Improving Management: Burger King

The classical approach has lead a manager to believe that cutting customer wait time will increase organizational efficiency.  In order to help more customers during the busy time of day, managers may want to consider putting more than one intercom outside to take orders.  With two intercoms, twice as many orders can be taken at one time, food can be prepared twice as fast and customer will receive there food twice as fast.  However, before taking this step, the manager needs to first evaluate the efficiency of the employees.  Are all of the employees working to their maximum potential?  Are there changes or incentives that can be given that will affect the efficiency of the employees?  Is the work being divided fairly and according to skill level and ability?  Are our employees happy?  Do the employees have all of the materials needed for maximum efficiency?  After evaluating possible alternatives to having to buy costly equipment, and making sure that it is the best solution to the problem, the manager should then make a small-scale test of the idea to make sure that it will increase customer-waiting time.  An employee can stand outside behind the first intercom and take orders just as he would from the window.  After doing this for a few days, the number of customers helped per period should be re-evaluated using the management science approach.  If the numbers suggest that adding a second intercom will increase customer wait time, the final step, buying the second intercom, should be taken.

The human variable states that employees need to receive a response to requests to maximize positive effects. The behavioral approach leads a manager to realize that they have to consider the feelings of their employees because these feelings have a strong impact on productivity. First, the employees should be reassured that they are all being paid equally the amount that they deserve for the job that they do and the time that they have been doing it.  Treating customers fairly is very important in these types of situations.  After that, an evaluation can be performed to see if it is in the budget to allow these raises and if not, seek alternate solutions.  Turnover is very expensive and should be avoided as much as possible.  Positive reinforcement could be the best way to solve this problem.  Where a raise unexpectedly may seem irrational to corporate, rewarding the employees for increased productivity may seem more reasonable.  You can satisfy the employees as well as upper management at the same time.  Making sure that the goals are reachable for the employees is also key.

When new product ideas are in need, employees could hold the solution that you are looking for. When employees are involved in the managerial decision making process, they tend to feel like they have more of a voice in the company and are happier. Applying the organizational approach would be the best action to take in this situation.  Bringing the employees together to brainstorm new ideas helps the company as a whole and the self-esteem of the employee.  New fresh ideas are brought to the table and extra money did not have to be spent to find them.  Everyone ends up happy and the company profits more.

I think that compared to other corporations, such as a bank or a car company, managing a fast-food restaurant would be relatively easy.  The manager only has to be focused on the food industry.  Managers of major corporations have much more to worry about and take care of. In addition, many of the fast food industries problems have easier solutions.  Designing a new hamburger to market seems a lot easier than having to design a totally new car.  On the other hand, they both have to deal with the similar problems with employees and where they should expand there store and services. 

When Did Communism Go Out Of Style?

          Communism changed from being an attractive political ideology after World War Two to being a political liability because it threatened the capitalist Western powers and they fought against it.  Throughout the post World War II era many under developed countries came to be governed by so-called Communist regimes.  At first, communism seemed like a decent idea to most because of the damage that World War II had done to so many under developed country's economies.  The thought of pooling all property and funds into the common good of the country seemed like a rebuilding tool that could get poorer countries back on their feet.  Then, it started to affect the capitalist Western powers.  Countries were dealt with harshly by Western powers because of the process of revolution. These countries were trying to establish independence from foreign control, so regardless of whether or not they were adopting "socialism," the Western powers would have fought against the action. Since countries were adopting "socialism" the capitalist Western powers felt threatened by them as a part of global Communist revolution. Capitalist leaders wanted to make sure that these countries would fail because, of course, the goal of Communists is to develop a system free from private ownership, which is definitely not in the best interests of people who are wealthy due to private ownership.  If you named yourself as socialist or communist, you were just begging to have the powerful capitalist Western powers plan on your demise.  The Cuban trade embargo is an example.

Democracy's Journey from Racially Discriminatory to Totalitarian Suffrage.

 America’s understanding of democracy changed from racially discriminatory voting  to totalitarian suffrage after the emergence of independent countries worldwide.  To be considered democratic, a country must choose its leaders through fair and competitive elections, ensure basic civil liberties, and respect the rule of law.  America was not a true democracy before the civil rights struggle because they were not being governed by all of their citizens (represented by their votes).  It wasn’t until the world took notice of democracy and democracy started to spread, that America started to develop their present understanding of democracy. After World War II, independent democracies started emerging everywhere. A Local Histories Timeline revealed that Japan wrote a new constitution and started elections in 1946. In 1948, Israel became this first democratic country in the Middle East. In 1952, India became an independent democracy. America barred African-Americans from suffrage legally and practically, until the civil rights struggle of 1955-1968.  It is evident that seeing countries with different races contributing equal votes toward sustained democratic elections clarified the understanding of true democracy for American's.  

Tomorrow's Tycoons

70%... that is the failure rate of new businesses today. It is said that out of every 100 new ideas, two of them will become a product, and one of them will be successful. Statistics like these are what makes it so astonishing that teenagers, still making there way through high school, are running internet businesses that net thousands of dollars every year. These young entrepreneurs ideas were fueled from their everyday lives. Mix that with their soaring conceptual skills and these teens started seeing success early than most people could ever dream of.

