a)Multinational companies are business organizations that operate in multiple nations. Coffee businesses are described as multinational companies because the countries that produce the raw ingredients, usually developing countries, often sell those goods to be produced and sold to factories and shops in mostly developed countries.
b)In fact, the top 10 coffee producers were in 2007: Brazil, Vietnam, Columbia, Indonesia, India, Ethiopia, Mexico, Guatemala, Honduras, and Cote d'Ivoire. All of these countries are developing countries. In contrast, the top coffee importers were: Japan, Italy, France, Spain, USA, Britian, Netherlands, and Germany (over 70% of imports). These are all developed countries. Right away you can see that the coffee business must work in several countries in order to make a profit. The companies must produce in a developing country and sell in a developed country. This process is mainly in order to make a profit. The company can get cheap workers and land (often leading to unfair conditions and exploitation of workers) in developing countries where there is land and less money. Then they can sell the coffee to the more wealthy populous in developed countries where coffee has become a necessity of daily life. This situation causes a 26% profit margin for companies like Nestle and the only people who aren't happy with the situation are the farmers that are getting paid 1/190 of the price. (based on Ugandan pounds in April 2004).
c)The increase in globalisation of this market is the fact that societies in developed countries have begun to rely on an item that used to be considered a luxury - coffee. Now, because of this, profit-seeking companies have begun to use to their benefit the fact that countries with ideal growing conditions for coffee beans, like those in South America, have a suffering economy and therefore are willing to mass produce for a much lower price. The governments most likely also reduce taxes due to the fact that the business from coffee companies has boosted their economy. Take Vietnam for instance, because of the coffee production, it's economic growth was 7% in 2000. When prices lower though, the economy will collapse. The coffee companies hold a lot of power over the countries they do business in, especially those that rely on the profits from their business. That puts those companies to an advantage and that encourages globalization. Not to mention, those in developed countries are willing to buy coffee which would normally be too expensive to be a daily drink in most developing countries. Therefore, they can get a bigger profit from the customers in those countries. It follows the business idea of produce cheap, sell for more.
d)Globalization has caused many changes in the coffee businesses. First of all, there has been a monopolization of large companies over the coffee production business. The main five are Kraft, Nestle, Procter & Gamble, Sara Lee and Tchibo. Nestle itself has over 57% of the global share on instant coffee. The problems about this are the fact that smaller companies have no chance of starting because there is little room for competition. In fact, there also is an inequality of power. Those companies completely control the global price of coffee and therefore can control the wages for 25 million coffee farmers worldwide. This inequality of power is the main factor caused by globalization. This is causing a breach in human rights and is forcing farmers to mass produce products that can only be sold to major companies and not used for themselves, as well as settle for low prices that the companies dictates because they have no better options.
e)The country only recieves wealth from the taxes and money of the companies but because most of the farmers are producing cash crops, there is not enough goods to sell as foodstuff, and therefore those countries continue to struggle and the people living there are in an endless cycle where all they can do is comply in order to survive. People in the developed countries are buying this coffee (in most cases without knowledge of the suffering in 3rd World Countries) as a daily necessity which only makes things worse because in order to keep up with demand, supply must also raise. And because so many countries are involved in this process, the numbers of supply and demand are huge. This just makes the issue more pronounced and contributes to globalization.
Mar 6, 2010
Jan 26, 2010
Invasion of the MNC's!
MNCs are multinational companies. This means that they are a business organization that operates in multiple nations.
Holding Companies are businesses that own controlling interest in other diverse companies.
They are alike because they both are companies that control various markets, but they are different because the holding company owns other companies, while the MNC owns different offices in many different countries. That means that while one deals with other companies, another expands it's company into different countries to grow as a company rather than as an empire.
Coca Cola has had a precarious path. The company was created by Dr. John Pemberton, who invented the syrup as a pharmacist. Then it was combined with carbonated water and made into a drink. After marketing the product as Coca Cola, it slowly progressed to popular drink, although never became truly famous until after Dr. Pemberton died. After giving the remaining shares to Asa Candler, he managed to boost sales ten fold and improve the company's publicity. As the empire continued to grow, it set up shop in nearly every state of America. Bottling coca cola was a new idea that helped increase sales. In 1919, Coca Cola was bought by Ernest Woodruff. He boosted the idea of a 'quality drink' to consumers. Huge amounts of marketing went underway as well. Several containers and devices were produced by the company in order to increase sales, such as drink coolers. The revolution of publicity was when Coca Cola was sold to spectators at the Olympic Games in 1928. Even during the wars, Coca Cola used the propaganda to publicize it's products. This made Coca Cola become more popular world wide. Through the years, several advertising campaigns and slogans were created to keep Coca Cola with the times. Over all this time, Coca Cola was able to expand into the global empire it is today due to hard work, perseverance and lots of luck.
