Maliha Ahmed

3123
MBA (M)

Submitted to: Ms. Abida

Shaheen
Date: 14. May. 09
“Business”

Any Organization, firm or company which provides goods and services to

gain profit.
Profit is money one make in business.

If you're attacking your market from multiple positions

and your competition isn't,
you have all the advantage and it will show
up in your increased success and income.
Jay Abraham
Quotation

In business, I’ve discovered that my purpose is to

do my best to my utmost ability every day.
That’s my standard. I learned early in my life
that I had high standards.
 “Economic System”

System in which
production of goods and
services, its distribution
and consumption
provided to the entire
society.
“Factors of Production”

 Labor.
 Capital.
 Entrepreneurs.
 Natural Resources.
“Labor”

People working for

business, provide labor.
“Capital”

Funds or money needed to

start up new business.
Its resources can be:
 Personal investments.
 Banks.
Quotation

We are the creative force of our life, and

through our own decisions rather than our
conditions, if we carefully learn to do certain
things, we can accomplish those goals.
Stephen Covey -
“Entrepreneurs”

A person who assume the risk

for business venture,
organizes and operated
business him/ herself.
“Natural resources”

It can be:
2. Physical resource.
3. Information resource.
Physical resources are the things organization
uses to conduct business.
Information resources are the information used
by businesses.
“Types of Economic system”

 Market Economy.
 Planned Economy.
 Mixed Market Economy.
“Market Economy”

It can be define as the economy of a country when

controlled by the individual. Also called a capitalist
economy.
“Planned Economy”

It can be define as the community that depends on

government or its many factors of production is
controlled by government.
It can be communism and socialism.
Mixed Market Economy

This system includes both market and planned

economy.
It means that it is a system that allows
simultaneous operations of public and
private enterprises.
U.S and Cuba are of the examples.
Quotation

Think not of yourself as the architect of your

career but as the sculptor. Expect to have to
do a lot of hard hammering and chiseling
and scraping and polishing.
BC Forbes -
“Capitalism”

System that encourages entrepreneurs and production

at private ownership.
For example US economy.
Communism: Socialism:
System in which System in which only major
government owns and factors of production are
operates all sources of owned by the
production. government.
For example: North Korea, For example: Sweden,
Cuba, Russia etc. Belarus, Denmark,
Vietnam etc.
Input Market:
Resources are brought by the
firms from the households,
which are then supplied.
Output Market:
Goods and services are
supplied in response to
demand.
“Demand”

Buyer’s ability to buy goods and

services.
Law of Demand:
Law of demand states that;
demand is inversely
proportional to price. That is
demand increases when price
is less.
OR
Demand decreases when price is
more.
“Supply”

Producers ability to offer goods

and services for sale.
Law of supply:
Supply is directly proportional to
price. That is producers will
offer more of its product as its
price rises.
OR
Producers will offer less of its
product as its price is less.
“Surplus, shortage and equilibrium”

Surplus is when supply is

more and demand is less.
Shortage is when supply is
less and demand is more.
Equilibrium is a state when
quantity supplied and
price charged is at right
point.
“Degrees of competition”

 Pure competition.
 Monopolistic competition.
 Oligopoly.
 Monopoly.
Quotation

Vitally important for a young man or woman is,

first, to realize the value of education and
then to cultivate earnestly, aggressively,
ceaselessly, the habit of self-education.
BC Forbes -
“Pure competition”

• Also called perfect competition.

• There are many buyers and many sellers.
• It is easy to enter or exit the market.
• Firms meet their maximum profit as there aim is to sell
where marginal cost meet the marginal revenue.
• Both buyers and sellers know the prices that others are
paying and receiving in the market place.
• The products offered by each firm is so identical that
buyers view them as similar to that of other firm.
• For example agricultural products such as potatoes and
wheat.
“Monopolistic competition”

• Like pure competition monopolistic has many sellers and

many buyers & no one has total control over market place.
• Monopolistic competition businesses may be large or small
but still they can leave or enter market easily.
• As there are many buyers and sellers they try to make their
products little different from others competitors.
• For example grocery stores and gas stations.
“Oligopoly”

• Only handful sellers.

• Sellers are quite large.
• The entry of new competitor is difficult because large
capital investment is necessary.
• For example industrial product such as steel and top
cigarettes company.
“Monopoly”

• When industry and market has only one producer.

• It is regulated by government.
• Entering into the market is blocked.
• A single firm has the control over price considerably.
• For example western union.
“Economic goals”

Stability: the condition in which money available in the

economy and goods produced in the economy
remains the same.
There are enough desirable products to satisfy
consumer’s demand and consumer have enough
money to buy.
“Inflation”

• The biggest threat to stability.

