chapter 2 (2014) mgt 153

49
CHAPTER 2 INFLUENCE OF ECONOMICS IN BUSINESS

Upload: nur-khaleeda

Post on 08-Jan-2016

77 views

Category:

Documents


5 download

DESCRIPTION

mgt 153

TRANSCRIPT

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 1/49

CHAPTER 2

INFLUENCE OFECONOMICS IN

BUSINESS

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 2/49

Chapter 2

•  2.1 Introduction to economics

•  2.2 Economic systems

•   2.3 Basic market models

•   2.4 Business environments

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 3/49

3

Economics: study of how wealth is created and distriuted ymen

!s anythin" that is of value to people

# Includes any kind of goods$ services

that are producedand sold to customers

!nythin" that a customer wants or needsInclude food$ houses$ clothin"$ lu%ury ite

INTRODUCTION TOECONOMICS

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 4/49

4

 &herefore$ in understandin" an 'economictheory( people)usiness is re*uired to

answer 3 important *uestions

1. +hat

2. ,ow

3. -or +hom

3 IMPORTANT QUESTIONS

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 5/49

3 IMPORTANT QUESTIONS

1. +hat/ producers have to think what kinds of

"oods and services are to e produced.

0roducers would usually produce "oods

that are demanded y society

E": to satisfy peoples needs of food$

many usinessman operate

restaurants to sell variety of foods

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 6/49

2 How/

0roducers would need to determine how much of

each type of "oods and services to produce

 &here is a need to think how will these "oods and

services e produced$ which means: who will

produced them

!nswerin" asic *uestion of how much of "oods to e

produced will re*uire a usiness to determine a rou"h

estimate of the numer of people needin" them$ andmakin" sure they employ the ri"ht people to produce

the "oods

3 IMPORTANT QUESTIONS

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 7/49

3. -or +hom/

+ho will "et the "oods and services

produced y usiness/

 &herefore$ usinessman who aim to

make as much prot must ensure

they know the "roup of people that

will uy the "oods and services they

produce.

3 IMPORTANT QUESTIONS

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 8/49

EC5657IC 898&E7

• Economic system is dened as the

mechanism y which laor and other

economic resources are rou"ht to"ether

to produce and distriute the "oods and

services to serve people need and wants.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 9/49

Can e dened as a nation system forallocatin" resources amon" its citien.

Basically$ it deals with allocatin" its limitedresources to fulll unlimited wants of

individuals. !s human needs are unlimited$ every

economic system has to deal with thescarcity of factors of production ;economicresources<

ECONOMICS!STEM

=6atural resources

=>aor=Capital resources=Entrepreneur

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 10/49

1?

1. 6atural resources

2. >aor

3. Capital or capital "oods

4. Entrepreneurs

8ince all the aove factors are limited and there are limits to

what 

can e produced$ who will produce them$ and what resources

will

e used$ asic choices must e made

@iAerent choices to the aove *uestions result in diAerent

types of

economic systems

FACTORS OF PRODUCTION

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 11/49

11

1. 6atural resources

 – Include all resources such as raw materials$water$ land$ minerals

2. >aor

 – Consist of people who perform the work in

producin" the "oods and services3. Capital or capital "oods

 – Includes all uildin"s$ machinery$ tools$ and

e*uipments used in actual production of

"oods and services

4. Entrepreneurs

 – 0eople who start the usiness and make

decisions and ensure all resources are used

eAectively and the "oals of the or"aniation

are achieved

FACTORS OF PRODUCTION

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 12/49

TYPES OF ECONOMIC SYSTEM1. Capitalism

•  An economic system based on the private onership here a!!economic decisions are ta"en by individ#a! ho#seho!ds and $irms

ith no %overnment intervention& It a!so "non as !aisse'($aire&

• Individ#a!s have ri%ht to acc#m#!ate ea!th ) ma*imi'e their

potentia!&

• +or" hard (, %et reards&

• Individ#a!s have - basic ri%hts.

