Possible essays/reports for HY

A. Sources of funds
There are two ways a business can access money: internally or externally. Internal sources of funds are called equity. These are: [CARS] 1. Capital invested by owners the owners financial claim on assets of a business. It is the original investment the owners made into the business by contributing capital or buying shares, plus any other profits the business ma es. !. S ares " another way to source internal equity finance is to invite other people to become part"owners by selling them shares in the business. #rdinary shares are the basic form of equity capital. $. Retained profits if the business ma es a profit the owner may decide to only ta e part of this and put the remainder bac into the business. %. Sale of unwanted assets can also provide funds for the business. !xternal sources of finance can include: ". S ort ter# borrowin$ [%%&] %an' overdraft gives a business fle&ibility to borrow money from a ban at short notice through its cheque account. 'n advantage of this facility is that interest paid by the business is ta& deductible. 'n alternative to an overdraft is a credit card which is becoming more and more common due to lower I(s. %an' bill or a commercial bill is a written order for a loan amount that is guaranteed by the businesss ban . The funds and the interest will be repaid to a particular person or business on a certain day in the future. &rade credit is a type of loan from a supplier. )*s are supplied but payment is made later. (. )on$ ter# borrowin$ [*+&] *ort$a$e are loans used to fund the purchase of e&pensive items such as property. These need security and e&tend to $+ years. +ebenture large, established companies can obtain finance by issuing debentures. ,inance companies and other large firms are invited to invest in these businesses by lending big amounts of money for a fi&ed time and with a fi&ed I(. &er# loan a loan that has a term of repayment longer than 1! months is considered a term loan. ,. )easin$ -usinesses lease non"current assets by agreeing to pay regular payments and it is therefore a type of debt finance.

-. .actorin$ .easing is a source of short"term finance because it can be used to obtain cash reasonably quic ly. It can be used to improve cash flow. This is the cash sale of a businesss accounts receivable to a factoring company. ,actoring is a method of improving a businesss liquidity at the e&pense of some of its wor ing capital in the short term. /. 0enture capital 'n entrepreneur, finance company or super fund can provide finance to a business in e&change for part ownership. This is very ris y. 1. 2rants )rants are financial gifts provided by the govt to assists businesses to establish or e&pand.

%. Strate$ies for profitability3 li4uidity3 efficiency and solvency

". PR5.6&A%6)6&Y is of ey concern to owners and managers and indicates not only the level of profits but of more interest, the level of return on #/. 0trategies to increase profitability: (educe costs by outsourcin$ 1sing sales #ix to increase revenue Cost7based pricin$ to increase sales 6nvestin$ in areas of i$ er $rowt potential 6#provin$ efficiency 1sing bud$ets to reduce costs (. )6896+6&Y refers to the ability of a business to repay its current debts as they fall due. 0ufficient cash flow is vital in the running of the business in the short term as well as long term. 0trategies to improve liquidity: Reduce current liabilities by e4uity fundin$ Sell non7current assets .actorin$ * )easin$ to free up capital Interest charges for late payments Sale lease7bac' i.e. lending non"current assets to other firms at a charge :6& inventory management +istribution of pay#ents and stretching repayments till last day

,. !..6C6!;CY relates to how well the business uses its resources to generate income and ultimately profit and return on investment. 0trategies to improve efficiency: (educe costs by retrainin$, multi"s illing and purchase of new technology Casualisin$ labour Rationali<in$ suppliers 1sing strategic alliances 9sin$ bud$ets +iscounts for early pay#ents =accounts receivable> -. S5)0!;CY refers to the long term stability of the business and relates to issues such as the level of debt and equity in the business. 2oncepts such as the $earin$ to debt e4uity ratio i.e. the ratio of total liabilities to t e level of e4uity funds invested by the owners indicate how stable the business is in regards to how well long term obligations can be met. 0trategies to improve solvency: +ecrease liabilities )easin$ Reducin$ owners? drawin$s reduce overdrafts and i$ interest loans sell non7current assets

C. !le#ents of a #ar'etin$ plan

". !@!C9&60! S9**ARY a brief description of current issues facing the business and summary of proposed strategies. (. S6&9A&65;A) A;A)YS6S provides firms to e&amine their current position within the mar et. a. *ar'et analysis a consideration of factors in a businesss internal and e&ternal environments that could directly affect the operations of the business. /.g. a recession decreases the opportunity to raise prices. b. Product analysis e&amines the current position of the g *3or s that a business produces. ' product will often go through different phases over the course of its e&istence nown as the product life cycle establishment, growth, maturity, post"maturity, decline and renewal stage. c. Co#petitor analysis process of investigating and assessing the mar eting strategies of ma4or competitors and e&amining their impact on the business. This includes: i. Identifying competitors ob4ectives for opportunities ii. Identifying competitors strategies for comparison iii. 'naly5ing competitors strengths and wea nesses for e&ploitation.

