Lecture 3 : Options for organising business

Sole proprietorship
-Sole Proprietorships are businesses owned and operated by one individual.

6 Advantages of Sole Proprietorships

1.Ease and cost of formation

-Forming a sole proprietorship is relatively easy and inexpensive.

2.Secrecy
- They make possible the greatest degree of secrecy; minimises the possibility of competitors
gaining trade secrets.

3.Distribution and use of profits

- All profits belong exclusively to the owner.

4. Flexibility and control of the business

- The owner has complete control over the business allowing them to respond quickly to
changing business conditions.

5.Government regulation
- Sole proprietorships have the most freedom from government regulation.

6.Taxation
- Taxes are considered personal income and are taxed at individual tax rates. Closing the
business - It can be dissolved easily.
6 Disadvantages of Sole Proprietorships

1.Unlimited liability
- The owner has unlimited liability in meeting the debts of the business.

2.Limited sources of funds

- Sources of external funds are difficult to find so it is more difficult to obtain funds to start or
expand a sole proprietorship.

3.Limited skills - The owner must have many diverse skills such as management, marketing,
finance, accounting, bookkeeping, and personnel management.

4. Lack of continuity
- The survival of the business is tied to the life of the owner and his or her ability to work.

5.Lack of qualified employees

- Qualified employees are hard to find as it is difficult for small proprietors to pay competitive
wages and benefits offered by large competing corporations.

6.Taxation
- Wealthy sole proprietors pay a higher tax rate than they would under the corporate form of
business.

Partnerships
-Partnerships is a form of business organization defined as an association of two or more
persons who carry on as co-owners of a business for profit

Types of Partnership

1) General partnership
-involves a complete sharing in the management of a business. In a general partnership, each
partner has unlimited liability for the debts of the business. Professionals such as lawyers,
accountants, and architects often join together in general partnerships.

2)Limited Partnership
-A limited partnership has at least one general partner, who assumes unlimited liability, and at
least one limited partner, whose liability is limited to his or her investment in the business.

3)Articles Partnership
-Articles of partnership are legal documents that set forth the basic agreement between
partners. Most states require articles of partnership, but even if they are not required, it makes
good sense for partners to draw them up.
6 Advantages of Partnerships
1)Ease of organization
-Partnerships are easy to organize. Starting a partnership requires little more than drawing up
articles of partnership.

2) Availability of capital and credit

-Partnerships can pool financial resources of the partners. Partnerships have higher credit
ratings due to the partner’s combined wealth.

3)Combined knowledge and skills

-Partners can specialize in their particular areas of expertise such as marketing, production,
accounting or service.

4)Decision making
-Small partnerships can react more quickly to changes in the business environment than can
large partnerships and corporations.

5)Regulatory controls
-Government regulations are few.

6)Taxation of Partnerships
-Partnerships are quasi-taxable organizations. This means that partnerships do not pay taxes
when submitting the partnership tax return to the Internal Revenue Service. The tax return
simply provides information about the profitability of the organization and the distribution of
profits among the partners. Partners must report their share of profits on their individual tax
returns and pay taxes at the income tax rate for individuals.
5 Disadvantages of Partnerships

1) Unlimited liability
- General partners have unlimited liability for the debts of the partnership, just as in a sole
proprietorship.

2)Business responsibility
- Partners are responsible for each others’ decisions and a bad decision by one partner can put
the other partners’ personal resources at risk.

3)Life of the partnership

- A partnership is terminated when a partner dies or withdraws.

4)Distribution of profits
-It is difficult to sell a partnership interest at a fair price. The distribution of profits may not
correctly reflect the amount of work done by each partner.

5)Limited sources of funds

-Sources of funds available to a partnership are limited.

Corporations
-Corporations is a legal entity, created by the state, whose assets and liabilities are separate
from its owners.

Characteristics:
A) Has many of the rights, duties, and powers of a person
B) Can own and transfer property
C) Can enter into contracts
D) Can sue and be sued in court

Types of Corporations

i)Private corporation owned by just one or a few people closely involved in managing the
business.
- No stock is sold to public
- Not required to disclose financial information publicly
- May become public via initial public offering (IPO)

ii)Public corporation is a corporation whose stock anyone may buy, sell, or trade.
- May be taken private when all firm’s stock is purchased and can no longer be sold publicly

Two types of public corporations:

a. Quasi-public - are owned and operated by the federal, state, or local government.
b. Nonprofit - focus on providing a service rather than earning a profit, but they are not owned
by a government entity.

5 Advantages of Corporations

1)Limited liability - The owners have limited liability providing protection to shareholders in that
the corporation’s assets and liabilities are separate from its owners.