Coca Cola's core business is selling soft drinks across the world, in a variety of flavors, types and packaging.
They have not quite diversified, they stayed within their own market, but their products have changed quite a lot and that helped their business by adapting to world tastes, and advertisements while keeping the true nature and original values of their business intact. Their products may be slightly different from the original formula but they keep the idea of a soft drink that is similar to the original alive. All of this will help lower the risks taken to make the product successful and continuous.
This gives them more customer loyalty, as their product has become so much a part of a culture, especially America's, that it really is difficult to compete with it. Not only that but the amount of economies of scale is enormous and the company functions with so many customers and outputs so much products, that it requires an empire of factories and production units.
They are listed on the New York Stock Exchange (NYSE).
There are 14 members on the Board of Directors, headed by the Chairman, Muhtar Kent.
AMR is the parent company of both American Airlines, Inc. and American Eagle Airlines, Inc., and has a number of businesses and key facilities within its corporate structure. The company is also a founding member of the global oneworld Alliance. All aspects of the airline’s worldwide activities are overseen from AMR’s Corporate Headquarters campus in Fort Worth, Texas.
It can influence the actions of nearly all the airline's worldwide activities.
Asset strippers are a form of corporate raiders that focus on a target company. They aim to control the company over time and will sell of parts of the company after gaining ownership in order to make a profit. They seem to be aiming for management rather than becoming an asset stripper.
MNC and Holding companies are the leaders of their markets and therefore control the rest of the companies. They have the ability to dominate and get ownership of their competitors and have an edge over those companies which are not MNCs or Holding companies.
Coca Cola has not had any problems expanding to a global market, the change simply let the company grow and it was apparent from the research done, that the company was able to transition into an MNC smoothly, in fact, it seemed like it was not the intention to go multinational in the beginning but became that way after getting consumers from other countries, due to the war.
The term conglomerate (in relation to companies) means combination of two or more companies engaged in entirely different businesses together into one overarching company.
Some of the conglomerates are: General Motors, General Electric, Sony, Apple, Microsoft etc. As they often have to combine with other companies in order to improve their products and reach a harder market.
Some advantages of being in a conglomerate are that you can get skills and training from a market other than your own and therefore combine the knowledge to access that other market, not to mention, you also can make a lot of money by sharing the risks with another company and combining your power as a company.
Some disadvantages are that you can sometimes lose control if the other company you are attached to is more successful than you and therefore will attempt to use you, not to mention, if the company is less successful than you and is in a deficit or the market is failing, then you will lose money because the companies are bound together.
More information is available at : http://www.thecoca-colacompany.com/heritage/ourheritage.html
Holding Companies are businesses that own controlling interest in other diverse companies.
They are alike because they both are companies that control various markets, but they are different because the holding company owns other companies, while the MNC owns different offices in many different countries. That means that while one deals with other companies, another expands it's company into different countries to grow as a company rather than as an empire.
Coca Cola has had a precarious path. The company was created by Dr. John Pemberton, who invented the syrup as a pharmacist. Then it was combined with carbonated water and made into a drink. After marketing the product as Coca Cola, it slowly progressed to popular drink, although never became truly famous until after Dr. Pemberton died. After giving the remaining shares to Asa Candler, he managed to boost sales ten fold and improve the company's publicity. As the empire continued to grow, it set up shop in nearly every state of America. Bottling coca cola was a new idea that helped increase sales. In 1919, Coca Cola was bought by Ernest Woodruff. He boosted the idea of a 'quality drink' to consumers. Huge amounts of marketing went underway as well. Several containers and devices were produced by the company in order to increase sales, such as drink coolers. The revolution of publicity was when Coca Cola was sold to spectators at the Olympic Games in 1928. Even during the wars, Coca Cola used the propaganda to publicize it's products. This made Coca Cola become more popular world wide. Through the years, several advertising campaigns and slogans were created to keep Coca Cola with the times. Over all this time, Coca Cola was able to expand into the global empire it is today due to hard work, perseverance and lots of luck.
Coca Cola's core business is selling soft drinks across the world, in a variety of flavors, types and packaging.
They have not quite diversified, they stayed within their own market, but their products have changed quite a lot and that helped their business by adapting to world tastes, and advertisements while keeping the true nature and original values of their business intact. Their products may be slightly different from the original formula but they keep the idea of a soft drink that is similar to the original alive. All of this will help lower the risks taken to make the product successful and continuous.
This gives them more customer loyalty, as their product has become so much a part of a culture, especially America's, that it really is difficult to compete with it. Not only that but the amount of economies of scale is enormous and the company functions with so many customers and outputs so much products, that it requires an empire of factories and production units.