• Period of widespread price increase throughout an
economic system.
• Inflation has an virtual impact on all goods and services
provided by the system.
• When businesses see they can charge higher prices, they
may hire new workers, invest more money in advertising
and introduce new products. Workers may start demand
higher wages to pay for more expensive products and
higher wages means low profit to the business, then seller
may rise the prices even more in the market- inflation.
“Recession”

Recession in downfall on the

country’s GDP which is
continue for two or more
quarters of a year.
“Causes of recession”

• Currency crisis- occurs when

value of currency changes
quickly.
• Inflation- persistent increase
in level of consumer prices.
• Govt.- debt.
• Speculation- engagement in
risky business on the chance
of quick profit.
• War.
“Effects of recession”

Bankruptcies- it is when bank

runs out of resources to pay
off its debt.
Deflation- persistent decrease in
level of consumer prices.
Foreclosure- in which bank or
other mortgage company
seeks to take owner’s
property to satisfy its debt.
Reduce sale.
Stock market crash.
 “Current global recession”

• It is caused by: sub-prime lending crisis (sudden

reduction in availability of loans), tightening of liquidity,
emerging market (a nation’s social or business activity in
the process of rapid growth and industrialization),
difficulty in borrowing (receiving something of a value and
you have to exchange it for something of a greater
value), capital flight (money rapidly flow out of the
country).
 “Recession in Asia”

This recession is one of the worst since world war-II.

• In Japan, industry data showed sales of new cars, trucks and buses
plunged 32.4 per cent in February compared to a year earlier in a
sector battered by a steep decline in spending, with consumers
opting to save amid the downturn.
• The seventh straight-month decline comes as Asia's biggest
economy endures its worst recession in decades.
• Fears that South Korea is slipping into recession
faster than expected were deepened
by official figures showing industrial
output tumbled at the sharpest
rate on record in January.
 “GDP”
• Gross domestic product.
• One of the measures of national income and output for a given
country's economy.
• It is the total value of all final goods and services produced in a
particular economy.
• GDP= consumption+ gross investment+ govt. spending.
• For example: United States GDP millions of USD is
14,264,600.
Brazil’s GDP, millions of USD is 1,572,839.
“GNP”
• It is called gross national product.
• The "value of all (final) goods
and services produced in a country
in one year by the nationals,

• Plus income earned by its citizens

abroad,
minus income earned by foreigners
in the country“.
• Low- and middle-income countries
produce about 20 %
of the world’s goods and services,
but have more than 80 percent of the
world’s population.
As a result,
people in these countries earn a smaller
share of the world’s income than people in
high-income countries.
“Conducting Business in
United States”
 “Industrial revolution”

• In 18th century industrial revolution become possible by

advance in technology.
• Replacing hundreds of cottage workers. Who had turned out
one item at a time.
• Factory system brought together in one place the materials
and workers required to produce items in large quantity.
• New machines were needed for mass production.
• A series of semiskilled workers, each trained to perform only
one task and supported by specialized machines and tools
greatly increased output.
• Mass production replaced a system of highly equipped workers.
 “Entrepreneurial era”

• In this era there was improvement in transportation.

• In 1820, opening of Eric canal, steam boats navigation and
development of rail roads. Made it easy and economical to
move object to distant market.
• Entrepreneurs were raised on a grand scale.
• A principal laissez faire was introduced that the govt. should
not interfere the economy, let business function with regulation
and according to its natural law.
• Furthermore it rose standard of living, prize fixing, market
manipulation become common business practice. Advertising
and a variety of employment were regulated.
 “Production era” 1913-1950

• Period during the early 12th century US business focused on

improving productivity and manufacturing efficiency.
• This era is called production era because there was a mass
production of weapon as there were both world wars in this
era.
• Henry Ford manufactured a car, in 1916 and lowered its prices
so that an average man can afford it.
• The great depression of 1930s and world war 2 promoted the
govt. to intervene in the economic system.
• The production era saw the rise of labor unions and practices
collective bargaining.
“Marketing era” 1950- 1970

• After world war 2, the demand of consumer good that has

been frustrated by war time shortages fueled the US
economy for sometimes.
• From 1950- 1960 production continued to increase,
technology advanced and standard of living rose.
• During this era, the concept of marketing came across.
• According to marketing concept- business starts with
costumer.
“Global era” 1970-1990

• There was a continuation of advance technologies in a

production, computer technology, information system and
communication skill.
• Globalization is a fact of life for more businesses today.
• In addition to more efficient international method of
financing, producing, distributing and
marketing products and services.
• Communication and transportation
has been improved in this era.
 “Internet era”1990- onwards
The internet gave a dramatic boost to all trade in all sectors of
economy. If the internet makes it easier for all trades to grow,
this is particularly true of trade in services.
The internet will serve to the level of playing field at least to some
extent between larger and smaller enterprises regardless of
what products or services they sell.
“Types of organization”

1. Proprietorship.
2. Partnership.
3. Cooperatives.
4. Corporation.
“Sole proprietor”

• Business owned and operated by

one person who is responsible for
all its debt.
• Sole proprietors accounts for one
third of the US business today.
 “Advantages”

• Sole proprietor answer to no one.

