Chapter 2 Blog – Demand and Supply - Sony shares jump on Apple takeover talk

Article: http://www.vancouversun.com/business/Sony+shares+jump+Apple+takeover+talk/3727709/story.html

Summary:

Compacted, this article gives a speculated answer to the increase of Sony shares. On Tuesday, Sony shares have seen a 3% increase in value. One speculation induces the possibility of Apple being in the mind set to buy out another company, with potential partners being; Adobe, Disney, and with a highlighted note on Sony. However, a Sony spokesman said: “We cannot comment on rumours or speculation.” On the other end, in conference call done with Steve Jobs, a question was asked about the current intentions of Apple with its presently $51-billion in cash. Retaliating to the question Steve felt that the company should keep their resources until necessary, for there are possibilities of one or more strategic opportunities in the future. Inevitably, there are also speculation on the rumours of Apply buying over Sony to be false, due to the Japanese market and the ongoing competition. Sony shares have been its highest trading volume since July 30^th.

Connections:

In relation to the concept of demand and supply, this article relates very well. Presented with a rise in prices and an increase of quantity demanded, Sony shares have gone through an increase in demand, due to the consumers behaviours. If, this was to be drawn into a supply and demand graph, we would see the demand curve reposition toward the right side to indicate an increase of demand. As for the equilibrium of the graph, it would also shift to the right and accommodate for higher prices and quantity traded. Reasoning to the increase of demand for Sony shares would be the speculations of Apple buying over Sony. To relate to the textbook, the speculation could be categorized as a factor of demand, specifically as an expectation of future prices.

Reflection:

Relating textbook examples with real life instances allowed me to realize how commonly used are the concept of supply and demand. The idea of Sony and Apple merging together is very exciting news to this biology nerd. Apple, which dominates the American market with their phones and laptops, working conjointly with Sony, a big producer in the Japanese market, could perhaps be the beginning of new product that would incorporated the unique patents and technologies of both companies into something extraordinary. There could also be more than the sole purpose of creating a new product, I would assume that there are intentions to unite and expand their products from Japan to American and from America to Japan, creating an international company with roots from the two parts of the world leading in technology advancement. 

Chapter 1

Article: http://www.cbc.ca/money/story/2010/09/16/scotiabank-brazil.html

Summary:

This article is about Scotiabank’s decision to purchase a Brazilian bank and expanding their services across South America. The name of the South American bank is “Dresdner Bank Brasil S.A”, and at the end of 2009, it was reported that this bank had assets around $400 million US and about 50 employees. The justification of Scotiabank’s purchase is to become the only Canadian bank in Brazil with a multiple bank license and to increase their presence in the oil and gas, power and mining sectors. The price of this transaction has not been announced, because Scotiabank claimed it to be “not financially material”, however, Mike Durland co-CEO of Scotia Capital, claims this trade to be a “tremendous potential for growth”.

Connections:

This article is a prime example of one of the main ideas of chapter 1, opportunity costs. Basically, opportunity costs are the expenses taken when performing any decision. For example; when you suddenly have a craving for pizza, the money you spend on your pizza, could have been invested in other things, such as investing. In fact, we run into opportunity costs every day, some deal with spending and losing positional money and some deal with gaining and losing other things. In the article, Scotiabank has suffered an opportunity cost by deciding to purchase Dresdner Bank Brasil S.A. The money Scotiabank used to purchase the Brazilian bank could’ve been doubling its value through investment.  Therefore, Scotiabank has made a decision to purchase a Brazilian based company, and suffered an opportunity cost to use that money elsewhere.

Reflection:

Associating the article with the concept of opportunity costs, gave me a new perspective on life. I am now aware that everything I do, no matter what choice I make, there will always be an opportunity cost. I can also understand why major companies make decisions over the course of weeks or months, instead of instantly on the spot. In business, every decision comes with consequences or costs, and with that knowledge, every ripple must be analyzed to find the most efficient and least costly way to perform. With a new mind set, I am now able to tackle choices with a more business approach, rather than being a typical consumer.