当代商学概论 Fundamentals of Business

Lecture 1:

Introduction

What to cover today ：1. Course description2. What is business?3. Forms of business ownership4. Franchising5. Business mission and company

profile6. International business 7. International economic

organizations

Exercises

1. Course description

1. Name 2. Instructor 3. Time4. Language5. Aims6. Methods 7. Textbooks and references8. Class schedule 9. Assessment

What is business?

money (capital &

profit)

companyproducts(goods

& services)

people

market

countries &

culturesconferences, negotiations

& trips

communication

2. What is business?Business is: the exchange or trade for things people want or

need the production, distribution and sale of goods an

d services for a profit a goal-directed behaviour aimed at getting and

using productive resources to buy, make, trade, and sell goods and services that can be sold at a profit (Source: Jones, 2007. Introduction to Business: How Companies Create Value for People)

productiveresources

land

capital enterprise

labor

3. Forms of business ownershipThree basic legal (vs. organizational) forms of busine

ss ownership ：1. sole proprietorship ( 个人 ) 独资企业2. partnership 合伙企业3. company 公司 Unlimited Liability Company 无限责任公司 Limited Liability Company (LLC) 有限责任公司 Limited Liability Company by Share/corporatio

n 股份有限公司

enterprise > company > corporation

3.1 Factors to be weighed in decision-making

ease of formation liability for business debts control over the operation management expertise available financial resources available taxation policies continuity legal capacity

3.2 Sole proprietorship

advantages & disadvantages

D4: lack of continuity

If the owner dies or becomes too ill to manage the business, there is no separate legal entity in existence with which the public, creditors, suppliers or employees can deal to ensure the continuity of the business.

3.3 Partnership3.3.1 Oral vs. written agreementarticles of partnership 合伙章程 names of the partners name of the partnership location of the partnership purposes of the partnership duration of the partnership capital contributions by partners rights and responsibilities of partners allocation of profits and losses among partners dissolution procedures

3.3.2 General partnership 普通合伙企业 vs. limited partnership 有限合伙企业

3.3.3 Advantages & disadvantages

3.4 Company

company

public（ corporation ）

quasi public(corporation)

private

profit non-profit

privately held(LLC)

publicly held(corporation)

public companies: established by the government, e.g. the U.S. Postal Service

quasi-public companies: established privately, but operated for public service and with high degree of government regulation and protection, e.g. private schools & hospitals

private companies: established privately and operated for private interests; including the bulk of existing companies

profit private companies: established to carry out business for profit-making purposes

non-profit private companies: established for charitable or religious purposes

privately held profit private companies: LLC; do not publicly offer their stock; owned by one or a few shareholders who normally have family or other close ties and also manage the business

publicly held profit private companies: LLC by share; publicly offer and freely trade their shares on stock exchanges; owned by a number of unrelated shareholders who do not actively manage the company (passive investors, c.f. limited partners); go public, IPO 首次公开募股

3.4.1 Corporation

70%

10%

20%

Proportion of Existing Businesses under Each

Form of Ownership

Proportion of Business Revenue Generated by

Each Form of Ownership

3.4.1.1 Corporate structure and management

incorporators/shareholders

board of directors

president/CEO

other officers

owners

managers

3.4.1.2 Corporate charter & legal person

Corporate charter 公司章程 : a document used to incorporate a business, and filed with the state government

The charter describes important aspects of the corporation, e.g. the name of the firm, the stock issued, and the firm’s operations

3.4.1.3 Advantages & disadvantages

A4: continuous life (perpetual continuity)

Theoretically, a corporation has a perpetual existence; it continues until dissolved, merged, or terminated for other reasons.

3.4.2 Limited liability company (LLC)

a firm that has all the favorable features of a typical general partnership, but also offers limited liability for the partners

has fewer restrictions on the type of owners and on the liability protection than S corporation

the precise rules on liability protection vary among states

According to United States federal income tax, an S corporation is a corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.

has 35 or fewer owners and satisfies other criteria

the owners have limited liability the earnings are distributed to the owners

and taxed at the respective personal income tax rate of each owner

3.4.3 S corporation S 公司

4. Franchising 特许经营budding period: the

early 1900s, filling stations, car dealerships

growth period: since the mid-1960s, paralleling the enormous expansion of the fast food industry

Three basic types of franchising:

product franchising: licensing for the right to sell trademarked goods purchased from the franchiser and resold by the franchisee, e.g. car dealers, gasoline stations

manufacturing franchising: licensing for the right to produce and distribute products, using supplies purchased from the franchiser, e.g. soft-drink bottling plants

business-format franchising: licensing for the right to open a business using the franchiser’s name and format for doing business, e.g. fast food chains

Advantages of franchising:

triple benefits of franchising according to the president of the International Franchise Association:

“The franchiser wins because he builds a strong foundation for his company. The franchisee wins because he can take advantage of the franchiser’s proven business system. And the general public benefits from the consistency of the product or service.”