2) Ease of transfer of ownership

- Ownership (stock) can be easily transferred.

3)Perpetual life
- Corporations usually last forever, extending beyond the life of its owners.

4)External sources of funds

- Raising money is easier than for other forms of business.

5)Expansion potential
- Expansion into new businesses is simpler because of the ability of the company to expand into
national and international markets.

4 Disadvantages of Corporations

1)Double taxation
- The company is taxed on its income, and owners pay a second tax on any profits received as
dividends.

2)Forming a corporation
- Forming a corporation can be expensive.
3)Disclosure of information
- Corporations must make information available to their owners, usually through an annual
report to shareholders. Because all reports filed with the Securities Commission (SEC) are
available to the public, competitors can access them. Additionally, complying with securities
laws takes time.

4)Employee-owner separation
- Most employees are not stockholders of the company for which they work. This separation of
owners and employees may cause employees to feel that their work benefits only the owners.
Employees without an ownership stake do not always see how they fit into the corporate picture.
Lecture 5 :The Nature of management

1) What is management? 何为管理?

- Management is the process designed to achieve an organisation’s objectives by

using its resources effectively and efficiently in a changing environment.
管理是在不断变化的环境中通过有效和高效地使用其资源来实现组织目标的过程。

- Effectively means having the intended result , while efficiently means

accomplishing the objectives with a minimum of resources.
有效是指取得预期的结果，而高效是指以最少的资源完成目标。

-Management is universal, which means that it is used in any organisation

requiring the coordination of resources.
管理是通用的，这意味着它适用于任何需要协调资源的组织。

2) Name the FOUR (4) functions of management. Briefly describe each function.
1. Planning 规划
-The process of determining the organisation’s and deciding how to accomplish
them.
确定组织目标并决定如何实现目标的过程。

-It involves forecasting events and determining the best course of action from a
set of options.
它包括预测事件，并从一组选项中确定最佳行动方案。

- The plan itself specifies what should be done, by whom , where, when and how.
计划本身规定了应该做什么，由谁，在哪里，何时以及如何做。

2.Organising 组织
-Is the structuring of resources and activities to accomplish objectives in an
efficient and effective manner.

组织资源和活动，以高效和有效的方式完成目标。

3.Directing 领导
-Is motivating and leading employees to achieve organisational objectives.
是否激励和领导员工实现组织目标

-Good directing involves telling employees what to do and when to do it through

the implementation of deadlines and then encouraging them to do their work.
好的指导包括告诉员工应该做什么，什么时候做，通过执行截止日期，然后鼓励他们完成工作。

4. Controlling
-Is the process of evaluating and correcting activities to keep the organisation on
course.
是评估和纠正活动的过程，以保持组织的正轨。
 3) Identify the THREE (3) levels of management. What is the focus of managers of
each level?

1. Top management 高层管理人员

-In business, top managers include the president and other top executives.
在商业中，高级经理包括总统和其他高级主管。

-Such as chief executive office , chief financial officer, and chief operations
officer, who have overall responsibility for the organisation.
比如首席执行官、首席财务官和首席运营官，他们对组织负有全面责任。

-They make the organisation’s strategy decisions.

他们制定组织的战略决策。

-Decisions that focus on overall scheme or key idea for using resources to take
advantage of opportunities.
专注于利用资源利用机会的总体方案或关键思想的决策。

2.Middle management 中层管理

-Are responsible for tactical and operational planning that will implement the genera; guideline established by top
management.

负责执行该属的战术和作战计划;由最高管理层制定的指导方针。
-Are involved in the specific operation of the organisation and spend more time organising that other managers.

参与组织的具体运作，比其他经理花更多的时间组织。
-In business, plant managers. Division managers, and department managers make up middle management.
在商业中，工厂经理，部门经理和部门经理组成中层管理人员。

3. First-line management 基层管理者

-Those who supervise and daily operations of the organisation 负责监督和组织日常运作的人员

-They are responsible for implementing the plans established by middle management and directing workers daily
performance on the job
他们负责执行中层管理制定的计划，指导工人的日常工作表现
-They spend most of their time directing and controlling
他们大部分时间都花在指导和控制上
-Common titles for first line managers are foreman, supervisor, and office manager.
基层管理者的常见头衔是领班、主管和办公室经理。
4) What are the areas of management? 管理的范畴在于哪儿？

1.Financial Manager 财务经理

- Focus on obtaining the money needed for the successful operation of the
organisation and using the money in accordance with organisational goals
专注于获得组织成功运作所需的资金，并根据组织目标使用这些资金

