Starting a Small Business In a Bad Economy

Even though our economy has been facing turbulent times lately with the new administration in office, I still believe that I would want to start my own small business if I had the capital available. Because of the economic problems that we as a country are facing, new tax cuts are being imposed that help the small business owner. Starting a business now is becoming more and more attractive as the new tax cuts role out. It is becoming easier and more beneficial for someone to be a small business owner because of the steps that the government is taking to try and stimulate the growth of small business in America.

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. 

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

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.

Disaffirming a Contract Signed By a Minor

The law states that minors do not have contractual capacity. Minors are defined by being under the age of majority. The age of majority varies from state to state and is usually 18,19, or 21. This gives adults who have signed contracts before the age of minority the ability to disaffirm or refuse to be bound by a contract. However, emancipated minors may be bound by their contracts. The ratification of a contract after the age of majority binds the person to that contract and will no longer allow them to disaffirm the contract. Court approved, insurance, work-related, reality and banking contracts cannot be disaffirmed.

If a person gives there real age when signing a contract, I believe that the companies should be liable for anything disaffirmations because they were aware of what could happen. I think that the fact that disaffirmation is still allowed even if the person lied about their age is a grey area ethically. A company should be responsible for getting proper proof of age when they are setting up a contract with someone. Therefore, they have not covered well enough for themselves and should still be held liable.

Minors have a reasonable length of time after achieving their majority to disaffirm contracts.  I think that within 5 years would be reasonable for a contract that is known about. If someone decided to seek money for a contract at a later time that the person was unaware of or didn’t remember having, I believe that they should be able to disaffirm it when they find out about it, no matter how many years later that is.

Ethically, I don’t believe that it’s right if a child lies about their age and then is still able to disaffirm a contract without consequences. However, we call them minors for a reason. These are young people who haven’t really gotten a chance to learn right from wrong and what types of contracts they should enter and the obligations that come with them. I think that the government protecting our minors from being contractually obligated to a contract agreed to before the age of majority is very ethical. We cannot allow our youth to be taken advantage of. 

Employee Drug Testing

Studies have shown that substance abusers are 33% less productive overall (Patrick Dixon). Patrick Dixon found research showing that “when the State of Ohio introduced random drug testing they found absenteeism dropped 91%, there were 88% less problems with supervisors and 97% decrease in on-the-job injuries”. Employers have a responsibility to ensure that their employees do not pose a safety risk to anyone while on the job. Unless employees’ belong to a union, they have little to no legal protection against being drug tested.

State and local legislature have limited the powers of employers by passing statutes regarding drug testing.  Because of this, many employers have put contractual agreements into place that effect what rights the employee has. However, even if an employer is able to obtain information that an employee is doing drugs, they are still limited as to how they are allowed to respond to their findings. It is believed that drug testing interferes with the EAW principle of guaranteed political right, more specifically, the right to privacy.

I believe that, because drug use can be such a liability to employers, drug testing should be allowed under any circumstances. The continued passage of acts that are limiting actions of employers shows that the majority of American’s would not agree with my statement.

Moral philosophies can be consistent with both arguments. An employee privacy is a right that should be guarded however not doing drugs may potentially affect your work performance is the ethical thing to do.  I think that this issue is present because we do not want people doing illegal drugs, however, when figuring out whether or not someone is doing illegal drugs divulges information about other legal drugs they are taking, privacy is violated. I don’t think that whether or not you are on depression medication or ADHD medication etcetera is any of an employer’s business.   

Dixon, Patrick. (Jan. 26, 2011). Drug Testing in the Workplace. Retrieved from http://www.globalchange.com/drugtest.htm on February 20, 2011.