/0 To on private property

10 To on a b#siness ) "eep a!! its pro$its a$ter ta*es20 Freedom to compete in ea!th acc#m#!ation ) cons#mption o$

%oods ) services

-0 Freedom o$ choice based on the abi!ity to pay

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 13/49

Characteristics o$ Capita!ism Economic System

" B#s$%ess ow%e&sh$' P&$(ate ow%e&sh$' o) '&o'e&t*

2. @e"ree of centralcontrol

elatively low with products. 0ricin"determined y competition.

3. E%tent of mana"erialdecision makin"

>imited role of "overnment privatemana"erial initiative

4. 0roducts prices andavailaility

0rices are determined y supply anddemand

. 5ccupational choice Individual free to choose Dos they like

. Incentive 0rot motive

Individuals can keep prot and use itwhenever they want

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 14/49

2 So+$al$s,

!n economic system which the asic industries areowned either y the "overnment itself or y privatesector under stron" "overnment control.

overnment or the Central !uthority makes the maDoreconomic decisions re"ardin" production anddistriution of "oods and services to ensure wholesociety "ets the enets.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 15/49

Characteristics o$ Socia!ism Economic System

" B#s$%ess ow%e&sh$' P#-l$+ ow%e&sh$' o) -as$+

$%d#st&$es

2. @e"ree of centralcontrol

7aDor "oals of economic set y"overnment

3. E%tent of mana"erialdecision makin"

7ana"ers of maDor rms must followthe "overnments central plan

4. 0roducts prices andavailaility

0rices are determined y supply anddemand

. 5ccupational choice Individuals may own small usinessesand choose Dos within the state#controlled economy

. Incentive 7any non#monetary incentives

0rots from "overnment ownedindustries "o ack to "overnment

0rot from small usiness reinvested

in the usiness.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 16/49

• !n economic system which all economic resourceswould e owned collectively y the state rather thany individuals.

• 0eople receive the economic enets ased in their

needs$ they work accordin" to their ailities and wouldreceive "oods and services accordin" their needs.

• esources are fairly distriuted amon" the memersof society.

• 6ot encoura"e entrepreneurs to e creative F

capitalie their ma%imum potential.• Even work hard not e rewarded.

COMMUNISM (CENTRALLY PLANNED SYSTEM)

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 17/49

Characteristics o$ Comm#nism Economic System

" B#s$%ess ow%e&sh$' P#-l$+ ow%e&sh$' o) ($&t#all* all'&od#+t$(e a+t$($t$es

2. @e"ree of centralcontrol

Central determination of allproductive activities.

3. E%tent of mana"erialdecision makin"

7ana"ers selected throu"h statepolitical party and hi"hlyureaucratied.

4. 0roducts prices andavailaility

0rices are usually hi"h. Consumershave limited choice of "oods.

. 5ccupational choice overnment owns all usiness and

 Dos are prescried y state. >ittlechoice in choosin" career.

. Incentive E%cess prot "oes to "overnment.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 18/49

• Economic decisions are made partly y the "overnment Fpartly throu"h market.

• -reedom of individual choice F decisions to ma%imie theirsatisfaction.

• 7arket is allowed to operate freely as lon" as it does not fail.

• 7arkets fail$ the "overnment will intervene.

• eco"nie individual interest F freedom of competition amon"individuals F rms.

• !ddress social issues such as ine*uality of income distriutionF e%ternalities such as the cost of pollution as the economy

"oes throu"h industrialiation.• overnment stron"ly supports privatiation$ it often intervenes

in pricin" decisions$ especially those of monopolists.

MIXED ECONOMIC SYSTEM

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 19/49

1G

In analyin" usiness environment$ we must

e%amine the

types of market situations that e%ist there

are 4 asic

models ) 4 diAerent de"ree of competition

1. 0ure monopoly

2. 5li"opoly3. 7onopolistic competition

4. 0ure)perfect competition

BASIC MAR.ETMODELS

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 20/49

• 8ituation in which a sin"le company owns all or

nearly all of the market for a "iven type of productor service.

•  &here is a arrier to market entry into the industrythat allows the sin"le company operate withoutcompetition.

• 5nly one seller or producer

•  &here are many uyers

• 6o sustitute for the products

•  &hey have a power to inHuence the market price.

MONOPOL! 

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 21/49

• !n oli"opoly is a market or industry is dominated y asmall numer of sellers.

