1. A multinational corporation (MNC) is a corporation or enterprise that manages production or delivers services in more than one country.
2. A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself, rather its only purpose is owning shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies
3. The similarities and differences between a multinational corporation and a holding are as follows:
- Holding companies do not produce goods or services itself unlike a MNC
- Both a Holding company and MNC can control/own a multitude of smaller companies beneath itself
- MNCs are involved with more than the owning of shares.
4. McDonalds
i) The company began in 1940, with a restaurant opened by the two brothers Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant.
However the McDonalds Corporation first began when, Ray Kroc franchised the business from the McDonalds in 1955. Establishing in Illinois the first franchised restaurant and, the entire corporation’s headquarters.
The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having a puffed out costume legs.
McDonald's first filed for a U.S. trademark on the name McDonald's on May 4, 1961, with the description "Drive-In Restaurant Services", which continues to be renewed through the end of December 2009.
ii) McDonalds primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, and desserts.
iii)The McDonalds Corporation has diversified themselves recently, in response to obesity trends in Western nations and in the face of criticism over the healthiness of its products; the company has modified its menu to include healthier alternatives i.e. salads, wraps and fruit.
In addition to its signature restaurant chain, McDonald’s Corporation held a minority interest in Pret A Manger until 2008, and owned the Chipotle Mexican Grill until 2006 and the restaurant chain Boston Market until 2007.
iv) The advantages this diversification process has provided allows the McDonalds Corp to capitalize on the growing consumer interest in health and wellness. This can be further seen with McDonalds’s revenue. McDonalds’s revenues grew 27% over three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.
v) New York Stock Exchange (NYSE:MCD)
vi) There are, 13 different members currently seated on the Board of directors.
5. Berkshire Hathaway
i)Berkshire Hathaway manages their subsidiaries and oversees the transactions and development of their assets. They could be considered an asset stripper as; through the transactions of smaller companies they have themselves experienced a tremendous growth in revenue and net worth.
ii) Berkshire achieved growth from switching its business strategy. As opposed to merely obtaining stocks and shares, they have now focused on buying entire companies. Berkshire because of this strategy now owns the majority interest in GEICO insurance in addition to, a diverse range of businesses including candy production, retail, home furnishings, encyclopedias, vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; manufacture, import and distribution of footwear; as well as several regional electric and gas utilities.
6. McDonalds actually has not experienced any trouble operating in the international/overseas market. In fact, they have found more international success than in the domestic market.
7. The problem that could rise from their international dependency could be there overreliance on the international/global economy. This can be exhibited via the global recession that has recently occurred could put financial restraints on the company i.e. forcing global franchises to cut costs or laying off employees.
8. Conglomerate- a corporation consisting of a number of subsidiary companies or divisions in a variety of unrelated industries, usually as a result of merger or acquisition
9. Coca Cola, McDonalds, IBM, Google, Microsoft, Sony, General Electric, and General Motors.
10. Conglomerates advantages are as follows:
1. By participating in a number of unrelated businesses, the parent corporation is able to reduce costs by using fewer resources.
2. By diversifying business interests, the risks inherent in operating in a single market are mitigated. However, history has shown that conglomerates can become so diversified and complicated that they are too difficult to manage efficiently. Many conglomerates have reduced the number of businesses under their management to a few choice subsidiaries. They are also highly dependent on the turnovers of their subsidiaries as exhibited by Sony’s loss of $3 billion.
Saturday, January 30, 2010
Saturday, January 9, 2010
Skoda study/LEDC
Skoda Auto Case Study
a. The two internal stakeholder groups suggested in the case Skoda Auto case study are the employees. As well as the shareholder group that is directly affected by the transpirations of the employees in the Public limited Company.
a. The two internal stakeholder groups suggested in the case Skoda Auto case study are the employees. As well as the shareholder group that is directly affected by the transpirations of the employees in the Public limited Company.
b. As Skoda is an international company of there was a variety of stakeholder conflicts occurring. In particular there was the fact that, the Czech government hadn't seemed to be regulating the business practices, such as the Czech Company's adherence to employment legislation. In turn the employees became disgruntled about the lack of full benefits and pay, the Czech employees responded in a workers strike at an attempt to raise awareness of their dissatisfaction.
c. In hopes of minimizing this conflict, managerial team and Board of directors of Skoda Auto could establish internal means of regulation for each area they operate in. This would in turn allow for less dependency on the government for profit making. Initially it may prove to be costly but in the long run it will be greatly effective. It will allow the managers and directors to avoid dilution of control considering the scale of the business
It is essential to recognize the economies/ diseconomies of scale that lie in front of Skoda i.e. if the business was solely on a national level, it would seem ridiculous to invest money into regulating unfair business practices as this is an aspect regulated by the government already.
