1) Whatis business
2) Internationalbusiness
3) Whatis abank
4) Companies
5) Product,Market and Market Relation
6) Finance
7) Accounting& Auditing
8) Modern Meansof Business Communication
1)What is business
Businessis a word which is commonly used in many different languages. But exactly whatdoes it mean? The concepts and activities of business have increased in moderntimes. Traditionally, business simply meant exchange or trade for things peoplewanted or needed. Today it has a more technical definition. One definition ofbusiness is the production, distribution and sale of goods and services for aprofit. To examine this definition, we will look at its various parts.
First,production is the creation of services or the changing of materials intoproducts. One example is the conversion of iron ore into metal car parts. Nextthese products need to be moved from the factory to the marketplace. This isknown as distribution, A car might be moved from a factory in Detroit to a cardealership in Miami.
Thirdis the sale of goods and services. Sale is the exchange of a product or servicefor money. A car is sold to someone in exchange for money. Goods are productswhich people either need or want, for example, cars can be classified as goods.Services, on the other hand, are activities which a person or group performsfor another person or organization. For instance, an auto mechanic performs aservice when he repairs a car. A doctor also performs a service by taking careof people when they are sick.
Business,then is a combination of all these activities: production, distribution andsale. However, there is one other part important factor. This factor is thecreation of profit or economic surplus. A major goal in the functioning of anAmerican business company is making a profit. Profit is the money that remainsafter all the expenses are paid. Creating an economic surplus or profit is,therefore, a primary goal of business activity.
2)International business
Internationalbusiness includes all business transactions that involvetwo or more countries. Such business relationships may be private or governmental.
Thereare three primary motivations for firms to pursue international business: toexpand sales, to acquire resources, and to diversity sources of sales andsupplies.
Theconcept of international business includes thebalance of trade (the relationship between exports and imports) and balance ofpayments (the difference between inward and outward cash flows).
Acompany can engage in international business through various means, includingexporting and/or importing of merchandise and services, direct and portfolioinvestments, and strategic alliances with other companies.
Merchandiseexports are tangible goods sent out of a country; merchandise imports aretangible goods brought in. Since these goods visibly leave and enter they aresometimes referred to as visible exports and imports.
Serviceexports and imports are international earnings other than those derived fromgoods sent to another country. Receipt of these earnings is considered aservice export, whereas payment is considered a service import. Services arealso referred to as invisibles. International business comprises many differenttypes of services: travel, tourism, and transportation; performance ofactivities abroad; use of assets from abroad.
Foreigninvestment is the ownership of property abroad. Direct investment is a subsetof foreign investment that takes place when control follows the investment.When two or more organizations share in the ownership of a direct investment,the operation is known as a joint venture.
Portfolioinvestment can be either debt or equity but the factor that distinguishesportfolio from direct investment is that control does not follow this kind ofinvestment.
3)What is a bank
Abank is a safe place to keep money. It’s also much more than that. People savemoney in banks, banks have money to lend. Loans to people help them buy things.Loans to business help them buy, build and expand, and keep people working.These loans help the country’s economy in making, distribution and use of ourwealth.
Earlybanks were little more than moneychangers, exchanging coins and bullions fromone form to another for a fee.
Theway in which a bank is organized and operates is determined by its objectives.A bank may not necessarily be in business to make a profit.
Thereare different types of banks but their names may vary from one country toanother.
Centralbanks such as the National Bank (Ukraine), the Bank of England (UK) or theFederal Reserve System (US) look after the governments finance and monetarypolicy and are responsible for issuing banknotes.
Commercialbanks deal directly with the public. The aim of commercial banks is to earnprofit.
Acommercial bank provides a wide variety of services. There are three mainfunctions of banking:
– deposits
– payments
– credits
Thesethree functions are the bases of the services by banks. They make it possiblefor banks to generate profits and to achieve their operating aims:
– opening savings and current accounts
– offering credit services to customers:personal loans and different credit cards
– providing their customers travellingabroad with foreign currencies, travelling checks
– investment advice: banks open ways tofind and invest large amount of money
– providing brokerage services
– offering a wide range of trust servicesfor individuals and businesses.
Merchantbanks don’t deal with the public. They provide services for companies.
Investmentbanks are firms that control the issue of new secrities (shares and bonds).
Savingsbanks are financial institutions in providing services such as savings accountsas opposed to general banking services.
