacerlo se sujetarán al cumplimiento de requisitos específicos. Las empresas deberán apegarse a las disposiciones establecidas en el Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior. Las mercancías que no podrán importarse al amparo de un programa IMMEX son las comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE), señaladas en el Anexo I del Decreto IMMEX. Las mercancías sujetas a requisitos son las comprendidas en las fracciones arancelarias de la TIGIE, señaladas en el Anexo II del Decreto IMMEX. Para obtener la autorización para la importación temporal de los productos considerados como sensibles, los interesados deberán realizar su solicitud a través de una ampliación de Programa IMMEX, que contenga los requisitos establecidos en el Decreto, además de los siguientes datos: I. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción: en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura, y Fracción arancelaria y unidad de medida, de conformidad con la TIGIE II. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. III. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. La resolución en que la SE emita la autorización de ampliación de producto sensible para importar bajo el Programa IMMEX, contendrá al menos los datos siguientes: I. Fracción arancelaria de las mercancías a importar, de conformidad con la TIGIE; II. Vigencia de la autorización, y III. La cantidad máxima en la unidad de medida de conformidad con la TIGIE, que se podrá importar. La SE dará respuesta dentro de los 10 días hábiles siguientes a la fecha de presentación de la solicitud. Para obtener una autorización subsecuente de productos sensibles, el solicitante deberá anexar a la solicitud de ampliación lo siguiente: I. Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. II. Un reporte firmado por el representante legal de la empresa, en donde se indique: Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el Anexo II del Decreto IMMEX; Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno; Volumen de las mermas y desperdicios correspondientes a los procesos industriales, y Cantidad de cada material, en términos de la unidad de medida de conformidad con la TIGIE, utilizada en los procesos productivos, indicando el porcentaje de mermas. Procederá una nueva autorización si la empresa ha exportado al menos el setenta por ciento del volumen, de uno de los siguientes conceptos: I. El consignado por la autorización anterior, siempre que éste se hubiere ejercido en su totalidad; II. El resultante de sumar las autorizaciones emitidas en los doce meses anteriores, o III. El volumen efectivamente importado, cuando no se haya ejercido la totalidad del volumen consignado en la autorización anterior y su plazo de vigencia haya expirado. El plazo máximo de la vigencia de las autorizaciones será de doce meses. La cantidad máxima que la SE autorizará a importar será hasta por una cantidad equivalente a doce meses de la capacidad productiva instalada, conforme al reporte del contador público que haya presentado la empresa. El plazo de vigencia de las autorizaciones de ampliación y ampliación subsecuente para importar bajo el Programa IMMEX las mercancías comprendidas en el Anexo II del Decreto IMMEX será de doce meses. De conformidad con la Regla 3.4.7 del Acuerdo, se exceptúa del cumplimiento de los requisitos específicos para la importación temporal de productos sensibles aquellas empresas con Programa IMMEX que exporten la totalidad de su producción. Asimismo, podrán acogerse a este beneficio solamente cuando hayan operado conforme a dichos requisitos por un año. <span><body><html>




Flashcard 1439618436364

Tags
#immex #mexico #octopus #operacion #trámites
Question
Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al [...]
Answer
domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio.


statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

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ml> Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio.<html>