Economic Growth Activity
It is essential to recognize the economies/ diseconomies of scale that lie in front of Skoda i.e. if the business was solely on a national level, it would seem ridiculous to invest money into regulating unfair business practices as this is an aspect regulated by the government already.
Economic Growth Activity
2.Peak or Boom: Economic activity at highest, Consumer expenditure, investment and export earnings, unemployment will be low, consumer and business confidence will be high, possible increase in wages, business have very good cash flow
Recession: Declining aggregate demand, lower investment expenditure, falling export sales, rising unemployment
Slump or Trough: High level of unemployment, very low levels of consumer spending, investment and export earnings, poor cash flow
Recovery or Expansion: GDP rises, national income begins to increase, consumption, investment, and employment will also increase
question 3
Cost reduction: methods such as finding alternative suppliers who offer the product you need at better prices or moving to a cheaper location should help cash flow during a recession.
Price Reduction:during a recession people become more cost aware and have less disposable income. A slight reduction in prices may prove to be effective in retaining customers
Branding: can help during a recession because customer who are loyal to the brand will continue purchasing its products regardless of price change helping the brand maintain its sales.
Outsourcing: the cost of production might be lower overseas so this could help a business gain a competitive price advantage and increase its profits.
question 4
How does growth occur via improved quality of factors of production?
Capital Goods: the greater the level of investment, the higher economic growth tends to be.
Education and training: if the workforce is trained better and more educated the workforce will become more productive.
Health technology: Better health care helps ensures that the overall health of the workers will be greater thus improving the overall productivity of the workforce.
z
question 5
How can the labor force of a country change?
Change in demographics: a fall in birth rate in developed countries, people delay work for higher educational opportunities and early retirement because of rising income are reasons that will reduce the size of the workforce.
Changes in participation rates: a higher participation rate can be caused by government incentives such as lower rates of income tax. due to an increase in the number of women that are returning to or starting work increases participation rates in different regions of the world.
Changes in net migration: this refers to the difference between immigration and emigration. If the net migration is positive then, the size of the workforce will increase.
Monday, November 23, 2009
2411/09
Ethics- the moral prinicples,values,& judgemnts that sociey believesorgaizions should consider inte decision making process
Morals-to address questions such as how a moral outcome can be achieved in a specific situation and how moral values should be determined.
Corporate Social Responsibility-self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms.
Social Auditing-review of the public-interest, nonprofit, and social activities of a business. These audits usually are performed primarily for internal benefit and typically are not released to the public. The social audit may be performed routinely by internal or external consulting groups, as part of regular internal audits. These evaluations consider social and environmental impacts of business activities.
. Three Examples of Unethical Business Behaviour:a) Financial Dishonesty - this encompasses illegal deliberate misinterpretation of financial accounts as well as morally unjust issues with business expenses being reimbursed to directors of companies. b) Exploitation of the workforce - Encompasses the exploitation of employees in areas such as neglect of welfare issues, poor pay and unjust working conditions.c) Exploitation of consumers - This is when firms knowingly exploit people or society by selling harmful products as well as charging excessive prices.3. Advantages and Disadvantages of Businesses which behave ethically
Advantages:
- Improved Corporate Image - enhances the businesses reputation through treating employees fairly as well as being environmentally friendly
.- Increased Customer Loyalty - businesses build larger customer base though ethical and moral ideals of their objectives and actions.
- Cost Cutting - by being conscious of the environment (e.g. recycling, reduced excess packaging) businesses can often reduce some costs of production as well as reduce the risk of litigation costs from illegal actions.
- Improved Self Motivation - drives employees motivation, productivity and loyalty as they are working for an ethically and morally positive business as well reducing labour turnover.
- Improved Staff Morale - recruitment and retainment of motivated, quality staff as more want to work for business with strong ethical stance.
Disadvantages:
- Compliance Costs - acting ethically could be far more expensive due to additional money and time needed to produce the ethically supportive products (e.g. organic food is more expensive to harvest).
- Lower Profits - Higher prices due to compliance costs which in turn could cause an ethical dilemma where the business could need to adopt a less profitable course of action.
- Stakeholder Conflict - Organizational objectives within the various stakeholder groups could be different (e.g. financial investors are more concerned with the short-term profits as oppose to the firm's ethical stance).
4. How CSR helps a Business compete?
The social responsibilities of a business play an important role in their corporate image. They alow the more consciencus customer to determine, what would be the right choice for their business.
5.Why Social Auditing is undertaken by a Business ?
Social auditing allows an organization to take into account its social performance, report on and improve that performance. It assesses the social impact and ethical behaviour of an organisation in relation to its aims and those of its stakeholders. Allowing the company to recognize how they are doing in satisfying the needs/wishes of the customers.
