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EDBA BUS 150 INTRODUCTION TO BUSINESS ADMINISTRATION. MAZLOMI INURUL AKMAR BT. MOHD. NOR. CHAPTER 1 THE NATURE OF BUSINESS. WHAT IS BUSINESS?. An individual or organization that provides goods, ideas and services to others who want or need them The outcome are products: tangible

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edba bus 150 introduction to business administration

EDBABUS 150INTRODUCTION TO BUSINESS ADMINISTRATION

MAZLOMI INURUL AKMAR BT. MOHD. NOR

what is business
WHAT IS BUSINESS?
  • An individual or organization that provides goods, ideas and services to others who want or need them
  • The outcome are products: tangible

intangible

  • The product provides satisfaction and benefits
basic concepts of business
BASIC CONCEPTS OF BUSINESS
  • Profit
  • Entrepreneurship
  • Risk taking
goal of business
GOAL OF BUSINESS
  • To maximize profits
  • Balance the needs of stakeholders
  • Not all organizations are business
purpose of business
PURPOSE OF BUSINESS
  • To supply goods and services to customers, rather than to supply jobs to workers and managers, or even dividends to stockholders
  • To have healthy and growing sales
  • New product development or new services
  • Cost control or lowering of costs
  • To create wealth for shareholders, employees, customers and society at large
rationale of business
RATIONALE OF BUSINESS
  • Make or provide good and quality goods, ideas and services
  • Make or provide reasonably-price goods, ideas and services
  • To fulfill the needs of consumers
business firm
BUSINESS FIRM
  • An organization under one management
  • Set up for earning profit
  • Providing goods, ideas and services
  • Sale in market
business environment
BUSINESS ENVIRONMENT
  • Economics condition
  • Legislation
  • Technological process
  • Socio-cultural environment
  • Competition
  • Globalization
definition of profit
DEFINITION OF PROFIT
  • The difference between what it costs to make and sell a product and what a customer pays for it
  • The reward for the risks they take in providing products
the importance of profit
THE IMPORTANCE OF PROFIT
  • To earn profit, an organization needs:
    • Management skills
    • Marketing expertise
    • Financial resources
  • Business must produce quality products, operates efficiently
contribution of business to society
CONTRIBUTION OF BUSINESS TO SOCIETY
  • Employment creation
  • Economic growth (GDP)
    • GDP measures both the total income earned in the economy and the total expenditure on the economy’s output of goods and services
    • Level of real GDP is a good gauge of economic prosperity
    • Growth of real GDP is a good gauge of economic progress
contribution of business to society1
CONTRIBUTION OF BUSINESS TO SOCIETY
  • Improved standard of living
    • The amount of goods and services people can buy with the money they have
  • Improved quality of life
    • The general well-being of a society in terms of political freedom, a clean natural environment, education, health care, safety, free time and many others that leads to one’s happiness and satisfaction
  • Peace and prosperity
business ethics
BUSINESS ETHICS
  • Principles and standards that determine acceptable conduct in business organization
  • Acceptability of behaviour in business is determined by customers, government, interest group, competitors
  • The organizational culture must be strong
  • Relates to an individual’s or work group
  • Relates to the culture in which a business operates
social responsibility
SOCIAL RESPONSIBILITY
  • Business’s obligation to maximize its positive impact and minimize its negative impact on society
  • Concerns the impact of the entire business’s activities
stakeholders of business
STAKEHOLDERS OF BUSINESS
  • People or parties that stand to gain or lose by the policies and activities of a business
    • Shareholders
    • Customers
    • Suppliers
    • Bankers
    • Government agencies
    • Competitors
ethical issues in business
ETHICAL ISSUES IN BUSINESS
  • Ethical issue is an identifiable problem, situation or opportunity that requires a person to choose from among several actions that may be evaluate as right or wrong, ethical or unethical
ethical issues in business1