Original toplevel document

Decreto IMMEX
carse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. <span>TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente: Certificado de firma electrónica avanzada del SAT. Registro Federal de Contribuyentes activo. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes. Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación: Copia certificada del acta constitutiva de la sociedad y, en su caso, de las modificaciones a la misma. Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa IMMEX, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. Tratándose de arrendamiento o comodato, se deberá acreditar que el contrato establece un plazo forzoso mínimo de un año y que le resta una vigencia de por lo menos once meses, a la fecha de presentación de la solicitud. Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación. Poder Notarial correspondiente (original o copia certificada y copia simple); o exhibir copia del Registro Único de Personas Acreditadas (RUPA). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del programa. Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación** (Decreto IMMEX), escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada. Carta de conformidad de la(s) empresa(s) que realizarán el proceso de submanufactura donde manifiesten bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original) Adicionalmente para la modalidad de Programa IMMEX Controladora de Empresas, presentar: - Actas de asamblea de accionistas, en las que conste la participación accionaría de la sociedad controladora y las controladas (original y copia). - Los asientos certificados del libro de registro de accionistas (copia). - La documentación a que se refieren los puntos 1, 2 y 5 de este apartado, además de presentar la copia de la cédula de identificación fiscal Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y - Los contratos de maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de maquila en el que deberán establecerse las obligaciones contraídas, tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del programa solicitado, debidamente protocolizados ante Notario (original y copia), y - La autorización como empresa certificada (copia), otorgada por la Secretaría de Hacienda y Crédito Público. 9. Adicionalmente para la modalidad de Programa IMMEX de Terciarización, presentar: - Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización, donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original). - La(s) empresa(s) que solicite(n) el programa bajo la modalidad de Terciarización, deberá(n) contar con la autorización como empresa certificada otorgada por la Secretaría de Hacienda y Crédito Público. 10.- Las empresas del sector textil y confección que soliciten la autorización del Programa IMMEX para la importación temporal de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar a su solicitud la siguiente documentación: I.- Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. II.- Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. El programa IMMEX.EXE puede obtenerse en la siguiente dirección de Internet: www.economia.gob.mx/?P=777 o directamente en las ventanillas de atención al público, presentando cuatro discos magnéticos de alta densidad o un CD. Ampliación de Programa. Llenar la solicitud en el programa IMMEX.EXE y presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. Ampliación de Programa IMMEX para producto no sensible. Las empresas del sector textil y confección que soliciten la ampliación de un Programa IMMEX para la importación temporal por primera vez de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar la siguiente documentación. Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. Ampliación de Programa IMMEX para productos sensibles. Las empresas que soliciten la ampliación para importar mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo II del Decreto IMMEX, deberán presentar anexo a su solicitud, la siguiente documentación. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la Tarifa Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción : en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura y fracción arancelaria y unidad de medida, de conformidad con la Tarifa. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. Ampliación de Programa IMMEX subsecuente de productos sensibles. En el caso de solicitar una ampliación subsecuente para la importación temporal de mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE) que se indican en el Anexo II del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, presentar anexo a su solicitud: I. Escrito en formato libre en el que especifique, datos de la mercancía a importar: fracción arancelaria y unidad de medida, de conformidad con la Tarifa, y volumen máximo a importar en el año y su valor en dólares. II. Reporte firmado por el representante legal de la empresa, en donde se indique: - Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el - Anexo II del Decreto IMMEX. - Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno - Volumen de las mermas y desperdicios correspondientes a los procesos industriales - Cantidad de cada material, en términos de la unidad de medida de conformidad con la Tarifa, utilizada en los procesos productivos, indicando el porcentaje de mermas. Ampliación de Programa IMMEX para el registro de actividades de servicio. No se requiere documentación anexa a su solicitud. Ampliación de Programa IMMEX de monto determinado a empresas del sector textil-confección. Las empresas del sector textil y confección que importen mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los capítulos 50 a 63 y subpartida 9404.90 de la citada Tarifa (fabricación de insumos textiles, confección de productos textiles y prendas de vestir), podrán ampliar el monto para la importación temporal de esas mercancías, presentando un escrito libre, de acuerdo a lo siguiente: I.- Para las empresas a que se refiere la fracción I de la regla 3.4.8 del Acuerdo por el que la Secretaría de Economía emite reglas y criterios en materia de comercio exterior, podrán justificar de entre los dos siguientes: Aprovechamiento de capacidad instalada ociosa, incluyendo, en su caso, el de las empresas que realicen actividades de submanufactura, o Ampliación de la capacidad instalada propia o, en su caso, de cada una de las empresas que realicen actividades de submanufactura. II.- Para las empresas que se refiere la fracción II de la regla 3.4.8, deberán especificar el porcentaje de utilización adicional de capacidad ociosa o de ampliación de capacidad instalada para los próximos 6 meses. Modificación de Programa. Registro de empresas submanufactureras: Escrito libre donde se formula la petición, indicando los siguientes datos de la empresa a registrar como submanufacturera: Nombre, denominación o razón social, Registro Federal de Contribuyentes y Domicilio fiscal y de la planta completo, anexando: Carta de responsable solidario de la empresa que realizará los procesos industriales o de servicios relacionados directamente con la operación de manufactura de la empresa con Programa IMMEX. (original y copia) Constancia de Inscripción con Cédula de Identificación Fiscal, constancia de Registro o Constancia de Inscripción al Registro Federal de Contribuyentes, correspondiente a la persona que realizará las operaciones de submanufactura (original y copia). Cambio de modalidad de programa: Escrito libre donde se formula la petición señalando el cambio de modalidad que se requiere. Adicionalmente indicar los siguientes datos de acuerdo al cambio de modalidad: Industrial, indicar los productos que se van a fabricar, así como su fracción arancelaria de acuerdo a la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación; Servicios, señalar las nuevas actividades que realizará la empresa con programa; Albergue, indicar el nombre y domicilio de las empresas extranjeras que facilitarán la tecnología a la empresa con programa, así como el material productivo a utilizar; Terciarización, indicar el nombre, Registro Federal de Contribuyentes y domicilio completo de la planta que corresponde a las empresas con las cuales va a operar; Controladora de empresas, señalar el nombre, Registro Federal de Contribuyentes y domicilio de las empresas controladas. Documentos que deberá anexar a la solicitud: Para solicitar el cambio a las modalidades de Industrial, Albergue o Servicios: Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. cuando esta información cambie en relación a la entregada originalmente (original y copia). Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación, en relación a la nueva modalidad (original y copia). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del Programa, según corresponda. (original y copia). Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada, cuando esta información cambie en relación a la entregada originalmente. (original y copia) Para solicitar el cambio a la modalidad de Controladora de Empresas, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y las controladas. (original y copia). Los asientos certificados del libro de registro de accionistas. (original y copia) la documentación a que se refiere a los puntos 1, 2 y 5 del apartado de programa nuevo, además de presentar la copia de la cédula de identificación fiscal. Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y Los contratos de Maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de Maquila en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del Programa solicitado , debidamente protocolizados ante notario. (original y copia). e) La autorización como empresa certificada (original y copia) otorgada por la Secretaría de Hacienda y Crédito Público. • Para solicitar el cambio a la modalidad de Terciarización, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). Registro de empresas a las que se prestarán servicios: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas a las que se les prestará servicios, tales como: Denominación o Razón Social. Registro Federal de Contribuyentes, Domicilio completo de planta y número de registro de programa IMMEX. No se requiere documentación anexa. Registro de empresas controladas. Escrito libre donde se formula la petición de registro de nuevas empresas controladas por la empresa controladora con Programa IMMEX, así como proporcionar Razón Social, Registro Federal de Contribuyentes, Domicilio Fiscal y de las Plantas, Monto de Exportaciones en dólares del año anterior y, en su caso número de programa de cada una de las empresas a registrar, anexar: a) Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y de las controladas (original y copia), b) Contratos que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades contraladas en relación con los objetivos del programa, debidamente protocolizados ante notario (original y copia). 7. Registro de empresas terciarizadas: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas terciarizadas a registrar: Denominación o Razón Social. Registro Federal de Contribuyentes y Domicilio completo de planta, anexar: a) Carta de conformidad de la empresa que realizará el proceso de terciarización donde manifieste bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). 8. Cambio, alta o baja de domicilios fiscal y plantas: Escrito libre donde se formula la petición, notificando el cambio, alta o baja de domicilio fiscal o plantas, indicando domicilio completo. 9. Suspensión de Programa. Si se suspenden actividades, también se deberá solicitar el trámite de suspensión temporal de los beneficios que otorga el Programa IMMEX, mediante la presentación de un escrito libre que lo exprese y explicando los motivos para su suspensión (original y copia). E) Cancelación de Programa. Si se decide dar por concluido el Programa IMMEX, se debe presentar un escrito libre que lo exprese para su cancelación (original y copia). F) Reporte Anual de Operaciones de Comercio Exterior. Únicamente a través de la página de la Secretaría de Economía: http://www.economia.gob.mx/?P=55, reporte anual. Este trámite tiene carácter de aviso, por lo que no genera respuesta de parte de la Secretaría de Economía. Control de Inventarios El titular del Programa deberá llevar un control de inventarios automatizado con la información mínima a que se refiere el Anexo IV del Decreto IMMEX. Normatividad Marco Legal Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, publicado en el Diario Oficial de la Federación el 1° de noviembre de 2006. Ley Aduanera y su Reglamento Reglas de Carácter General en Materia de Comercio Exterior. Ley Federal de Procedimiento Administrativo. Ley de Comercio Exterior y su Reglamento. Reglamento Interior de la Secretaría de Economía. Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior, y sus modificaciones. Acuerdo por el que se dan a conocer los Trámites Inscritos en el Registro Federal de Trámites Empresariales que Aplican a la Secretaría de Economía y su Sector Coordinado. Acuerdo que modifica al diverso por el que se aprueban los formatos que deberán utilizarse para realizar trámites ante la Secretaría de Economía, el Centro Nacional de Metrología, el Consejo de Recursos Minerales, el Fideicomiso de Fomento Minero y la Procuraduría Federal del Consumidor y sus reformas. Acuerdo por el que se dan a conocer los trámites inscritos en el Registro Federal de Trámites y Servicios que aplican a la Secretaría de Economía, y los organismos descentralizados y órganos desconcentrados del sector. Tratado de Libre Comercio de América del Norte. Resolución por la que se establecen las reglas de carácter general relativas a la aplicación de las disposiciones en materia aduanera del Tratado de Libre Comercio de América del Norte y sus reformas. Disposiciones TLCAN Conforme a lo establecido a partir del 2001 por el Tratado de Libre Comercio de América del Norte (TLCAN), con el fin de evitar la distorsión de las preferencias arancelarias acordadas en el marco del mencionado tratado en los países miembros, el Programa IMMEX se sujeta a lo siguiente: a) Se aplicará la fórmula establecida en el artículo 303 del TLCAN, a los insumos no originarios de América de Norte que se incorporen a un bien que será exportado a EUA o Canadá. De acuerdo con la fórmula sólo se puede exentar el menor del monto de aranceles, que resulte al comparar, el monto de aranceles de los insumos importados a México y el monto de aranceles pagados en EUA o Canadá por el producto terminado. b) El artículo 304 del TLCAN prohíbe a los países miembros de la zona de libre comercio otorgar exenciones de impuestos de importación a maquinaria y equipo condicionada a la exportación. Por consiguiente, las empresas con Programa IMMEX deberán pagar el impuesto de importación de dichos productos. Los aranceles sobre insumos, partes, componentes, maquinaria y equipo importados a México se pueden calcular en base a las tasas establecidas en los Tratados de Libre Comercio y acuerdos comerciales suscritos por México, como el TLCUE, los Programas de Promoción Sectorial y la Regla 8ª, siempre que cuente con la autorización correspondiente. Programas para productos sensibles La SE determinará aquellas mercancías (productos sensibles) que no podrán importarse al amparo de un Programa IMMEX o que para hacerlo se sujetarán al cumplimiento de requisitos específicos. Las empresas deberán apegarse a las disposiciones establecidas en el Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior. Las mercancías que no podrán importarse al amparo de un programa IMMEX son las comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE), señaladas en el Anexo I del Decreto IMMEX. Las mercancías sujetas a requisitos son las comprendidas en las fracciones arancelarias de la TIGIE, señaladas en el Anexo II del Decreto IMMEX. Para obtener la autorización para la importación temporal de los productos considerados como sensibles, los interesados deberán realizar su solicitud a través de una ampliación de Programa IMMEX, que contenga los requisitos establecidos en el Decreto, además de los siguientes datos: I. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción: en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura, y Fracción arancelaria y unidad de medida, de conformidad con la TIGIE II. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. III. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. La resolución en que la SE emita la autorización de ampliación de producto sensible para importar bajo el Programa IMMEX, contendrá al menos los datos siguientes: I. Fracción arancelaria de las mercancías a importar, de conformidad con la TIGIE; II. Vigencia de la autorización, y III. La cantidad máxima en la unidad de medida de conformidad con la TIGIE, que se podrá importar. La SE dará respuesta dentro de los 10 días hábiles siguientes a la fecha de presentación de la solicitud. Para obtener una autorización subsecuente de productos sensibles, el solicitante deberá anexar a la solicitud de ampliación lo siguiente: I. Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. II. Un reporte firmado por el representante legal de la empresa, en donde se indique: Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el Anexo II del Decreto IMMEX; Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno; Volumen de las mermas y desperdicios correspondientes a los procesos industriales, y Cantidad de cada material, en términos de la unidad de medida de conformidad con la TIGIE, utilizada en los procesos productivos, indicando el porcentaje de mermas. Procederá una nueva autorización si la empresa ha exportado al menos el setenta por ciento del volumen, de uno de los siguientes conceptos: I. El consignado por la autorización anterior, siempre que éste se hubiere ejercido en su totalidad; II. El resultante de sumar las autorizaciones emitidas en los doce meses anteriores, o III. El volumen efectivamente importado, cuando no se haya ejercido la totalidad del volumen consignado en la autorización anterior y su plazo de vigencia haya expirado. El plazo máximo de la vigencia de las autorizaciones será de doce meses. La cantidad máxima que la SE autorizará a importar será hasta por una cantidad equivalente a doce meses de la capacidad productiva instalada, conforme al reporte del contador público que haya presentado la empresa. El plazo de vigencia de las autorizaciones de ampliación y ampliación subsecuente para importar bajo el Programa IMMEX las mercancías comprendidas en el Anexo II del Decreto IMMEX será de doce meses. De conformidad con la Regla 3.4.7 del Acuerdo, se exceptúa del cumplimiento de los requisitos específicos para la importación temporal de productos sensibles aquellas empresas con Programa IMMEX que exporten la totalidad de su producción. Asimismo, podrán acogerse a este beneficio solamente cuando hayan operado conforme a dichos requisitos por un año. <span><body><html>







#immex #mexico #octopus #operacion #programa-nuevo #trámites



Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente:

  1. Certificado de firma electrónica avanzada del SAT.
  2. Registro Federal de Contribuyentes activo.
  3. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes.

