Documente Academic
Documente Profesional
Documente Cultură
Date: 6/7/06
Class: Intro to Business BA11 5040
Professor: McNamara
Chapter 3
Questions on page 75
How do world population and market statistics support the expansion of U.S. business
into global markets?
With the world population around 6 billion plus or minus a few, that gives the U.S. quite
a few potential customers. Since we are able to practice free trade with many other
nations in the world we are able to sell products to other nations that cannot produce them
efficiently giving us the ability to price them at a premium to our cost of manufacturing
this gives us the ability to purchase things that we cannot produce readily which is a
factor in smooth cycles of business.
What is comparative advantage, and what are some examples of this concept in actual
global markets?
Comparative advantage theory states that a country should sell to other countries those
products that it produces most effectively and efficiently and buy from other countries
those products it cannot produce as effectively or efficiently. Some examples would be
that the U.S. is able to computer chips, software and engineering services, while at the
same time the U.S. does not have an advantage over various items like coffee beans or
making shoes.
What is dumping?
Dumping is defined as the practice of selling products in a foreign country at lower prices
than those charged in the producing county. Companies sometimes use this tactic to
reduce surplus products in foreign markets or to gain a foothold in a new market by
offering products for lower prices than domestic competitors do. Japan and Russia for
example have been accused of dumping steel in the U.S. And Canada of dumping
softwood lumber. U.S. laws against dumping are specific and require that foreign firms
must price their products to include 10 percent overhead costs and an 8 percent profit
margin. Now I believe it would be hard to prove some nations of dumping when they are
at a specific low cost advantage over the U.S. say in the area of wages.
Questions from page 81
What are the advantages to a firm of using licensing as a method of entry in global
markets? What are the disadvantages?
Some advantages of using licensing as an entry point into global markets would be that
someone else has to come up with the money, also the licensor usually will assist with
distribution, promotion and consulting which it normally charges a fee for. The licensor
also usually gets paid a royalty on the product or services sold. Some disadvantages
would be that typically a licensor would license the product or service for an extended
period of time, say 20 years, now if the licensor experiences tremendous growth the bulk
of the revenue will go to the licensor and not the licensee.
What is the key difference between a joint venture and a strategic alliance?
A joint venture is basically a partnership in which two or more companies often from
different countries join to undertake a major project. According to Coopers & Lybrand, a
New York-based international professional services firm, companies that participate in
such partnerships grow much faster than their counterpart companies that are not
participating. Joint venture can even be mandated by governments as a condition of
doing business in their country. The benefits of international joint ventures are clear:
Shared technology, shared marketing and management expertise, entry into market where
foreign companies are often not allowed unless their goods are produced locally, and
shared risk. A strategic alliance is a long-term partnership between tow or more
companies establish to help each company build competitive market advantages. Suck
alliances can provide access to market, capital and technical expertise. Unlike joint
ventures, however, the do not typically involve shares costs, risks, management or even
profits.
Which cultural and societal differences are most likely to affect global trade efforts?
(Name at least two)
Religion is a major cultural difference that may affect global trade. There are many
different religions in the world today and they are all different in the way that they are
performed ceremonially and what religious laws are contained in each one. Some
religions may not allow work on Sundays, some may not allow the eating of beef, which
would be particularly bad places for say a Burger King or McDonalds. Another
sociocultural difference that can also affect important business decisions involving
human resource management would be how authority is viewed upon by the working
crowd. Consider what happened to one American manager in Peru who was unaware of
this important cultural characteristic and believed workers should participate in
managerial functions. This manager was convinced he could motivate his workers to
higher levels of productivity by instituting a more democratic decision-making style than
the style already in place. Son workers began quitting their jobs in droves. When asked
why, the Peruvian workers said the new production manager and supervisors did not
know their jobs and were asking the workers what to do, the workers thought of the
managers as incompetent.
What are the advantages and disadvantages of trade protectionism and tariffs?
Trade protectionism is defined as the use of government regulations to limit the import of
goods and services. Advocates of protectionism believe it allows domestic producers to
survive and grow, producing more jobs. Countries use protectionist measures to guard
against things like dumping. Another form of protectionism would be import quotas
which are defined as limiting the amount of goods to be brought into the country. The
overall effect is to protect U.S. jobs and companies. Another form of protectionism
would be an embargo. An embargo would be the complete ban on the import or export of
a certain good or service to another country. This would be done in the case of high tech
weapons so they cannot be used against the U.S. Some disadvantages of tariffs would be
that for the country doing the exporting it may make it quite hard for the company to
grow.
What are the economic risks of doing business in countries like the People’s Republic of
China or Russia?
Some risks of doing business with countries such as China and Russia are that say in
China they have a one-party political system, its human rights policies usually leave
something to be desired and there is difficulty with China’s financial market. For quite
sometime China has been accused of currency manipulation by not letting it float ‘fairly’
like other countries do. With Russia sever political and cultural issues are still problems
for businesses.
What might be some important factors that will have an impact on global trading?
The largest factor that will have an impact on global trading is e-commerce. E-commerce
is by far the fastest growing segment of the market place as a whole today. Such
companies that come to mind would be E-Bay.com, Amazon.com; there has also been the
advent of comparison shopping sites, another form of e-commerce like Shopping.com
and Activeshopper.com.
Chapter 4
When faced with ethical dilemmas, what questions can you ask yourself that might help
you make ethical decisions?
