Revision

http://www.slideshare.net/geeta_123/foreign-market-entry-strategies


http://www.slideshare.net/vishumaheshwari/indian-economic-liberalisation

http://www.slideshare.net/gurjeit/liberalization-privatization-globalization


http://www.slideshare.net/cwhizkid420/projecttradeblocs


http://www.slideshare.net/Abdullah2012/globalization-trading-blocks

http://www.slideshare.net/Abdullah2012/globalization-trading-blocks

GDP

GDP

The Gross Domestic Product (GDP) in China was worth 5878.63 billion US dollars in 2010, according to a report published by the World Bank. The GDP value of China is roughly equivalent to 9.48 percent of the world economy. Historically, from 1960 until 2010, China GDP averaged 839.3700 billion USD reaching an all time high of 5878.6300 billion USD in December of 2010 and a record low of 46.4600 billion USD in December of 1962. The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. This page includes a chart with historical data for China GDP.

Annual Growth Rate

The Gross Domestic Product (GDP) in China expanded 8.10 percent in the first quarter of 2012 over the same quarter of the previous year. Historically, from 1989 until 2012, China GDP Annual Growth Rate averaged 9.3000 Percent reaching an all time high of 14.2000 Percent in December of 1992 and a record low of 3.8000 Percent in December of 1990. The annual growth rate in Gross Domestic Product measures the increase in value of the goods and services produced by an economy over the period of a year. Therefore, unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment. This page includes a chart with historical data for China GDP Annual Growth Rate.

Growth Rate

The Gross Domestic Product (GDP) in China expanded 1.80 percent in the first quarter of 2012 over the previous quarter. Historically, from 2011 until 2012, China GDP Growth Rate averaged 2.1200 Percent reaching an all time high of 2.4000 Percent in September of 2011 and a record low of 1.8000 Percent in March of 2012. The Gross Domestic Product (GDP) growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy. China's economy is the second largest in the world after that of the United States. During the past 30 years China's economy has changed from a centrally planned system that was largely closed to international trade to a more market-oriented that has a rapidly growing private sector. A major component supporting China's rapid economic growth has been exports growth. This page includes a chart with historical data for China GDP Growth Rate.

SHORT, MEDIUM , LONG-TERM FINANCE

• SHORT- 1-3 years e.g trade credit, overdraft, loan
• MEDIUM- 3-10 years e.g leasing, hire purchase, loan
• LONG- over 10 years e.g loan, share capital, mortgages, venture capital, finance from the EU

Different sources of finance avialable to a business start-up

• LOANS-  longer-term kind of finance, fixed period over which the loan is provided (e.g. 5 years), the rate of interest and the timing and amount of repayments.  good for financing investment in fixed assets  and are generally at a lower rate of interest that a bank overdraft.  However, they don’t provide much flexibility.

• SPONSORSHIP hard to get
• GOVERNMENT GRANDS hard to get 
• PERSONAL SAVINGS e.g redundancy money risky This is a cheap form of finance and it is readily available.   Investing personal savings maximises the control the entrepreneur keeps over the business.  It is also a strong signal of commitment to outside investors or providers of finance.
• RE-MORTGAGING- The way this works is simple.  The entrepreneur takes out a second or larger mortgage on a private property and then invests some or all of this money into the business.  The use of mortgaging like this provides access to relatively low-cost finance, although the risk is that, if the business fails, then the property will be lost too. .
•  INVESTORS may decide to pull out, hard to find 
• DEBENTURES 
• FRIEND/FAMILY e.g inheritance -  This can be quicker and cheaper to arrange (certainly compared with a standard bank loan) and the interest and repayment terms may be more flexible than a bank loan.  However, borrowing in this way can add to the stress faced by an entrepreneur, particularly if the business gets into difficulties.
• SALE OF ASSETS 
• SALE AND LEASEBACK 
• OVERDRAFT-is a more short-term kind of finance. An overdraft is really a loan facility – the bank lets the business “owe it money” when the bank balance goes below zero, in return for charging a high rate of interest. As a result, an overdraft is a flexible source of finance, in the sense that it is only used when needed. Bank overdrafts are excellent for helping a business handle seasonal fluctuations in cash flow or when the business runs into short-term cash flow problems (e.g. a major customer fails to pay on time).

What is the difference between Public and Private sector? what is privatisation? give 1 example of business that has been privatased.