4)Companies
Companyis a corporate enterprise that operates as one single unit, in the success ofwhich all the members participate. Company is made of a number of people unitedin an industrial or commercial enterprise. Each company works out its ownpolicy. It is a selected, planes’ line of conduct in the light of whichdecisions are made and co-ordination of work achieved. There is a differencebetween a corporation, a sole trader and a partnership. The principle differenceis that a sale trader end a partnership are not corporations but limitedcompanies are. A corporation is a company that is publicly registered andlegally separated from its owners. It means that the corporation stays inexistence even after the death of any of its owners. An incorporated company isa legal person in its own right, able to own property. Limited LiabilityCompany is a joint-stock company, the financial liability of whose members islimited by law. An unlimited company is one in which the liability of themembers is not limited in any way. A registered company is the most common typeof company. A company may be registered either as a public limited company or aprivate company. Private Limited Company is a limited company, which must notinvite the public to subscribe for its shares or debentures, and does not allowits members to transfer their shares without the agreement of the othershareholders. It must have at least two but usually not more than fiftymembers. Public Limited Company is a limited company, which can offer itsshares and debentures to the public; there is normally no limit to the right ofits members to transfer their shares to other persons. There is no limit to thetotal number of members except that there must be at least seven. A publiclimited company must have a name ending with the initials «Pic» andhave an authorized share capital. The regulation of such companies is stricterthan of private companies. Most public companies are converted from privatecompanies, under the registration procedure laid down in the Companies Act.Subsidiary Company is a company of which more than half the share-capital isowned by another company, called either a holding company or a parent company.The subsidiaries of the same parent or holding company are said to beaffiliates. Many well-known companies are multinationals, these are companieswhich operate in a number of countries. A joint-stock company is a company inwhich the members pool their stock, trading on the basis of their joint stock. Peoplein a company, its employees hold different positions. The relationship betweenthose employees with different positions makes organization structure. Atpresent most firms are divided into three major parts: capital (shareholders),management and labor. Let us take a typical company. There is a director who isa senior manager. He sits on the Board under the authority of the President.The Board decides what company policy and expenditure must be. The chiefexecutive officer (CED) is the link between the Board and senior management. Asfor the middle managers, they run departments of a firm. They account to seniormanagement for their area of work done. There is a difference between executivedirectors and non-executive ones. The directors, who run their firm onday-to-day basis are called executive directors. Those who sit on the Board anddo not run the firm directly are called non-executive directors. In modernAmerican English they use also the term inside directors for executive and outsidedirectors for non-executive ones.
5)Product, Market and Market Relation
Productis everything that one receives in exchange. Some products are tangible andsatisfy individual desires, while others are intangible but also important insatisfying individual interests. Products are divided into two classes: goodsand services. For example, a hamburger is a good, while a doctor’s examinationis a service. When you buy an automobile, you are purchasing a good. When youhave someone adjust a carburetor, however, you are purchasing a service. Sogood is a real, physical, tangible thing that produced and consumed. A serviceis an intangible attribute that involves selling help and advice, or deliveringgoods for customers.
Thedefinition of the term product is based on the concept of a market. The marketis an extension of the ancient idea of a market as a place where people gatherto buy and sell goods. In former days part of a town was kept as themarketplace, and people would travel many kilometers on special market days inorder to buy and sell various commodities. Today, however, markets such as thegold market or the cotton market do not need to have any fixed geographicallocation. Such a market is a set of transactions in which the transactions forthis commodity among different individuals and firms are related.
Somepeople come to a market because they want to buy (demanders), others comebecause they want to sell (suppliers). A market is created when those whowillingly supply a good exchange with those who desire to use, control orconsume a good or service.
Supplyand demand are the twin factors which determine the price in any market. Supplyis the quantity of goods or services sellers will offer for sale at differentprices at a particular time and place. Demand is the total amount of a type ofgoods or services that people or companies buy at a particular time and place.
Marketsreallocate commodities from supplies to demanders. What if suppliers want toprovide more than demanders want to purchase? Or, what if demanders want morethan suppliers are willing to provide?
Excesssupply occurs when, at a particular market price, the quality of demand. Excessdemand occurs when, at a particular market price, there is more demand forsomething than available suppliers of it.
Amarket is equilibrium when the quantity that suppliers are willing to provideto the market at a specific market price is exactly equal to the quantity thatdemanders desire to purchase in the market at the same market price.
Theimportance of equilibrium is that the equilibrium relative price is the onlyprice at which the interests of demanders happen to coincide precisely with theinterests of the suppliers.