ETHICAL ISSUES IN BUSINESS
  • Abusive and intimidating behaviour
    • Physical threats, insults, profanity, yelling
  • Conflict of interest
    • Whether to advance a person’s personal interests or those of others
    • Separate personal financial interests from business dealings
    • Example: bribes
ethical issues in business2
ETHICAL ISSUES IN BUSINESS
  • Fairness and honesty
    • Relate to the general values of decision makers
    • Not to harm customers, clients or competitors
  • Communications
    • False and misleading advertising
    • Truthfulness about product safety
  • Business relationship
    • Behaviour of businesspersons toward customer, suppliers and other in workplace
improving ethical behaviour in business
IMPROVING ETHICAL BEHAVIOURIN BUSINESS
  • Code of ethics
  • Policies on ethics
  • Ethics training programs
nature of social responsibility
NATURE OF SOCIAL RESPONSIBILITY
  • Economics
    • Earning profits
  • Legal
    • Obeying the law
  • Ethical
    • Doing what is right, just and fair
  • Voluntary
    • Being a good citizen
social responsibility issues
SOCIAL RESPONSIBILITY ISSUES
  • Relations with owners and stockholders
  • Employee relation
  • Consumer relation
  • Environmental issues
  • Community relations
sole proprietorship
SOLE PROPRIETORSHIP
  • Owned by one person
  • Advantages:
    • Total independence in making decisions
    • Sole ownership of profits
    • Pay only personal income tax and not business tax
    • Low set-up cost
sole proprietorship1
SOLE PROPRIETORSHIP
  • Disadvantages:
    • Entirely responsible for debts and risks
    • Unlimited personal liability
    • Limited access of capital
    • Limited skills and capabilities
    • Feeling of isolation
    • Short life of business
partnership
PARTNERSHIP
  • Owned by two or more persons
  • Partners are joint owners of the business and share profits, loses and risks
  • Not a separate legal entity from its owner
  • Types of partners:
    • Limited partner
    • General partner
partnership1
PARTNERSHIP
  • Advantages:
    • Easy and cheap set-up cost
    • Able to raise more capital
    • Tax advantage
  • Disadvantages:
    • At least one partner has unlimited liability
    • Lack of continuity
    • Difficulty to raise large sum of capital
    • Bound by the act of one partner
corporation
CORPORATION
  • Legal entity separate from its constituent members
  • Formed by several persons who are able to own property, draw contracts and employ people
  • Three types of corporation:
    • Limited by shares
    • Limited by guarantee
    • Unlimited corporation
corporation1
CORPORATION
  • Advantages:
    • Limited liability
    • Easy to raise capital through sale of shares
    • Able to transfer ownership
    • Relative permanence of existence
    • Increase expertise and skills
    • Able to delegate authority
corporation2
CORPORATION
  • Disadvantages:
    • Activities limited by law
    • Costly incorporation process
    • Double taxation
    • Loss of control by the founder
    • Regulation
small business
SMALL BUSINESS
  • Independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people
  • Advantages:
    • Independence
    • Costs
    • Flexibility
    • Focus
    • Reputation
small business1
SMALL BUSINESS
  • Disadvantages:
    • High stress level
    • High failure rate
      • Undercapitalization
      • Managerial inexperience or incompetence
      • Inability to cope with growth
multinational corporation
MULTINATIONAL CORPORATION
  • Firms having operations in more than one country, international sales and a nationality mix of managers and owners
  • Examples:
    • International computer goods
    • Electronics goods
    • Consumer goods
  • Depends on the international market for a large percentage of their total revenue
conglomerates
CONGLOMERATES
  • A company that consists of multiple distinct businesses
  • Unrelated businesses
  • Large and can be formed by merging more than three businesses together
  • The term may also refer to a multi-industry company
conglomerates1
CONGLOMERATES
  • Advantages:
    • Allow capital to be allocated in a more efficient way
    • More efficient allocation of capital
  • Disadvantages:
    • Lack of focus and inability to manage unrelated businesses equally