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d. SA5& analysis the strengths and wea nesses are internal whereas opportunities and threats are e&ternal to the business. !S&A%)6SH6;2 *ARB!&6;2 5%:!C&60!S 6need to be 07'(T8 )eneral mar et ob4ectives include: a. increasin$ #ar'et s are, b. expandin$ into new $eo$rap ic #ar'ets and c. expandin$ t e product ran$e 6+!;&6.Y6;2 &H! &AR2!& *ARB!& define target mar et and use mar et segmentation to determine one of these consumer mar ets: a. 7ass mar et b. 7ar et segments c. 9iche mar et +!0!)5P6;2 *ARB!&6;2 S&RA&!26!S C the mar eting mi& is the process of developing a product that meets the needs of consumers and implementing a series of promotional, pricing and distribution strategies that will encourage consumers to purchase the product. a. Product other than the physical attributes such as pac aging a business must consider: i. Positionin$ image of the product ii. %randin$ the reputation of business or product. b. Price a business may use: i. Penetratin$ pricin$ lowest possible price ii. .oss leader low but limited iii. 7ultiple"unit pricing bul buying iv. *ar'et s'i##in$ high price to recover v. :restige pricing high price vi. Co#petition7based pricin$ vii. Psyc olo$ical pricin$ 7 ;<< instead of ;1++ viii. Product +eletion Pricin$ c. Pro#otion C i. Personal sellin$ door"to"door ii. Advertisin$ iii. +irect #ar'etin$ 070 d. Place/distribution7 i. 6ntensive distribution to everyone ii. Selective distribution limited stores iii. !xclusive distribution restriction on supply 6*P)!*!;&A&65;3 *5;6&5R6;2 A;+ C5;&R5))6;2 once the mar eting plan has been devised, a business must implement the strategies contained in the plan. The three common forms of analysis and control when monitoring the performance of a mar eting plan are: Sales analysis the sales of a particular product among different customer groups, sales reps and times of the year. *ar'et s are analysis a firms sales compared to that of total mar et.

*ar'etin$ profitability analysis " evaluating the financial and non"financial benefits that have been achieved through a specific mar eting plan against the costs of implementing that plan.

+. & e nature and sources of c an$e

!@&!R;A) 6;.)9!;C!SD P!)&S 2. C an$e..

". C an$in$ nature of #ar'ets =eregn of financial and labour, trade liberisation and changing consumer mar ets. (. !cono#ic influences fiscal, 7: and micro ,. .inancial influences effect of I(s on debt and equity finance -. 2eo$rap ic influences our location, popn shifts and refugees /. Social influences communitys needs, opinions and attitudes 1. )e$al influences common law and legislations E. Political influences 'ustrade, )0T, reduced company ta& and privatisation F. &ec nolo$ical develop#ents can increase efficiency e.g. internet and e"commerce 6;&!R;A) 6;.)9!;C!SD ". !ffects of acceleratin$ tec nolo$y managers need to assess the need and then implement. /.g. teleconferencing and /"commerce the use of electronic communications to carry out business. (. ;ew syste#s and procedures managers need to respond to technological changes such as computeri5ed stoc controls to gain a competitive advantage. ,. ;ew business cultures the culture of a business includes the informal communication and unwritten procedures followed in the business. The dominance of a set culture may inhibit a businesss progress and business needs to communicate effectively to employees to for greater opportunity of success. /.g. mergers Structural responses to c an$e 1. #utsourcing !. ,lat mgt structures $. 0trategic alliances and networ s

!. Reasons for resistance to c an$e

1. ,inancial costs a. 9ew equipment b. (edundancy payments c. :lant layout d. (etraining !. Inertia of managers change agents $. 2ultural incompatibility in mergers3ta eovers %. 0taffing 6.'=8

a. =es illing b. 'cquiring new s ills c. .oss of career prospects

.. *ana$in$ c an$e effectively [62CC]

6dentifyin$ t e need for c an$e involves assessing mar et trends and firms performance compared to industry and world standards. Settin$ ac ievable $oals involves revising the -: and establishing 0>#T to establish current position and achievable goals Creatin$ a culture of c an$e through team wor and change agents 9tilisin$ c an$e #odels available force"field analysis and .ewins unfree5e3change3refree5e model.