2.Production and Operations Manager 生产运营经理

-Develop and administer the activities involved in transforming resources into

goods, services, and ideas ready for the marketplace.
开发和管理将资源转化为商品、服务和为市场准备的想法的活动。

3. Human Resources Manager 人力资源经理

-Handle the staffing function and deal with employees in a formalised manner.
以正式的方式处理人事职能和与员工的关系。

4.Marketing Manager
-Responsible for planning, pricing, and promoting products and making them
available to customers through distribution.
负责产品的规划、定价和推广，并通过分销渠道将产品提供给客户。

5.Information Technology (IT) Manager 信息技术经理

-Responsible for implementing, maintaining, and controlling technology
applications in business, such as computer networks.
负责实现、维护和控制业务中的技术应用，如计算机网络。

6.Administrative Manager 行政经理

-Manage an entire business or a major segment of a business; do not specialise in a
particular function
管理整个业务或业务的主要部分;不擅长某一特定功能

Lecture 5 :Customer Driven Marketing

1)A consumer electronics company wants to implement a multi segment approach to market segmentation. What
requirements must be met to ensure that the strategy is successful?

-Consumers' needs for the product must be heterogeneous.

-The segments must be identifiable and divisible.

-The total market must be divided in a way that allows estimated sales potential, cost, and profits of the segments to
be compared.

-At least one segment must have enough profit potential to justify developing and maintaining a special marketing
strategy.

-The company must be able to reach the chosen market segment with a particular market strategy.

2.Discuss any FIVE (5) functions of marketing. How does an organisation use marketing activity to achieve its
objective?

1.Buying
-Everyone who shops for products (consumers, stores, businesses, governments) decides whether and what to buy.

-A marketer must understand buyers' needs and desires to determine what products to make available.

2.Selling
-The exchange process is expedited through selling

-Marketers usually view selling as a persuasive activity that is accomplished through promotion (advertising,
personal selling, sales promotion, publicity, and packaging)

3. Transporting
-Transporting is the process of moving products from the seller to the buyer.

-Marketers focus on transportation costs and services.

4.Grading
-Grading refers to standardising products by dividing them into subgroups and displaying and labelling them so that
consumers clearly understand their nature and quality

-Many products, such as meat, steel, and fruit, are graded according to a set of standards that often are established by
the state or federal government.

5.Financing
-For many products, especially large items such as automobiles, refrigerators, and new homes, the marketer arranges
credit to expedite the purchase.

6.Marketing research
-Through research, marketers ascertain the need for new goods and services.

-By gathering information regularly, marketers can detect new trends and changes in consumers' tastes.

3.Explain the FOUR (4) components of the marketing mix

1)Product
-A product-whether a good, service, an idea, some combination- is a complex mix of tangible and intangible
attributes that provides satisfaction and benefits.

- A good is a physical entity you can touch.

-A service is the application of human and mechanical efforts to people or objects to provide intangible benefits to
customers.

2) Price
-A value placed on an object exchanged between a buyer and a seller.

3)Distribution
-Distribution is making products available to customers in the quantities desired.

4)Promotion
-Promotion is a persuasive form of communication that attempts to expedite a marketing exchange by influencing
individuals, groups, and organisations to accept goods, services, and ideas.

4.What is the marketing concept ? Why is it so important?

-The marketing concept states that an organisation should try to satisfy customer’s needs through coordinated
activities that also allow it to achieve that and also allow it to achieve its own goals.

-Adoption of the marketing concept is important because it provides the organisation with a philosophy of meeting
customer’s needs without sacrificing the long run needs of the organisation.

5.What is a marketing strategy?

-A meeting strategy is a plan of action for developing, pricing, distributing, and promoting products that meet the
needs of specific customers.

6)Briefly describe the factors that influence buying behaviour. How does understanding buying behaviour help
marketers?
- Psychological and social variables play a part in buyer behaviour

The psychological variable includes these factors:

1. Perception
- The process by which a person selects, organises, and interprets information received from her senses in order to
understand it.

2. Motivation
- An internal force that directs an individual's behaviour to achieve a goal.

3.Learning
-A change in a person's behaviour caused by information and experience.

4.Attitude
-Knowledge and positive or negative feeling about something

5.Personality
-The organisation of an individual's distinguishing character traits, attitudes, and habits.

Social variable of buyer behaviour include the following four factors:

1. social roles
-The set of expectations for individuals based on some position they occupy

2. reference groups
-Groups with whom individuals identify and whose values or attitudes the individuals a

3.social classes
-Determined by ranking people into higher or lower positions of respect.