Morals-to address questions such as how a moral outcome can be achieved in a specific situation and how moral values should be determined.
Corporate Social Responsibility-self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms.
Social Auditing-review of the public-interest, nonprofit, and social activities of a business. These audits usually are performed primarily for internal benefit and typically are not released to the public. The social audit may be performed routinely by internal or external consulting groups, as part of regular internal audits. These evaluations consider social and environmental impacts of business activities.
. Three Examples of Unethical Business Behaviour:a) Financial Dishonesty - this encompasses illegal deliberate misinterpretation of financial accounts as well as morally unjust issues with business expenses being reimbursed to directors of companies. b) Exploitation of the workforce - Encompasses the exploitation of employees in areas such as neglect of welfare issues, poor pay and unjust working conditions.c) Exploitation of consumers - This is when firms knowingly exploit people or society by selling harmful products as well as charging excessive prices.3. Advantages and Disadvantages of Businesses which behave ethically
Advantages:
- Improved Corporate Image - enhances the businesses reputation through treating employees fairly as well as being environmentally friendly
.- Increased Customer Loyalty - businesses build larger customer base though ethical and moral ideals of their objectives and actions.
- Cost Cutting - by being conscious of the environment (e.g. recycling, reduced excess packaging) businesses can often reduce some costs of production as well as reduce the risk of litigation costs from illegal actions.
- Improved Self Motivation - drives employees motivation, productivity and loyalty as they are working for an ethically and morally positive business as well reducing labour turnover.
- Improved Staff Morale - recruitment and retainment of motivated, quality staff as more want to work for business with strong ethical stance.
Disadvantages:
- Compliance Costs - acting ethically could be far more expensive due to additional money and time needed to produce the ethically supportive products (e.g. organic food is more expensive to harvest).
- Lower Profits - Higher prices due to compliance costs which in turn could cause an ethical dilemma where the business could need to adopt a less profitable course of action.
- Stakeholder Conflict - Organizational objectives within the various stakeholder groups could be different (e.g. financial investors are more concerned with the short-term profits as oppose to the firm's ethical stance).
4. How CSR helps a Business compete?
The social responsibilities of a business play an important role in their corporate image. They alow the more consciencus customer to determine, what would be the right choice for their business.
5.Why Social Auditing is undertaken by a Business ?
Social auditing allows an organization to take into account its social performance, report on and improve that performance. It assesses the social impact and ethical behaviour of an organisation in relation to its aims and those of its stakeholders. Allowing the company to recognize how they are doing in satisfying the needs/wishes of the customers.
Monday, November 16, 2009
Franchising study
Case Study on Franchising
To what extent is a franchise opportunity a true reflection of what it is like to set up and run a business?
Setting up a business, and setting up a franchise can be very similar and different at the same time. The buyer will need to be aware of several major differences that are necessary and/or vital to the decision process.
When a franchisee buys the rights to set up a franchise, they are buying rights to use the franchisor’s trademark and model. They therefore don’t have to come up with their own ideas for the business; the logo, product, trade name, equipment etc. are already provided. The franchisee also will not have to exhaust money on advertisements as, the franchisor takes responsibility for general marketing (e.g. McDonalds’ national ad campaigns).
Apart from that, however, running a franchise is very similar to running an individual business. The franchisor controls the individual selling price of its goods, (however the franchisor generally gives a suggested sell price of its products). The franchisee has the sole responsibility of, insuring that the quality of the product is in decent condition. In addition, it is up to the franchisee to conduct and organize their franchise in such a way that it earns a profit. Thus, a franchise is generally a decent reflection of what it is like to operate a business not however, how to set up an un-established one.
Use the Forbes site and the Business of Baseball site to do some research on the financial positions of the different baseball franchises in the United States and Canada. Using the data, suggest which teams are the most vulnerable to seeing their franchise sold to a rival bidder such as Portland Oregon.
Teams like the Tampa Bay Rays or the Chicago Cubs have a higher probability of being sold to a rival bidder than, the Boston Red Sox or the New York Yankees. This is because they rank in the lowest tier of the top 30 teams of the league. This is ranking, is of course a reflection of how they fare in their games, which obviously is not very well
The Tampa Bay Rays are having success in the financial sector of baseball; they have an operating income of 27.2 million dollars annually (the third highest amount in the entire league). Therefore, a bidder would be more likely to buy them as opposed to the Pirates which sufficed to say are not doing well financially. For the potential bidder, the Rays are more attractive because, they have the potential to earn the buyer more income. The fact that the team isn’t doing all that well competition-wise can work to the bidder’s advantage in negotiation e.g. sale price and/or minimum bid price.