    • Stocks are usually penalized by the market
co operatives
CO-OPERATIVES
  • Composed of individuals or small businesses that have banded together
  • The set-up is not to make money
  • The creation is to create enough profit to maintain the organization
  • It can help distribute the products of its members
input output model
INPUT-OUTPUT MODEL
  • Inputs
  • Transformation or conversion
  • Outputs
inputs
INPUTS
  • Labour
  • Money
  • Materials
  • Energy
conversion process
CONVERSION PROCESS
  • Combines inputs in predetermined ways using different equipment, administrative procedures and technology to create products
  • To ensure that the process generates quality products, control must be made
conversion process1
CONVERSION PROCESS
  • Take measurements at various points
  • Take actions for any deviation
  • Different types of transformation process take place in different organizations
outputs
OUTPUTS
  • Final products differ from each other
  • Human and technological elements associated with a service
  • Customer services
managing the business process
MANAGING THE BUSINESS PROCESS
  • Process focus
  • Product focus
  • Repetitive focus
operations management
OPERATIONS MANAGEMENT
  • Sets of activities that creates goods and services through the transformation of inputs into outputs
  • Deals with the design, direction, control, integration and improvement of the processes
  • The main goal is to ensure the efficient transformation of production
operations management1
OPERATIONS MANAGEMENT
  • Doing of work for things like superior quality, speed-to-market, low costs
  • Excellence in operations can become a competitive advantage
  • Closely coordinated with inventory control
goals of om
GOALS OF OM
  • Productivity
  • Quality
  • Innovation
  • Customer satisfaction
  • Profitability
technology in om
TECHNOLOGY IN OM
  • To meet customer requirements, lower costs and higher quality
  • Machines without computer memory but controlled by magnetic tape which called numerical control machines
  • Robots
  • Flexible manufacturing system
quality in om
QUALITY IN OM
  • What is quality?
  • Why is it important?
  • Two ways quality can improve profitability
    • Market gains
    • Reduced costs
quality management
QUALITY MANAGEMENT
  • Reflects the degree to which a good or service meets the demands and requirements of customers
  • Quality control refers to the processes an organization uses to maintain its established quality standards
quality management1
QUALITY MANAGEMENT
  • TQM involves coordinating efforts to:
    • Improve customer satisfaction
    • Increase employee participation and empowerment
    • Form and strengthen supplier partnerships
    • Foster an organizational culture of continuous quality improvement
  • TQM should be incorporated throughout the transformation process
points for implementing quality improvement
POINTS FOR IMPLEMENTING QUALITY IMPROVEMENT
  • Create consistency of purpose
  • Lead to promote change
  • Build quality into the produce
  • Build long-term relationships
  • Continuously improve
  • Start training
  • Emphasize leadership
  • Drive out fear
points for implementing quality improvement1
POINTS FOR IMPLEMENTING QUALITY IMPROVEMENT
  • Break down barriers between departments
  • Stop haranguing workers
  • Support, help and improve
  • Remove barriers to pride in work
  • Institute a vigorous program
  • Work on the transformation
quality management2
QUALITY MANAGEMENT
  • Establishing standards – ISO
  • Inspection
  • Sampling
  • Benchmarking
  • Continuous improvement
business process reengineering
BUSINESS PROCESS REENGINEERING
  • Time-function mapping
  • Work-flow analysis
    • Request
    • Negotiation
    • Performance
    • Acceptance
high tech manufacturing
HIGH-TECH MANUFACTURING
  • Computer-aided design
  • Computer-aided manufacturing
  • Computer-integrated manufacturing
benefits of cad cam
BENEFITS OF CAD/CAM
  • Product quality
  • Shorter design time
  • Database availability
  • New range of capabilities
just in time
JUST-IN-TIME
  • Eliminates manufacturing wastes
  • Also known as lean production or stockless
  • Can be implemented with high level of commitments
inventory management
INVENTORY MANAGEMENT
  • Functions of inventory:
    • Provide a stock of goods
    • To permit operations to continue smoothly
    • To take advantages of quantity discounts
    • To protect against shortages
  • Types of inventory:
    • Raw material inventory
    • Work-in-process inventory
    • Maintenance/Repair/Operating supply
    • Finished goods inventory
supply chain management
SUPPLY CHAIN MANAGEMENT
  • A supply function of operations
  • Connecting and integrating all parties / members of the distribution system, to satisfy customers
  • Also known as logistics
  • Includes all activities and get them to customers
  • Integrates firms into seamless flow of information and products
supply chain management1
SUPPLY CHAIN MANAGEMENT
  • To control inventory by managing the flows of materials
  • Involves overseeing and controlling materials, information and finances
  • Involves coordinating and integrating the flows both within and among companies
  • Material suppliers manufacturer distributors wholesaler retailer

customers

supply chain management2
SUPPLY CHAIN MANAGEMENT
  • Purchasing
  • Managing inventory
  • Outsourcing
  • Routing and Scheduling
purchasing
PURCHASING
  • Buying all materials needed by organization
  • Materials of desired quality, right quantities, lowest cost
  • Either make some components, purchase or lease
purchasing strategies
PURCHASING STRATEGIES
  • Many suppliers
  • Few suppliers
  • Vertical integration
  • Keiretsu networks
  • Virtual companies
managing inventory
MANAGING INVENTORY
  • Every raw material, component, completed or partially completed product, must be accounted
  • Three basic types of inventory:
    • Finished-goods inventory
    • Work-in-process inventory
    • Raw materials inventory
managing inventory1
MANAGING INVENTORY
  • Inventory control:
    • Process of determining how many supplies and goods needed
    • Keeping track of quantities on hand
    • Where each item is
    • Who is responsible for it
  • Economic Order Quantity Model
  • Just-in-Time Inventory Management
  • Material-requirements Planning
outsourcing
OUTSOURCING
  • Contracting of manufacturing or tasks to independent companies
  • Cost-cutting tactic
  • Allows organizations to boost productivity and remain competitive
  • May create conflict
routing and scheduling
ROUTING AND SCHEDULING
  • Routing is the sequence of operations through which the product must pass
  • Scheduling assigns the tasks to be done to departments or specific machines, workers or teams
  • Approaches to scheduling:
    • Trial and error
    • PERT
what is strategy
WHAT IS STRATEGY
  • Ideas, plans and support that an organizations employ to compete successfully against their rivals
  • To help organizations achieve competitive advantage
strategy concept
STRATEGY CONCEPT
  • Distinctive competence
    • Enable a firm to distinguish itself from its rival
    • Examples: special capabilities, skills, technologies
  • Terrain
    • Environmental setting in which an engagement with an adversary takes place
    • Targeting market segments and to win customers
factors that shape a firm s strategy
FACTORS THAT SHAPE A FIRM’S STRATEGY
  • Societal, Political, Regulatory, Citizenship Considerations
  • Competitive Conditions and Overall Industry Attractiveness
  • Firm’s market opportunities and external threats
  • Personal ambitions, business philosophies and ethical beliefs of managers
  • Influence of shared values and company culture on strategy
levels of strategy
LEVELS OF STRATEGY
  • Corporate strategy
  • Business strategy
  • Functional strategy
  • Operating strategy
corporate strategy
CORPORATE STRATEGY
  • The moves made to establish business positions in different industries
  • The approaches used to manage the company’s group of businesses
  • Involves four kinds of initiatives:
    • Establish positions
    • Initiating actions
    • Capture cross-business strategic fits
    • Establishing investment priorities
business strategy
BUSINESS STRATEGY
  • Also known as business-level strategy
  • Managerial plan for a single business
  • Core elements:
    • R&D strategy
    • SCM strategy
    • Manufacturing strategy
    • Financial strategy
    • Human Resources strategy
functional strategy
FUNCTIONAL STRATEGY
  • Managerial plan for a particular functional activity, business process or key department within a business