            Aaron Sacks, a 16 year old from Silver Springs, put his parents at-home printing shop to good use. He decided to personalize playing card decks and had all the resources he needed right outside his bedroom door. When a few bumps in the road arose with the cards sharp corners, his Grandma bought him a corner cutting machine. With lots of thanks to Grandma, Aaron’s hard work landed him his biggest gig to date when the mayor of D.C. ordered 1,000 decks of personalized cards. Aarons dad stated that Aaron “can think well on his feet” which is probably one of the main reasons for all of the success he has encountered. Some people are just born businessmen.

            Casey Reichl had a love for baking, as well as a love for her dogs. From these sprung her idea to start baking high priced pooch treats. When she had time free from her extra curricular activities at Marshall High School, she would come home and test her products on her three dogs. But before she jumped into the business world, this bright 18 year old did extensive market research. Her planning definitely paid off when a local gift shop agreed to stock up on her treats. The best thing about her treat is the standardizing she put into them. All of Casey’s treats are catered for the dentally challenged as well. Even dogs with gingivitis can enjoy her “gourmet biscuits.”  She’s hoping to continue to collect a portion of the 14.2 million dollars that dog owners spend on food and treats for their dogs every year.

            Photography is a course offered in millions of high schools around the nation. Thomas Dant Jr. was one of the many kids sharing the passion for great photographs. His first idea was to hire out his skills to anyone willing to pay, but a local business competition lead him in a different direction. Instead of selling his services, Thomas decided to sell his original photos. Through his website, people can browse and purchase any of his pieces that he has placed on display. In 2006, Thomas grossed 1,000 dollars in the first year of his business venture. By setting goals, building up his reputation, and keeping a close eye on his business, Thomas believes that all of his success is a product of networking and knowing the right people that can get you out there. His ultimate goal? “To take pictures and have people love them as much as I do.”

The International Organization of Standardization

               The International Organization of Standardization has subsidiaries in 162 countries around the world. The ISO believes that standards make a positive contribution to all aspects of life around the globe. Their goal is to ensure the quality of products in areas such as safety, reliability, efficiency, and environmental friendliness. The organization prides themself in being responsible for thousands of standards that positively benefit the world. The standards strive to make development as well as the manufacturing process and the supply and services process safer. They also have standards that work toward making international trade fairer. They provide governments with standard guidelines on safety, health and environmental legislation. Safeguarding consumers is also very important to the ISO. Their official mission states that ISO develops high quality voluntary International Standards which facilitate international exchange of goods and services, support sustainable and equitable economic growth, promote innovation and protect health, safety and the environment” (ISO Central Secretariat, p. 3, 2011).

               The ISO supplies several products on their guidelines to any customers that are interested. Products include informational material such as magazines, databases, handouts, packages and checklists. 55% of income is generated from their membership fees and the other 45% comes from the sale of publications (ISO Central Secretariat, p. 26, 2009). Their 2009 total revenue was 36,349,000 CHF but after expenditures and operating costs, the net result was 0. This is because the ISO only aims to earn enough revenue to meet direct organizational costs. In the ISO’s Strategic Plan 2011-2015, they laid out guidelines for increasing opportunities for “maintain(ing) the strong financial base of the organization” (ISO Central Secretariat, p.3, 2009) which is comprised of fixed, long term, current and liquid assets. The investments are necessary for the organizations long term sustainability as well as for meeting the operating expense cash requirements.

               Because ISO generates the majority of its capital from the development of standards, meeting standard requirements is key to the success of the organization. ISO maintains a consistent publishing amount year to year. Annual production charts would suggest that ISO’s product strategy is to be able to continue publishing at a consistent rate each year, even though they have already created so many. ISO’s distribution strategy has been evolving over the past several years. E-products, available to customers online, is one of the newer ways that products are offered to customers. Because the material comes in a downloadable PDF file, it can be sold at a lower cost. There are no longer material costs for ISO when customers purchase their products this way. It is almost 100% profits.  

               ISO’s global business environment is very good because there are many developing countries that are in desperate need of standards. Because they are one of the few organizations of their type, ISO has very little global competition. Their target market is governments and private sector businesses. “A key element of ISO’s customer focus strategy is communicating, informing and educating ISO’s current and future customers” (ISO Central Secretariat, p.23, 2009). They recently launched a communications package for customer’s top management. They host annual Marketing and Communication Forum’s. They also have developed the ISO Café which put everything customers would ever want to know about ISO in one convenient location.  They also send out e-Newsletters consistently.

               ISO’s impact on global culture is extremely positive. They spread knowledge, facilitate trade, disseminate vastly innovative advances in technology, and share successful management practices as well as conformity assessment practices. “ISO standards provide solutions and achieve benefits

for almost all sectors of activity, including agriculture, construction, mechanical engineering, manufacturing, distribution, transport, medical devices, information and communication technologies, the environment, energy, quality management, conformity assessment and services” (ISO Central Secretariat, p.2, 2009). They focus to improve global economic, environmental and societal quality.

               Management needs to focus more of the customer’s needs. The growth of an organization is based upon the organization having satisfied customers. Because the meaning of customer to ISO can be quite broad, the customer’s exact needs can be hard to define at times. If a company cannot anticipate customer needs they will never thrive.  ISO’s management needs to develop specific guidelines to help them better assist their customers. 

Avoiding Accumulating Excess Retained Earnings

A company faces the possibility of having issues with the Internal Revenue Service scrutinizing them with regards to the retained earnings. Retained earnings could be perceived as being excessive related to the capital needs of the company. A solution is needed that addresses finding the most tax efficient way to maximize shareholder value. If the sole proprietorship was converted to a C Corporation, they would be able to better maximize the profits that they end up with.