• ! "eneral lack of competition can lead to hi"her costs forconsumers.

• Because there are few sellers$ each oli"opolist is llikely to

e aware of the actions of the others.•  &he decisions of one rm inHuence the decisions of other

rms.

•  &he product either homo"eneous or diAerentiate from oneanother

 ;e." :each rm attempts to have diAerentiation of astandardied product.

 &heir "oods are very similar in nature and the rms wouldtry to distin"uish their products from those of theircompetitors<.

OLI/OPOL! 

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 22/49

• ! type of imperfect competition such that manyproducers sell products that are diAerentiated from oneanother ut not perfect sustitutes ;such as fromrandin"$ *uality or location<.

•  &here are lar"e numer of uyer and seller.

• Easy to enter and leave the industry.

• 8eller try to diAerentiate their product from their rivaly rand names$ desi"n or advertisin".

756505>I8&IC C570E&I&I56

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 23/49

•  &his is market structure where there are many independentsellers$ each oAerin" its products in the same asic way.

• !ll of the products are standardied i.e. there are almostidentical and uyers are in diAerent to which one they purchase.

• Each rm has no si"nicant control over the products priceecause none of them is supplyin" more than a small fraction ofthe total output ein" demanded.

• -irms can enter or leave the industry easily.

•  &here is no use of non#product competition$ as the product isstandardied.

• In pure competition$ sellers and uyers must accept the "oin"price. &he price of each product is determined y the actions ofall uyers and sellers to"ether$ throu"h the forces of supplyand demand.

 COMPETITON

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 24/49

COMPARISON IN MAR.ETSTRUCTURE

Cha&a+te&$st$+s 

Pe&)e+tCo,'et$t$o%

P#&eMo%o'ol*

Mo%o'ol$st$++o,'et$t$o%

Ol$go'ol*

6umer of7arket

7any 5ne7any$ ut fewer

than perfectcompetition

-ew

!ility to Control0rice 6one ,i"h 8ome 8ome

Barriers &o Entry 6one8uDect to

"ovt.re"ulation

-ew 7any

0roduct@iAerentiation

ery little

6o product

thatcompetedirectly

Emphasis on

showin"perceiveddiAerences in

product

8omediAerences

E%amples

-arm products

such as wheatand corn

Jtilities suchas "as$water$

etail specialtyclothin"

8teel$automoiles$

airlines$aircraft

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 25/49

2

Business: must aware of chan"es and e responsive to many e%($&o%,e%tal

)a+to&s   chan"e and adapt to the chan"es

1. ,istorical2. 6atural#physical

3. 0olitical and le"al

4. 8ocial and cultural

. Economic. International

. &echnolo"ical

BUSINESSEN1IRONMENT

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 26/49

2

  ISTORICAL

Consists of records of events and activities that

have taken place daily # provides ack"round for

all the other environments

Business need to look at historical records of

various companies performance # useful "uide to

run usiness eAectively F eKciently

By e%aminin" its historical past$ a usiness is

etter ale to anticipate new developments and

plan for them

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 27/49

2

NATURAL P YSICAL ENVIRONMENT

Consists of all natural resources ;water$ oil$ "as$ iron<

and many other raw materials

Business is restricted y its natural environment

whenever it relies on the availaility of natural

resources to produce "oods resources ecome

reduced as we produce more and more "oods F

sometimes not replaceale

0rolems of pollution would arise and have a very

serious usiness impact on the e+olog* is the

study of relationship etween people and

environment

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 28/49

2L

5ther depressin" situations related to pollution of

the water$ noise and waste cost of cleanin" up the

environment has to e orne y usiness

or"aniations and societies

 &herefore$ usiness needs to e innovative and

proactive in its eAort to develop its usiness

production of "oods and services usin" natural#

physical resources may have to e reduced with

sustitutes to e invented

Cont…NATURAL P YSICAL ENVIRONMENT

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 29/49

2G

POLITICAL & LEGAL

Consists of law$ re"ulations$ and activities of

the "overnment and its a"encies which

restrict usiness activities and protect the

customers

overnment intervention into usiness

aAairs have een increasin" ecause need

to protect customers ri"ht from unfair

usiness practices$ preservation of theenvironment and to reduce discrimination in

the work place

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 30/49

3?