  • Support the business strategy
  • The manager of a particular business function works closely with key subordinates
operating strategy
OPERATING STRATEGY
  • Strategic initiatives and approaches for managing key operating units and handling daily operating tasks
  • The bottom of the strategy-making pyramid
  • Support the higher-level strategies
strategic management process
STRATEGIC MANAGEMENT PROCESS
  • A management process designed to achieve firm’s vision and mission
  • Consists of four steps:
    • Analysis
    • Formulation
    • Implementation
    • Adjustment/Evaluation
analysis of business strategy
ANALYSIS OF BUSINESS STRATEGY
  • PEST Analysis
  • Porter’s Five Forces Model
  • SWOT Analysis
  • Value Chain Analysis
pest analysis
PEST ANALYSIS
  • Stands for Political, Economic, Social, and Technological analysis
  • Strategic tool for understanding market growth or decline, business position, potential and direction for operations
  • The model's factors will vary in importance to a given company based on its industry and the goods it produces
porter s five forces model
PORTER’S FIVE FORCES MODEL
  • Potential entrants
  • Competitors
  • Buyers
  • Suppliers
  • Substitutes
swot analysis
SWOT ANALYSIS
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
value chain analysis
VALUE CHAIN ANALYSIS
  • Primary activities
    • Inbound logistics
    • Operations
    • Outbound
    • Marketing/Sales
    • Services
  • Support activities
    • Infrastructure
    • Human Resources Management
    • Technology development
    • Procurement
generic business strategies
GENERIC BUSINESS STRATEGIES
  • Low-cost leadership strategies
  • Differentiation strategies
  • Focus strategies
low cost leadership strategies
LOW-COST LEADERSHIP STRATEGIES
  • Firm’s ability to provide a product or service at a lower cost than its rival
  • To acquire a substantial cost advantage over other competitors that can be passed on to consumers to gain a large market share
  • The products or services are standardized and not customized to an individual customer’s tastes, needs or desires
low cost leadership strategies1
LOW-COST LEADERSHIP STRATEGIES
  • Advantages:
    • Strong relationship between high market share and high profitability
      • Risk avoidance by customers
      • Strong market presence
  • Disadvantages:
    • High level of asset commitment
    • Cost reduction methods are easily imitated or copied by other firms
differentiation strategies
DIFFERENTIATION STRATEGIES
  • Based on providing buyers with something different or unique
  • Customers are willing to pay higher price for a product that is distinct
  • Customers more loyal
  • Products more innovative design, produced using advanced materials or quality process
differentiation strategies1
DIFFERENTIATION STRATEGIES
  • Advantages:
    • Allows firms to insulate themselves from competitive rivalry in the industry
    • Customers are less sensitive to prices
  • Disadvantages:
    • Other firms may attempt by providing a similar or better product
    • Difficulty in sustaining a price minimum
focus strategies
FOCUS STRATEGIES
  • To help a firm target a specific niche within an industry
    • Particular buyer group
    • Narrow segment of a given product line
    • Geographic market
  • To specialize the firm’s activities in ways that other broader-line firms cannot perform as well
focus strategies1
FOCUS STRATEGIES
  • Advantages:
    • Able to carve market niche against larger, broader-line competitors
    • Improve other sources of value-adding activities that contribute to cost or differentiation
  • Disadvantages:
    • Risk that the market niche may shift more toward characteristics of broader market
core competencies
CORE COMPETENCIES
  • Something that a company does well relative to other internal activities
  • Can relate to any of several aspects of its business
  • Gives a company competitive capability
other business strategies
OTHER BUSINESS STRATEGIES
  • Process-based strategy
  • Portfolio management
growth strategies
GROWTH STRATEGIES
  • Focus on better customers
  • Superior new product development
  • Channel management
  • New markets
  • Acquisitions
what is technology
WHAT IS TECHNOLOGY?