Case study: A Godsend

5. Business mission and company profile

5.1 Business mission/vision

-- a brief statement that tells stakeholders and the public why the firm is in business, how it intends to satisfy customer needs, and why it will satisfy their needs better than its competitors

Sample mission statements

StarbucksOur mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

DellDell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: • Highest quality • Leading technology • Competitive pricing • Individual and company accountability • Best-in-class service and support • Flexible customization capability • Superior corporate citizenship • Financial stability

Sample mission statements

Nike Our mission for the Nike brand is: To bring inspiration an

d innovation to every athlete in the world. Alibaba Alibaba Group (Alibaba for short) is a global e-commerce

leader basing in China. Alibaba has 7 subsidiary companies, business involving the B2B, C2C, online payments, software service, search engine, online advertising, local living and consumption community etc. Alibaba is committed to building the world‘s leading e-commerce infrastructure and high quality online living platform.

5.2 Company profile Company history Founders and/or current top managers Major line of business Location and subsidiaries Markets Staff size Production capacity Annual turnover/sales Awards

Listening:

Listen to a presentation delivered by the PR Department Manager of Oracle China and construct a chart for the company profile

Word bank: headquarters 总部 headcount 员工总数 annual revenue 年收入

Oracle China Profile Status: the world’s ____ enterprise software

company, ____ global software giant in ____ Established in: ____ Headquarters: Redwood Shores, ______ Headcount: ______ Annual revenue: ____ Launched on China’s market in ____ Oracle China branches: Beijing, Shanghai,

Guangzhou, ____ Services: 9i E-Business platform, E-Business Suite,

consulting services, ______, and support services

largest

education

China

1977

California

42,000

$11billion

1989

Chengdu

first

Sample company profileGMhttp://www.gm.com/corporate/about/company.jsp Ecolab http://www.ecolab.com/CompanyProfile/ PhilipsEnglish version:

http://www.philips.com/about/company/companyprofile.page Chinese version: http://www.philips.com.cn/about/company/com

panyprofile.page Alibaba English version:http://news.alibaba.com/specials/aboutalibaba/index.html?tracel

og=24581_foot_company_info Chinese version:http://page.china.alibaba.com/shtml/about/ali_china1.shtml

6. International business

What is ?-- business activities across national boundaries,

including movements of goods, services, capital, technology, information, data and/or personnel

What is the difference between

and ?-- international trade is merely one form or method of

international business; the later covers a much wider range of business sectors than the former

6.1 Reasons for international business6.1.1 Economic reasons: difference in the

practicality or efficiency of producing something

absolute advantage 绝对优势 : comparison between two or more countries concerning a single product

comparative advantage 相对优势 : comparison between two or more products of the same country

6.1.2 Political reasons: political concerns, hostility or confederation

6.2 Methods of international business

international trade 国际贸易 agents 代理 licensing arrangement 特许协议 outsourcing 外包生产 branch offices 分支机构 foreign direct investment (FDI) 外商

直接投资 : JV & FOE multinational corporations (MNCs)/tr

ansnational corporations (TNCs) 多国公司 / 跨国公司

degree of

involve-ment

low

high

Licensing arrangement case study:

In order to enter the Japanese market, Xerox, the inventor of the photocopier, licensed its Xerographic know-how to Fuji Photo, the industry leader in Japan. In return, Fuji paid Xerox a royalty fee equal to 5% of the net sales revenue that it earned from the sales of photocopiers based on Xerox’s patented know-how. The license was originally granted for 10 years, and it has been renegotiated and extended several times since.

Licensing arrangement case study: RCA color TV

RCA Corporation once licensed its color TV technology to a number of Japanese manufacturers including Matsushita and Sony. The Japanese firms quickly assimilated the technology, improved it, and used it to enter the US market. Now the Japanese brands have a much bigger share of the US market than the RCA brand.

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Joint venture case study: Coca-Cola and the Swiss company Nestle are joini

ng forces to develop the international market for “ready to drink” tea and coffee, which currently sell in significant amounts only in Japan.

Procter & Gamble has formed a joint venture with its Italian arch-rival Fater to cover babies’ bottoms in the United Kingdom and Italy. Their diaper company will give the combined group almost 60% of the U.K. market and up to 90% of the Italian market.

Domestic appliance manufacturer Whirlpool has taken a 53% stake in the Dutch electronics group Philips’ white-goods business to leapfrog into the European market.

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Test yourself: how many MNC logos do you know?

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7. International economic organizations

WTO 世界贸易组织 : the only global international organization dealing with the rules of trade between nations, established in 1995 as the successor of the General Agreement on Tariffs and Trade (GATT, 关贸总协定 )

APEC 亚太经济合作组织 : the premier inter-governmental forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region, established in 1989, 21 “Member Economies”, approximately accounting for 56% of world GDP and 48% of world trade, no treaty or legally binding obligations, by consensus and commitments undertaken on a voluntary basis

Exercises 1. Translation1. 个人独资企业 2. 普通合伙人3. 有限合伙人 4. 无限责任5. 营业执照 6. 法人7. 董事会 8. 股息9. 公司章程 10. 年报11. 股东年会 12. 特许经营13. 合资企业 14. 外资企业15. 专业技术 16. 外包生产

2. Cloze test and sentence rearrangement (p.8, p.125)

3. Find out the business focus of the top 10 franchise brands in 2009 listed by Entrepreneur Magazine

4. Compile the mission statement and/or company profile of a well-renowned MNC currently operating in China

5. Group project: observe and guess the business forms of shops or companies operating on your campus or in Guangzhou, and collect necessary information through interview or on the Internet to verify your thoughts

6. Supplementary reading

(1) Cooperative Joint Ventures in China

(2) Nestle’s Global Food Empire

(3) World Trade Organization

(4) Asia-Pacific Economic Cooperation