            A company is limited to the amount of retained earnings that it can keep in the company because the IRS wants to prevent corporations from sheltering or sparing shareholders from paying income taxes that they would pay on earnings that are distributed. Because there is a maximum amount of retained earnings that are allowed to be kept on a balance sheet, excess retained earnings have to be distributed to the shareholders of the company. There are several ways that a C Corporation can go about distributing earnings without having to be excessively taxed on those distributions (IRS, 2011).

C Corporations generally only use a few methods of extracting capital from the corporation. Salaries and bonuses of the company would immediately become tax deductible and would minimize the tax burden to the company. However, if the salary is deemed excessive for the work being done by the IRS, the tax deduction is disallowed.

            C Corporations can pay out cash dividends to their shareholders. The owner of the company would be the exclusive holder of all of the shares of the company. Because the dividend that is being paid out is post-tax money, they qualify for the 15% tax bracket under the Bush Tax Cuts. This is going to save a lot of money because the top tax bracket for income earned is as high as 39.6%. 

            The Bush Tax Cuts were recently extended by President Obama through the end of 2012, when the previous 2001 tax rules will go back into place. This is known as the sunset provision. To utilize the maximum benefit of the Bush Tax Cuts, a large amount of retained earnings should be distributed prior to the expiration. I would recommend cutting retained earnings by half and distributing the other half and have that half subject to the 15% tax bracket. It is always possible that these tax cuts could once again be extended to last a longer period of time as opposed to expiring in 2012. Legislation should be carefully monitored to assure that they are going to expire or be extended.

            If they are going to be extended, the company should only distribute what they have to in order to not be subject to the penalties that are imposed on companies that retain excessive amounts of earnings in the company. The action plan for the company in between now and the dividend payment time should involve following the new on the possibility of Bush Tax Cuts extension. When the legislation is passed, cash should be raised in the corporations brokerage account and match gains to losses. Next, the company will have to examine the shareholders passive loss situation. Near the end of the year, a meeting will have to convene to announce the declaration of an appropriate extra dividend.

            This strategy creates a timeline for reducing retained earnings in 2012 based on whether or not the Bush Tax Cuts are extended. The company is going to be able to save much more money if they classify themselves as a C Corporation instead of a sole proprietorship because of the taxation rules for each corporation. It outlines what the board member are going to have to watch out for and the actions that they are going to need to take in regards to whether there is an extension or not. There must be effective communication as to what is going on with the legislation and everyone is going to need to be well informed so that the proper steps can be taken.

IRS. (2011). Sole Proprietorships. Retrieved from http://www.irs.gov/businesses/small/article/0,,id=98202,00.html.

Managing Reorganization

As the newly hired manager of a division that is failing at my company, there are several factors I will focus in on to begin the transition to the turn around. Firstly, I want to focus on the fact that we are losing market shares because our product line is outdated. Next, I want to work to fix the problem we are having with adversarial interdepartmental communication. I would also like to address the ongoing issue that we have been having with receiving corporate funding. It is going to be very important to take each of the issues that we are having and incorporate them into an organizational structure change. After defining how we want to fix the issues we have addressed, I would like to give a more detailed account as to the steps that I believe are best to take in implementing this change. Lastly, I would like to highlight the effect that the external environment will have on the turn-around of the division.

               Richard Brock (n.d.) said “You sell a company twice. First of all, you see them the product, then you sell them the service.” The product line of a company is a huge part of the key to its success. To have a product line that is outdate is simply unacceptable. We need to develop a structure change in our division that will transition us from a functional structure to a project structure. Our new project structure should have an extensive focus on our product line. We need to make sure that we have the most up to date information and that our product reflects the type of workers that we are. Bill Gates (n.d.) once said “its quality! It's creating brand recognition and going after market share!” We need to be innovative and be the industry leader. In becoming the industry leaders, we will no longer be losing market shares and our company will benefit immensely. An organizational change in technology would also help to update our product line by allowing employees to collaborate and communicate much easier. This will lead to employees being able to learn how to be more efficient and effective from each other, as well as allow employees to access complete information faster and make quicker, better informed decisions about their work. 

               Adversarial interdepartmental communication can have extremely detrimental effects on division productivity. Bill Gates (n.d.) once stated that “like a human being, a company has to have an internal communication mechanism, a "nervous system", to coordinate its actions.” If we lack the ability to properly communicate with our co-workers, in theory, our nervous system is unable to function correctly, leading to a company spiraling to its grave. Management can work towards overcoming some of the communication barriers at hand by implementing several valuable techniques. We need to use feedback that our employees have to help pin-point the cause of the problem. We collaborating interdepartmentally, we need to ensure the use of simplified, direct, to the point language. We may need to have some activities that help employees to utilize the positive effects of active listening. Emphasis on constraining emotions and watching for non-verbal cues is also been proven effective in the workplace. It should be communicated to the workforce that we want everyone to communicate fully, openly, and honestly. As a result, fewer rumors will surface and it will cause higher morale in the office. We could also make more online databases available as well as create communities of practice for the divisions to greater expand the opportunities that they have to communicate effectively.