4. Culture
-The integrated, accepted pattern of human behaviour that includes thought, speech, and artefacts

-Marketers analyse buying behaviour because a firm's marketing strategy should be guided by an understanding of
what,where,when,and how consumers buy.

Topic:Leader and Leadership

Definition:

Leadership:
The process by which a person uses influence over other people and encourages, motivates and directs their
activities to help achieve group or organisational goals.

Leader:
An individual who is able to exert influence over other people to help achieve group or organisational goals.

5 sources of leadership Power:

1. Legitimate power:
-Legitimate power is the authority a manager has by virtue of his or her position in an organisation’s hierarchy.

2.Reward power:
-Reward power is the ability of manager to give or withhold tangible rewards(pay rises,bonuses,and choice job
assignments) and intangible rewards (verbal praise, a pat on the back, respect)

3.Coercive power:
Coercive power is the ability of a manager to punish others.

4.Expert Power:
Expert power is based on the special knowledge, skills, and expertise that a leader possesses.

5.Referent power:
Referent power is the power that comes from subordinates and coworkers respect, admiration, and loyalty.

Path-goal theory
-Path-Goal Theory states that effective leaders motivate subordinates to achieve goals by:

1. Clearly identifying the outcomes that subordinates are trying to obtain

2. Rewarding workers with these outcomes for high-performance and goal attainment.

3. Clarifying the paths to the attainment of the goals.

 Leadership behaviour Situation (Kind of work they do)

Directive behaviour Workers have difficulty completing task

Supportive behaviour Workers faced high level of stress

Participative behaviour Worker’s support of a decision is required

Achievement behaviour Highly capable workers

Transformational leadership:
Transformational leadership is that which makes subordinates aware of the importance of their jobs and their
performance for the organisation, as well as making them aware of their own needs for personal growth. Through
transformational leadership, subordinates become motivated to work for the good of the organisation.

The following are the three ways in which it is transformational:

leadership occurs:

1. Transformational managers make subordinates aware of how important their jobs are for the organisation
and how necessary it is for them to perform those jobs as best they can so the organisation can attain its
goals.

2. Transformational managers make their subordinates aware of the subordinates own needs for personal
growth, development, and accomplishment.

3. Transformational managers motivate their subordinates to work for the good of the organisation as a whole,
not just for their own personal gain or benefit.

Topic: Motivation of needs:

6 types of Maslow’s Hierarchy of needs

1. Physiological needs
-The most basic and first needs to be satisfied are the essentials for living-water, food,shelter,and clothing.

-According to Maslow, humans devote all their efforts to satisfying physiological needs until they are met.
-Only when these needs are met can people focus their attention on satisfying the next level of needs -security.

2.Security needs
-Relate to protecting yourself from physical and economic harm

-Once security needs have been satisfied,people may strive for their need for esteem.

3.Social needs
-Are the need for love,companionship, and friendship (the desire for acceptance by others.

-Once their social needs have been satisfied, people attempt to satisfy their need for esteem.

4.Esteem needs
-Relate to respect (both self - respect and respect from others)

-One aspect of esteem needs is competition (the need to feel that you can do something better than anyone else)

-Competition often motivates people to increase their productivity.

5.Self-actualisation
-At the top of Maslow’s hierarchy, it means being the best you can be.

-Self-actualisation involves maximising your potential.

-A self-actualised person feels that she or he is living life to its fullest in every way.

Conclusion:
Maslow’s theory maintains that the more basic needs at the bottom of the hierarchy must be satisfied before higher
level goals can be pursued.

Maslow’s theory also suggests that if a lower level need is suddenly reactivated, the individual will try to satisfy that
need rather than higher level needs.

Strategies of Motivation:

Theory X:

1.Countries that use this style

=China

2. Philosophy
=Tight control over workers
3.Job Description
=Considerable specialisation

4.Control
=Tight control

5.Worker welfare
=Limited concern

6.Responsibility
=Managerial

Theory Y:
1.Countries that use this style
=United States

2. Philosophy
=Assume workers will seek out responsibility and satisfy social needs

3.Job Description
=Less control and supervision;address higher levels of Maslow’s hierarchy

4.Control
=Commitment to objectives with self-direction

5.Worker welfare
=Democratic

6.Responsibility
=Collaborative

Theory Z:
1.Countries that use this style
=Japan

2. Philosophy
=Employee participation in all aspects of company decision making

3.Job Description
=Trust and intimacy with workers sharing responsibilities

4.Control
=Relaxed but required expectations
5.Worker welfare
=Commitment to worker’s total livers

6.Responsibility
=Participative