International Business Environment Revision PDF

International business environment revision sheet Adell's section **Types of business organisations** \[ for profit or not-for-profit organisation\] Organisations are an organised group of people with a particular purpose. Organisational structure refers to how a organisations management is stru...

International business environment revision sheet Adell's section **Types of business organisations** \[ for profit or not-for-profit organisation\] Organisations are an organised group of people with a particular purpose. Organisational structure refers to how a organisations management is structured, these are tall/hierarchical, flat and matrix. Benefits of a clear organisational structure, plays an important role in achieving objectives, enhances efficiency , positive impact on organisational culture and behaviour. Sole traders/proprietorships, partnerships, corporations. **Globalisation -- definition, interconnectivity, interdependence, global economy, drivers for globalisation -- technological, economic and political and cultural factors. Cultural exchange** **Multinationals -definition, characteristics, role in international trade, transfer pricing , profit shifting, economic, social and environmental impacts of mnc's and future trends in MNC's.** **Mission statements -- meanings of mission and vison statements, examples apple and google, characteristics and their impact on organisational culture and business strategy.** **Culture -- definition, importance in business, different countries with different cultures such as Japan, Norway and America, difficulties and challenges of managing a diverse workforce + solutions to overcome cultural differences** **Politics and capitalism -- definitions, interconnection, regulation and deregulation, political stability and business growth, impact of capitalism on companies** **Government regulation -- regulations, economic regulation, social regulation, labour regulations, administrative regulations, deregulation trends and issues with government regulation.** **Technology and labour - e-business, ecommerce, example amazon, digital market places, data analytics, emerging technologies, digital divide and access.** **Business strategy -- definition, role of strategy in business, strategic management, process and foundations of business strategy, types of business strategy's -- cost leadership strategy, differentiation, focus, hybrid.** **Organisational management and leadership -manager vs leader -- differences, positives negatives. Responsibilities of a manager, model of management rational goal model\[scientific\], internal process model \[henry Fayol\], human relations model \[Elton mayo\], open systems model, responsive management model. Mintzberg roles of a manager.** **Entrepreneurship -- entrepreneurs and intrapreneurs examples positive and negative to companies, characteristics and differences. Types of entrepreneurs social, hustler, imitator, researcher, buyer, skills of an entrepreneur** **Innovation -- types of innovations incremental, disruptive, archtechial and radical. Unique selling point, innovation strategy and innovation hubs.** **Human resources -- employment, employee relations, how to create good industrial relations, hiring process, employee life cycle.** **Organisational culture -corporate culture, traditional or new work culture, positives and negatives. How to improve organisational culture, examples include google, Facebook, Nike, how good strong leadership can improve organisation culture.** **Demographics and society -- business demographics age, religion, income education, family life cycle and gender. Pestele analysis -- political, economic, social, technological, environmental, legal and ethical.** **Corporate ethics -- organisations policy's and procedures, professional ethics, integrity, objectivity, equality, professional competence and due care, confidentiality, professional behaviour** **Corporate social responsibility \[CSR\] -- definition, examples of CSR, benefits drawbacks. brand differentiation, customer engagement, company image, examples google, McDonalds.** **Fairtrade and sustainability -- main objectives of sustainability -- economic growth, environmental protection and social inequality. Sustainability processes,** **operations -- barriers to entry, business operations, product lifecycle -- introduction, growth maturity and decline \[include diagram\], commercial opportunity** **Marketing -- ethical marketing, marketing strategy, 4 P's of marketing product, price, place and promotion additional P's physical evidence, process, positioning, packaging, people. Barriers to marketing opportunities, socially responsible marketing** **Stock exchange -- importance of a stock exchange and functions, London stock exchange, securities, types of shares** **Sources of finance -- equities, types of markets main market, alternative investment market, primary market, secondary market. Par value, share capital, limited liability.** **Issuing shares -- rights issue shares and calculations , prospectus, regulation, IPO's and SEO's.** **Sources of finance \[debt\]** **Financial pages \[reading and making calculations} -- calculations for dividend yield, price to earning ratio, EPS, dividend cover, dividend payout** **Role of a finance director -- at for profit and not for profit organisations, role of finance director over the years** **Personal finance -- savings, pensions -- defined benefit pension schemes, types of pensions \[workplace + personal\], investment of pension funds, taxation on pensions.