PUBLIC SECTOR - The part of national economy providing basic goods / services that are either not, or cannot be, provided by the private sector. It consists of national and local governments, their agencies.

PRIVATE SECTOR- The part of national economy made up of private enterprises. It includes the personal sector (households) and corporate sector (companies), and is responsible for allocating most of the resources within an economy.

privatisation-Sale or return of publicly owned enterprises to private ownership and control.

e.g ROYAL MAIL

Multinational

An enterprise operating in several countries but managed from one (home) country. Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation.

franchise

• A privilege granted to make or market a good or service under a patented process or trademarked name.
• A business operating under such privilege.

Public and Private Limited Companies

• Each company has its own identify in law
• the company employs staff, not the owners
• the company owns assets not the owner
• the company operates until in formally wound up/ liquidation
• the company pays co-operation tax on its profits

PRIVATE

ADVANTAGES

• limited liability
• minimum of 1 director + 1 shareholder
• easy to set up/ affairs still private
• easier to raise capital/ borrow from bank
• death of shareholder has no effect on company

DISADVANTAGES

•  cannot sell shares to public
• more regulations to comply with
• account procedures may be more costly
• death of shareholder has no effect on company
• share transfers need agreement of all

PUBLIC 

ADVANTAGES

• limited liability
• increased capital as public can buy shares
• min of 2 directors + 2 shareholders
• shares increase in value if company sucessful 
• operating large scale can lower cost per unit

DISADVANTAGES

• many regulations to comply with
• accounts (and problems) are public knowledge
• shareholders may sell shares of dividends porr
• original owner may lose overall control

Partnership

2 people/ more

ADVANTAGES

• easier to raise capital
• problems/ ideas can be discussed
• greater range of skills and expertise
• cover for holidays + sickness
• death of a partner means share needs repaying

DISADVANTAGES

• unlimited liability
• profits shared
• may be disagreements 
• decisions/ actions legally binding on all partners

Sole Trader

1 owner

• Unlimited liability (owners responsible for all debts and may have to sell personal assets)

ADVANTAGES

• easy to set up and give personal service
• owner independent
• can make quick decisions
• min of paperwork
• knows customers- help avoid bad ideas

DISADVANTAGES

• unlimited liability
• long hours, no cover for holidays/ sickness
• capital may come from savings
• need business skills
• business ends on death

two entrepreneurs!

Name of entrepreneur: Brad Deal

What is she renowned for? – Sticks and Stones Gifts

 Brad Deal is infact a father when he became successful entrepreneur; he had initiative that he saw something good and decided to go for it. He was also very clever in business and economics area as had economics degree, he was playing games with his little daughter teaching the alphabet when he though of idea, out of box so space in market, this lead to the multi-million dollar fortune. It was his family that lead him to think of his new idea, his walks with his daughter the fact she enjoyed nature and the architecture, and he with his daughter noticed find sticks/stones that resembled letters and began to take photos. He used the photos to teach his daughter slowly the pile of photos grew. However there still was no business until a Teacher of their daughter gave them a gift and they came up with idea of framing the photos to do form the teachers last name, she loved it, and the entrepreneur side of Brad kicked in. their website Sticks and Stones and gathered all the photos, framed them and placed them on their catalogue. They visited Oprah Winfrey ( host and entrepreneur) and got the unique gift delivered to eye of public, she personally was impressed and ordered one for Celebrity Actor Tom Cruise!!! The family business kicked off. Nowadays there are even ‘’sticks and stones’’ in the White House along with millions of houses, they are no millionaires and the business is forever growing. They have got 3 daughters and teach still the alphabet with sticks and stones.

Name of entrepreneur: Josephine Esther Mentzer (known as Estee Lauder)

What is she renowned for? - Cosmetic Company Estee Lauder.