• They need not to inform about their operations to anyone.
• They alone take the reward of profit and bear the failures.
• They are easy to dissolve.
• They have low start up cost.
“Disadvantages”

• Unlimited liability.
• Firm legally dissolves when the owner dies.
• Resources depends on the owner.
• Banks are reluctant to giving loans.
“Partnership”

Another form of legal organization is the partnership, which

is frequently used by professionals.
There are 3 types of partnerships:
• General partnership.
• Limited partnership.
• Master partnership.
 “General partnership”

A simple sole proprietorship multiplied by the number of partner

owners.
There is no legal limitation to the no. of partners.
Partner may invest equal or unequal sum of money.
Profit bear no relation according to their investment.
 “Limited partnership”

It is a partnership in which only one partner is required as a

general partner.
This partnership is same as the general partnership except that of
partner limitation.
Limited partners have limited liability.
In US limited partnership is most common in some organization
like in film industry.
 “Master limited partnership”

That sells shares to the investors who receive profits and pay
taxes on individual income.
In master limited partnership, partner should have minimum of
50% of investments.
 “Partnership”

Advantages: Disadvantages:
• Distributed liability. • Unlimited liability.
• Easier to get loans and • Lack of continuity.
investments.
• Internal conflicts.
• No limit to no. of partners.
• Less legal documentation. • Dispute revolution.
• Ability to growth.
• New talent and money
resources.
• Few legal requirements.
 “Cooperatives”

• Many partnership under one roof.

• Plays major role in agriculture.
• For example: PECHS (Pakistan employee cooperative housing
society).
• It gives their members greater production power, greater
marketing power or both.
Advantages: Disadvantages:
• All profits are shared.
In case of bankruptcy
• Combine marketing and
everyone will share equal
supplies.
unlimited liability.
• Buying and negotiation as
one organization.
“ Corporations”

Business that is equally considered an entity separate from

its owners and is liable for its own debts; owners liability
extends to the limits of their investments.
Advantages:
Limited liability of the investors
is limited to their personal
investments.
Shares may be passed on from
generation to generation.
They can expand no. of
investors by selling their
stock.
Disadvantages:
Tender offer allows to buy
share directly to target
the share holders of the
corporation.
Double taxation means the
taxes are paid on the
basis of corporations
profit and by share
holders on dividend
income.
 “Types of corporations”

• Closely held.
• Publicly held.
• Sub- chapter 5.
• Limited liability.
• Professional.
• Multinationals.
 “Closely held corporation”

• It’s the firm that has few stockholders. This means they are
those corporations who has very small no. of shareholders and
they control the policies of the firm.
• There are about 90% closely held corporations in U.S.
• They can be family businesses. Like hallmark.
 “Publicly held corporation”

• Stock is widely held among many investors.

• This means stocks can be bought by anyone having money.
• Like Motorola has issued about 600 stocks. These can be
bought by anyone having enough money.
 “Subchapter 5”

• Also called S corporation.

• A form of business ownership.
• It is treated as a partnership for taxes purposes.
 “Limited liability corporation”

• It has certain characteristics of partnership and corporation.

• They enjoy the benefit from limited liability.
• It is subjected to additional regulation and partnership
taxation.
 “Professionals”

• It is the corporation formed by the licensed professionals like

doctors, lawyers etc.
• It exist on larger and complicated firm the is organized as
partnership.
 “Multinationals”

• Multinationals serves more than one country.

• Managers are likely to be from many countries as there stock is
traded to several other countries.
• For example : Nestle.
“Corporate governance”

The ways on which corporations and controlled and administrated is

corporate governance.
It involves three distinct bodies stockholders, the board of directors
and the officer.
• Stockholders are the real owners.
• Board of directors checks the management of the corporation.
• Officers run the corporation on daily basis, they are the top
managers and are elected by BOD.
“Initial public offering”

IPO is when stocks are offered by some company in order

to expand their businesses.
It is often offered by small companies who are seeking
capital to expand.
“ Joint venture”

• When some organization join for one common activity.

They for a joint venture.
• No new organization is formed.
• It remains for longer time.
• It improves access to financial resources.
• Access new customer and technology.
• Manageable innovation and goals.
“Strategic Alliance”

• Two or more organizations collaborate on a mutual project.

• No new organization is formed.
• Corporation aims for synergy where everyone hopes for
the greater benefit from the alliance.
• For ex: Surf excel and Gulahmed jointly formed Ideas.
“Employee Stock Ownership Programs”

• ESOP is employees are given stock shares of a

company.
• These stocks are given to employees just to
motivate them as the company is already being
expanded.
“Diversification”

• It is to develop a wide range of products or skills in order

to be more successful or reduce risks through great sales.
“Mergers”

Two corporations unit to form one corporation in

which there original identity remains same.
For ex: GSK.
“Acquisition”

When one company is purchased by another

company who is having big market value then
the other one. For ex: Walls and Polka.
 “Divestitures”

It is a strategy in which firms sell only its one of the unit.