2. Bey influences on e#ploy#ent relations

". Social a. 2hanging wor patterns greater proportion of women lead to part"time and casualisation also technology has reduced manug b. :opn shifts culturally diverse meaning employers need to promote cultural tolerance (. )e$al a. ,ederal legislation: such as the >or place (elations 'ct and 'nti"discrimination 'ct b. 0tate legislation: such as the Industrial (elations 'ct, #?*0 'ct and >or ers 2ompensation 'ct c. 2ommon law made by courts ,. ;ew or$ani<ational be avioral influences a. ,lat mgt structures b. Team structures -. !cono#ic a. /co cycle affects employment also inflation boom and slowdown. b. )lobaln impact of deregn on closures and hence retrenchments

H. !ffective e#ploy#ent relations

7easures of effectiveness: 6tie in with the @effective /(8 'bsenteeism .evels of staff turnover -enchmar ing disputation quality

1. !. $. %. A.

Ac4uisition recruit the @right people with the right s ills +evelop#ent through formal and informal training and performance appraisals *aintenance financial and non"financial to attract staff and increase benchmar ing Separation managers need to be aware of changing laws Co##unication syste#s a. )rievance procedures b. Team briefings c. >or er participation behavioural mgt style B. .a#ily"friendly pro$ra#s a. 2hild"care centres b. :ermanent part"time wor c. Cob sharing d. ?ome"based wor e. ,le&ible wor ing hours f. :arental .eave D. Rewards .

6. Causes of industrial conflict

1. !. $. %. >age demands >or ing conditions 7anagement policy :olitical goals and social issues

9nitary both will benefit and wor towards common and unified goals. 2onflict seen as disloyalty, wor of stirrers and agitators Pluralist sta eholders hold differing views on a wide range of issues. 's a result it is not possible for all sta eholders to share the same beliefs and have the same goals. These could possibly cause conflict Radical conflict is inevitable. /mployers are e&ploitative in every way. The competing interests of sta eholders means only one can gain at the e&pense of the other.

:. &ypes of industrial action

#vert clear and visible: 6:0"-.>8 0tri es :ic ets .oc outs -ans >or "to"rule campaigns 2overt less obvious and hidden: 60/'T8 'bsenteeism 0abotage

.abour turnover /&clusion from decision ma ing

B. Costs and benefits of industrial action

C5S&SD 1. .inancial costs a. .oss of income firms may close or relocate. b. .oss of production c. 'dditional costs such as replacing labour d. .oss of mar et share and sales !. Personal costs low staff morale, lower levels of 4ob satisfaction and increased staff turnover levels. $. Social costs pressure leads to drug and alcohol. %. Political costs govts can be politically damaged by adopting a view on a particular dispute A. 6nternational costs " loss of intl confidence leading to less loans and less Es %!;!.6&SD 1. (aises awareness of unethical mgt decisions !. 9ew methods of communication can be established $. 7ore efficient wor practices may be adopted %. /mployees may receive improve wages and conditions

). Reasons for expansion

". *ar'etin$ reasons a. Increase sales b. ,ind new mar ets c. 7inimi5e competitive ris d. /&tend product life cycle (. 5perations reasons a. 'chieve economies of scale b. )ain access to technology ,. !#ploy#ent relations reasons a. (egulatory differences b. 0 illed labour -. .inance reasons a. 2ushioning the eco cycle b. =iversification c. Ta& minimisation