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blico de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: <span>A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente: Certificado de firma electrónica avanzada del SAT. Registro Federal de Contribuyentes activo. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes. Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación: Copia certificada del acta constitutiva de la sociedad y, en s

Original toplevel document

Decreto IMMEX
carse al 01 800 410 2000 disponible para todo el país ó al buzón de la Secretaría de Economía en www.economia.gob.mx; o al teléfono 52-29-61-00, ext. 34347, Lic. Sergio Manríquez Fernández, Subdirector de Devolución de Impuestos. <span>TRÁMITES Operación: Los trámites relativos al Programa IMMEX son gratuitos y pueden ser realizados en las ventanillas de atención al público de las Representaciones Federales de la Secretaría de Economía que corresponda al domicilio de la planta en donde se lleve a cabo el proceso productivo o servicio. Los interesados podrán realizar los siguientes trámites: A) Programa Nuevo. Llenar la solicitud en el programa IMMEX.EXE*, presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. El solicitante deberá contar con lo siguiente: Certificado de firma electrónica avanzada del SAT. Registro Federal de Contribuyentes activo. Que su domicilio fiscal y los domicilios en los que realice sus operaciones al amparo del Programa, estén inscritos y activos en el Registro Federal de Contribuyentes. Asimismo, a la presentación de solicitud del trámite deberá anexarse la siguiente documentación: Copia certificada del acta constitutiva de la sociedad y, en su caso, de las modificaciones a la misma. Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa IMMEX, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. Tratándose de arrendamiento o comodato, se deberá acreditar que el contrato establece un plazo forzoso mínimo de un año y que le resta una vigencia de por lo menos once meses, a la fecha de presentación de la solicitud. Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación. Poder Notarial correspondiente (original o copia certificada y copia simple); o exhibir copia del Registro Único de Personas Acreditadas (RUPA). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del programa. Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación** (Decreto IMMEX), escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada. Carta de conformidad de la(s) empresa(s) que realizarán el proceso de submanufactura donde manifiesten bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original) Adicionalmente para la modalidad de Programa IMMEX Controladora de Empresas, presentar: - Actas de asamblea de accionistas, en las que conste la participación accionaría de la sociedad controladora y las controladas (original y copia). - Los asientos certificados del libro de registro de accionistas (copia). - La documentación a que se refieren los puntos 1, 2 y 5 de este apartado, además de presentar la copia de la cédula de identificación fiscal Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y - Los contratos de maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de maquila en el que deberán establecerse las obligaciones contraídas, tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del programa solicitado, debidamente protocolizados ante Notario (original y copia), y - La autorización como empresa certificada (copia), otorgada por la Secretaría de Hacienda y Crédito Público. 9. Adicionalmente para la modalidad de Programa IMMEX de Terciarización, presentar: - Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización, donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original). - La(s) empresa(s) que solicite(n) el programa bajo la modalidad de Terciarización, deberá(n) contar con la autorización como empresa certificada otorgada por la Secretaría de Hacienda y Crédito Público. 10.- Las empresas del sector textil y confección que soliciten la autorización del Programa IMMEX para la importación temporal de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar a su solicitud la siguiente documentación: I.- Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. II.- Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. El programa IMMEX.EXE puede obtenerse en la siguiente dirección de Internet: www.economia.gob.mx/?P=777 o directamente en las ventanillas de atención al público, presentando cuatro discos magnéticos de alta densidad o un CD. Ampliación de Programa. Llenar la solicitud en el programa IMMEX.EXE y presentarla en disco magnético o CD, con impresión de dos ejemplares debidamente requisitados. Ampliación de Programa IMMEX para producto no sensible. Las empresas del sector textil y confección que soliciten la ampliación de un Programa IMMEX para la importación temporal por primera vez de las mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los Capítulos 50 a 63 y la subpartida 9404.90 de la citada Tarifa (Fabricación de insumos textiles, confección de productos textiles y prendas de vestir), deberán anexar la siguiente documentación. Reporte de contador público registrado, que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La maquinaria y equipo para realizar el proceso industrial; La capacidad productiva instalada para efectuar el proceso industrial mensual, por turno de 8 horas; Los productos que elabora, y El número de trabajadores de la empresa titular del Programa IMMEX y, en su caso, el de cada una de las empresas que le realicen actividades de submanufactura. Escrito libre del representante legal de la empresa donde declare la proyección de las exportaciones en dólares para los seis meses posteriores al inicio de operaciones. Ampliación de Programa IMMEX para productos sensibles. Las empresas que soliciten la ampliación para importar mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo II del Decreto IMMEX, deberán presentar anexo a su solicitud, la siguiente documentación. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la Tarifa Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción : en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura y fracción arancelaria y unidad de medida, de conformidad con la Tarifa. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. Ampliación de Programa IMMEX subsecuente de productos sensibles. En el caso de solicitar una ampliación subsecuente para la importación temporal de mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE) que se indican en el Anexo II del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, presentar anexo a su solicitud: I. Escrito en formato libre en el que especifique, datos de la mercancía a importar: fracción arancelaria y unidad de medida, de conformidad con la Tarifa, y volumen máximo a importar en el año y su valor en dólares. II. Reporte firmado por el representante legal de la empresa, en donde se indique: - Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el - Anexo II del Decreto IMMEX. - Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno - Volumen de las mermas y desperdicios correspondientes a los procesos industriales - Cantidad de cada material, en términos de la unidad de medida de conformidad con la Tarifa, utilizada en los procesos productivos, indicando el porcentaje de mermas. Ampliación de Programa IMMEX para el registro de actividades de servicio. No se requiere documentación anexa a su solicitud. Ampliación de Programa IMMEX de monto determinado a empresas del sector textil-confección. Las empresas del sector textil y confección que importen mercancías comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación, que se indican en el Anexo III del Decreto IMMEX, exclusivamente para la elaboración de bienes que se clasifiquen en los capítulos 50 a 63 y subpartida 9404.90 de la citada Tarifa (fabricación de insumos textiles, confección de productos textiles y prendas de vestir), podrán ampliar el monto para la importación temporal de esas mercancías, presentando un escrito libre, de acuerdo a lo siguiente: I.- Para las empresas a que se refiere la fracción I de la regla 3.4.8 del Acuerdo por el que la Secretaría de Economía emite reglas y criterios en materia de comercio exterior, podrán justificar de entre los dos siguientes: Aprovechamiento de capacidad instalada ociosa, incluyendo, en su caso, el de las empresas que realicen actividades de submanufactura, o Ampliación de la capacidad instalada propia o, en su caso, de cada una de las empresas que realicen actividades de submanufactura. II.- Para las empresas que se refiere la fracción II de la regla 3.4.8, deberán especificar el porcentaje de utilización adicional de capacidad ociosa o de ampliación de capacidad instalada para los próximos 6 meses. Modificación de Programa. Registro de empresas submanufactureras: Escrito libre donde se formula la petición, indicando los siguientes datos de la empresa a registrar como submanufacturera: Nombre, denominación o razón social, Registro Federal de Contribuyentes y Domicilio fiscal y de la planta completo, anexando: Carta de responsable solidario de la empresa que realizará los procesos industriales o de servicios relacionados directamente con la operación de manufactura de la empresa con Programa IMMEX. (original y copia) Constancia de Inscripción con Cédula de Identificación Fiscal, constancia de Registro o Constancia de Inscripción al Registro Federal de Contribuyentes, correspondiente a la persona que realizará las operaciones de submanufactura (original y copia). Cambio de modalidad de programa: Escrito libre donde se formula la petición señalando el cambio de modalidad que se requiere. Adicionalmente indicar los siguientes datos de acuerdo al cambio de modalidad: Industrial, indicar los productos que se van a fabricar, así como su fracción arancelaria de acuerdo a la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación; Servicios, señalar las nuevas actividades que realizará la empresa con programa; Albergue, indicar el nombre y domicilio de las empresas extranjeras que facilitarán la tecnología a la empresa con programa, así como el material productivo a utilizar; Terciarización, indicar el nombre, Registro Federal de Contribuyentes y domicilio completo de la planta que corresponde a las empresas con las cuales va a operar; Controladora de empresas, señalar el nombre, Registro Federal de Contribuyentes y domicilio de las empresas controladas. Documentos que deberá anexar a la solicitud: Para solicitar el cambio a las modalidades de Industrial, Albergue o Servicios: Copia del documento que acredite legalmente la posesión del inmueble en donde pretenda llevarse a cabo la operación del Programa, en el que se indique la ubicación del inmueble, adjuntando fotografías del mismo. cuando esta información cambie en relación a la entregada originalmente (original y copia). Contrato de maquila, de compraventa, órdenes de compra o pedidos en firme, que acrediten la existencia del proyecto de exportación, en relación a la nueva modalidad (original y copia). Escrito libre mediante el cual se detalle el proceso productivo o servicios objeto de la solicitud del Programa, según corresponda. (original y copia). Tratándose de las mercancías a que se refiere el artículo 4, fracción I del Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, escrito en el que se proporcione la descripción detallada del proceso productivo o servicio que incluya la capacidad instalada de la planta para procesar las mercancías a importar o para realizar el servicio objeto del programa y el porcentaje de esa capacidad efectivamente utilizada, cuando esta información cambie en relación a la entregada originalmente. (original y copia) Para solicitar el cambio a la modalidad de Controladora de Empresas, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y las controladas. (original y copia). Los