“Spin off”

Setting on or more than one corporate units as new

independent corporations.
“Understanding the Global Context of the Business”
 “Globalization”

It is the process in which people around the globe are

unified and form a single society and function together.
Factors:
• Exports and imports.
• Information revolution.
• Technology innovation.
• Simplification of order process.
• Communications.
• Transport. These are the some factors which allows
globalization to become denser, more fast, easy and cheap.
 “Exports and Imports”

• Exports are the goods transported across the border of a

particular country. It can be any thing for which the particular
country is specialized for.
Ceramics, cotton textile, pharmaceuticals, ready made garments
are some of the products exported from Pakistan.
• Imports are the products which are made in one country but
sold to other countries.
Telecommunication equipments, generators, chemical fertilizers,
aircrafts are the some example of imports from U.S to
Pakistan.
“Marketplaces”

There are three major marketplaces: North America,

Europe and Asia. They are the World’s largest
economies, biggest multinational and highest
income consumers.
Quotation

The ill effects of thought come about when we

forget that thought is a function of our
consciousness.. an ability that we as human
beings have. We are the producers of our
own thinking.
Richard Carlson
“World Bank”

Countries are divided into three groups according to

World Bank as an average of per person’s income.
• High income countries
• Middle income countries
• Low income countries are also called developing
countries.
• High income countries include U. S, Canada, Japan, New
Zealand, South Korea, U.A.E, Australia, Israel, Singapore, Hong
Kong.
• Middle income countries include: Czech Republic, Greece,
Hungary, Poland, Soviet Bloc, Turkey, Mexico, Argentina and
Uruguay.
• Low income countries are China, India, Pakistan etc.
• It is the single largest marketplace and enjoys the most
stable economy in the world.
• Canada and Mexico are also the World’s largest trading
bloc.
• Mexico provides cheap labor and low transportation
costs and because of this many firms have established
their plants there.
• Canada, United States and Mexico altogether enjoyed
the benefits because of NAFTA over 15 yrs of period.
• This was an agreement created by govt. of
these three countries.
“NAFTA”

It was created by the govt. of

Canada, Mexico and
United States. According
to this agreement these
three nations had
eliminated there taxes on
the things coming in and
going out of the country.
It also created millions of jobs
and largely increased the
trade.
Quotation

Actually I did not invent the seven habits, they

are universal principles and most of what I
wrote about is just common sense. I am
embarrassed when people talk about the
Covey Habits, and dislike the idea of being
some sort of guru.
Stephen Covey
Germany, UK, France and Italy are the major trading
bloc of Europe.
Germany alone trade 7% of its product through out
the globe for ex. Siemens is said to be a global
powerhouse.
Trade must be only in EURO was standardized by
European Union. It gives 30% to the World’s GDP.
UK has World’s greatest stock market.
 “Maastricht treaty”

• It was signed on 1992.

• It created the European Union and led to EURO.
• It allowed unified economic and trade.
• It also created a single market without barriers to travel and
investments.
Quotation

Trust the Universe. Trust and believe and have

faith. I truly had no idea how I was going to
bring the knowledge of The Secret onto the
movie screen. I just held to the outcome of
the vision, I saw the outcome clearly in my
mind, I felt it with all my might, and
everything that we needed to create The
Secret came to us.
Rhonda Byrne
• Consist of Japan, China, Thailand, Malaysia, Singapore,
Indonesia, South Korea, Taiwan. Australia and
Philippines.
• Vietnam is sometimes included in this region. It is
fueled by strong entries in automobiles, electronics,
and banking industries.
• P. Asia is an important force of the world’s economy
and a major source of competition for N. American
firms.
 Quotation
Most people struggle with life balance simply
because they haven't paid the price to decide
what is really important to them.
Stephen Covey -
 “ASEAN”
• Association of Southeast Asian Nations.
• Founded in1967.
• As an organization of economic, political, social, cultural
cooperation.
• Brunei, Darussalam, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, Philippines, Singapore, Thailand and Vietnam.
“Objectives of ASEAN”

The ASEAN Declaration states that the aims and

purposes of the Association are:
(2) To accelerate economic growth, social progress and
cultural development in the region.
(3) To promote regional peace and stability through
abiding respect for justice and the rule of law in the
relationship among countries in the region and
adherence to the principles of the United Nations
Charter.
Quotation

The turning point, I think, was when I really

realized that you can do it yourself. That you
have to believe in you because sometimes
that's the only person that does believe in
your success but you.
Tim Blixseth -
 “Balance of trade”

The difference between the value of the imports and exports that
a nation makes.
Origin This expression is of uncertain origin and dates back to at
least the 17th century. From Sir Josiah Child's A New Discourse
on Trade, published 1668:
"The Balance of Trade is to be taken by a strict scrutiny of what
proportion the value of the Commodities exported out of this
Kingdom bear, to those imported."
Given that this is a definition of the term and is the earliest known
reference, it is quite likely that Child coined it himself.
“Exchange rates”

The balance of imports and exports between

two countries is affected by the rate of
exchange between their currency.
Do you know?