               It has also been made apparent that the competition for corporate resources has become a large issue. But I believe that we need to look at this in a different way. Fairfax Cone (n.d.) stated that “the inventory goes down the elevator every night.” That being said, we have to realize that our people are our most valuable internal resource. As long as we have them, we can do anything. It is important that we utilize each individual employee’s strength and weaknesses and make sure we are placing them in a position where they can be as efficient as possible. We need to make sure that they have the resources to do that as well. We will save a lot of money right of the bat if we utilize, to the best of our ability, what we have right in front of us. By taking these appropriate steps to change the structure, technology, and people, I believe that the solution to our financial problems will slowly solve themselves. In the beginning, we will save ourselves the money, and once we have developed a new product line that upper management can get excited about, the funding should follow.

               We are going to need to monitor the transition very closely for any kind of resistance. The steps that I would suggest to manage the transition would involve reducing the resistance to change as much as possible. Just as Robbins (2009) emphasizes, I would focus on my employees. I’d be sure to educate and communicate the department of the changes we are making and why, encourage participation, and provide a support system for them. Because building trust is a vital element to create a thriving workplace, I would avoid any strategies involving manipulation, co-optation, and coercion because of the damaging effect that it would have with employee relations. I would assess the external environment and integrate it into the turn-around plan by conducting research on changes in consumer demands, laws, technology, and economics and decided on adjustments accordingly.

               Many factors have to be taken into account to successfully turn around a failing business unit. An outdated product line, adversarial communication, and competition are the three main problems that have hindering our department. To fix these problems, I plan to implement a change in structure, technology and people. In managing the transition, I would suggest closely monitoring any resistance to change, and responding immediately to it. The external environment should also be reviewed and incorporated into the overall plan according to any changes.

References

Brook, Richard (2010, Dec). Richard Brock Quotes. Retrieved on January 18, 2011 from http://einstein/quotes/richard_brock/

Cone, Fairfax (n.d.). QFinance. Retrieved on January 18, 2011 from http://www.qfinance.com/finance-and-business-quotes/employees

Gates, Bill. (n.d.). Bill Gates Quotations. Retrieved on January 18, 2011 from http://www.afterquotes.com/great/people/bill-gates/index.htm

Robbins, Stephen P. (2009). Chapter 12: Managing Change and Innovation [Electronic Version]. Management (p.256-278). Pearson Prentice Hall. Retrieved from https://mycampus.aiu-online.com/controls/eBookFileServer.ashx?id=51_119_102_52_71_80_65_104_72_84_52_121_56_57_89_108_77_104_43_114_71_103_69_116_78_120_106_51_54_55_98_112_115_83_83_66_76_68_106_68_113_121_57_82_100_118_66_117_53_65_74_52_80_103_74_105_100_65_67_111_118_99_116_89_116_70_81_113_100_89_51_102_112_86_47_111_116_69_81_108_115_120_43_73_75_119_61_61&File=Robbins_Ch12 256-278&friendlyName=Chapter 12: Managing Change and Innovation

Implementing Management Change

               The three most important principles to implement when managing change are planning, measurement, and support structures. It is extremely important to plan during change because, as Lynda Rogerson (n.d.) states, “a clearly defined vision of the end result enables all the people to define the most efficient path for accomplishing the results”. You need to know what you are aiming for before you start shooting. Scenario planning would work well in this situation because it would identify early warning signals that the turn-around may be experiencing problems and would define what steps you wanted to take if any type of shifts (economically, politically, technologically) were to surface. Manager should be careful not to treat scenarios as forecasts however. 

Measurement is the second important principle that I feel is necessary during change because managers can set milestones, both short and long, which is essential in tracking progress. If you are reaching your goals when you planned, you know that you are on the right track. You must put into place a specific way to say whether you are failing or not. As a manager, you would want to make sure to put an exact timeframe into the goals, for example, sell 500,000 units to stores by November 15^th.  Knowing exactly what the goal is more clearly defines the objective for employees and consistently meeting goals is good for employee morale.

A support structure is the third important principle that I chose. People are very resistant to change because they are creatures of habit. Helping employees to work through the fears they may have during a change is one of the best ways to help them weather the storm. Managers can provide counseling, new skill training or a little bit of paid time off to allow employees stress level to decrease. Reiterating to employees that you are there to support them is very important during times of change. 

References

Rogerson, Lynda. (n.d.). Twelve Principles for Managing Change. Retrieved of January 24, 2011 from http://www.lynco.com/12prin.html

Computer Privacy In The Workplace

Computer privacy in the workplace is a controversial issue for most. Employers can use software that allows them to monitor internet usage. They can track all of the website you visit and keep track of all the emails you write and receive. Many companies use a tracking system that records keystrokes so that they are less likely to miss anything. Other types of employee monitoring include a technique that keeps track of the amount of time spend away from the computer terminal or idling.

          Employers are generally allowed to do all the tracking they please because they own the computers.  Most tracking systems make sure that the person being tracked has no idea that this is going on, unless the employer makes it known. In most states, there are no law in place that require employers to inform you if they do decide to start tracking you.

          Employees have very few rights when it comes to computer privacy in the workplace. Under certain circumstances, employees are offered protection from monitoring. Some union contracts limit the right of the employer to monitor. The United States Constitution provides minimal rights to public sector employees, most importantly the fourth amendment, which protects people against unreasonable search and seizure. (Privacy Rights Clearinghouse)

In 2007, the American Management Association and the e Policy Institute found that two-thirds of employers monitored employee internet usage. It is well known that many companies track content, keystrokes, and time spent at the keyboard.  Over 30% of companies use technology to automatically monitor the emails that are written by employees. Some of the latest software claims that by analyzing each employee’s “digital footprint” they can create an in-depth evaluation of performance and conduct. The software looks for word patterns, changes in the style of language, and communication patterns. However, the AMA does report that "Most respondent firms carry on surveillance practices on an occasional basis in the manner of spot checks rather than constantly or on a regular routine."