asientos certificados del libro de registro de accionistas. (original y copia) la documentación a que se refiere a los puntos 1, 2 y 5 del apartado de programa nuevo, además de presentar la copia de la cédula de identificación fiscal. Esta documentación deberá presentarse para la controladora y por cada una de las sociedades controladas, y Los contratos de Maquila que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato de Maquila en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades controladas en relación con los objetivos del Programa solicitado , debidamente protocolizados ante notario. (original y copia). e) La autorización como empresa certificada (original y copia) otorgada por la Secretaría de Hacienda y Crédito Público. • Para solicitar el cambio a la modalidad de Terciarización, adicionalmente a lo señalado para Industrial, Albergue o Servicios, se deberá presentar: Carta de conformidad de la(s) empresa(s) que realizará(n) el proceso de terciarización donde manifieste(n) bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). Registro de empresas a las que se prestarán servicios: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas a las que se les prestará servicios, tales como: Denominación o Razón Social. Registro Federal de Contribuyentes, Domicilio completo de planta y número de registro de programa IMMEX. No se requiere documentación anexa. Registro de empresas controladas. Escrito libre donde se formula la petición de registro de nuevas empresas controladas por la empresa controladora con Programa IMMEX, así como proporcionar Razón Social, Registro Federal de Contribuyentes, Domicilio Fiscal y de las Plantas, Monto de Exportaciones en dólares del año anterior y, en su caso número de programa de cada una de las empresas a registrar, anexar: a) Actas de asamblea de accionistas, en las que conste la participación accionaria de la sociedad controladora y de las controladas (original y copia), b) Contratos que cada sociedad controlada tenga celebrado con la sociedad controladora o un contrato en el que deberán establecerse las obligaciones contraídas tanto por la sociedad controladora como por las sociedades contraladas en relación con los objetivos del programa, debidamente protocolizados ante notario (original y copia). 7. Registro de empresas terciarizadas: Escrito libre donde se formula la petición, incluyendo los siguientes datos de las empresas terciarizadas a registrar: Denominación o Razón Social. Registro Federal de Contribuyentes y Domicilio completo de planta, anexar: a) Carta de conformidad de la empresa que realizará el proceso de terciarización donde manifieste bajo protesta de decir verdad la responsabilidad solidaria sobre las mercancías importadas temporalmente (original y copia). 8. Cambio, alta o baja de domicilios fiscal y plantas: Escrito libre donde se formula la petición, notificando el cambio, alta o baja de domicilio fiscal o plantas, indicando domicilio completo. 9. Suspensión de Programa. Si se suspenden actividades, también se deberá solicitar el trámite de suspensión temporal de los beneficios que otorga el Programa IMMEX, mediante la presentación de un escrito libre que lo exprese y explicando los motivos para su suspensión (original y copia). E) Cancelación de Programa. Si se decide dar por concluido el Programa IMMEX, se debe presentar un escrito libre que lo exprese para su cancelación (original y copia). F) Reporte Anual de Operaciones de Comercio Exterior. Únicamente a través de la página de la Secretaría de Economía: http://www.economia.gob.mx/?P=55, reporte anual. Este trámite tiene carácter de aviso, por lo que no genera respuesta de parte de la Secretaría de Economía. Control de Inventarios El titular del Programa deberá llevar un control de inventarios automatizado con la información mínima a que se refiere el Anexo IV del Decreto IMMEX. Normatividad Marco Legal Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportación, publicado en el Diario Oficial de la Federación el 1° de noviembre de 2006. Ley Aduanera y su Reglamento Reglas de Carácter General en Materia de Comercio Exterior. Ley Federal de Procedimiento Administrativo. Ley de Comercio Exterior y su Reglamento. Reglamento Interior de la Secretaría de Economía. Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior, y sus modificaciones. Acuerdo por el que se dan a conocer los Trámites Inscritos en el Registro Federal de Trámites Empresariales que Aplican a la Secretaría de Economía y su Sector Coordinado. Acuerdo que modifica al diverso por el que se aprueban los formatos que deberán utilizarse para realizar trámites ante la Secretaría de Economía, el Centro Nacional de Metrología, el Consejo de Recursos Minerales, el Fideicomiso de Fomento Minero y la Procuraduría Federal del Consumidor y sus reformas. Acuerdo por el que se dan a conocer los trámites inscritos en el Registro Federal de Trámites y Servicios que aplican a la Secretaría de Economía, y los organismos descentralizados y órganos desconcentrados del sector. Tratado de Libre Comercio de América del Norte. Resolución por la que se establecen las reglas de carácter general relativas a la aplicación de las disposiciones en materia aduanera del Tratado de Libre Comercio de América del Norte y sus reformas. Disposiciones TLCAN Conforme a lo establecido a partir del 2001 por el Tratado de Libre Comercio de América del Norte (TLCAN), con el fin de evitar la distorsión de las preferencias arancelarias acordadas en el marco del mencionado tratado en los países miembros, el Programa IMMEX se sujeta a lo siguiente: a) Se aplicará la fórmula establecida en el artículo 303 del TLCAN, a los insumos no originarios de América de Norte que se incorporen a un bien que será exportado a EUA o Canadá. De acuerdo con la fórmula sólo se puede exentar el menor del monto de aranceles, que resulte al comparar, el monto de aranceles de los insumos importados a México y el monto de aranceles pagados en EUA o Canadá por el producto terminado. b) El artículo 304 del TLCAN prohíbe a los países miembros de la zona de libre comercio otorgar exenciones de impuestos de importación a maquinaria y equipo condicionada a la exportación. Por consiguiente, las empresas con Programa IMMEX deberán pagar el impuesto de importación de dichos productos. Los aranceles sobre insumos, partes, componentes, maquinaria y equipo importados a México se pueden calcular en base a las tasas establecidas en los Tratados de Libre Comercio y acuerdos comerciales suscritos por México, como el TLCUE, los Programas de Promoción Sectorial y la Regla 8ª, siempre que cuente con la autorización correspondiente. Programas para productos sensibles La SE determinará aquellas mercancías (productos sensibles) que no podrán importarse al amparo de un Programa IMMEX o que para hacerlo se sujetarán al cumplimiento de requisitos específicos. Las empresas deberán apegarse a las disposiciones establecidas en el Acuerdo por el que la Secretaría de Economía emite Reglas y Criterios de Carácter General, en Materia de Comercio Exterior. Las mercancías que no podrán importarse al amparo de un programa IMMEX son las comprendidas en las fracciones arancelarias de la Tarifa de la Ley de los Impuestos Generales de Importación y de Exportación (TIGIE), señaladas en el Anexo I del Decreto IMMEX. Las mercancías sujetas a requisitos son las comprendidas en las fracciones arancelarias de la TIGIE, señaladas en el Anexo II del Decreto IMMEX. Para obtener la autorización para la importación temporal de los productos considerados como sensibles, los interesados deberán realizar su solicitud a través de una ampliación de Programa IMMEX, que contenga los requisitos establecidos en el Decreto, además de los siguientes datos: I. Escrito en formato libre en el que especifique: Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. Datos del producto final a exportar, que se elaborará con las mercancías a que se refiere el numeral 1 anterior, cumpliendo para tales efectos con la siguiente información: Descripción: en los términos en que debe señalarse en el pedimento de exportación. La descripción deberá permitir relacionarla con la descripción comercial de la factura, y Fracción arancelaria y unidad de medida, de conformidad con la TIGIE II. Reporte de un contador público registrado que certifique: La ubicación del domicilio fiscal y de los domicilios en los que realiza sus operaciones al amparo del Programa IMMEX; La existencia de maquinaria y equipo para realizar los procesos industriales; La capacidad productiva instalada mensual para efectuar los procesos industriales, por turno de 8 horas, y Los productos que elabora. III. Para el caso de las mercancías listadas en el Anexo II, fracción I, del Decreto IMMEX, adicionalmente deberá presentar la documentación que compruebe que el promovente se encuentra dentro del Sistema Tipo de Inspección Federal (TIF), su capacidad de refrigeración y, en su caso, congelación, así como el documento que demuestre que se cuenta con la autorización de importación emitida por el país al que se va a exportar el producto transformado. La resolución en que la SE emita la autorización de ampliación de producto sensible para importar bajo el Programa IMMEX, contendrá al menos los datos siguientes: I. Fracción arancelaria de las mercancías a importar, de conformidad con la TIGIE; II. Vigencia de la autorización, y III. La cantidad máxima en la unidad de medida de conformidad con la TIGIE, que se podrá importar. La SE dará respuesta dentro de los 10 días hábiles siguientes a la fecha de presentación de la solicitud. Para obtener una autorización subsecuente de productos sensibles, el solicitante deberá anexar a la solicitud de ampliación lo siguiente: I. Datos de la mercancía a importar: Fracción arancelaria y unidad de medida, de conformidad con la TIGIE Volumen máximo a importar en el año y su valor en dólares. II. Un reporte firmado por el representante legal de la empresa, en donde se indique: Volumen de las mercancías importadas al amparo de la autorización anterior de las mercancías comprendidas en el Anexo II del Decreto IMMEX; Volumen de los productos elaborados con las mercancías importadas a que se refiere el inciso anterior, mencionando número y fecha de los pedimentos de retorno; Volumen de las mermas y desperdicios correspondientes a los procesos industriales, y Cantidad de cada material, en términos de la unidad de medida de conformidad con la TIGIE, utilizada en los procesos productivos, indicando el porcentaje de mermas. Procederá una nueva autorización si la empresa ha exportado al menos el setenta por ciento del volumen, de uno de los siguientes conceptos: I. El consignado por la autorización anterior, siempre que éste se hubiere ejercido en su totalidad; II. El resultante de sumar las autorizaciones emitidas en los doce meses anteriores, o III. El volumen efectivamente importado, cuando no se haya ejercido la totalidad del volumen consignado en la autorización anterior y su plazo de vigencia haya expirado. El plazo máximo de la vigencia de las autorizaciones será de doce meses. La cantidad máxima que la SE autorizará a importar será hasta por una cantidad equivalente a doce meses de la capacidad productiva instalada, conforme al reporte del contador público que haya presentado la empresa. El plazo de vigencia de las autorizaciones de ampliación y ampliación subsecuente para importar bajo el Programa IMMEX las mercancías comprendidas en el Anexo II del Decreto IMMEX será de doce meses. De conformidad con la Regla 3.4.7 del Acuerdo, se exceptúa del cumplimiento de los requisitos específicos para la importación temporal de productos sensibles aquellas empresas con Programa IMMEX que exporten la totalidad de su producción. Asimismo, podrán acogerse a este beneficio solamente cuando hayan operado conforme a dichos requisitos por un año. <span><body><html>