Germany, being the third largest economy in the World, is very

important to us and one obviously that we cant ignore.
 “ Organizational structure”

International Division Structure, International Area Structure,

Global Product Structure, Global Matrix Structure, and Global
Functional Design Structure. (CTU, 2005) The one that would
be optimal for a company

 that is just expanding is the International Area Structure. The

reason this would be optimal is because a company is new to
selling internationally. "In this organizational structure, the
company is organized into countries or geographic regions."
(CTU, 2005) This would be a benefit to have the organizational
in this manner because it would allow a company to focus on
the region of the world we are selling to and tailor the needs of
mobility products to that area. As a company grows
internationally we can expect to see a companies organization
grow as well.
 “Independent agent”

Agent representing several insurance companies. The

agent is independent from all the companies he or she
sells for, and can therefore in theory evaluate different
insurance policies objectively. Independent agents pay
all their own expenses and keep their own records and
earn their income from commissions on the policies
they sell. The opposite of an independent agent is a
Captive Agent who works exclusively for one company.
 “Licensing agreement”

A licensing agreement is a legal contract between two parties, known as

the licensor and the licensee. In a typical licensing agreement, the
licensor grants the licensee the right to produce and sell goods, apply
a brand name or trademark, or use patented technology owned by the
licensor. In exchange, the licensee usually submits to a series of
conditions regarding the use of the licensor's property and agrees to
make payments known as royalties.
Licensing agreements cover a wide range of well-known situations. For
example, a retailer might reach agreement with a professional sports
team to develop, produce, and sell merchandise bearing the sports
team's logo. Or a small manufacturer might license a proprietary
production technology from a larger firm to gain a competitive edge,
rather than expending the time and money trying to develop its own
technology. Or a greeting card company might reach agreement with a
movie distributor to produce a line of greeting cards bearing the
image of a popular animated character.
Whatever the type of licensing arrangement, the formal licensing
agreement is an important component in a successful venture. "While
it is impossible to determine the future success of a product, much can
be done in the earliest stages to ensure that a licensed product gets
the best chance possible," Teresa Salas wrote in Playthings. "One
might even say that the entire future of a licensed product is laid out,
at least in part, during the process of negotiating a licensing
contract."
 “Branch offices”

Instead of developing relationship with foreign companies or

independent agents, a firm may send some of its own
managers to overseas branch office.
For example
 “Global market phenomenon”
• Absolute advantage • Comparative
refers to the ability of a
party to produce a good
or service using fewer
real resources than
another entity producing
the same good or service
advantage refers to the
ability of a person or a
country to produce a
particular good at a lower
marginal cost and
opportunity cost than
another person or
country.
 “FDI”
Foreign direct investment (FDI) in its classic form is
defined as a company from one country making a
physical investment into building a factory in another
country. It is the establishment of an enterprise by a
foreigner. Its definition can be extended to include
investments made to acquire lasting interest in
enterprises operating outside of the economy of the
investor.
FDI of year 2000
G8- most powerful nations. Solve issues like labor, law of enforcements, terrorist,
trade, foreign affairs etc.
 Barriers to international trade
Free trade refers to the elimination of barriers to
international trade. The most common barriers
to trade are tariffs, quotas, and non tariff
barriers.
 “A tariff”

A tariff is a tax on imports, which is collected by the

federal government and which raises the price of
the good to the consumer. Also known as duties or
import duties, tariffs usually aim first to limit
imports and second to raise revenue
A quota

A quota is a limit on the amount of a

certain type of good that may be
imported into the country. A quota can
be either voluntary or legally enforced.
 “Subsidies”
Subsidies can be regarded as a form of protectionism or
trade barrier by making domestic goods and services
artificially competitive against imports. Subsidies may
distort markets, and can impose large economic costs
 “Socio-cultural Differences”

With 20 different languages, difference in language as well

as cultural rules, values, attitudes and behavior makes it
difficult to the potential entrepreneur.  Feelings of
exasperation, aggravation, annoyance, uncertainty and
anxiety remain.  In some cases, people are aware that
they are experiencing feelings of alienation, while in
other cases, the process occurs under the surface.
Language is an issue that plays a part of the adjustment
process.  Although English speakers often assume that
other cultures will automatically cater to their needs,
learning at least Creole/Krio the language of the host
culture can effectively combat cultural disorientation.  
 Economics Differences

There is not a noticeable difference in economic differences as

seen in the social and cultural differences.
Though rich in minerals, the majority of diamond and gold
production has been smuggled abroad. The economic
infrastructure nearly collapsed due to corruption, neglect, and
war-related disruptions.
An estimated $103 million (2001 est.) in Economic Aid was given
to help boost the economy.
 Legal Differences