** **Personal finance -- borrowing/credit, credit cards, mortgages, types of mortgages fixed rate, variable rate, capped rate, calculating APR, cost = interest rate, pay day loans** **Additional sources of finance - preference/ordinary shares + calculations** Chat gpt revison notes **Types of Business Organisations** - **Definition**: An organisation is an organised group of people working together with a particular purpose, which may be for profit or not-for-profit. - **Types of Business Organisations**: 1. **For-Profit Organisations**: Aim to generate revenue and profit (e.g., corporations, partnerships, sole traders). 2. **Not-for-Profit Organisations**: Focus on achieving a mission rather than profit (e.g., charities, NGOs). - **Organisational Structure**: 1. Refers to how management and roles are structured within an organisation. 2. **Types**: 1. **Tall/Hierarchical**: Clear levels of authority, but slower decision-making. 2. **Flat**: Few layers, encourages collaboration, but can lead to confusion. 3. **Matrix**: Combines functional and project teams for flexibility but is complex. - **Benefits of Clear Organisational Structure**: 1. Achieves objectives efficiently. 2. Enhances operational efficiency. 3. Positively impacts organisational culture. - **Types of Ownership**: 3. **Sole Traders**: Easy to set up, full control, but unlimited liability. 4. **Partnerships**: Shared responsibility and risk, but profits are divided. 5. **Corporations**: Shareholders have limited liability, but more complex regulations. **Globalisation** - **Definition**: The growing interconnectedness and interdependence of countries in economic, cultural, and political activities. - **Key Aspects**: - Increased trade and investment. - Exchange of technology, ideas, and culture. - Global supply chains. - **Drivers of Globalisation**: - **Technological**: Internet, AI, automation for faster communication and production. - **Economic**: Trade liberalisation, free-market policies. - **Political**: Free trade agreements (e.g., WTO, EU). - **Cultural**: Spread of global brands and cultural exchange. - **Cultural Exchange**: Globalisation facilitates the sharing of art, food, and traditions globally. **Multinational Corporations (MNCs)** - **Definition**: Companies that operate in multiple countries but have a central headquarters. - **Characteristics**: - Large-scale operations with access to global markets. - Ability to engage in **transfer pricing** and **profit shifting** for tax purposes. - **Role in International Trade**: - Promote global trade and investment. - Transfer of technology and skills across borders. - **Impacts of MNCs**: - **Economic**: Boost GDP and create jobs but can dominate local industries. - **Social**: Bring modern practices but may erode local cultures. - **Environmental**: Resource depletion and pollution. - **Future Trends**: Increased focus on sustainability and digital transformation. **Mission and Vision Statements** - **Mission Statement**: - Describes the organisation\'s purpose and goals. - Example: **Apple** - "To bring the best user experience through innovative hardware, software, and services." - **Vision Statement**: - Describes the organisation's long-term aspirations. - Example: **Google** - "To provide access to the world's information in one click." - **Characteristics**: - Aligns employees toward a common goal. - Guides business strategy. - **Impact**: - Shapes organisational culture. - Enhances decision-making and long-term planning. **Culture** - **Definition**: Shared values, beliefs, and practices within an organisation or society. - **Importance in Business**: - Influences decision-making, leadership styles, and employee motivation. - **Cultural Differences**: - **Japan**: Focus on hierarchy and teamwork. - **Norway**: Collaborative and egalitarian approaches. - **USA**: Emphasis on individualism and innovation. - **Challenges**: - Language barriers. - Differing communication styles. - **Solutions**: - Provide diversity training. - Encourage open dialogue. - Adapt leadership styles to fit cultural contexts. **Politics and Capitalism** - **Politics**: - Government stability and policies influence business operations. - Regulatory frameworks affect industries. - **Capitalism**: - Economic system where trade and industries are controlled by private entities for profit. - **Interconnection**: - Capitalism thrives in politically stable environments. - **Regulation vs Deregulation**: - **Regulation**: Promotes fair practices and protects consumers but can increase costs for businesses. - **Deregulation**: Reduces bureaucracy, encourages innovation, but may reduce consumer protections. - **Impact**: - Political stability fosters business growth. - Capitalism encourages competition but may widen inequality. **Government Regulation** - **Definition**: Laws and rules imposed by governments to regulate business practices. - **Types of Regulations**: 1. **Economic**: Promotes fair competition (e.g., anti-monopoly laws). 2. **Social**: Ensures environmental protection and public health. 3. **Labour**: Protects workers\' rights (e.g., minimum wage laws). 4. **Administrative**: Governs reporting and compliance. - **Deregulation Trends**: 1. Aims to reduce red tape and boost innovation. 