Imagine a situation where the English soccer Premier League became the franchisor as in the case of MLB Inc. How might the Premier League seek to use this position to expand the growth of the ‘brand’? What implications would this scenario have for clubs in the League and outside it (i.e. those in the Championship?)
The Premier League might seek to use this position as an opportunity to introduce Americans/Canadians to Premier League football. The Premier league can dual market both franchises e.g. (Market baseball in England and, Football in America). Thus, allowing potential interest to fester which could in turn lead to a larger income total/turnover.
Several questions would arise however in regards to potential baseball franchises in England/ football franchises in America. These franchises would only be able to compete, if there was a fully functional league in both countries e.g. a league of twelve or more teams, broken down into two divisions. These two divisions would compete in a playoff ultimately resulting in a champion. The champion of said league would then be pitted against, the champion of the other country in an “Intercontinental Championship match”. This would allow a greater amount of revenue for the Premier League/MLB because; it would be an internationally televised event allowing an even greater customer base/market.
Lastly, there would be the need to regulate the amount of money spent on players for the Premier League baseball team. With such a large amount of income, the franchisor would be able to acquire virtually any player they desire. This would cause baseball to become a truly one sided game then. It would be necessary for the MLB to introduce a full salary cap, as opposed to the Luxury Tax now in effect. This regulation would allow for a “level playing field”.
To what extent is a franchise opportunity a true reflection of what it is like to set up and run a business?
Setting up a business, and setting up a franchise can be very similar and different at the same time. The buyer will need to be aware of several major differences that are necessary and/or vital to the decision process.
When a franchisee buys the rights to set up a franchise, they are buying rights to use the franchisor’s trademark and model. They therefore don’t have to come up with their own ideas for the business; the logo, product, trade name, equipment etc. are already provided. The franchisee also will not have to exhaust money on advertisements as, the franchisor takes responsibility for general marketing (e.g. McDonalds’ national ad campaigns).
Apart from that, however, running a franchise is very similar to running an individual business. The franchisor controls the individual selling price of its goods, (however the franchisor generally gives a suggested sell price of its products). The franchisee has the sole responsibility of, insuring that the quality of the product is in decent condition. In addition, it is up to the franchisee to conduct and organize their franchise in such a way that it earns a profit. Thus, a franchise is generally a decent reflection of what it is like to operate a business not however, how to set up an un-established one.
Use the Forbes site and the Business of Baseball site to do some research on the financial positions of the different baseball franchises in the United States and Canada. Using the data, suggest which teams are the most vulnerable to seeing their franchise sold to a rival bidder such as Portland Oregon.
Teams like the Tampa Bay Rays or the Chicago Cubs have a higher probability of being sold to a rival bidder than, the Boston Red Sox or the New York Yankees. This is because they rank in the lowest tier of the top 30 teams of the league. This is ranking, is of course a reflection of how they fare in their games, which obviously is not very well
The Tampa Bay Rays are having success in the financial sector of baseball; they have an operating income of 27.2 million dollars annually (the third highest amount in the entire league). Therefore, a bidder would be more likely to buy them as opposed to the Pirates which sufficed to say are not doing well financially. For the potential bidder, the Rays are more attractive because, they have the potential to earn the buyer more income. The fact that the team isn’t doing all that well competition-wise can work to the bidder’s advantage in negotiation e.g. sale price and/or minimum bid price.
Imagine a situation where the English soccer Premier League became the franchisor as in the case of MLB Inc. How might the Premier League seek to use this position to expand the growth of the ‘brand’? What implications would this scenario have for clubs in the League and outside it (i.e. those in the Championship?)
The Premier League might seek to use this position as an opportunity to introduce Americans/Canadians to Premier League football. The Premier league can dual market both franchises e.g. (Market baseball in England and, Football in America). Thus, allowing potential interest to fester which could in turn lead to a larger income total/turnover.
Several questions would arise however in regards to potential baseball franchises in England/ football franchises in America. These franchises would only be able to compete, if there was a fully functional league in both countries e.g. a league of twelve or more teams, broken down into two divisions. These two divisions would compete in a playoff ultimately resulting in a champion. The champion of said league would then be pitted against, the champion of the other country in an “Intercontinental Championship match”. This would allow a greater amount of revenue for the Premier League/MLB because; it would be an internationally televised event allowing an even greater customer base/market.
Lastly, there would be the need to regulate the amount of money spent on players for the Premier League baseball team. With such a large amount of income, the franchisor would be able to acquire virtually any player they desire. This would cause baseball to become a truly one sided game then. It would be necessary for the MLB to introduce a full salary cap, as opposed to the Luxury Tax now in effect. This regulation would allow for a “level playing field”.
Subscribe to:
Posts (Atom)