6) Finance
Financeis the function in a business that is responsible for obtaining funds, managingfunds, within if and controlling them. Most organizations have finance managersor financial departments in charge of financial operations. Financialmanagement performs the following finance functions.
PlanningCollecting funds (Credit management)
BudgetingAuditing
Obtainingfunds Managing taxes
Controllingfunds Advising top management on financial matters
So,the main task of finance manager is to obtain money, then plan it, use andcontrol money effectively.
Youmust be sure that without a carefully calculated financial plan and budget thefirm has little chance for success.
Obtainingfunds — is a very important finance function, because the amount of moneyneeded for various time periods and its sources are fundamental questions insound financial management.
Financialcontrol means that the revenues, costs and expenses are periodically reviewedand compared with projection.
Creditmanagement gives a firm chance to earn money having an interest on credits andloans given.
Managingtaxes means tax implications of various financial transactions.
Andfinally, financial people help management in decision making. All thisfunctions depend greatly on the information provided by the accountingstatements.
7)Accounting & Auditing
Accountingis often called the language of business. It is used in the business world todescribe the transactions entered into by all kinds of organizations.Accounting is the recording, classifying, summerising and interpreting offinancial events and transactions to provide management and other interestedparties, (owners, investors, bankers, lawyers and accountants) with theinformation they need to make better decisions.
Afterrecording the transactions into the journal they are classified into groups(accounts) that have common characteristics.
Thereare 5 accounts in accounting: assets, liabilities, owner’s equity (capital),revenues and expenses. The double-entry system divides each page into twohalves. The left-hand side, value, received, is called a debit side, theright-hand side, value parted with, the credit side.
Auditingis an accounting function that involves the review and evaluation of the financialrecords and financial position of a company. Audits’ are performed by highlyqualified accountants (auditors) and are ordered by the management of thecompany or by state authorities (revision and control). Not so many years agoan audit suggested that a company had financial difficulties or someirregularities in the records. At present, audits are a normal and regular partof business practice
Thereare two types of auditing: internal and independent.
Internalauditing is a system of internal control which provides accounting controls;against errors and misappropriations. Many companies employ their ownaccountants to maintain the internal audit.
Independentauditing is done by certified accountants who are not employees of theorganization whose books they examine. Independent auditors review thebusiness’s operating activities: they examine financial statements, theaccounting records and other business papers to determine the accuracy andcompleteness of the records.
Theauditor’s judgement or opinion on the fairness of the records is written in adocument sent to the client upon completion of the audit. It consists of aletter addressed to the-client that consists of a scope paragraph j(a list ofdocuments that the auditor has examined and the standards that were used forthe audit) and an opinion paragraph (the auditor’s opinions).
Auditorscan help the business set up a reliable accounting system.
8)Modern Means of Business Communication
Peoplehave always tried to convey information. Now, they send letters and documentsby post, by fax, by computer and they make phone calls from home or the officeor, thanks to mobile phones, from wherever they happen to be.
Thelist of services, thanks to advanced technology, is long and presumably will grow.People can phone and fax from trains and planes. They can buy things, carry outfinancial transactions, get information — all without leaving their chairs.
Thisis the global information age. The worldwide computer network known as theInternet connects millions of people worldwide. It connects many computernetworks and uses common addressing system.
Themost popular Internet service is e-mail. Using e-mail, you can send messages toanyone with an internet account. Most businesses today have electronic addressbecause e-mail provides cheap and rapid communication.
Sincethe mid-1990s electronic commerce has become one of the most rapidly growingretail sectors involving the use of computer telecommunication networks formaintaining business relationships and selling information, services andcommodities. Although e-commerce usually refers only to the trading of goodsand services over the Internet, it actually includes broader economic activitysuch as business-to-consumer and business-to-business commerce as well asinternal organizational transactions that support these activities.
Anew form of collaboration known as a virtual company is flourishing now. Thistype of company is actually- a network of firms, each performing some of theprocesses needed to manufacture a product or deliver a service.
E-mailis cheap and easy to use. E-mail is the transmission and distribution ofinformation through personal computers linked to the telephone system, whichallows subscribers to send a message directly to another subscriber that willappear in their electronic mail box.
Computeruse continues to grow and develop in all spheres of our life. Its applications havehad a great impact on the business world. Computers have helped society byincreasing productivity and simplifying many services, such as checking, creditcards, and telephone service.