*. +rivers of $lobalisation
1. &;C?s T92s are corporations who have production facilities in at least two countries and are owned by residents of at least two countries. These have helped

business e&pand both intly and domestically. 0ince 1<<+ the number of T92s has more than doubled to D+,+++ but more importantly the number of affiliates to T92s has quadrupled to over B<+,+++. This dramatic e&pansion has provided businesses with opportunities to affiliate and hence benefit from these larger corporations. In !++B a third of all world trade was between T92s and their affiliations. Therefore businesses can e&pand from T92s because they provide them with a stable customer base which is essential for future growth. !. 2lobal consu#ers Cust as different economies in the world are merging into one global economy, consumers around the world are increasingly demanding similar products. This has made it easier for businesses wanting to e&pand o3s since their g or s may only need small modifications to be sold in that particular country. The increasing number of the ageing population around the world was spotted by ?0-2 in !+++ and since then they have placed greater emphasis on their retirement services e&panding their range of retirement pac ages and superannuation incentives to benefit from this growing mar et. $. 6#pact of tec nolo$y transport technology developments have made geographic distances between businesss inputs and mar ets significantly smaller. 2ontainer ships and cheaper and more frequent air travel have dramatically reduced transport costs for businesses and made it easier for them to e&pand globally and domestically. 'lso the instant flow of information and data via satellites and the internet has helped businesses e&pand to growing mar ets entirely through internet advertising and the establishment of facilities for online orders and shipping. Technology can certainly be used to achieve business e&pansion as seen in ?0-2 in !++%, where its technology spending was increased from 10;1 billion to 10;% billion to ta e full advantage of its economies of scale and hence reduce costs to customers. This investment allowed it to improve services and enhance the customer e&perience over a range of global mar ets, thus increasing global revenue and mar et share. %. Role of $ov?t the govt has a ma4or role in helping businesses achieve global e&pansion. 'ustrade is a federal govt organisation which assists 'ustn businesses through financial assistance, information on potential E mar ets and mar eting advice. #ne of its main schemes is the /&port 7ar et =evelopment )rant 6/7=)8 scheme, which reimburses Eers for some of their costs in promoting their Es in new mar ets. This scheme is a very practical approach for e&pansion in o3s mar ets and has provided businesses with over ;1D+ million over the past % years. In addition to this the govt has pushed for bilateral and regional ,T's in recent years which have dramatically reduced barriers to o3s mar ets thus ma ing it easier for businesses to E to emerging mar ets and hence e&pand their operations.

A. +ere$?n of financial #ar'ets deregn is the removal of restrictions and regulations on an industry in order to increase efficiency and productivity. This has played a substantial role in helping firms achieve global e&pansion. The deregn of financial mar ets around the world has meant that businesses can now borrow funds from countries with lower I(s to e&pand their operations and investments with more ease. They can also invest and e&pand in other mar ets with less regulations and Fred tapeG holding them bac . This uniformity of regulatory standards around the world has decreased ?0-2s regulation and supervision costs from over 10;1.! billion in 1<H+ to 4ust 10;A++ million in !++%. This has allowed ?0-2 to e&pand its operations internationally to over DD countries around the world.

;. Strate$ies for $lobal expansion

1. !xport 7 e&porting occurs when a business manufactures its product in its home nation and sells it in foreign mar ets. This has played a significant role in business e&pansion in recent years because it is easier and cheaper and with less ris than other methods of e&pansion. Through this a business can penetrate new mar ets e&tending the product life cycle of its g or s whilst increasing both profits and sales. Through this firms can also try out or test out a mar et without the hefty costs of an ,=I. !. 9se .+6 ,=I occurs when a business from one country invests in businesses, properties or assets in another country. There are $ main forms of ,=I: ,irst, ,=I can be in the form of a ta eover or merger involving the purchase of at least 1+I of a business o3s. -y having some input into the mgt decisions of a local business a partnership is possible, enabling intl e&pansion. 0ince the 1<A+s ?0-2 has pursued the strategy of e&pansion through ,=I. (ecent acquisitions include the ban of -ermuda and 1<.<I of the ban of 2ommunications .imited in 2hina. The 2hairman of ?0-2 alluded to the fact that Fban of 2ommunications provides the )roup with a new window for developing our business in 2hina and e&panding our operationsG

0econd, a business may use ,=I to establish a new business from scratch in a foreign mar etJ nown as a )reenfield strategy. This plays an important role in the global e&pansion of businesses as they can minimi5e the competitive ris in that country and hence penetrate the new mar ets available. Third, when two or more firms invest together in a new pro4ect o3s a 4oint venture is established. This is an effective strategy for e&pansion because it allows ris s and resources to be shared, which assists both businesses to enter mar ets o3s with lower costs.