Flashcard 1439623941388

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#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question

3. UTILITY THEORY: MODELING PREFERENCES AND TASTES


The section is divided in:

3.1. [...]

3.2. Representing the [...]

3.3. [...] The Graphical Portrayal of the [...]

3.4. Indifference Curve Maps

3.5. Gains from Voluntary Exchange: Creating Wealth through Trade

Answer
Axioms of the Theory of Consumer Choice

Preference of a Consumer: The Utility Function

Indifference Curves: Utility Function


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Section 3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
3. UTILITY THEORY: MODELING PREFERENCES AND TASTES The section is divided in: 3.1. Axioms of the Theory of Consumer Choice 3.2. Representing the Preference of a Consumer: The Utility Function 3.3. Indifference Curves: The Graphical Portrayal of the Utility Function 3.4. In







Flashcard 1439648320780

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#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

Managers can improve their forecasting abilities through [...]

Answer
a post-audit.


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Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long

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Subject 2. Basic Principles of Capital Budgeting
In a non-conventional cash flow pattern, the initial outflow can be followed by inflows and/or outflows. <span>Some project interactions: Independent versus mutually exclusive projects. Mutually exclusive projects are investments that compete in some way for a company's resources - a firm can select one or another but not both. Independent projects, on the other hand, do not compete for the firm's resources. A company can select one or the other or both, so long as minimum profitability thresholds are met. Project sequencing. How does one sequence multiple projects over time, since investing in project B may depend on the result of investing in project A? Unlimited funds versus capital rationing. Capital rationing occurs when management places a constraint on the size of the firm's capital budget during a particular period. In such situations, capital is scarce and should be allocated to the projects most likely to maximize the firm's aggregate NPV. The firm's capital budget and cost of capital must be determined simultaneously to best allocate the firm's capital. On the other hand, a firm can raise the funds it wants for all profitable projects simply by paying the required rate of return. Learning Outcome Statements b. describe the basic principles of capital budgeting; c. explain how the evaluat







Article 1439669554444

1. INTRODUCTION
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11

A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial



#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
A company grows by making investments that are expected to increase revenues and profits

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1. INTRODUCTION
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, t




Flashcard 1439671913740

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#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
A company grows by making [...] that are expected to increase [...]
Answer
investments

revenues and profits


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A company grows by making investments that are expected to increase revenues and profits

Original toplevel document

1. INTRODUCTION
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, t







#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds.

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1. INTRODUCTION
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a compa




Flashcard 1439675321612

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
The company acquires the capital or funds necessary to make investments by [...] or [...].
Answer
borrowing

using funds from owners


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The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on th

Original toplevel document

1. INTRODUCTION
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a compa







Flashcard 1439678467340

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
By applying capital to investments with long-term benefits, a company is [...].
Answer
producing value today


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The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ f

Original toplevel document

1. INTRODUCTION
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a compa







Flashcard 1439680826636

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
By investing long-term, the company is produces value today. But, how much value?
Answer
The answer depends on the investments’ expected future cash flows and on the cost of the funds.

Borrowing is not costless. Neither is using owners’ funds.


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The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds.</b

Original toplevel document

1. INTRODUCTION
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a compa







#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well.

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1. INTRODUCTION
, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. <span>The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of ca




Flashcard 1439686593804

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
The cost of capital is important in both investment decision making by managers and [...] by [...] .
Answer
the valuation of the company

investors


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The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects who

Original toplevel document

1. INTRODUCTION
, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. <span>The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of ca







Flashcard 1439688953100

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
If a company invests in projects that [...], the company has created value.
Answer
produce a return in excess of the cost of capital

in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value.


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The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the

Original toplevel document

1. INTRODUCTION
, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. <span>The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of ca







Flashcard 1439691312396

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
The estimation of [...] is a central issue in corporate financial management.
Answer
the cost of capital


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a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of <span>the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’

Original toplevel document

1. INTRODUCTION
, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. <span>The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of ca







#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well.

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in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. <span>For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well.<span><body><html>

Original toplevel document

1. INTRODUCTION
, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. <span>The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of ca




#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project.

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1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat




Flashcard 1439696293132

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
Is estimating capital cost easy?
Answer
Cost of capital estimation is a challenging task.


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Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. An

Original toplevel document

1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat







Flashcard 1439698652428

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
The cost of capital is not [...] but, rather, must be [...].
Answer
observable

estimated


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Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately

Original toplevel document

1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat







Flashcard 1439701011724

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
Arriving at a cost of capital estimate requires a host of [...].
Answer
assumptions and estimates


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Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cas

Original toplevel document

1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat







Flashcard 1439706516748

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
The cost of capital that is appropriately applied to a specific investment depends on [...]
Answer
the characteristics of that investment


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ot observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on <span>the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estim

Original toplevel document

1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat







#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
In reality, a company must estimate project-specific costs of capital.

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s and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. <span>In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk

Original toplevel document

1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat




Flashcard 1439710448908

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
Question
To estimate the cost of capital of a contemplated project you [...] and adjust it to reflect the risk of the contemplated project.
Answer
estimate the company's cost


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mpany must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of <span>the contemplated project relative to the company’s average project.<span><body><html>

Original toplevel document

1. INTRODUCTION
ital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. <span>Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat







#cfa-level-1 #corporate-finance #reading-36-cost-of-capital #study-session-11
This reading is organized as follows:

In Section 2, we introduce the cost of capital and its basic computation.

Section 3 presents a selection of methods for estimating the costs of the various sources of capital.

Section 4 discusses issues an analyst faces in using the cost of capital.

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1. INTRODUCTION
r, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. <span>This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimating the costs of the various sources of capital. Section 4 discusses issues an analyst faces in using the cost of capital. A summary concludes the reading. <span><body><html>




Article 1439715953932

1. INTRODUCTION
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4

The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competi



#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4

The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects.

statusnot read reprioritisations
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1. INTRODUCTION
The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market struc




Flashcard 1439718313228

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question

An understanding of market structure is a powerful tool in analyzing issues such as a firm’s [...] and its potential to increase profitability.