  • The process by which humans modify nature to meet their needs and wants
  • Includes all of the infrastructure necessary
  • A product of engineering and science
information technology
INFORMATION TECHNOLOGY
  • The collection of computer systems used by an organization
  • Includes hardware, databases, software, networks and other devices
advantages of it
ADVANTAGES OF IT
  • Communication flows
  • Sharing knowledge and building ideas
  • Digital process
  • Route customer complaints immediately
  • Decrease cycle-time
  • Delivery of sales and services
negatives of it
NEGATIVES OF IT
  • Illegal copying of software programs
  • Surveillance of employees’ e-mails files
  • Information anxiety
  • Job stress
  • Dehumanization
what is marketing
WHAT IS MARKETING
  • A group of activities designed to expedite transactions by creating, distributing, pricing and promoting goods, services and ideas
  • An organizational function for creating, communicating and delivering value to customers
  • To manage customer relationships
what is marketing1
WHAT IS MARKETING
  • Art of selling products
  • Peter Drucker:
    • To know and understand the customer so well that the product or service fits him and sells itself
    • Customer is ready to buy
    • To make the product / service available
marketing orientation
MARKETING ORIENTATION
  • Requires organizations:
    • To gather information about customer needs
    • Share information throughout entire organization
    • Use the information to help build long-term relationships with customers
  • Top Executives, Marketing Managers, Non-marketing Managers, Customers
market segmentation
MARKET SEGMENTATION
  • Dividing a big market into smaller groups of buyers
  • Ways of segmenting consumer markets:
    • Geographic
    • Demographic
    • Psychographic
    • Behavioural
    • Multiple
    • Segmenting business market
marketing mix
MARKETING MIX
  • Product
  • Price
  • Place (distribution channels)
  • Promotion
product
PRODUCT
  • Anything that a person receives in an exchange between marketer and customer
  • Classification of consumer products:
    • Convenience products
    • Shopping products
    • Speciality products
    • Unsought products
product1
PRODUCT
  • Product items, lines and mixes:
    • Product item
    • Product lines
    • Product line depth
    • Product mix
    • Product mixed width
  • Branding:
    • Benefits of branding
    • Branding strategies
product2
PRODUCT
  • Packaging:
    • Functions of packaging
  • Product life cycle:
    • Introduction stage
    • Growth stage
    • Maturity stage
    • Decline stage
price
PRICE
  • Amount of money charged for a product or service
  • Factors to consider when setting prices:
    • Internal factors:
      • Objectives of marketing
      • Marketing mix
      • Operation cost
      • Size of organization
    • External factors:
      • Nature of market
      • Competition
      • Other factors
place
PLACE
  • Also known as distribution channel
  • Products and services are available to final customers
  • Number of channel levels
  • Channel conflict
place1
PLACE
  • Conventional distribution channels
  • Vertical marketing system
  • Channel design decisions
promotion
PROMOTION
  • Marketing communication programmes
  • Promotion tools:
    • Advertising
      • Information advertising
      • Persuasive advertising
      • Comparative advertising
      • Reminder advertising
promotion1
PROMOTION
  • Sales promotion
    • Consumer promotions
    • Trade promotions
    • Sales force promotions
  • Public relations
    • Speeches
    • Buzz marketing
    • Corporate identity materials
    • Mobile marketing
promotion2
PROMOTION
  • Personal selling
    • Identifying and qualifying potential customers
    • Gathering information
    • Approaching customer
    • Presenting and demonstrating
    • Closing
    • Follow-up
  • Direct marketing
    • Benefits for buyers
    • Benefits for sellers
    • Forms of marketing
marketing strategy
MARKETING STRATEGY
  • Plan of action for developing, pricing, distributing and promoting products that meets the needs of specific customers
  • Understanding external environment
  • Selecting target market
  • Developing marketing mix
  • Creating a competitive advantage
marketing environment
MARKETING ENVIRONMENT
  • Micro environment
    • Company
    • Suppliers
    • Marketing intermediaries
    • Customers
    • Competitors
    • Publics
marketing environment1
MARKETING ENVIRONMENT
  • Macro environment
    • Demographic
    • Economic
    • Natural
    • Technological
    • Political
    • Cultural
target market
TARGET MARKET
  • Set of customers sharing the same needs and wants
  • Selecting target market segments:
    • Undifferentiated marketing
    • Differentiated marketing
    • Concentrated marketing
    • Micromarketing
marketing process
MARKETING PROCESS
  • Understand customers
  • Design the marketing strategy
  • Construct marketing program
  • Build strong relationship