They are listed on the New York Stock Exchange (NYSE).
There are 14 members on the Board of Directors, headed by the Chairman, Muhtar Kent.
AMR is the parent company of both American Airlines, Inc. and American Eagle Airlines, Inc., and has a number of businesses and key facilities within its corporate structure. The company is also a founding member of the global oneworld Alliance. All aspects of the airline’s worldwide activities are overseen from AMR’s Corporate Headquarters campus in Fort Worth, Texas.
It can influence the actions of nearly all the airline's worldwide activities.
Asset strippers are a form of corporate raiders that focus on a target company. They aim to control the company over time and will sell of parts of the company after gaining ownership in order to make a profit. They seem to be aiming for management rather than becoming an asset stripper.
MNC and Holding companies are the leaders of their markets and therefore control the rest of the companies. They have the ability to dominate and get ownership of their competitors and have an edge over those companies which are not MNCs or Holding companies.
Coca Cola has not had any problems expanding to a global market, the change simply let the company grow and it was apparent from the research done, that the company was able to transition into an MNC smoothly, in fact, it seemed like it was not the intention to go multinational in the beginning but became that way after getting consumers from other countries, due to the war.
The term conglomerate (in relation to companies) means combination of two or more companies engaged in entirely different businesses together into one overarching company.
Some of the conglomerates are: General Motors, General Electric, Sony, Apple, Microsoft etc. As they often have to combine with other companies in order to improve their products and reach a harder market.
Some advantages of being in a conglomerate are that you can get skills and training from a market other than your own and therefore combine the knowledge to access that other market, not to mention, you also can make a lot of money by sharing the risks with another company and combining your power as a company.
Some disadvantages are that you can sometimes lose control if the other company you are attached to is more successful than you and therefore will attempt to use you, not to mention, if the company is less successful than you and is in a deficit or the market is failing, then you will lose money because the companies are bound together.
More information is available at : http://www.thecoca-colacompany.com/heritage/ourheritage.html
Jan 4, 2010
Inflation & Employment
Previously, I described inflation in relation to a real life example of Zimbabwe, this time I am discussing inflation in general.
Governments believe that inflation is a priority for the following reasons:- it can cause inefficiencies in the market, leading to economic problems as well as business and consumer protests.
- it makes it difficult to plan ahead, as the value of your money can lower substancially unpredictibly, and lead to problems for people who want to save their money.
- it can cause problems with company productivity as they work to decrease the costs of production for their products.
- it can discourage future investments and saving, leading to less money in the banks and an increase in demand.
- there is less purchasing power for the country in international trade.
- less price stability.
The two main causes of inflation are:
- if a government prints an excess of money in order to meet the demand of the economy, it can cause the value of the currency to decrease, leading to inflation.
- Also, if there is a rise in production costs, it can cause an increase in prices of products, leading to inflation.
Inflation is Bad for Business Because:
- it raises the costs of production, meaning that if the company does not change it's prices, it will lead to a lesser and sometimes negative profit.
- it makes the companies lose capital, as well as causes worker unrest, as the rise of inflation causes the cost of living to be higher, making them demand higher wages, leading to another increase in the costs of production.
Inflation is Bad for Employees Because:
- inflation means that the costs of living will rise, but the wages will not for some time, eventually that means that they will lose a lot of money, making it harder for them to support themselves and their families.
- it can also be the case that this will increase the spending, as their money is not worth much sitting in a bank during times of inflation, which will lead to access buying and a loss of revenue, which will be a problem if coupled with the first issue.
Inflation is Bad for Customers Because:
- prices are much higher, meaning they must spend more, but the lowering value of their money, means it is best spent instead of invested or saved so they lose even mor money.
- the prices are constantly varying and can lead to inconsistancies for the buyers, who do not expect the sudden changes in pricing.
The Government Can Control Inflation By:
- higher interest rates can control inflation, by balancing the rate of the decline of money in banks, and encouraging saving over spending.
- direct wage controls can control inflation by setting limits on the growth of wages and can therefore reduce cost inflation.
Governments believe that inflation is a priority for the following reasons:- it can cause inefficiencies in the market, leading to economic problems as well as business and consumer protests.
- it makes it difficult to plan ahead, as the value of your money can lower substancially unpredictibly, and lead to problems for people who want to save their money.
- it can cause problems with company productivity as they work to decrease the costs of production for their products.
- it can discourage future investments and saving, leading to less money in the banks and an increase in demand.
- there is less purchasing power for the country in international trade.
- less price stability.
The two main causes of inflation are:
- if a government prints an excess of money in order to meet the demand of the economy, it can cause the value of the currency to decrease, leading to inflation.