Answer
pricing of its products


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erstanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s <span>pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it

Original toplevel document

1. INTRODUCTION
The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market struc







Flashcard 1439720672524

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question

In the long run, a firm’s profitability will be determined by the forces associated with [...].

Answer
the market structure within which it operates


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rs, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by <span>the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the

Original toplevel document

1. INTRODUCTION
The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market struc







Flashcard 1439723031820

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question

In a highly competitive market, long-run profits will be driven down by [...].

Answer
the forces of competition


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tential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by <span>the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure

Original toplevel document

1. INTRODUCTION
The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market struc







Flashcard 1439725391116

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#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question

In less competitive markets, [...] even in the long run; in the short run, any outcome is possible.

Answer
large profits are possible


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rm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, <span>large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ sho

Original toplevel document

1. INTRODUCTION
The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market struc







Flashcard 1439727750412

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question

Understanding the forces behind the market structure will aid the financial analyst in determining [...].

Answer
firms’ short- and long-term prospects


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forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in <span>determining firms’ short- and long-term prospects. <span><body><html>

Original toplevel document

1. INTRODUCTION
The purpose of this reading is to build an understanding of the importance of market structure. As different market structures result in different sets of choices facing a firm’s decision makers, an understanding of market structure is a powerful tool in analyzing issues such as a firm’s pricing of its products and, more broadly, its potential to increase profitability. In the long run, a firm’s profitability will be determined by the forces associated with the market structure within which it operates. In a highly competitive market, long-run profits will be driven down by the forces of competition. In less competitive markets, large profits are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market struc







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2 #study-session-4
Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates.

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1. INTRODUCTION
ts are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. <span>Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, olig




Flashcard 1439731944716

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#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2 #study-session-4
Question
Section 2 introduces the [...].
Answer
analysis of market structures


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Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market st

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1. INTRODUCTION
ts are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. <span>Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, olig







Flashcard 1439734304012

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2 #study-session-4
Question
Section 2 addresses questions such as: What determines the degree of [...] with each market structure?
Answer
competition associated


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Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does

Original toplevel document

1. INTRODUCTION
ts are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. <span>Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, olig







Flashcard 1439736663308

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#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2 #study-session-4
Question
Section 2 addresses questions such as: Given the degree of competition associated with each market structure, what decisions are left to [...]?
Answer
the management team developing corporate strategy


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of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to <span>the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the

Original toplevel document

1. INTRODUCTION
ts are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. <span>Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, olig







Flashcard 1439739022604

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#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2 #study-session-4
Question
Section 2 addresses questions such as: How does a chosen [...] and [...] evolve into specific decisions that affect the profitability of the firm?
Answer
pricing and output strategy

The answers to these questions are related to the forces of the market structure within which the firm operates.


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determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen <span>pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates

Original toplevel document

1. INTRODUCTION
ts are possible even in the long run; in the short run, any outcome is possible. Therefore, understanding the forces behind the market structure will aid the financial analyst in determining firms’ short- and long-term prospects. <span>Section 2 introduces the analysis of market structures. The section addresses questions such as: What determines the degree of competition associated with each market structure? Given the degree of competition associated with each market structure, what decisions are left to the management team developing corporate strategy? How does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, olig







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively.

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1. INTRODUCTION
does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. <span>Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regula




Flashcard 1439742954764

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question
Sections 3, 4, 5, and 6 analyze demand, supply, optimal [...] and [...], and factors affecting [...] for perfect competition, monopolistic competition, oligopoly, and pure monopoly.
Answer
price and output

long-run equilibrium


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Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively.

Original toplevel document

1. INTRODUCTION
does a chosen pricing and output strategy evolve into specific decisions that affect the profitability of the firm? The answers to these questions are related to the forces of the market structure within which the firm operates. <span>Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regula







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading.

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1. INTRODUCTION
tes. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. <span>Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading. <span><body><html>




Flashcard 1439746362636

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question
Section 7 reviews techniques for [...] the various forms of market structure.
Answer
identifying


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Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a p

Original toplevel document

1. INTRODUCTION
tes. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. <span>Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading. <span><body><html>







Flashcard 1439748721932

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Question
There are accepted measures of [...] that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets.
Answer
market concentration


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Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial ana

Original toplevel document

1. INTRODUCTION
tes. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. <span>Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading. <span><body><html>







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #study-session-4
Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits.

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ture. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. <span>Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading.<span><body><html>

Original toplevel document

1. INTRODUCTION
tes. Sections 3, 4, 5, and 6 analyze demand, supply, optimal price and output, and factors affecting long-run equilibrium for perfect competition, monopolistic competition, oligopoly, and pure monopoly, respectively. <span>Section 7 reviews techniques for identifying the various forms of market structure. For example, there are accepted measures of market concentration that are used by regulators of financial institutions to judge whether or not a planned merger or acquisition will harm the competitive nature of regional banking markets. Financial analysts should be able to identify the type of market structure a firm is operating within. Each different structure implies a different long-run sustainability of profits. A summary and practice problems conclude the reading. <span><body><html>




Article 1439752654092

2. ANALYSIS OF MARKET STRUCTURES
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4

Traditionally, economists classify a market into one of four structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Section 2.1 explains that four-way classification in more detail. Section 2.2 completes the introduction by providing and explaining the major points to evaluate in determining the structure to which a market belongs. 2.1. Economists’ Four Types of Structure Economists define a market as a group of buyers and sellers that are aware of each other and are able to agree on a price for the exchange of goods and services. While the internet has extended a number of markets worldwide, certain markets are limited by geographic boundaries. For example, the internet search engine Google operates in a worldwide market. In contrast, the market for premixed cement is limited to the area within which a truck can deliver the mushy mix from the plant to a construction site before the compound becomes useless. Thomas L. Friedman’s international best seller The Wo



#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Traditionally, economists classify a market into one of four structures: perfect competition, monopolistic competition, oligopoly, and monopoly.

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2. ANALYSIS OF MARKET STRUCTURES
Traditionally, economists classify a market into one of four structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Section 2.1 explains that four-way classification in more detail. Section 2.2 completes the introduction by providing and explaining the major points to evaluate in determining the stru




Flashcard 1439755013388

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Traditionally, economists classify a market into one of four structures: [...], [...] , [...], and [...]
Answer
perfect competition

monopolistic competition

oligopoly

monopoly.


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Traditionally, economists classify a market into one of four structures: perfect competition, monopolistic competition, oligopoly, and monopoly.

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
Traditionally, economists classify a market into one of four structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Section 2.1 explains that four-way classification in more detail. Section 2.2 completes the introduction by providing and explaining the major points to evaluate in determining the stru







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Economists define a market as a group of buyers and sellers that are aware of each other and are able to agree on a price for the exchange of goods and services.

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2. ANALYSIS OF MARKET STRUCTURES
in more detail. Section 2.2 completes the introduction by providing and explaining the major points to evaluate in determining the structure to which a market belongs. 2.1. Economists’ Four Types of Structure <span>Economists define a market as a group of buyers and sellers that are aware of each other and are able to agree on a price for the exchange of goods and services. While the internet has extended a number of markets worldwide, certain markets are limited by geographic boundaries. For example, the internet search engine Google operates in a worldwi




#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
While the internet has extended a number of markets worldwide, certain markets are limited by geographic boundaries. For example, the internet search engine Google operates in a worldwide market. In contrast, the market for premixed cement is limited to the area within which a truck can deliver the mushy mix from the plant to a construction site before the compound becomes useless.

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2. ANALYSIS OF MARKET STRUCTURES
longs. 2.1. Economists’ Four Types of Structure Economists define a market as a group of buyers and sellers that are aware of each other and are able to agree on a price for the exchange of goods and services. <span>While the internet has extended a number of markets worldwide, certain markets are limited by geographic boundaries. For example, the internet search engine Google operates in a worldwide market. In contrast, the market for premixed cement is limited to the area within which a truck can deliver the mushy mix from the plant to a construction site before the compound becomes useless. Thomas L. Friedman’s international best seller The World Is Flat1 challenges the concept of the geographic limitations of the market. If the service being provided by the seller can be




#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Some markets are highly concentrated, with the majority of total sales coming from a small number of firms

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2. ANALYSIS OF MARKET STRUCTURES
and. That radiographic image can be digitized and sent to a radiologist in India to be read. As a customer (i.e., patient), you may never know that part of the medical service provided to you was the result of a worldwide market. <span>Some markets are highly concentrated, with the majority of total sales coming from a small number of firms. For example, in the market for small consumer batteries, three firms controlled 87 percent of the US market (Duracell 43 percent, Energizer 33 percent, and Rayovac 11 percent) as of 20




Flashcard 1439761566988

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#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Some markets are [...], with the majority of total sales coming from a small number of firms
Answer
highly concentrated


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Some markets are highly concentrated, with the majority of total sales coming from a small number of firms

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
and. That radiographic image can be digitized and sent to a radiologist in India to be read. As a customer (i.e., patient), you may never know that part of the medical service provided to you was the result of a worldwide market. <span>Some markets are highly concentrated, with the majority of total sales coming from a small number of firms. For example, in the market for small consumer batteries, three firms controlled 87 percent of the US market (Duracell 43 percent, Energizer 33 percent, and Rayovac 11 percent) as of 20







Flashcard 1439763139852

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Is perfect competition an economic imaginary concept?
Answer
Perfect competition is a reality baby

Think commodities n shit


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2. ANALYSIS OF MARKET STRUCTURES
ompetition, monopolistic competition, oligopoly, and monopoly. We start with the most competitive environment, perfect competition . Unlike some economic concepts, perfect competition is not merely an ideal based on assumptions. <span>Perfect competition is a reality—for example, in several commodities markets, where sellers and buyers have a strictly homogeneous product and no single producer is large enough to influence market prices. Perfect comp







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Profits under the conditions of perfect competition are driven to the required rate of return paid by the entrepreneur to borrow capital from investors (so-called normal profit or rental cost of capital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition.