Josephine was brought up in a large family which helped with getting to the network of people she needed that would help her end up being one of the most successful lady entrepreneurs known in America. Her father owned a store, so she learnt and grew up in an environment of business. She started by getting a job through her uncle who was a chemist (owned a company which sold lotions to beauty shops) selling creams. I think that she got to see how business world works as whole as how stores get their supplies (through uncle) and how they sell it to customers (through father). Also her uncle inspired her into her passion of cosmetics, to start with cream, she created her own Brand Estee Lauder and formulated her own creams. She met up with the manager of Sak’s Fifth avenue who she convinced to carry her new creams which actually sold out in 2 days I think what landed her this hit was that she was so persuasive and again like Hugh had a passion and strong belief for what she was selling. This breakthrough also increased her confidence and set out to sale every major department store in the United States, with her products. She succeeded in signing contracts with three 3 important contacts. However she than unsuccessfully tried to convince several advertising agencies to take her company on as a client. She had the initiative and decided to do her own campaign by offering free samples in the mail and free gifts with the purchase of one of her products. This was a fantastic marketing plan as nowadays many beauty and food companies use this technique. However her large hit was when she developed ‘’Estee Lauder’s Youth Dew’’ a combination of bath oil and perfume, building on this success she increased her target market to men making a line for them. Within 20 years her products were available in every major department store in more than 70 countries. She was clearly hardworking and never gave-up to get to this success infact she was hard worker till she had to stop her career at age of 86 as she unfortunately broke her hip. Estee Lauder, Inc. went public, and four years later it became the nation’s largest cosmetic company accounting for more than 50% of all retail beauty products sold across the USA. She became the only women to be on the 20 most influential business geniuses of the century, in 1988; Times Magazine. Unfortunately Estee Lauder died 6 years ago however leaving a more than successful business with revenues in excess of $6.4 Billion, and over 25000 employees. Today the Estee Lauder brand is available in over 118 countries.

What is an entrepreneur?

 SOMEONE WHO MAKES A BUSINESS IDEA HAPPEN THROUGH THEIR OWN EFFORT/ BY ORGANISING OTHERS TO DO WORK

Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a good or service will be produced.
An entrepreneur supplies risk capital as a risk taker, and monitors and controls the business activities. According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily motivated by profit but regard it as a standard for measuring achievement or success. Schumpeter discovered that they (1) greatly value self-reliance, (2) strive for distinction through excellence, (3) are highly optimistic (otherwise nothing would be undertaken), and (4) always favor challenges of medium risk. 

Define the 4 stages of the business cycle and explain why they happen.

1. RECOVERY/ UPSWING

• (recovers from slump)
• production + employment increase
• consumers spend more as more confident in the security of their employment
• no major decisions are required to meet rising demand whilst spare capacity exists (use idle resources)
• as business confidence increases, firms may invest in further fixed assets (e.g. factories)
• employees find jobs more easily + wages rise

2. BOOM

• high levels of production + expenditure by firms , consumers, goverment
• lead to prosperity + confidence in business community
• investment in fixed assets rise
• can experience pressure
• skilled workers become scarce and firms offer higher wages
• shortages occur as insufficient raw materials to meet high demand
• price rise
• combination of higher wages + rise in price of raw materials --> inflation (lead to end of boom)

3. DOWNSWING

• incomes + output start to fall
• rising prices of labour + materials increase cost of production
• business lower profits
• UK government normally raise interest rates to avoid inflation
• falling profits + rising interest rates --> delays in new plans for new factories/ offices
• production can fall and amount of spare capacity raises
• some businesses fail + level of bankruptcies rise

4. SLUMP

• production at lowest
• unemployment high
• increasing numbers of firms suffer from isolvency

How does economic activity relate to GDP

GDP depends on economic activity. (e.a --> relate to level of spending and production)
rising economic activity will cause higher level of GDP

What is the business cycle and what is meant by GDP?

• Describes the regular fluctuations in economic activity.
• GDP--> Gross Domestic Product --> measures the value of a nation's output over a period of time (normally a year) 

What can a business do to improve their cash flow?

• dispose of surplus assets
• debt factoring
• proceeds from new share capital
• reduction in inventories
• Have a reliable cash flow forecasting system
• Actively manage working capital
• Choose the right sources of finance for the business needs

What is cashflow? what is the difference between Cash Inflows and Outflows?

CASH FLOW = Incomings and outgoings of cash, representing the operating activities of an organization.

IN = Money received by an organization as a result of its operating activities, investment activities, and financing activities.

OUT = Money paid out by an organization as a result of its operating activities, investment activities, and financing activities.

Why is it important for businesses to calculate the cost of production?

To manage cashflow and realise how much everything would cost

How is average cost calculated?

(Fixed costs + Variable costs) ÷ Total output = AVERAGE COST

Opportunity costs

A benefit, profit, or value of something that must be given up in order to achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.