In the United States you have the right to sue, but it becomes a
different story when you look further down South. You could
win bout any case as long as the price is; just knowing the right
people is the key.
For example you want to set up a mining and export business, but
have enough money to make the Chairman of the Government
Gold and Diamond Office (GGDSO) smug, though you don't
either requirements of having a back account and office, he'll
look the other way, and keep asking when he gets a little
pressure.
 “Political Differences”

The government controls everything, though they claim to

have a democratically elected, no business will start
before "visiting" the "elders".
Without greasing the palms of every top official involved,
you will be up for delays in processing and have a real
example myself with purchasing licenses for a mining
and wholesale trade, it still isn't finalized.  The fees
especially for foreigners who have no connections is
discouraging as in addition to all the legal fees, still have
to make a "gift" to those in charge so things will flow
easily.
“Local content law”

Law requiring that products sold in a particular

country be at least partly made there.
“Cartel”

Association of producers whose purpose is to control

supply and prices.
“Dumping”

Practice of selling a product abroad for less than the

cost of production.
Antidumping legislations.
“Small business”

A type of enterprise that is independently owned

and operated, has few employees, does a
small amount of business, and is not
predominant in its area of operation.
Entrepreneur

An individual who, rather than working as an

employee, runs a small business and
assumes all the risk and reward of a given
business venture, idea, or good or service
offered for sale. The entrepreneur is
commonly seen as a business leader and
innovator of new ideas and business
processes.
Job creation

Job creation programs are programs or projects

undertaken by a government or state of a nation in
order to assist unemployed members of the
population in seeking employment. They are
especially common during time of high
unemployment. They may either concentrate on
macroeconomic policy in order to increase the supply
of jobs, or create more efficient means to pair
employment seekers to their prospective employers.
“Innovation”

The term innovation means a new way of doing

something. It may refer to incremental,
radical, and revolutionary changes in
thinking, products, processes, or
organizations. A distinction is typically made
between invention, an idea made manifest,
and innovation, ideas applied successfully.
“Services”

A service is the diametrically opposed non-material

counter piece of a physical good.
“Retailing”

Selling of merchandise directly to the consumer.

Retailing began several thousand years ago with
peddlers hawking their wares at the earliest
marketplaces. It is extremely competitive, and the
failure rate of retail establishments is relatively high.
“Launching new venture”

• Great financial success.

• Independence (triggers them to operate their business).
• Flexibility (working hours, management, decision).
• Challenges (he is alone to envision the business).
• Survival (survival for future).
90% of small businesses
Cooperate in US economy
 “Distinctive
characteristics of
entrepreneurs”
• Self reliance (believe in yourself).
• Vision (focusing on where you want to see you after 10, 20
yrs).
• Tolerance of uncertainty (what if something goes wrong?).
• Tolerance of failure (it can be internal, due to lack of expertise).
• Energy (enthusiasm in their personality).
• Confidence (to do something).
 “Opportunities for small business”
• Market niches. (opportunity of identifying certain market
segments).
• Personal customer service.
• Lower overhead cost (extra cost like managing your
operations).
• Technology.
 “Possible threats”

• Competitions.
• Economical changes.
• Lack of knowledge.
• Bigger regulatory burden.
• Risk of failures are high.
• It is not easy to gain profit.
• Neglect ion of the owner (many have started business as
part time).
 “Launching options”

• Starting from scratch.

• Buying an established business.
• Buying franchise.
 “Starting from scratch”

Advantages:
It is all you.
You don’t have to deal with the prior owner’s bad decision.
Disadvantages:
Its hard to get credit.
Logistics can be challenging.
It takes time and money.
 “Buying an establishing business”

Advantages:
New relationship can be made easily.
Obtaining financing is less challenging.
Disadvantages:
What if the present costumer is not happy with you?
Working on someone else idea.
You may inherit old mistakes.
 “Buying a franchise”

Advantages:
It has low failure rate.
Profits.
Help with startup and beyond.
It already have a brand name.
Disadvantages:
You have to do it on their way.
You need to pay the franchisor each month.
Buying a well known franchise is very expensive.
Buying inexpensive franchise can be a real gamble.
 “ Tools for business success”

• Small business administration.

• Gain experiences.
• Learn from others.
• Educate yourself.
• Business planning.
SMEDA

• Small And Medium Enterprise Development Authority.

• No financial resources given by them, but can help you to
find the source.
“Business plans: the road map”

• Executive summary.
• Description of business.
• Competitive and industry research.
• Marketing strategies.
• Operating procedure.
• Personnel.
• Financial project.
Money funding”
“

• Personal resources.
• Loans.
• Angel investors.
• Venture capital.
 “Small business and the economy”

• Creating new jobs.