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2. ANALYSIS OF MARKET STRUCTURES
mmodities markets, where sellers and buyers have a strictly homogeneous product and no single producer is large enough to influence market prices. Perfect competition’s characteristics are well recognized and its long-run outcome unavoidable. <span>Profits under the conditions of perfect competition are driven to the required rate of return paid by the entrepreneur to borrow capital from investors (so-called normal profit or rental cost of capital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson




#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition.

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2. ANALYSIS OF MARKET STRUCTURES
apital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. <span>Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market




Flashcard 1439768120588

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#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Monopolistic competition is also highly competitive; however, it is considered a form of [...]
Answer
imperfect competition.


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Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition.

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2. ANALYSIS OF MARKET STRUCTURES
apital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. <span>Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market







#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions

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2. ANALYSIS OF MARKET STRUCTURES
ts. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. <span>Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions. The competitive characteristic is a notably large number of firms, while the monopoly aspect is the result of product differentiation. That is, if the seller can convince consumers tha




#cfa-level-1 #microeconomics #monopolistic-competition #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions. The competitive characteristic is a notably large number of firms, while the monopoly aspect is the result of product differentiation. That is, if the seller can convince consumers that its product is uniquely different from other, similar products, then the seller can exercise some degree of pricing power over the market. A good example is the brand loyalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics.

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2. ANALYSIS OF MARKET STRUCTURES
apital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. <span>Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions. The competitive characteristic is a notably large number of firms, while the monopoly aspect is the result of product differentiation. That is, if the seller can convince consumers that its product is uniquely different from other, similar products, then the seller can exercise some degree of pricing power over the market. A good example is the brand loyalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must cons




Flashcard 1439773101324

Tags
#cfa-level-1 #microeconomics #monopolistic-competition #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
The competitive characteristic in Monopolistic competition is [...].
Answer
a notably large number of firms

The seller can convince consumers that its product is uniquely different from others then the seller can exercise some degree of pricing power over the market.


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hamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions. The competitive characteristic is <span>a notably large number of firms, while the monopoly aspect is the result of product differentiation. That is, if the seller can convince consumers that its product is uniquely different from other, similar products, t

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
apital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. <span>Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions. The competitive characteristic is a notably large number of firms, while the monopoly aspect is the result of product differentiation. That is, if the seller can convince consumers that its product is uniquely different from other, similar products, then the seller can exercise some degree of pricing power over the market. A good example is the brand loyalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must cons







Flashcard 1439775460620

Tags
#cfa-level-1 #microeconomics #monopolistic-competition #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
What is a good example of monopolistic competition?
Answer
The brand loyalty associated with soft drinks such as Coca-Cola.

Customers believe that their beverages are truly different from and better than all other soft drinks.

The same is true for fashion and cosmetics.


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oly aspect is the result of product differentiation. That is, if the seller can convince consumers that its product is uniquely different from other, similar products, then the seller can exercise some degree of pricing power over the market. <span>A good example is the brand loyalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics.<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
apital). This does not mean that all perfectly competitive industries are doomed to extinction by a lack of profits. On the contrary, millions of businesses that do very well are living under the pressures of perfect competition. <span>Monopolistic competition is also highly competitive; however, it is considered a form of imperfect competition. Two economists, Edward H. Chamberlin (US) and Joan Robinson (UK), identified this hybrid market and came up with the term because there are strong elements of competition in this market structure and also some monopoly-like conditions. The competitive characteristic is a notably large number of firms, while the monopoly aspect is the result of product differentiation. That is, if the seller can convince consumers that its product is uniquely different from other, similar products, then the seller can exercise some degree of pricing power over the market. A good example is the brand loyalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must cons







Oligopoly example
#cfa-level-1 #microeconomics #oligopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms.

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2. ANALYSIS OF MARKET STRUCTURES
yalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. <span>The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a si




Flashcard 1439778868492

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
The oligopoly market structure is based on a [...] supplying the market.
Answer
relatively small number of firms


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The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production level

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
yalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. <span>The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a si







Flashcard 1439781227788

Tags
#cfa-level-1 #microeconomics #oligopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
The small number of firms in the oligopoly market means that each firm must consider what retaliatory strategies the other firms will pursue when [...].
Answer
prices and production levels change


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>The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
yalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. <span>The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a si







Flashcard 1439783587084

Tags
#vocabulary
Question
Retaliate
Answer
to return like for like, especially evil for evil


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#cfa-level-1 #microeconomics #oligopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms.

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is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. <span>Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms.<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
yalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. <span>The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a si




Flashcard 1439788305676

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
If one of the carriers changes its pricing package, others will likely retaliate.

In which market structure does this happen?
Answer
Oligopoly


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ial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. <span>If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms.<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
yalty associated with soft drinks such as Coca-Cola. Many of Coca-Cola’s customers believe that their beverages are truly different from and better than all other soft drinks. The same is true for fashion creations and cosmetics. <span>The oligopoly market structure is based on a relatively small number of firms supplying the market. The small number of firms in the market means that each firm must consider what retaliatory strategies the other firms will pursue when prices and production levels change. Consider the pricing behavior of commercial airline companies. Pricing strategies and route scheduling are based on the expected reaction of the other carriers in similar markets. For any given route—say, from Paris, France, to Chennai, India—only a few carriers are in competition. If one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a si







#cfa-level-1 #microeconomics #monopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return.

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2. ANALYSIS OF MARKET STRUCTURES
one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. <span>Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. 2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms




Flashcard 1439791713548

Tags
#cfa-level-1 #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
The least competitive market structure is [...] .
Answer
monopoly


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Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises co

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. <span>Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. 2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms







Flashcard 1439794859276

Tags
#cfa-level-1 #microeconomics #monopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In pure [...], there are no other good substitutes for the given product or service.
Answer
monopoly markets

There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions.


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Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over prici

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. <span>Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. 2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms







#cfa-level-1 #microeconomics #monopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return.

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e is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. <span>The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return.<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
one of the carriers changes its pricing package, others will likely retaliate. Understanding the market structure of oligopoly markets can help in identifying a logical pattern of strategic price changes for the competing firms. <span>Finally, the least competitive market structure is monopoly . In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. 2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms




2.2. Factors That Determine Market Structure
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4

Five factors determine market structure:

  1. The number and relative size of firms supplying the product;

  2. The degree of product differentiation;

  3. The power of the seller over pricing decisions;

  4. The relative strength of the barriers to market entry and exit; and

  5. The degree of non-price competition.

The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda).

In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods.

When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result.

The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets.

Non-price competition dominates those market structures where product differentiation is

...

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2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4

Five factors determine market structure:

  1. The number and relative size of firms supplying the product;

  2. The degree of product differentiation;

  3. The power of the seller over pricing decisions;

  4. The relative strength of the barriers to market entry and exit; and

  5. The degree of non-price competition.

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Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplyi

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




Flashcard 1439803247884

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#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question

[...] factors determine market structure:

Answer
Five


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Parent (intermediate) annotation

Open it
Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; T

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda).

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uct differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. <span>The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated i

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices.

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Parent (intermediate) annotation

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The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar pro

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




Flashcard 1439811636492

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
The number and relative size of firms in a market influence [...].
Answer
market structure


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The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monop

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
One extreme case is the monopoly market structure, with only one firm supplying a unique good or service.

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pan>The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large in

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




Flashcard 1439815568652

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
What are the extremes in market structures and why?
Answer
One extreme is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product.


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Parent (intermediate) annotation

Open it
pan>The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, a

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
An example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda).

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umers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, <span>an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda).<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods.