Studies conducted by CareerBuilder, an employment website, found that 45% of hiring managers check social media pages when considering prospective employees. (Wortham) They looks for things such as excessive drinking, drug use and bad mouthing of previous employers. The study also found that 35 percent of those mangers decided not to offer a candidate the job because of what they found on their social networking site. Privacy setting are offered by the sites to keep the array of people allowed to view your information limited. Sadly, the confusion over privacy settings leave some users publicly posting information without knowing it.

Companies like Teneros offer services that monitor publicly posted information on a regular basis for companies. (Brustein) They help companies to reveal potentially confidential or embarrassing information before other are able to get a hold of it. Employees’ social media creates a trail that could be subject to use in litigation. In the United States, there are no statutory laws that directly address implications of employers using social network sites as part of their hiring process. (Sinrod)

A prospective employer does not have the right to demand access to a social networking page. Even when it comes to social networking sites, there can be some expectations of privacy. (Sinrod) If an employer violates the terms of service of a social networking site, it could be said that they were committing a privacy violation. This mean that companies should never “hack” their way onto people social networking sites or pretend to be someone they are not to gain access to someone’s page. This is misrepresentation and violates the terms of service for the sites.

Common sense would save many people a lot of trouble when it comes to internet monitoring. When it comes down to it, if you are doing what you are supposed to be doing when you are at work, you shouldn’t have a problem. Most employers let you know what they expect from you and what they feel is acceptable when it comes to surfing the web.

Tthe government agency I work for tells you right up front that everything you do is kept on record, down to how many minutes you’ve spent of each website. Legal has informed us that surfing is acceptable during breaks and lunch (around an hour each day.) However, there are limitations as to the type of surfing you are doing. Most sites that the Agency wants us to stay away from are blocked. Interestingly, we are allowed to use facebook. The Defense Logistics Agency even created their own network that employees can join. At the end of the day, what it comes down to is that you should never put anything on the internet that you don’t want everyone to see. You must be internet smart and market yourself wisely.

Bibliography

Brustein, Jashua. New York Times. 26 March 2010. 10 December 2010 <http://bits.blogs.nytimes.com/2010/03/26/keeping-a-closer-eye-on-workers-social-networking/>.

Privacy Rights Clearinghouse. Workplace Privacy and Employee Monitoring. Spetember 2010. 7 December 2010 <http://www.privacyrights.org/fs/fs7-work.htm#3a>.

Sinrod, Eric. Prospective Employees Inadvertently Open Their Kimonos to Employers On Social Networking Sites. 11 November 2008. 2 December 2010 <http://articles.technology.findlaw.com/2008/Nov/04/11218.html>.

Wortham, Jenna. New York Times. 20 August 2009. 8 December 2010 <http://bits.blogs.nytimes.com/2009/08/20/more-employers-use-social-networks-to-check-out-applicants/>.

Foreign Investments

The purpose of foreign investment is to provide more opportunities through new marketing channels. This can lead to businesses finding facilities that enable cheaper production, access to newer technologies, skills, products and financing.  “It usually involves participation in management, joint-venture, transfer of technology and expertise” (Answers Corporation, 2011).  Because foreign investment is an important factor in a countries economic development, foreign investment regulations have been developed to help safeguard investors. The laws that are established promote foreign investment and ensure the permissibility of foreign investments. Foreign company investments (FCI) limits aim to provide a balance between domestic and foreign investments and control flow in different sectors.

               The foreign investment regulations attract foreign capital. It does a lot to promote productivity as well as the development of new technologies. It encourages participation locally and reduces foreign competition when local businesses are doing a good job. Some countries minimize the number of regulations that they use and increase incentives for foreign investments. Others increase incentives but establish a quota that must be met for participants that are local. Some countries even go as far as to make local participation mandatory. Foreign investors usually have to prove that they are complying with the operational investment code of the country that they are investing in to prove that they are lawfully investing. If an investor is acting unlawfully, a country has the right to disapprove the rights to invest in their country.

 Some regulations limit the amount of a company that a foreign investor can own to protect the business from being taken over. Sectoral limitations place different allowances on the different industry sectors of a country.  Most foreign investors are not allowed to invest in any businesses that deal with matters of national security. Most countries want foreign investors to focus on industries that are lacking development resources. These companies benefit from foreign investors because more local jobs become available, and foreign export trade is increased. Another regulation that is frequently used is one on the geographic area that foreigners can invest in. It is usually for security purposes but is also sometimes for economical purposes. When screening potential markets and sites, managers may run into concerns because the area they are interested in is off limits or limits the amount of investment allowed to a lower amount than is desired. Another issue is the fact that they could be disapproved as a foreign investor all together. Management should focus mainly on cultural political and legal forces, logistics and country image when they are considering investing. 

The steps to the screening process are as follows:

“Indentify basic appeal, asses the national business environment, measure market or site potential, select the market or site” (AIU Online Virtual Campus: Multimedia Printable Version, p. 3, 2011). Once all of these areas have been evaluated, an educated decision can be made as to whether it would be profitable to invest in the foreign market.