- Also, if there is a rise in production costs, it can cause an increase in prices of products, leading to inflation.
Inflation is Bad for Business Because:
- it raises the costs of production, meaning that if the company does not change it's prices, it will lead to a lesser and sometimes negative profit.
- it makes the companies lose capital, as well as causes worker unrest, as the rise of inflation causes the cost of living to be higher, making them demand higher wages, leading to another increase in the costs of production.
Inflation is Bad for Employees Because:
- inflation means that the costs of living will rise, but the wages will not for some time, eventually that means that they will lose a lot of money, making it harder for them to support themselves and their families.
- it can also be the case that this will increase the spending, as their money is not worth much sitting in a bank during times of inflation, which will lead to access buying and a loss of revenue, which will be a problem if coupled with the first issue.
Inflation is Bad for Customers Because:
- prices are much higher, meaning they must spend more, but the lowering value of their money, means it is best spent instead of invested or saved so they lose even mor money.
- the prices are constantly varying and can lead to inconsistancies for the buyers, who do not expect the sudden changes in pricing.
The Government Can Control Inflation By:
- higher interest rates can control inflation, by balancing the rate of the decline of money in banks, and encouraging saving over spending.
- direct wage controls can control inflation by setting limits on the growth of wages and can therefore reduce cost inflation.
Dec 20, 2009
Inflation in Zimbabwe
In Q 1.5.3. they discuss the rapid inflation rates in Zimbabwe and the crisis it caused, in July 2008.
The three factors that may be causing inflation in Zimbabwe are:
- one of the main factors is that the price of food is raising too much, one issue of this is the fact that Zimbabwe is forced to sell it's staple food, maize out of the country, and import such important products, which are more expensive than home-grown products. The high food prices mean that everyday, people need to spend more in order to buy them, making inflation worsen.
- there is also problems with electricty, as it is expensive to power the homes, it is difficult for even the government and companies to supply the vast demand of power, especially in the farming sector, as they need lots of power to irrigate their crops. All this means more money has to be spent to buy the power and keep the farms going, which are an important source of income for the country.
- the final problem is the huge amount of un-employment, which means that people just do not have the money to pay for these basic living costs, making large debts and raising inflation through that route.
The combination of all these factors has caused inflation to raise at such a high level, that it just makes things worse in the end. These problems must be curbed in order for Zimbabwe to have a chance of recovery.
The main problems that uncontrollable inflation could cause for Zimbabwe are:
- a raise in food prices, meaning that the cost of living would be put even higher
- a serious problem with importing and exporting goods, as the currencies would transfer to Zimbabwe dollars and be worth even less the next day
- wage costs would have to raise, to match the high living costs, which would make the production costs for a company higher, which would make the product it produces more expensive, which would make inflation higher (becoming an endless cycle without some way to change it)
- poverty will worsen, which it already has come to an intolerable level, if there is a tolerable level of poverty
- people will not be able to afford living costs
- mass emmigration out of the country in order to find work in places with lower living costs, which will cause problems with finding workers in the country, making it even worse off
- there will be less savings, as the worth of them will become lower, so then there will be more spending, and in the long term, much less money for investments
Some information on the problems in Zimbabwe were found at this website: http://news.bbc.co.uk/2/hi/business/6665749.stm
The three factors that may be causing inflation in Zimbabwe are:
- one of the main factors is that the price of food is raising too much, one issue of this is the fact that Zimbabwe is forced to sell it's staple food, maize out of the country, and import such important products, which are more expensive than home-grown products. The high food prices mean that everyday, people need to spend more in order to buy them, making inflation worsen.
- there is also problems with electricty, as it is expensive to power the homes, it is difficult for even the government and companies to supply the vast demand of power, especially in the farming sector, as they need lots of power to irrigate their crops. All this means more money has to be spent to buy the power and keep the farms going, which are an important source of income for the country.
- the final problem is the huge amount of un-employment, which means that people just do not have the money to pay for these basic living costs, making large debts and raising inflation through that route.
The combination of all these factors has caused inflation to raise at such a high level, that it just makes things worse in the end. These problems must be curbed in order for Zimbabwe to have a chance of recovery.