oles of "overnment in usiness areas are:

1. Government as a business regulator and promoter  

By implementin" favorale ud"et policies$ "overnment

promotes usiness activities that stimulate economies By encoura"in" certain usiness activities$ "overnment can

tar"et the standard livin" of nations

overnment will also hand out certain "uidelines concernin"

price %in"$ advertisin"$ minimum wa"e and workin"

conditions which the usiness must follow

>e"islation directed towards improvin" and maintainin" the

nations physically *uality has een set up to re"ulate

usiness interaction with the environment

Cont….POLITICAL & LEGAL

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 31/49

31

 oles of "overnment in usiness areas are:

2. Government as a customer  

overnment uys "oods and services$ ran"in" from oKce

machines$ computers to war materials for defense purpose from

private rms overnment acts as owner and competitor y providin" "oods and

services in the market place. &hey also act as suppliers as they own

a "reat deal of the nations natural resources. E": land which is

occasionally sells to a usiness

Current 78C proDect launched in early 1GG will open up new

opportunities for many companies such as &E>EM57$ ,8BC$ 8!0J!

in providin" related services$ and providin" other infrastructures

Cont…..POLITICAL & LEGAL

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 32/49

32

SOCIAL & CULTURAL

• Includes de,og&a'h$+s and consumer preferences representsocial tendencies to which usiness is e%posed.

Characteristics of the human population or specic se"ments of the

population$ e": increase in the elderly population has led to an

increased demand for many prescription dru"s.

• chan"es in consumers demand may also aAect the demand for

products produced$ e": technolo"y advances: 8E! to

0>!98&!&I56$ N#B5N$ I@E5 to C@$ @@$ @ownload 7usic 5nline.

8ocietys values and customs have ecome "uidelines to many

or"aniations methods of operation.• 8ocial and cultural environment are made of eliefs$ attitudes$

customs and norms of every "roup in society.

• E": drive#thru of 7c@onald F M-C due to our usy lifestyle.

 

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 33/49

33

ECONOMIC

,ave a stron" impact on the performance of each usiness

+hen company is st&o%g$ employment is h$gh and compensation

paid to employees is also h$gh 

8ince people have "ood income under this conditions$ they

purchase lar"e amount of products

-irms that produce the products enet from the lar"edemand

+ill hire many employees to ensure that they can

produce a suKcient amount of products to satisfy the

demand

Can also aAord to pay wa"es to employees

E%pand their operations results in increased demand

for supplies$ materials$ construction services

In the end$ many workin" opportunity can e created

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 34/49

34

Economy is wea   rms tend to la* o4 some of their

employees

Cannot aAord to pay hi"h wa"es people will

receive low income 0eople will purchase small amount of product

aAect the producer

0roducer will facin" losses retrenched many

employees

Employees lose their Dos

Cont…..ECONOMIC

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 35/49

3

INTERNATIONAL

International &rade transactions made

etween countries.

Include e%chan"e of "oods and services and

nancial Hows. It ecome possile due to diplomatic ties

estalished amon" the "overnments.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 36/49

3

INTERNATIONAL

7ay aAect usiness directly or indirectly

1. !ttract forei"n demand

some companies unale to increase

their market share in J8 ecause of

intense competition within their

industry # try to nd forei"n marketwhere potential demand may e%ist

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 37/49

3

2. Capitalie in technolo"y many J8 companiesestalished new usinesses in the so#called

developin" countries which have relatively low levels

of technolo"y ;>atin !merica<

3. Jse ine%pensive resources

>aor and land costs can vary si"nicantly amon"

countries rms often attempt to set up

production at a location where land and laor are

ine%pensive

Cost of laor is much hi"her in developed

countries ;J8$ JM< than other countries ;7e%ico$India<

 &herefore$ numerous J8 company has estalished

susidiaries in those low cost laor countries

Cont.. INTERNATIONAL

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 38/49

3L

4. Jse ine%pensive resources

>aor and land costs can vary si"nicantly amon"