• Fueling innovation.
• Vitalizing inner cities.
• Create 50% GDP.
• Make up 97% of exporters and produce 29% of all export
value.
• Employees start up at a rate of over 5,00,000 per year.
“Economy impact”

The impact of economy on employment and

incomes produced by decision and events.
HR Management

• Planning.
• Staffing.
• Development.
• Evaluation.
• Compensation & benefits.
HR Planning

• Job analysis-
2. Job description.
3. Job specification.
• HR demand and supply.
Job description: A systematic
evaluation of the duties,
working conditions, tools,
materials and equipment
related to the performance of Job specification:
a job. Description of the skills,
abilities and other
credentials required for
performing a particular job.
“Forecasting HR demand and supply”

Predicting and planning for the job requirements of a particular

organization in the future.

Analyzing the sources of supply and matching requirements like hiring

numbers, salary levels, positions to be filled in departments etc.
“Staffing”

• Recruitment: Developing • Selection:

a pool for potential Selecting best candidate for
candidates. the job.
2. Internal recruitment. • Validation: Process of determining
3. External recruitment. the predictive value of information.
• Tools for Validation
(Selection tools):
• Application form
• Tests
• Interviews
 “Orientation”
• Tool for informal training.
“Training and development”
• Instruction based training based on Lecture or Discussion Approach and
Computer Assisted Instructions.
• Work-based Training:
• Vestibule Training: Training in a simulated environment
Apprenticeship, Internship

• Job Rotation & Transfer

 “Performance appraisal”
• Ranking Methods: Ranks Employees from best to worst

• Rating Scales: Uses predetermined performance dimensions to

rate performance
“Compensation and benefits”

• Skill based pay

• Performance based pay

“Separation”

• Employees can leave for the variety of reasons.

2. Fired.
3. Lay off
4. Transfer.
5. Career changes.
6. Personal reasons.
Marketing is all about anticipating customer needs, developing and
selling product, creating needs and full filling demands.
Marketing

The process of planning and executing the conception,

pricing, promotion and distribution of ideas, goods and
services to create exchanges that satisfy individual and
organizational objectives
“What to market?”

• Ideas.
• Goods.
• Services.
Consumer Goods: Products purchased by consumers for personal
use.
Industrial Goods: Products purchased by companies to produce other
products.
Services: Intangible products such as time, expertise or an activity that
can be purchased
 Why do market?
Individual Objective
Organizational Objective.
Where to market?
Political & Legal.
Social & Cultural.
Technological.
Competitive.
“What to do in market?”

• Concept
• Product Development
• Customer Service
• Marketing mix
“Marketing mix”

• Product.
• Price.
• Place promotion.
• Promotion.
• Product:
Good, service or idea that is
marketed to fill consumer
needs and wants.
• Place:
Transporting product from
producer to consumer and
selecting areas of contact
with customer.
(Distribution)
• Price: • Promotions:
Monetary value at which the Creating demand and informing
product is sold. the customer about the
product.
Generating customer interest in
the product
Advertising, Personal Selling,
Sales Promotion, Public
Relations
MARKET SEGMENTATION

The process of dividing a market into categories of

customer types.
TARGET MARKET

Group of people that has similar want and needs and

that can be expected to show interest in the same
products.
GEOGRAPHIC VARIABLES

Geographic units that may be considered in

developing a segmentation strategy
E.g.. Some products are more challenging to be sold
in remote areas.
DEMOGRAPHIC VARIABLES

Characteristics of populations that may be considered

in developing a segmentation strategy.
PSYCHOGRAPHIC VARIABLES

Consumer characteristics such as lifestyles, opinions,

interests, behaviors and characteristics that may be
considered in developing a segmentation strategy.
MARKETING RESEARCH

• Primary data.
• Secondary data.
• Research methodologies.

• Methods: Survey, observation, focus group,

experiments.
Consumer behavior
Psychological Influences
Motivations, Perceptions, Ability to Learn, Attitudes
Personal Influences

Life Style, Behaviors, Personality traits, Economic

Status.
Social Influences Cultural Influences
• Family, Coworkers, • Culture, Subculture, Social
Professional Associates, Class.
Neighbors, Community
Consumer buying process

1. Problem/Need Recognition

3. Seeking Information

5. Evaluation of Alternatives

7. Purchase Decision

9. Post Purchase Evaluation.

 • Motivation- Set of forces that cause people to behave in certain
ways.
• CLASSICAL THEORY- Workers are motivated solely by
money.
• BEHAVIOR THEORY- Tendency for productivity to increase
when workers believe they are receiving special attention from
management.
CONTEMPORARY THEORIES
• Human Resource Model
• Maslow’s hierarchy of needs model
• Two Factor theory
• Expectancy theory
• Equity theory
• Goal Setting Theory
CONTEMPORARY THEORIES

Theory X: Theory of Theory Y: Theory of

motivation holding that motivation holding that
people are naturally people are naturally
irresponsible and non- responsible, growth
cooperative. oriented, self motivated and
interested in being
productive.
Maslow’s Hierarchy of Human Needs
Two factor theory- Job satisfaction depends on two type of factors hygiene
factors and motivation factors