$. Relocate operations [production8 " relocation of operations involves shifting an entire business function offshore. This plays a big role in businesses e&panding domestically, through outsourcing production to a manufacturer o3sJ and globally,

through the purchase or establishment of a manufacturing plant in a country where the costs of production are considerably lower. %. !stablis a #$t contract " a mgt contract is an arrangement where a business provides managerial assistance and e&pertise to another o3s business for a fee. This is very effective in e&pansion in both global and domestic mar ets because the @establishing business can benefit significantly from the e&pert advice and invaluable guidance from the established operator in the same sector. The @guiding company can also e&pand through its involvement with e&porting professional service and advice. A. 9se licensin$ and franc isin$ " licensing is an agreement where one business permits another to produce and mar et its products in return for royalties or license fees. This is the least ris y form of e&pansion and is very effective because the licensee has access to a proven, well" nown product that will provide instant sales and growth. ,ranchising is similar in that one business sells another the right to use its operating methods, products and trademar . ?owever franchising is different to licensing in that a franchisor must provide wor e&perience, mgt training and continual advice for the entrepreneur3s. The advantage of franchising is it allows the global e&pansion of a brand name without the original business facing the ris of establishing in other nations.

5. Specific influences on $lobal business

". .inancial influences o 2urrency fluctuations affects business profitability and E and 7s. o Interest rates and o3s borrowing affect borrowing price. (. Political influences o Tensions between protectionism and free trade firms may face greater competition or cheaper inputs. o Intl organisations and treaties can benefit firms o Trade agreements and regionalism o 2ivil war and unrest terrorism reduces confidence ,. )e$al influences o 2ontracts managers need to be aware o =ispute resolution may be different so negotiation is preferable o Intellectual property protected by patents -. Social/cultural influences o .anguages o Tastes o (eligion o Karying business practices and ethics

P. *ana$in$ $lobal business

.6;A;C6A) ". Credit ris's 7ethods of payment a letter of credit is a document that allows the seller to draw money out of the buyers account under terms. ' bill of e&change is a written order confirmed by a ban that the transaction is legally followed. 'n effective strategy by global business is to research suppliers and buyers thoroughly. Insurance to protect non"payments and theft. The /,I2 is the govt department which helps e&porters in this area. (. Currency fluctuations ?edging is any strategy or financial tool used to reduce the ris of loss resulting from financial transactions. ?edging can be done naturally by using subsidiaries but derivatives which are special contracts between global firms can also be used. The $ types of derivatives are: ,orward e&change contracts where the ban will guarantee the e&porter a certain /( on a certain day regardless of current /(s. 2urrency option contracts where the firm can buy or sell foreign currency when the /( is to its advantage. 0wap contracts where the buyer gives the seller another currency and swaps this for the sellers currency at a spot rate which is agreed upon. ,. 5btainin$ finance cheaper I(s o3s however ris y -. +ifferent financial and le$al syste#s a business must be aware of different laws and regulations and hire a specialist to avoid problems *ARB!&6;2 ". Researc of #ar'et through primary and secondary and mar et segmentation. (. 2lobal brandin$ a firm must promote its brand globally to avoid cultural issues with certain products ,. Standardi<ation and differentiation to suit mar ets and appropriation of the % ps 5P!RA&65;S ". Sourcin$ " sourcing refers to a global business buying its inputs so that it can manufacture or provide g*s a. 7a e or buy b. Kertical integration and ta e over the suppliers business to reduce costs through economies of scale, CIT and transfer pricing (. 2lobal web 6components produced in different countries8 this strategy is buying inputs form cheapest country, obtaining finance from lowest I(s and distributing to those who demand the products. !*P)5Y*!;& R!)A&65;S ". 5r$ani<ational structure a. )eographic subsidiary speciali5ing in a certain mar et b. ,unctional e.g. only operations or mar eting for one subsidiary c. :roduct"based is where mgt is responsible for 4ust one product (. Staffin$ syste#s a. /thnocentric moving all employees to the new country

b. :olycentric moving some managers and employing others c. )eocentric employing the best person for the 4ob regardless of bac ground ,. S orta$e of s'illed labour a global business will have to balance the opportunity to reduce costs by accessing cheap labour against the costs of training labour. -. )abour law variations and #ini#u# standards of labour a business must be aware of labour laws in the new mar et such as minimum age and wages and types of employment contracts.