countries rms often attempt to set up

production at a location where land and laor are

ine%pensive

Cost of laor is much hi"her in developed

countries ;J8$ JM< than other countries ;7e%ico$

India<

 &herefore$ numerous J8 company has estalished

susidiaries in those low cost laor countries

Cont….INTERNATIONAL

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 39/49

3G

8ome rms rely on forei"n countries for raw materialssupply or sell their products in various countries

rms estalish susidiaries in forei"n countries where

they can produce and sell the products

Even if rm is not plannin" to sell its products in forei"n

countries$ it must e aware of the "loal environmentecause it may face forei"n competition when it sells its

products locally

-urthermore$ "loal economic conditions can aAect local

economic conditions if economic weaken in forei"n

countries$ the forei"n demand and sales for 7alaysianproducts will decrease

eneral income level for aAected rm will

decline F consumer will have less money to

spent

Co%t5INTERNATIONAL

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 40/49

4?

TEC NOLOGY

Includes scientic and technolo"ical reakthrou"h

and advancement in industries as well as society

6owadays$ many or"aniations used hi"h level of

technolo"y to assist them in the process of

producin" "oods Companies are competin" with one another to

produce *uality products more eKcient and

eAective with the help of technolo"y

E": telecommunication industry$ constructionindustry

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 41/49

41

HOW TO CONDUCT

INTERNATIONAL BUSINESS

1. Importin"

2. E%portin"

3. -@I ;forei"n directinvestment<

4. >icensin"

. 8trate"ic alliances

. -ranchisin"

. Ooint venture

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 42/49

42

" I,'o&t$%g 

 – Buyin" of products or services fromanother country throu"h a supplier.

 – E": 7alaysia consumers purchase

automoile$ clothin"$ cameras and other

products from J8.

 – 7any rms import materials that are used

to produce products.

 – Even if these rms sell the products locally$

they can enet from importin" materials.

 –  &hey import forei"n materials that are lesse%pensive or of a hi"her *uality than

alternative local supplies

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 43/49

43

2 E6'o&t$%g

 – 8ellin" of local products to another

country directly or throu"h third

parties such as tradin" companies.

 – !dvanta"e in reducin" risks since it

allows the usiness to penetrate the

"loal market on a "radual asis ased

on the demand from the forei"n

customers.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 44/49

44

3 FDI 7Fo&e$g% D$&e+t I%(est,e%t8

 – -orei"n#owned corporations that set up

their physical ase in a forei"n countrythrou"h direct investment.

 – E": -ord 7otors$ ,onda$ has facilities in

various countries that produce automoiles

and sell them in those locations

 –  Oustication:

• To a(o$d t&ade -a&&$e&s9 rm that has

een e%portin" products is informed that

the forei"n "overnment will impose trade

arriers therefore$ rm estalishes asusidiary that can manufacture and sell

products in that country

• To &ed#+e la-o& +osts

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 45/49

4

: L$+e%s$%g

 – !n a"reement to produce F market

another companys product in

e%chan"e for a royalty or fee. – >icensin" allows a rm ;licensor< to

appoint a forei"n company as the

licensee to produce it prodcts.

 –  &he licensee pays royalty or fee to

licensor.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 46/49

4

; St&ateg$+ All$a%+es

 – ! lon"#term partnership etween two or

more usiness entities estalished to help

each other to uild competitive market

advanta"es.

 –  &o reach their individual ut

complementary "oals$ these outts

normally share ideas$ e%pertise$ resources$

technolo"ies$ investment tools$ risk$

mana"ement as well as prots.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 47/49

4

< F&a%+h$s$%g – ! system where companies

;franchisee< are "ranted the ri"ht

to operate a usiness accordin"

to a special contract with parent

or"aniation. ;franchiser<.

 – E": 7c@$ 0ia ,ut$ 8ecret

ecipe.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 48/49

4L

=  >o$%t (e%t#&e

 – !n a"reement etween two or

more parties to invent in a sin"le

usiness or property.

 – In a Doint venture oth partieswould a"ree to create a new entity

y contriutin" in terms of e*uity$

revenues$ e%penses and control of

enterprise would e shared.

7/17/2019 chapter 2 (2014) mgt 153

http://slidepdf.com/reader/full/chapter-2-2014-mgt-153 49/49