Hygiene Factors Motivation Factors

• Supervisors • Achievement
• Working Conditions • Recognition
• Interpersonal Relations • The work itself
• Pay & Security • Responsibility
• Company policies and • Advancement and Growth
administration
Expectancy theory: Theory of
motivation holding that
people are naturally
responsible, growth oriented,
self motivated and interested
in being productive.
Equity theory: People evaluate
their treatment by employers
relative to the treatment of
others.
Leader and leadership

• Leader
someone who can influence others and who has managerial
authority
all managers should ideally be leaders
not all leaders have the ability to be an effective manager
• Leadership
process of influencing a group toward the achievement of goals
a heavily researched topic
Early leadership theories

• Trait Theories • Behavioral Theories

characteristics that might be • knowing what effective
used to differentiate leaders leaders do would provide
from nonleaders. the basis for training leaders
• might be used as a basis
for selecting the “right”
people to assume formal
leadership positions
• proved to be impossible to
identify a set of traits that
would always differentiate
leaders from nonleaders.
• explanations based solely
on traits ignored the
interactions of leaders,
their groups, and
situational factors
Three leadership styles

autocratic - leader dictated work methods

democratic - involved employees in decision
making
used feedback to coach employees
laissez-faire - gave the group complete
freedom
• employee oriented - emphasized interpersonal
relationships
accepts individual differences among subordinates
associated with high group productivity
• production oriented - emphasized the technical or task
aspects of the job
concerned with accomplishing the group’s tasks
associated with low group productivity and low job
satisfaction
Product

1. Consumer products:
• Convenience Goods: Products purchased and consumed rapidly.
Inexpensive in price.
• Shopping Goods: Products which are moderately expensive and
purchased infrequently.
• Specialty Goods: Products that are very expensive and rarely
purchased.
2. Industrial Products:
• Expense Items: Purchased and consumed rapidly and
regularly.
• Capital Items: Expensive. Long lasting items purchased
infrequently.
Product development cycle

1. Product ideas (consumer, sales force, marketing

research)
2. Screening (eliminate that do not match with firm’s abilities
and expertise)
3. Concept Testing customer's inputs about product benefit
and price)
4. Business Analysis (marketers check if the product meets
min profitability)
5. Product testing & test marketing
6. Commercialization.
Price

Process of determining what a company will receive in exchange of its

products.
2. Profit Maximization

4. Market Share

6. Survival
Promotion

• Communicating Information- Average consumer comes

across 1550 bits of promotional information everyday
• Positioning- Process of establishing an identifiable product image
in the mind of the consumer
• Adding Value- Additional benefits with product

• Controlling Sales Volume.

Promotion types

• Persuasive Advertising

• Comparative Advertising

• Reminder Advertising
 DISTRIBUTION

1. Distribution Channel
2. Distribution Mix
3. Intermediaries
4. Wholesaler
5. Retailer
INFORMATION SYSTEMS & COMMUNICATION
TECHNOLOGY

Raw facts and figures- Data.

Meaningful, useful interpretation of
information- information.
Systems for transforming raw data into
information that can be used in making
decisions- information system.
MONEY & BANKING

• Functions:
Medium of exchange

Store of Value

Unit of value
 Spend able Money Supply

• M0: The total of all physical currency, plus accounts at the

central bank that can be exchanged for physical currency.
• M-1
Measure of currency supply that includes the most liquid (spend able)
forms of currency
e.g. currency, demand deposits, checkable deposits.
• M-2
Measure of the currency supply that includes all the components of M-1
plus the forms of money that can be easily converted into spend able
form e.g. M-1 , time deposits, mutual funds and money market mutual
funds.
M1 + most savings accounts, money market accounts, small
denomination time deposits and certificate of deposit accounts
(CDs) of under $100,000.
M3
M2 + all other CDs, deposits of Eurodollars and repurchase
agreements.
Credit cards

Very profitable to issuers

Annual fee
Interest on unpaid balances
High rates and compounded values
Merchants pay 2-5% of credit sales
Financial Institutions

1. Commercial Banks
2. Savings & Loan Associations
3. Mutual saving banks and Credit Unions
4. Non deposit Institutions
Stock

• Par Value – Value of stock at the time of launch

• Market Value – Current price of stock in market
• Book value – Value of stock expressed as total share
holders equity divided by the number of shares of stock
Types of stock

TYPES
• Common Stock – traded in stock market

• Preferred Stock – Given before stock is launched to

preferred investors
• Value expresses as % of par value
• Priority over common stock while paying dividend and
at liquidation of company
Banks

Creators of Money

3. Deposit
4. Loan
5. Interest
Functions

1. Storage Function and Lending Function

2. Overlap is the cause of wealth concentration
3. The source of injustice in the world