The main problems that uncontrollable inflation could cause for Zimbabwe are:
- a raise in food prices, meaning that the cost of living would be put even higher
- a serious problem with importing and exporting goods, as the currencies would transfer to Zimbabwe dollars and be worth even less the next day
- wage costs would have to raise, to match the high living costs, which would make the production costs for a company higher, which would make the product it produces more expensive, which would make inflation higher (becoming an endless cycle without some way to change it)
- poverty will worsen, which it already has come to an intolerable level, if there is a tolerable level of poverty
- people will not be able to afford living costs
- mass emmigration out of the country in order to find work in places with lower living costs, which will cause problems with finding workers in the country, making it even worse off
- there will be less savings, as the worth of them will become lower, so then there will be more spending, and in the long term, much less money for investments
Some information on the problems in Zimbabwe were found at this website: http://news.bbc.co.uk/2/hi/business/6665749.stm
Strong Stakeholders
Skoda Auto, which is located in Czech, perhaps has too many high risk stakeholders. Because of it's large export habits, the country has become too reliant on the money it brings, leading to crisis when a worker strike could end up creating huge losses of income. This raises a huge issue of whether it is wise for a government to rely on an company with it's own private interests, in order to supply income for the economy. There is too much vested in a relationship that is so precarious.
Nonetheless, the two main internal stakeholder groups mentioned by this issues are the employees, who feel their benefits are not substancial enough, and require higher pay, or they will strike. And, the managers and directors, who have to decide whether or not to sacrifice a large portion of their income to satisfy worker wants, or find a way to violate the labour rights, and keep their income high. There is also an added pressure of the shareholders, as it will be difficult to keep them happy if they are losing a large amount of their dividends and the stock prices lower, due to the loss of income. They will surely rebel as well.
The main conflict that exists between the main stakeholders, is the wants of the workforce and employees, which conflicts with the objectives of the shareholders, as well as will put a heavy strain on the government, as they rely on the income that the company provides. It could cause major problems within the country itself and indirectly affect the consummers as well, as the prices will probably raise in order to compensate for the increase in production costs. The competitors will probably be happy though, as the prices will raise, and the customers will go to them instead, to get better deals. Although, with automobiles there is a slight difference, as the cars are different depending on the brand, and if Skoda really is such a huge company, the raise in prices may cause less damage for the amount of customers than if the company was small the the products were the same for every company. Hopefully, with Skoda's reputation, they will be able to hold on to their customers without losing them, and causing a greater loss of income because the customers do not want to pay such high prices. It would depend on the time in which this was occuring. Since the issue started in 2007, there may be less tolerance for the price rise, as that was soon after the economic crisis, so people were less willing to spend more. That was probably the first cause of the strike, as the workers were suffering from the affects of the economic crisis, and wanted a higher pay in order to balance out the difference.
There are several ways that this conflict could be minimized. One main way, would be to raise prices. It is risky as the customers may not tolerate it and cause a greater loss of income, but if it was coupled with a greater public acceptance, it may be the right move. The factors are risky, but if the company was able to market itself well and continue bringing in good customers, adding value due to reputation and better qualities, then it could make the price raise more acceptable. One other way would be to
Nonetheless, the two main internal stakeholder groups mentioned by this issues are the employees, who feel their benefits are not substancial enough, and require higher pay, or they will strike. And, the managers and directors, who have to decide whether or not to sacrifice a large portion of their income to satisfy worker wants, or find a way to violate the labour rights, and keep their income high. There is also an added pressure of the shareholders, as it will be difficult to keep them happy if they are losing a large amount of their dividends and the stock prices lower, due to the loss of income. They will surely rebel as well.
The main conflict that exists between the main stakeholders, is the wants of the workforce and employees, which conflicts with the objectives of the shareholders, as well as will put a heavy strain on the government, as they rely on the income that the company provides. It could cause major problems within the country itself and indirectly affect the consummers as well, as the prices will probably raise in order to compensate for the increase in production costs. The competitors will probably be happy though, as the prices will raise, and the customers will go to them instead, to get better deals. Although, with automobiles there is a slight difference, as the cars are different depending on the brand, and if Skoda really is such a huge company, the raise in prices may cause less damage for the amount of customers than if the company was small the the products were the same for every company. Hopefully, with Skoda's reputation, they will be able to hold on to their customers without losing them, and causing a greater loss of income because the customers do not want to pay such high prices. It would depend on the time in which this was occuring. Since the issue started in 2007, there may be less tolerance for the price rise, as that was soon after the economic crisis, so people were less willing to spend more. That was probably the first cause of the strike, as the workers were suffering from the affects of the economic crisis, and wanted a higher pay in order to balance out the difference.
There are several ways that this conflict could be minimized. One main way, would be to raise prices. It is risky as the customers may not tolerate it and cause a greater loss of income, but if it was coupled with a greater public acceptance, it may be the right move. The factors are risky, but if the company was able to market itself well and continue bringing in good customers, adding value due to reputation and better qualities, then it could make the price raise more acceptable. One other way would be to
Dec 9, 2009
Mind Your Own Business - Stakeholders
Stakeholders are the people or organization that have a direct interest in and is affected by the actions and performance of a business.
Internal Stakeholders are the members of the actual organization or business.