  • Create customer value
customer and marketplace concept
CUSTOMER AND MARKETPLACE CONCEPT
  • Customer needs, wants and demands
  • Products, services and experiences
  • Customer value and satisfaction
  • Exchanges and relationships
  • Markets
evolution of marketing
EVOLUTION OF MARKETING
  • Production concept
  • Product concept
  • Selling concept
  • Marketing concept
  • Societal marketing concept
consumer market
CONSUMER MARKET
  • Individuals, groups and households who buy goods or services for own use
  • Buyer decision process
    • Recognize the need
    • Search for information
    • Evaluation alternatives
    • Purchase
    • Post purchase behaviour
direct marketing
DIRECT MARKETING
  • The use of consumer-direct channels
  • One of the fastest growing avenues for serving customers
  • Sales have been growing rapidly
  • Sales to consumer market, B2B, fund-raising by charitable institutions
e marketing
E-MARKETING
  • Application of marketing principles and techniques via electronic media
  • Also known as internet marketing and online marketing
  • The process of marketing a brand using the Internet
  • Give businesses access to the mass market at an affordable price
why go international
WHY GO INTERNATIONAL
  • No country can produce all goods and services that its society needs
  • Resources vary among nations
  • Goods that cannot be produced by a country may be made available for consumption by importing from another producing country
why go international1
WHY GO INTERNATIONAL
  • Increasing competition
  • New markets for profits
  • Reducing cost
  • Enabling factors
    • Transportation
    • ICT
    • Globalization
    • WTO
    • Government intensive
    • Trading blocks
factors to consider when going global
FACTORS TO CONSIDER WHEN GOING GLOBAL
  • Politics and government policies
  • Business potential
  • Culture
  • Business infrastructure
  • Foreign exchange risks
strategies for entering foreign markets
STRATEGIES FOR ENTERING FOREIGN MARKETS
  • Exporting
  • Joint ventures
  • Licensing
  • Franchising
  • Wholly owned foreign subsidiary
types of companies
TYPES OF COMPANIES
  • Multinational
  • Global
  • International
  • Transnational
capital
CAPITAL
  • The money the organization uses to fund the business activities or expenditures
  • Sources of capital:
    • The owners
    • The creditors
capital1
CAPITAL
  • Long-term funds of the firm
  • One of the most complex areas of financial decision making
  • Financial manager must be able to assess the firm’s capital structure
  • Poor capital structure decisions can result in a high cost of capital
  • Effective decisions can lower the cost of capital
types of capital
TYPES OF CAPITAL
  • Debt capital
    • Long-term borrowing incurred by the firm
  • Equity capital
    • Long-term funds provided by the firm’s owner
  • Debt-equity ratio
    • The relationship between long-term funds provided by creditors and firm’s owners
short term funds
SHORT-TERM FUNDS
  • Bank loans
  • Trade credits
  • Commercial paper
  • Factoring
long term funds
LONG-TERM FUNDS
  • Common stock
  • Preferred stock
  • Bonds
  • Retained earnings
  • Venture capital
  • Leasing
  • Writing a Business Plan to raise capital
working capital
WORKING CAPITAL
  • Current liability
  • Current assets
  • Managing working capital
capital structure
CAPITAL STRUCTURE
  • Proportion of equity and debt that makes up the capital of the organization
  • Risky to have a high proportion of debt instrument
  • Equity will not be paid back
capital structure1
CAPITAL STRUCTURE
  • Types of debt instrument:
    • Bond
    • Bank term loan
    • Inter-company loan
cost of capital
COST OF CAPITAL
  • It acts as a major link between the firm’s long-term investment decision and the wealth of the owners as determined by investors in the marketplace
  • Can be used to decide whether a proposed corporate investment will increase or decrease the firm’s stock price
cost of capital1
COST OF CAPITAL
  • The rate of return that a firm must earn on its project investments to maintain the market value of its stock
  • Basic structure of cost of capital:
    • Business risk
    • Financial risk
    • After-tax costs
investment considerations
INVESTMENT CONSIDERATIONS
  • Return
  • Risk
  • Liquidity
investment analysis tools
INVESTMENT ANALYSIS TOOLS
  • Simple interest
  • Compound interest
  • Pay-back period
  • Net Present Value
  • Internal Rate of Return
time value of money
TIME VALUE OF MONEY
  • Future value:
    • Measured at the end of a project’s life
    • Cash you will receive at a given future date
  • Present value:
    • Measured at the start of a project’s life
    • Cash you have in hand today
time value of money1
TIME VALUE OF MONEY
  • Concept of future value:
    • Compound interest
    • Principal
  • Concept of present value:
    • Discounting cash flows
    • Rate of return
financial controls
FINANCIAL CONTROLS
  • Budget
  • Audit
  • Policies and Procedures
what is management
WHAT IS MANAGEMENT?