If an investor is approved to invest in a country, reports must be regularly submitted to the state in which they are investing on a regular basis. The state inspects all aspects of the company periodically as well to ensure compliance with all major laws. Financial reports are often required for review by the countries. Appraisal rights are granted to all shareholders with guaranteed dividends and the right to take legal action should the need for it arise.

References

AIU Online Virtual Campus: Multimedia Printable Version. (2011). Int’l Business Management. Retrieved from https://mycampus.aiu-online.com/Classroom/Pages/multimediacoursetext.aspx?classid=309635&tid=196&uid=200753&HeaderText=Course%20Materials:%20MGMT220-1102A-01%20:%20Introduction%20to%20International%20Business.

Answers Corporation. (2011). Foreign Direct Investment. Retrieved from http://www.answers.com/topic/foreign-direct-investment.

E-Business Security

All business owners should be aware of the risks associated with conducting business on the internet. Ventures like this can pose serious security risks if they are not gone about in the correct manner. A responsible business owner needs to take the necessary precautions when they decide that they want to conduct an e-business. Taking the time to protect your business from hackers will maximize the potential for success.

          “The term hacker was originally used to refer to a self-taught computer expert who is highly skilled with technology, programming, and hardware” (Jenkins, 2000). Hackers target small businesses because they lack the resources that large corporations possess to provide security. A malicious code can destroy all of a company’s code generators and programs. They have caused companies to lose millions of dollars as well as industry position. To avoid malicious codes debilitating your online company, anti-virus and anti-spyware programs should be used and updated regularly and have the most recent patches. A firewall is also a good tool to utilize when trying to protect your online business from these types of threats.

          Data breaches are a common problem seen by online companies that fail to secure their wireless internet networks properly. It can lead to your customer’s financial information falling into the hands of someone who intends to misuse the information. If you intend on using a wireless network for you business you have to ensure that proper security steps are taken. The default password should be changed to something lengthy and preferably containing both large and small letters as well as numbers and characters. You should also make sure that you encrypt your wireless router with Wi-Fi protected access or WPA.  If you aren’t using a wireless router, you should still secure communications that go on over a network. This should be done with the use of internet protocol security or IPSec.

          Another important internet security issue that stems from network use is an always-on connection. Most internet businesses rely on a high bandwidth connection like DSL or a cable modem. An always-on network connection leaves you vulnerable to attacks 24/7. Static IP addresses are also maintained when using an always-on connection. The presents a problem because “once a potential hacker has found the computer, he or she will be able to return to it as long as it is using the same IP address, placing it at greater risk of malicious intrusion” (Jenkins, 2000).

          E-businesses constantly exchange data. It is important to be aware of who you are exchanging data with. Connecting to systems that are owned as well as controlled by others can pose serious security issues. Because of this, it is important that the security mechanisms chosen are “standards based, flexible, and interoperable, to ensure that they work with others’ systems. They must support browsers, and work in multi-tier architectures with one or more middle tiers such as web servers and application servers” (White, 2002, p. 4).

          It is also important to encrypt the information that you keep on your personal computer. You must be prepared for the possibility that your computer could fall into the wrong hands. If it did, you would want to ensure that whoever has the computer won’t be able to view any of the sensitive information being kept on it. To protect your business from the possibility of a computer being stolen, use encryption programs that make information unreadable without an encryption key or password. “An additional strategy is to utilize Secure Sockets Layer (SSL) and/or S-HTTP, which work great to secure e-business transactions and other communications between browsers and Web sites” (B., 2010).

When it comes to email, security should be a number one priority. All emails should use file encryption so that communications remain between the customer and the business. Employees should also be made aware of spear phishing scams. They could receive emails that appear to come from a legitimate place like an IT department and be asked to relay sensitive passwords via email. Employees should always be made “aware of what a spear phishing attack is and to be on the lookout for anything in their in-box that looks suspicious (Teixeira, 2007).

I have no doubt that an acceptable level of security can be reached when conducting business over the internet; however, it is a business owner’s responsibility to take the proper steps to ensure the highest security level possible.  Security of an e-business is a multifaceted challenge requiring appropriate policies and practices. When you have successfully deployed an internet business, you will have developed a well established risk management procedure to deter disintermediation of data access.  Providing security for your internet business shouldn’t be hard. There are numerous program providers in the network security field to help you. Failing to take it into account at all would be a fatal error on a business owner’s part.

References

B., D. (2010, May 28). Exploring the Security Concerns for an Online e-Business. Retrieved from http://www.brighthub.com/computing/enterprise-security/articles/72582.aspx.

Teixeira, R. (2007, June 4). Top Five Small Business Internet Security Threats. Retrieved from http://smallbiztrends.com/2007/06/top-five-small-business-internet-security-threats.html.

White, O. (2002, January). Managing E-Business Security Challenges. Retrieved from http://www.cgisecurity.com/database/oracle/pdf/9iR2hisec.PDF.

Expanding Business into China... Good or Bad?

China is the third largest country in the world (Underwood, 2002). Mandarin is the predominant dialect spoken by its people. The government encourages its citizens to be atheist however, freedom of religion given. They have a population of over 1.2 billion people. China is thought to have the most powerful of all communist governments that exist.

The People’s Republic of China was established in 1949 by the Communist Party of China after the Third Revolutionary Civil War. Their government includes and executive, legislative, and judicial branch and the positions and powers of the President and Vice President are established in the Constitution of the People’s Republic of China.  This Constitution, which was adopted by the country in 1982, is their source of law.