Some are:
Employees
Who strive to improve:
- pay
- working conditions
- job security
- training and career progression opportunities
Shareholders
Who's main objectives are:
- maximizing dividend payments
- rise of the value of share price
Managers and Directors
Who attempts to:
- maximize their own benefits (bonus and perks)
- profit maximization
External Stakeholders are not part of the business but have interest in the actions of the organization.
Some are:
Suppliers
Who rely on business co-operation and purchasing
Customers
Who rely on the product and business, and have the control of either buying or not the business' service or good
Special Interest Groups are an organization that advocates certain issues, and is also an external stakeholder, monitoring the ethical behaviour of companies.
Their members are passionate individuals who believe in the cause that they are trying to promote/protect.
Some of the types of SIG's are:
Trade Unions (Labour Unions)
They aim to:
- protect and enhance the conditions of the working members
- make sure that wages and salaries rise with inflation
- introduces minimum wage
- better working conditions
Pressure Groups:
They aim to:
- place influence on organizations to act a certain way
- lobby a change in legislation
- protet their point of interest
- provide public awareness on the issue
Industry Trade Groups:
- promoting particular industries through education and advertising
- funded by business in particular industry
Local Community:
They will place demands on businesses that operates in their community
Such as:
- job creation and opportunities
- consideration of the local environment
- wide choice of provision of products with competitive prices
- sponsorship and fundraising of local events
Unless the business does these things for the local community, it will not be accepted into the area and will be boycotted.
The factors which when completed can help SIG's complete their goals are:
- funding (public funding will provide more strength in an SIG)
- public opinion (the better people think of them, the more damage they can do if displeased and the greater effects they can make)
- number of members (the more people involved, the bigger impact if goods are boycotted or protested)
- commitment of members (if the members are commited, there is a greater chance of success as they will be willing to sacrifice a lot for their cause)
The reasons a company should pay notice to a SIG is because:
- the effectiveness of the SIG (could cause more damage)
- market power of the business (if they have a monopoly they may not need to care)
- costs (if the price is higher than they can pay it is not worth it, but if they can then should they?)
- views of directors, senior managers, and shareholders (if they believe the SIG should be noticed, it causes more pressure to notice them)
- aims and objectives of the business (whether or not the SIG follows or conflicts with the objectives)
Internal Stakeholders are the members of the actual organization or business.
Some are:
Employees
Who strive to improve:
- pay
- working conditions
- job security
- training and career progression opportunities
Shareholders
Who's main objectives are:
- maximizing dividend payments
- rise of the value of share price
Managers and Directors
Who attempts to:
- maximize their own benefits (bonus and perks)
- profit maximization
External Stakeholders are not part of the business but have interest in the actions of the organization.
Some are:
Suppliers
Who rely on business co-operation and purchasing
Customers
Who rely on the product and business, and have the control of either buying or not the business' service or good
Special Interest Groups are an organization that advocates certain issues, and is also an external stakeholder, monitoring the ethical behaviour of companies.
Their members are passionate individuals who believe in the cause that they are trying to promote/protect.
Some of the types of SIG's are:
Trade Unions (Labour Unions)
They aim to:
- protect and enhance the conditions of the working members
- make sure that wages and salaries rise with inflation
- introduces minimum wage
- better working conditions
Pressure Groups:
They aim to:
- place influence on organizations to act a certain way
- lobby a change in legislation
- protet their point of interest
- provide public awareness on the issue
Industry Trade Groups:
- promoting particular industries through education and advertising
- funded by business in particular industry
Local Community:
They will place demands on businesses that operates in their community
Such as:
- job creation and opportunities
- consideration of the local environment
- wide choice of provision of products with competitive prices
- sponsorship and fundraising of local events
Unless the business does these things for the local community, it will not be accepted into the area and will be boycotted.
The factors which when completed can help SIG's complete their goals are:
- funding (public funding will provide more strength in an SIG)
- public opinion (the better people think of them, the more damage they can do if displeased and the greater effects they can make)
- number of members (the more people involved, the bigger impact if goods are boycotted or protested)
- commitment of members (if the members are commited, there is a greater chance of success as they will be willing to sacrifice a lot for their cause)
The reasons a company should pay notice to a SIG is because:
- the effectiveness of the SIG (could cause more damage)
- market power of the business (if they have a monopoly they may not need to care)
- costs (if the price is higher than they can pay it is not worth it, but if they can then should they?)
- views of directors, senior managers, and shareholders (if they believe the SIG should be noticed, it causes more pressure to notice them)
- aims and objectives of the business (whether or not the SIG follows or conflicts with the objectives)
Nov 10, 2009
Franchises and Baseball
Franchises: A type of ownership of a business where a person starts the business with a bought license with another firm's benefits (a.k.a. name, trademark, logo, and brands).