Three questions that you can ask yourself to help you make ethical decisions would be; Is
it legal? Is it balanced? and How will it make me feel about myself? When you ask
yourself is it legal not only should you wonder if you are violating any laws but are you
violating company policy. Really it comes down to should you drink and drive, how
should you fire an employee, how do you get rid of waste or even should you be using a
questionable nickname. When you ask yourself if the decision is balanced you should
ask yourself if you would like to be treated in this fashion. Often Win-Lose situations
become Lose-Lose situations and there is nothing like retaliation from the looser who has
suffered a major loss. Now when you ask yourself how you would feel about yourself
after the decision you should want to know if your family and the public in general would
be proud of you or ashamed of you. You would never want to have to ask yourself how
will I hide my actions so I look good this is an obvious indication that it is a bad decision.
What are the six steps to follow in establishing an effective ethics program in a business?
The six steps to follow are as follows:
Top management must adopt and unconditionally support an explicit corporate code of
conduct.
Employees must understand that expectations for ethical behavior begin at the top and
that senior management expects all employees to act accordingly.
Managers and others must be trained to consider the ethical implications of all business
decisions.
An ethics office must be set up. Pone lines to the office should be established so that
employees who don’t necessarily want to be seen with an ethics officer can inquire about
ethical matters anonymously. Whistleblowers (people who report illegal or unethical
behavior) must feel protected from retaliation. In 2002 President Bush signed the
Corporate and Criminal Fraud Accountability (Sarbanes-Oxley) Act. The act contains
historic protections for corporate whistleblowers.
Outsiders such as suppliers, subcontractors, distributors and customers must be told about
the ethics program. Pressure to put aside ethical considerations often comes from the
outside and it helps employees resist such pressure when everyone know what the ethical
standards are.
The ethics code must be enforced. It is important to back any ethics program with timely
action if any rules are broken.
What is corporate social responsibility and how does it relate to each of business’s major
stakeholders?
Corporate social responsibility is the concern businesses have for the welfare of society.
It goes well beyond merely being ethical. Just as you and I need to be good citizens,
contributing what we can to society, corporations need to be good citizens as well. The
social performance of a company has several dimensions:
Corporate philanthropy includes charitable donations to nonprofit groups of al kinds.
Corporate charitable donations amounted to $9.1 billion in 2001. Strategic philanthropy
involves companies making long-term commitments to one cause such as McDonald’s
founding and support of Ronald McDonald Houses, which house families whose
critically ill children require treatment away from home. Corporate responsibility
includes everything from hiring minority workers to making safe products, minimizing
pollution, using energy wisely and providing a safe work environment-that is, everything
that has to do with acting responsibly within society. Corporate policy refers to the
position a firm takes on social and political issues.
Chapter 5
If you buy stock in a corporation and someone gets injured by one of the corporation’s
products, can you be sued? Why or why not? Could you be sued if you were a general
partner in a partnership?
Stockholders cannot be sued for something a corporation does or form any problems that
arise from something the corporation does or produces. The corporation is a separate
entity and the stockholders a shielded by their limited liability. The only thing a
stockholder may want to do is sell the stock or short it. Now if the same circumstances
come about over the form of a general partnership then yes you can be sued and I hope
you have a good lawyer. Since in a general partnership the partner is not shielded by
limited liability and therefore can loose everything.
What is a cooperative?
A cooperative is a business owned and controlled by the people who use it-producers,
consumers, or workers with similar needs who pool their resources for mutual gain.
There are 47,000 co-ops in America today. Some co-ops are set up to give individuals
more economic power as a group then they would have as an individual. The idea was
first for farmers who banded together to try and get better prices for their crops.
Eventually the organization expanded enough to allow them to be able to buy and sell
equipment, fertilizer and many other things needed in the running of a modern day farm.
Chapter 6
A business plan is probably the most important document a small-business owner will
ever create. There are nine sections in the business plan outline on page 191. Can you
describe at least five of those sections?
The first part of a business plan would be the cover letter. In the cover letter you need to
make yourself standout since you will not be the only one looking for money. The best
way to address the cover letter is with the first name of the potential investor and with
“To whom it may concern” or “Dear Sir or Madam”. You will also need an executive
summary which will tell a little bit about the venture. You should include major goals
and a short description of the business. A potential investor will also want a company
background meaning give details of the company to date if there are any operations to
speak about and summarize the company’s financial situation. One of the most important
things an investor will want to know is who is going to be running the company and what
experience do they have. You will need to discuss this in the Management team part of
the business plan. Since investors are in business to make money like most businesses
are they are going to want to see a five year projection of income, expenses and funding
sources. This will help them decide on whether or not the company is worth investing in.
If the company has a great product and management team but shows that it will never
turn a profit no one in their right mind would invest in it. Now for one of the most
important things in the plan, the amount of capital needed. You must make sure that you
can explain how the money is going to be used and that the amount asked for and the
cash flows add up.
What are three of the reasons given by the SBA for why small businesses fail financially?
Some reasons as to why a small business will fail or do fail are as follows:
Plunging in without first testing the waters on a small scale. You may think that you have
a great product of service but if you do no test the market it may be like trying to sell Ice
to Eskimos. Another pitfall that can be averted by testing the marketplace would be over
or under pricing. If you overprice you product or service you may not be able to get the
amount of business you need to pay the bills. Also if you under price yourself you may
not be able to get enough business to pay the bills. Another large pitfall of why
businesses fail is bringing personal extravagance into the business. Trying to lead a
lifestyle the business was never meant to support.
What are some advantages small businesses have over large businesses in selling in
global markets?
Some things that small businesses have going for them over their larger counterparts in
the global markets are that they can adapt to markets a lot quicker than the larger
companies, this will help them in all aspects of their business such as personal customer
service and quicker turnaround on shipping or many other of the customers needs. Many
small companies will give their undivided attention to an overseas customer because they
are a major source of revenue for them.