            China’s population increases at a respectable rate of 1.3% per year. The rate of growth is unsurpassed by any emerging country in the world. In 2008, the real growth rate of China’s GDP reported at 9.8% (Travel Document Systems, Inc.). These economic factors have lead to a rapid surge in energy demand. By 2003, China had become the second-largest worldwide consumer of oil (Travel Documents Systems, Inc.).

As the third-largest producer of energy in the world, with expected electricity consumption growth of over 4% through 2030, there is a vast potential market for any energy sector company (Travel Documents Systems, Inc.). 20% of China’s generated electricity is foreign supplied. It is expected that 15,000 megawatts of generating capacity will be added per year (Travel Documents Systems, Inc.). If that’s not convincing enough, 70% of China’s energy consumption comes from coal (Travel Documents Systems, Inc.).  They are also the largest producer and consumer of coal.

            Thomas A. Edison founded General Electric Company in 1878.  They are extremely innovative as well as environmentally conscious. General Electric would benefit immensely from the potential market in China. They offer services pertaining to numerous aspects of the energy sector including electricity, oil, gas and coal. With the rising demand for electricity, light bulb sales will be steadily increasing. GE extracts oil from tar sands and provides customers with “clean, economical, coal-to-power solutions” (General Electric Company, 2011).  They also dabble in hydropower, water control, gasification, rail, nuclear energy, and solar energy, all of which China has a potential market for.

            “The leadership of the (Communist Party of China) is stressed and solidified” (Underwood, 2002) in the Preamble of the Constitution of the People’s Republic. The countries case law differs from our own primarily because there is a lack of strict precedential concept. The previous verdict of one court holds no weight in another court room. In regards to administrative law, citizens have the right to challenge administrative actions however; court review is not permitted in affairs pertaining to national defense or foreign affairs by the state.

            The involvement of government in China’s economy is a lot greater than what we are used to in the United States. Interactions between Chinese officials and those doing business in China are inevitable. “Each significant economic sector (is) supervised and controlled by one or more of these organizations, which included the People's Bank of China, State Planning Commission, State Economic Commission, State Machine-Building Industry Commission, and the ministries of agriculture, animal husbandry, and fishery; coal industry; commerce; communications; finance; light industry; metallurgical industry; petroleum industry; railways; textile industry; and water resources and electric power” (U.S. Library of Congress, n.d.).

The economic activities sheer volume is the only thing that limits the extent of government control. Fortunately, this is leading towards a shift to more indirect guidance from government as well as more of a dynamic economy. Such factors also mean that further consideration of taking advantage of the potential in China’s energy market would be ideal. Such emerging markets could be instrumental to the continued success of companies such as General Electric.

           

               

Work Cited

General Electric Company. (2011). Imagination at work. Retrieved from http://www.ge.com/products_services/energy.html.

Travel Document Systems, Inc. (n.d.) Economy. Retrieved from http://www.traveldocs.com/cn/economy.htm.

U.S. Library of Congress. (n.d.). Roles of the Government and the Party. Retrieved from http://countrystudies.us/china/93.htm.

International Trade & World Output

The gross amount of product used globally is referred to as the world output. International trade is the exchange of securities or commodities from one country to another.  “Countries with higher income account for about sixty percent of the World’s merchandise trade, while trade between high income and low and middle income countries accounts for nearly thirty four percent of the world merchandise trade” (Motley, 2005). Studies have shown that economies that embrace open trade have, on average, outperformed closed trade economies.

The amount of world output directly influences how much international trade there is. The more that the world’s economic output increases, the more the amount of international trade increases and vice versa. The rate at which International trade grows tends to be greater than that of world output. “Since 1948, world trade has consistently grown faster than world output” (World Trade Organization, n.d.). It is thought that this trend is due to trading good becoming more inexpensive over time.

International trading patterns become broader and broader as time passes.  The most significant amount of trading is done between the combination of high income and middle income countries paired with high income and low income countries. There is a lesser but still substantial amount of trade done between middle and low income countries. Knowing how much trading is going on, especially in poorer countries, helps us to determine which developing counties have and emerging economic market place.  The more interdependent a country is, the easier it is for them to specialize in their own competitive areas. This provides the citizens of the country with more job opportunities and higher profit potential.

If trade seized to exist as we know it, the world would feel a crippling affect and cause illiquidity. As Americans, we could say goodbye to things like coffee, tropical fruits, Italian leather, German lager and Swiss chocolates. We would no longer have Lexus, Ferrari, Jaguar or numerous other foreign automobiles.  

Americans would also not be able to maintain the supply needed to meet the demands of the consumer for petroleum and gas. We would have to release current reserves to starve off short term needs. Without the ability for America in import oil, we would be unable to keep oil prices at an economically viable price. We would be unable to run cars. With the majority of Americans living in the suburbs, access to work will become more difficult, impossible for some.  The economy would be pushed to the brink of collapse with the reduction in air traffic and trucking industry due to a lack of oil.  

20.1 % of are exporting is done to Canada (Economy Watch, n.d.). Without our imports, Canada wouldn’t be able to obtain a lot of the things they import most from the United States as easily. These are products such as trucks, automobiles, aircrafts, spacecrafts, natural gas, crude oil and petroleum excluding light oils (Workman, 2010).  It is convenient for Canada to import products from the U.S. because of how close we are.