The franchisor (original owner of the firm) receives not only a license fee for the original costs of buying the brand, but also receives a royalty payment (the commissions) from the franchisee (the purchaser of the franchise).
Examples of Franchises:
- McDonald's
- Pizza Hut
- Subway
- The Body Shop
- Quiznos
Good Traits for Franchise Possibilities:
- a good track record of profitability
- a unique or unusual concept
- broad geographic appeal
- easy to operate
- inexpensive
- easily duplicated
Benefits for Growth of Franchisor:
- less risky as the franchisor has to spend less money for the outlet itself
- gives international and national presence without higher personal cost
- gives benefits of economies of scale
- can grow without worrying about costs of operation
- receives royalty payments from franchisee
- there is more incentives to do well on the franchisees part and that gives more motivation than a salaried manager
- brings more awareness of local market and cultural differences
Advantages for Franchisee:
- low risk as business already has success
- lower start-up costs since business has already been started
- there is more incentive to ensure the franchise succeeds
- benefits from large scale advertising from a well-known parent company
Pitfalls for Franchisor:
- difficult to control the business
- huge risk of reputation as the business name is at stake if franchisee fails at improving the company
- there are faster methods of growth
Disadvantages for Franchisee:
- very expensive
- no guarantees of payback
- less profit as franchisees have to give a royalty payment to the franchisor
- less flexibility for innovation
A franchise opportunity provides the opportunities for growth and the ability to run your own business, without having all the risks involved. The goals for a franchise is to expand and grow, while a business could be that as well as work on making a profit and getting a name for themselves. A franchise gives the franchisee a chance to learn how to run a business successfully (hopefully) and is a good learning experience for those who do not want to have to go through the trouble of setting up their own business and reduce risk. It also provides the franchisors with a lot of new opportunities.
And now the baseball...
Baseball teams value has apparently risen 15% last year. This means there is a much greater business to be made in managing and owning baseball teams. Currently the teams in the USA and Canada are worth over 176 million dollars, and the highest team is worth 950 million dollars (in 2005 according to Forbes.com). Several of these teams are in substantial debt which means they are more venerable to be outbid and sold to rival bidders. Some of these are:
Arizona Diamondbacks - Debt: 103%, Value: $286 mil, Operating Income: $-18.7 mil
Although this team's value is moderate, the debt is very high. Unless the franchisees are able to make a large increase in profits and pay off these debts, it will be difficult for them to be able to hold onto the company. They also have a negative operating income, which means they are continuing to lose money, which obviously will lead to more debt and a higher risk of outbidding.
Los Angeles Dodgers - Debt: 99%, Value: $424 mil, Operating Income: $-7.4 mil
This teams debt is high, as well as a negative income, which means it is in a precarious position to defend itself against bidders, the value is fairly high, but it may go down as the debt increases.
The Oregon Stadium is an example of a rival bidder for teams:
The Oregon Stadium Campaign is working in collaboration with city and state leaders to secure a Major League Baseball franchise for Oregon. The Oregon Stadium Campaign served as the driving force behind passage of the MLB Jobs Bill, which authorizes the state to transfer income tax revenue from player salaries to finance approximately $115 million of a new Portland ballpark. The campaign continues to work closely with the City of Portland to bring Major League Baseball to Portland in a way that is sensible for both Oregonians and for Major League Baseball.
(As taken from http://www.oregonstadiumcampaign.com/)
If English soccer Premier League were to take over teams like the Major League Baseball did, there would be a lot of fan protest. Although the teams would make more money and there would be better financing for the sport, as soccer is already such a huge market, and very reliant on the fans, it would be difficult to convince the masses that moving teams around and making them neutral instead of affiliated with particular cities, would cause dissatisfaction. Soccer, a more internationally acclaimed sport, is very reliant on heavily vocal fans, and most of it is very patriotic, which would cause problems if the teams roots were to be taken out of their original cities. Much like how Montreal was upset that their baseball team, the Montreal Expos, was moved around so much that it ceased to remain loyal to Montreal, many fans would protest and grow angry if the same thing were to happen to soccer teams. Not to mention, it seems as though soccer has so much money already invested in it, that if there was any more, it would become even more corrupt and less about the sport, and more about the money. Soccer would lose public confidence and morale. It probably would not do well in the long term.
Although the clubs in the League would have more business and grow more profitable from the increase in teams and games and money being pumped into them, the soccer associations outside of the League would suffer from a loss in participants and such thing as the Championship etc. would become less valued and there would be less public interest. This would mean that more money would be pumped into the League, and the other teams would be pressured to join. But this would only work if the League had public support, which would be difficult to get originally as mentioned in the previous paragraph. But if it were to work out, the profits of the people involved in running the League would be enormous.