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l market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). <span>In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




Flashcard 1439822122252

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In the case of monopolistic competition, there are many firms providing products to the market, as with [...].
Answer
perfect competition


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In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, th

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1439824481548

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
What is the main difference between monopolistic competition and perfect competition?
Answer
Product differentiation


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Open it
In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1439826840844

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In the case of monopolistic competition If a firm is successful in differentiating its product, the differentiation will provide [...].
Answer
pricing leverage

The more dissimilar the product appears, the more the market will resemble the monopoly market structure.


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Parent (intermediate) annotation

Open it
s with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide <span>pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns;

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1439829200140

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In the case of monopolistic competition the more dissimilar the product appears, the more the market will resemble [...].
Answer
the monopoly market structure


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y that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will <span>resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of oth

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1439831559436

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In the case of monopolistic competition a firm can differentiate its product through aggressive [...]; frequent styling changes; the linking of its product with other, [...]; or a host of other methods.
Answer
advertising campaigns

complementary products


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differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive <span>advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods.<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result.

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le the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. <span>When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the s

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




Flashcard 1440228969740

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
When the market dictates the price based on [...] , the individual firm has no control over pricing
Answer
aggregate supply and demand conditions


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When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market s

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1440246009100

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
The typical hog farmer in Nebraska and the milk producer in Bavaria are [...] .
Answer


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Parent (intermediate) annotation

Open it
When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1440280874252

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
What are price takers
Answer
they must accept whatever price the market dictates.


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Open it
head>When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1440324128012

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In which market structures are firms price takers?
Answer
perfect competition.


statusnot learnedmeasured difficulty37% [default]last interval [days]               
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Parent (intermediate) annotation

Open it
d on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. <span>This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1440356896012

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In the case of monopolistic competition, the success of [...] determines the degree with which the firm can influence price.
Answer
product differentiation


statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
aska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of <span>product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small num

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1440390712588

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
In the case of oligopoly, there are so few firms in the market that [...].
Answer
price control becomes possible

However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result.


statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Parent (intermediate) annotation

Open it
ructure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that <span>price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result.</s

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets.

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the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. <span>The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>




Flashcard 1441672858892

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Barriers to entry can result from [...] requirements, as in the case of petroleum refining.
Answer
very large capital investment


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ons depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from <span>very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is t

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1441675218188

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Barriers to entry may also result from [...], as in the case of some electronic products and drug formulas.
Answer
patents


statusnot learnedmeasured difficulty37% [default]last interval [days]               
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costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from <span>patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1441677577484

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
Another entry consideration is the possibility of [...].
Answer
high exit costs

For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets.


statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
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Parent (intermediate) annotation

Open it
sult from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of <span>high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for th

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







Flashcard 1441679936780

Tags
#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Question
[...] deter entry and are therefore also considered barriers to entry.
Answer
High exit costs


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Parent (intermediate) annotation

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on is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. <span>High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>







#cfa-level-1 #factors-that-determine-market-structures #microeconomics #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets.

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Parent (intermediate) annotation

Open it
o a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. <span>In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets.<span><body><html>

Original toplevel document

2. ANALYSIS OF MARKET STRUCTURES
d monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return. <span>2.2. Factors That Determine Market Structure Five factors determine market structure: The number and relative size of firms supplying the product; The degree of product differentiation; The power of the seller over pricing decisions; The relative strength of the barriers to market entry and exit; and The degree of non-price competition. The number and relative size of firms in a market influence market structure. If there are many firms, the degree of competition increases. With fewer firms supplying a good or service, consumers are limited in their market choices. One extreme case is the monopoly market structure, with only one firm supplying a unique good or service. Another extreme is perfect competition, with many firms supplying a similar product. Finally, an example of relative size is the automobile industry, in which a small number of large international producers (e.g., Ford and Toyota) are the leaders in the global market, and a number of small companies either have market power because they are niche players (e.g., Ferrari) or have little market power because of their narrow range of models or limited geographical presence (e.g., Škoda). In the case of monopolistic competition, there are many firms providing products to the market, as with perfect competition. However, one firm’s product is differentiated in some way that makes it appear better than similar products from other firms. If a firm is successful in differentiating its product, the differentiation will provide pricing leverage. The more dissimilar the product appears, the more the market will resemble the monopoly market structure. A firm can differentiate its product through aggressive advertising campaigns; frequent styling changes; the linking of its product with other, complementary products; or a host of other methods. When the market dictates the price based on aggregate supply and demand conditions, the individual firm has no control over pricing. The typical hog farmer in Nebraska and the milk producer in Bavaria are price takers . That is, they must accept whatever price the market dictates. This is the case under the market structure of perfect competition. In the case of monopolistic competition, the success of product differentiation determines the degree with which the firm can influence price. In the case of oligopoly, there are so few firms in the market that price control becomes possible. However, the small number of firms in an oligopoly market invites complex pricing strategies. Collusion, price leadership by dominant firms, and other pricing strategies can result. The degree to which one market structure can evolve into another and the difference between potential short-run outcomes and long-run equilibrium conditions depend on the strength of the barriers to entry and the possibility that firms fail to recoup their original costs or lose money for an extended period of time and are therefore forced to exit the market. Barriers to entry can result from very large capital investment requirements, as in the case of petroleum refining. Barriers may also result from patents, as in the case of some electronic products and drug formulas. Another entry consideration is the possibility of high exit costs. For example, plants that are specific to a special line of products, such as aluminum smelting plants, are non-redeployable, and exit costs would be high without a liquid market for the firm’s assets. High exit costs deter entry and are therefore also considered barriers to entry. In the case of farming, the barriers to entry are low. Production of corn, soybeans, wheat, tomatoes, and other produce is an easy process to replicate; therefore, those are highly competitive markets. Non-price competition dominates those market structures where product differentiation is critical. Therefore, monopolistic competition relies on competitive strategies that may not include pricing changes. An example of non-price competition is product differentiation through marketing. In other circumstances, non-price competition may occur because the few firms in the market feel dependent on each other. Each firm fears retaliatory price changes that would reduce total revenue for all of the firms in the market. Because oligopoly industries have so few firms, each firm feels dependent on the pricing strategies of the others. Therefore, non-price competition becomes a dominant strategy. Exhibit 1. Characteristics of Market Structure Market Structure Number of Sellers Degree of Product Differentiation Barriers to Entry Pricing Power of Firm Non-price Competition Perfect competition Many Homogeneous/ Standardized Very Low None None Monopolistic competition Many Differentiated Low Some Advertising and Product Differentiation Oligopoly Few Homogeneous/ Standardized High Some or Considerable Advertising and Product Differentiation Monopoly One Unique Product Very High Considerable Advertising From the perspective of the owners of the firm, the most desirable market structure is that with the most control over price, because this control can lead to large profits. Monopoly and oligopoly markets offer the greatest potential control over price; monopolistic competition offers less control. Firms operating under perfectly competitive market conditions have no control over price. From the consumers’ perspective, the most desirable market structure is that with the greatest degree of competition, because prices are generally lower. Thus, consumers would prefer as many goods and services as possible to be offered in competitive markets. As often happens in economics, there is a trade-off. While perfect competition gives the largest quantity of a good at the lowest price, other market forms may spur more innovation. Specifically, there may be high costs in researching a new product, and firms will incur such costs only if they expect to earn an attractive return on their research investment. This is the case often made for medical innovations, for example—the cost of clinical trials and experiments to create new medicines would bankrupt perfectly competitive firms but may be acceptable in an oligopoly market structure. Therefore, consumers can benefit from less-than-perfectly-competitive markets. PORTER’S FIVE FORCES AND MARKET STRUCTURE A financial analyst aiming to establish market conditions and consequent profitability of incumbent firms should start with the questions framed by Exhibit 1: How many sellers are there? Is the product differentiated? and so on. Moreover, in the case of monopolies and quasi monopolies, the analyst should evaluate the legislative and regulatory framework: Can the company set prices freely, or are there governmental controls? Finally, the analyst should consider the threat of competition from potential entrants. This analysis is often summarized by students of corporate strategy as “Porter’s five forces,” named after Harvard Business School professor Michael E. Porter. His book, Competitive Strategy, presented a systematic analysis of the practice of market strategy. Porter (2008) identified the five forces as: Threat of entry; Power of suppliers; Power of buyers (customers); Threat of substitutes; and Rivalry among existing competitors. It is easy to note the parallels between four of these five forces and the columns in Exhibit 1. The only “orphan” is the power of suppliers, which is not at the core of the theoretical economic analysis of competition, but which has substantial weight in the practical analysis of competition and profitability. Some stock analysts (e.g., Dorsey 2004) use the term “economic moat” to suggest that there are factors protecting the profitability of a firm that are similar to the moats (ditches full of water) that used to protect some medieval castles. A deep moat means that there is little or no threat of entry by invaders, i.e. competitors. It also means that customers are locked in because of high switching costs. <span><body><html>