On the other hand, if you were to look at the imports of a country like China, the products would be different. China is a major importer of American goods. If we decided to no longer export to China, they wouldn’t be able to obtain our semi-conductors, civilian aircrafts, industrial machines, computer accessories, and steel making material. They would also no longer be receiving soybeans, plastics, raw cotton, copper and aluminum (Workman, 2007).

Globalization has lead to a vast number of countries becoming interdependent upon imports and exports. Without the international trade system, even the world’s economically soundest countries would be debilitated. The U.S. would be unable to obtain many of the items that they currently take for granted. Choices would become limited or nonexistent. Low income countries would be striped of income. International trade is beneficial for all involved and we should feel fortunate to be part of a country that supports it.

Motley, L. (2005, December 9). International Trade: What Is It Really?. Retrieved from http://www.associatedcontent.com/article/15777/international_trade_what_is_it_really_pg2.html?cat=3.

Perry, M. (2011, April 22). The Global Economy’s Remarkable Recovery: World Trade and Output Reach New Record Levels in February. Retrieved from http://blog.american.com/2011/04/the-global-economy%e2%80%99s-remarkable-recovery-world-trade-and-output-reach-new-record-levels-in-february/.

Workman, D. (2010, August 5). Cananda’s Top Imports and Exports with US So Far in 2010. Retrieved from http://www.suite101.com/content/canadas-top-imports-and-exports-with-us-so-far-in-2010-a270542.

Workman, D. (2007, June 28). Top Chinese Exports & Imports.  Retrieved from http://www.suite101.com/content/top-chinese-exports-imports-a24920.

World Trade Organization. (n.d.). Growth, jobs, development and better international relations: how trade and the multilateral trading stsyens help. Retrieved from http://www.wto.org/english/thewto_e/minist_e/min99_e/english/book_e/stak_e_3.htm.

Economic Integration?

Economic integration is a dynamic process that involves the coordination of trade, fiscal or monetary policies. It has both advantages and disadvantages. The goal of regional integration is to enhance the economic outcome of the countries involved. Deciding who whether or not equal power over policies can sometimes be an obstacle that countries run into.

The scale and competition effect removes trade barriers and essentially enlarges the regional market. It is an essential step to any countries endeavor to integrate the regional market.  Companies are able to benefit from the greater scale and increased size of the market. It increases the amount of competition and forces companies to become much more efficient.

The trade and location effect involves a regional agreement upon preferential reduction in tariffs. This results in purchases switching their demand more towards supply from the countries that they are entering into the agreement with. It leaves domestic product as well as imports from countries not included in the agreement at a loss. Essentially, it is trade creation and diversification. Government revenue from tariffs is decreased and alternative source costs can increase or decrease dependent upon supply.  A disadvantage of economic integration is “determining how to deal with economic disruptions and/or redistribution of resources” (Suranovic, 1998).

Increased returns coupled with increased competition are an advantage of regional economic integration. When you have a smaller market, you can run into “a trade-off between economies of scale and competition” (Worldbank, 2005). A larger economy removes the trade-off and makes the existence of bigger companies with greater productivity possible. It also results in lower prices due to increased competition. Governments should keep external tariffs low to allow a higher degree of import competition from outside companies to help smaller businesses compete after the formation of trade blocs.

Suranovic, S. (1998). International Trade Theory and Policy. Retrieved from http://internationalecon.com/Trade/Tch110/T110-2.php.

Worldbank. (2005). Regional Integration: Concepts, Advantages, Disadvantages and Lessons of Experience. Retrieved from http://siteresources.worldbank.org/EXTAFRREGINICOO/Resources/Kritzinger.pdf.

Ebay's Business Model

Ebay Inc. is the provider of an online marketplace where goods and services are sold auction style. They are in the services sector of the catalog & mail order houses industry. Their competitors consist of companies such as Amazon.com and Liberty Media Corporation (Yahoo, 2011). Their online platforms include Ebay.com, StubHub, and Shopping.com (Yahoo, 2011). They operate in over 27 countries and just recently entered into the European Marketplace (CNBC, 6/29/2005).

Their e business model aims to provide customers with an easy inexpensive way to save as well as make money, depending on whether you use Ebay to buy or sell. Ebay gets charges a fixed fee based on the value of the item sold to the seller and receives the money when the sale has been made. Essentially, they are getting paid for their platform.

With regular maintenance and upkeep to the sight, they don’t have to worry about inventories or overhead expenses like the retail change experiences. They have also done an excellent job with their branding and are a well known name in most every household. They have a good marketing position because they are the best of bread when it comes to selling things online. The fact that they were one of the first to implement the idea of creating a platform where people can sell to other people has made them a very innovative and breakthrough company. Their long term success will be decided on their ability to keep their site running effectively and without any issues from spammers or people utilize the website for marketing.

The economy would be one of the larger market influences on this company. A bad economy could benefit Ebay if it meant that people were turning there to supplement their income by selling some of their things or if people were trying to save money on an item and looking for a deal on the site. A bad economy could negatively affect Ebay if it meant that people were not spending as much money and weren’t making as many purchases on their site because they didn’t feel they had the expendable income. 

CNBC, Inc. (May, 29 2005). Ten things You didn’t know about Ebay. Retrieved from http://www.msnbc.msn.com/id/8391726/ns/business-cnbc_tv/t/ten-things-you-didnt-know-about-ebay/#.TkWDcmFOrzY.

Yahoo. (2011).  Industry Center - Catalog & Mail Order Houses. Retrieved from http://biz.yahoo.com/ic/739.html.