The franchisor (original owner of the firm) receives not only a license fee for the original costs of buying the brand, but also receives a royalty payment (the commissions) from the franchisee (the purchaser of the franchise).
Examples of Franchises:
- McDonald's
- Pizza Hut
- Subway
- The Body Shop
- Quiznos
Good Traits for Franchise Possibilities:
- a good track record of profitability
- a unique or unusual concept
- broad geographic appeal
- easy to operate
- inexpensive
- easily duplicated
Benefits for Growth of Franchisor:
- less risky as the franchisor has to spend less money for the outlet itself
- gives international and national presence without higher personal cost
- gives benefits of economies of scale
- can grow without worrying about costs of operation
- receives royalty payments from franchisee
- there is more incentives to do well on the franchisees part and that gives more motivation than a salaried manager
- brings more awareness of local market and cultural differences
Advantages for Franchisee:
- low risk as business already has success
- lower start-up costs since business has already been started
- there is more incentive to ensure the franchise succeeds
- benefits from large scale advertising from a well-known parent company
Pitfalls for Franchisor:
- difficult to control the business
- huge risk of reputation as the business name is at stake if franchisee fails at improving the company
- there are faster methods of growth
Disadvantages for Franchisee:
- very expensive
- no guarantees of payback
- less profit as franchisees have to give a royalty payment to the franchisor
- less flexibility for innovation
A franchise opportunity provides the opportunities for growth and the ability to run your own business, without having all the risks involved. The goals for a franchise is to expand and grow, while a business could be that as well as work on making a profit and getting a name for themselves. A franchise gives the franchisee a chance to learn how to run a business successfully (hopefully) and is a good learning experience for those who do not want to have to go through the trouble of setting up their own business and reduce risk. It also provides the franchisors with a lot of new opportunities.
And now the baseball...
Baseball teams value has apparently risen 15% last year. This means there is a much greater business to be made in managing and owning baseball teams. Currently the teams in the USA and Canada are worth over 176 million dollars, and the highest team is worth 950 million dollars (in 2005 according to Forbes.com). Several of these teams are in substantial debt which means they are more venerable to be outbid and sold to rival bidders. Some of these are:
Arizona Diamondbacks - Debt: 103%, Value: $286 mil, Operating Income: $-18.7 mil
Although this team's value is moderate, the debt is very high. Unless the franchisees are able to make a large increase in profits and pay off these debts, it will be difficult for them to be able to hold onto the company. They also have a negative operating income, which means they are continuing to lose money, which obviously will lead to more debt and a higher risk of outbidding.
Los Angeles Dodgers - Debt: 99%, Value: $424 mil, Operating Income: $-7.4 mil
This teams debt is high, as well as a negative income, which means it is in a precarious position to defend itself against bidders, the value is fairly high, but it may go down as the debt increases.
The Oregon Stadium is an example of a rival bidder for teams:
The Oregon Stadium Campaign is working in collaboration with city and state leaders to secure a Major League Baseball franchise for Oregon. The Oregon Stadium Campaign served as the driving force behind passage of the MLB Jobs Bill, which authorizes the state to transfer income tax revenue from player salaries to finance approximately $115 million of a new Portland ballpark. The campaign continues to work closely with the City of Portland to bring Major League Baseball to Portland in a way that is sensible for both Oregonians and for Major League Baseball.
(As taken from http://www.oregonstadiumcampaign.com/)
If English soccer Premier League were to take over teams like the Major League Baseball did, there would be a lot of fan protest. Although the teams would make more money and there would be better financing for the sport, as soccer is already such a huge market, and very reliant on the fans, it would be difficult to convince the masses that moving teams around and making them neutral instead of affiliated with particular cities, would cause dissatisfaction. Soccer, a more internationally acclaimed sport, is very reliant on heavily vocal fans, and most of it is very patriotic, which would cause problems if the teams roots were to be taken out of their original cities. Much like how Montreal was upset that their baseball team, the Montreal Expos, was moved around so much that it ceased to remain loyal to Montreal, many fans would protest and grow angry if the same thing were to happen to soccer teams. Not to mention, it seems as though soccer has so much money already invested in it, that if there was any more, it would become even more corrupt and less about the sport, and more about the money. Soccer would lose public confidence and morale. It probably would not do well in the long term.
Although the clubs in the League would have more business and grow more profitable from the increase in teams and games and money being pumped into them, the soccer associations outside of the League would suffer from a loss in participants and such thing as the Championship etc. would become less valued and there would be less public interest. This would mean that more money would be pumped into the League, and the other teams would be pressured to join. But this would only work if the League had public support, which would be difficult to get originally as mentioned in the previous paragraph. But if it were to work out, the profits of the people involved in running the League would be enormous.
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