  • Mary Parker Follet
    • Art of getting things done through other people
  • George R. Terry
    • A process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources.
what is management1
WHAT IS MANAGEMENT?
  • Donnelly
    • A process undertaken by one or more individuals to coordinate the activities of others to achieve results not achievable by one individual acting alone
  • What managers do
  • Ensuring that work activities are completed efficiently and effectively by people responsible for doing them
what is management2
WHAT IS MANAGEMENT?
  • A continuous, ongoing process
  • A goal-directed activity
  • Uses of various organizational resources
why is management important
WHY IS MANAGEMENT IMPORTANT?
  • Critical element in the economic growth of the country
  • Essential in all organized effort
  • Dynamic, life giving element in every organization
  • The reality of work
  • Rewards and challenges of being a manager
types of managers
TYPES OF MANAGERS
  • Top-Level Managers
  • Middle-Level Managers
  • First-Level Managers
managerial skills
MANAGERIAL SKILLS
  • Technical Skills
  • Human Skills
  • Conceptual Skills
managerial roles
MANAGERIAL ROLES
  • Interpersonal Roles
  • Informational Roles
  • Decisional Roles
management functions
MANAGEMENT FUNCTIONS
  • Newman and Summer
    • Planning, Organizing, Leading, Controlling
  • Luther Gullick
    • Planning, Organizing, Staffing, Directing, Coordinating, Reporting, Budgeting
management functions1
MANAGEMENT FUNCTIONS
  • Warren Haynes and Joseph Massie
    • Decision making, Organizing, Staffing, Planning, Controlling, Communicating, Directing
  • Henri Fayol
    • Planning, Organizing, Commanding, Coordinating, Controlling
management functions2
MANAGEMENT FUNCTIONS
  • Planning
    • Setting objectives and strategies to accomplish them
    • Guide employees’ behaviour and actions
    • Managers at different levels are involved
    • Must support organization’s mission
  • Organizing
    • Process of arranging and coordinating organizational resources
    • Allows cooperation between members and motivates members to work together
management functions3
MANAGEMENT FUNCTIONS
  • Leading
    • Process of motivating and inspiring subordinates
    • Good leaders can lead, guide and inspire people
  • Control
    • Final link in management function
    • Effective control systems allow managers to know how well plans being implemented
motivating employees
MOTIVATING EMPLOYEES
  • Driving force that is capable of bringing out the best in people
  • A highly motivated person always strive to work harder than an unmotivated person
  • Two theories:
    • Hierarchy of Needs Theory
    • Motivator-Hygiene Theory
maslow s hierarchy needs
MASLOW’S HIERARCHY NEEDS
  • Physiological needs
  • Safety needs
  • Social needs
  • Esteem needs
  • Self-actualization needs
motivator hygiene theory
MOTIVATOR-HYGIENE THEORY
  • Also known as two-factor theory
  • Intrinsic factors are related to job satisfaction (motivators)
  • Extrinsic factors are related to job dissatisfaction (hygiene factors)