2. However, may lead to unethical practices or risks to consumers. **Technology and Labour** - **E-Business**: Conducting business activities online (e.g., Amazon). - **E-Commerce**: Buying and selling goods or services online. - **Examples**: - **Amazon**: Leader in online retail and cloud computing. - **Emerging Technologies**: - Artificial Intelligence (AI): Automates tasks and improves efficiency. - Blockchain: Ensures secure transactions. - Data Analytics: Provides insights for better decision-making. - **Digital Divide**: Unequal access to technology creates disparities in opportunities. **Business Strategy** - **Definition**: A long-term plan for achieving business objectives. - **Role in Business**: - Aligns resources and actions to organisational goals. - Provides competitive advantage. - **Strategic Management**: - Process of planning, monitoring, and implementing strategies. - **Types of Business Strategies**: - **Cost Leadership**: Focus on reducing costs to offer lower prices (e.g., Walmart). - **Differentiation**: Creating unique products or services (e.g., Apple). - **Focus**: Targeting niche markets with specialised offerings. - **Hybrid**: Combining cost efficiency with product differentiation. Internal business enviroment **Organisational Management and Leadership** - **Manager vs Leader**: - **Manager**: Focus on processes and systems, ensuring tasks are completed. - **Leader**: Inspires and motivates the team, focusing on vision and innovation. - **Differences**: - Managers maintain; leaders innovate. - Managers control; leaders inspire. - Managers work within rules; leaders challenge them. - **Positives of Managers**: Consistency, efficient use of resources. - **Negatives of Managers**: Lack of adaptability, risk aversion. - **Positives of Leaders**: Creativity, driving change. - **Negatives of Leaders**: Potential lack of focus on practicalities. - **Responsibilities of a Manager**: - Planning, organising, leading, controlling resources. - **Management Models**: - **Rational Goal Model (Scientific Management)**: Focus on efficiency and productivity (e.g., Frederick Taylor\'s time studies). - **Internal Process Model (Henry Fayol)**: Emphasises structure, hierarchy, and clear rules. - **Human Relations Model (Elton Mayo)**: Highlights employee motivation and well-being. - **Open Systems Model**: Adapts to external changes, focuses on innovation. - **Responsive Management Model**: Flexible management aligned to dynamic environments. - **Mintzberg's Roles of a Manager**: - Interpersonal (e.g., leader, liaison). - Informational (e.g., monitor, spokesperson). - Decisional (e.g., negotiator, resource allocator). **Entrepreneurship** - **Entrepreneurs vs Intrapreneurs**: - **Entrepreneurs**: Create new businesses (e.g., Elon Musk, Jeff Bezos). - **Intrapreneurs**: Innovate within organisations (e.g., Google employees who developed Gmail). - **Differences**: Entrepreneurs take personal financial risks; intrapreneurs work within corporate resources. - **Types of Entrepreneurs**: - **Social**: Focus on social change (e.g., TOMS Shoes). - **Hustler**: Hardworking and resourceful. - **Imitator**: Improves existing ideas. - **Researcher**: Makes informed, data-driven decisions. - **Buyer**: Acquires existing businesses. - **Skills of an Entrepreneur**: - Creativity, risk-taking, adaptability, resilience, and leadership. **Innovation** - **Types of Innovation**: 1. **Incremental**: Small improvements to existing products (e.g., iPhone updates). 2. **Disruptive**: Changes markets entirely (e.g., Netflix). 3. **Architectural**: Reconfiguring existing systems (e.g., car-sharing apps). 4. **Radical**: Groundbreaking changes (e.g., electric cars). - **Unique Selling Point (USP)**: Distinctive feature making a product/service stand out. - **Innovation Strategy**: 1. Aligning innovation goals with business objectives. - **Innovation Hubs**: 1. Examples: Silicon Valley, London Tech City. **Human Resources** - **Employment and Employee Relations**: - Foster good relationships through fair treatment, benefits, and communication. - **How to Create Good Industrial Relations**: - Regular dialogue, fair wages, resolving disputes quickly. - **Hiring Process**: - Recruitment. - Selection. - Onboarding. - **Employee Life Cycle**: - Attraction → Recruitment → Onboarding → Development → Retention → Exit. **Organisational Culture** - **Corporate Culture**: - Shared values, norms, and practices within a company. - Traditional: Formal hierarchy, rigid rules. - New Work Culture: Flexibility, inclusivity. - **Positives and Negatives**: - Strong culture improves morale and productivity but can resist change. - **How to Improve Organisational Culture**: - Encourage leadership, diversity, and innovation. - **Examples**: - **Google**: Creative, open culture. - **Nike**: Focus on employee empowerment. - **Role of Leadership**: - Influences culture through actions and decisions. **Demographics and Society** - **Business Demographics**: - Impact of factors like age, religion, income, education, and gender on business. - **PESTLE Analysis**: - **Political**: Government stability, trade policies. - **Economic**: Inflation, interest rates. - **Social**: Changing consumer preferences. - **Technological**: Emerging innovations. - **Environmental**: Sustainability trends. - **Legal**: Compliance with laws. **Corporate Ethics** - **Definition**: Organisations' policies and procedures ensuring ethical behaviour. - **Professional Ethics**: - Integrity, equality, confidentiality, professional behaviour. - **Key Practices**: - Fair treatment of employees. - Transparent operations. **Corporate Social Responsibility (CSR)** - **Definition**: Business initiatives benefiting society and the environment. - **Examples**: - **Google**: Renewable energy projects. - **McDonald\'s**: Sustainable sourcing. - **Benefits**: - Brand differentiation, customer engagement, better reputation. - **Drawbacks**: - Can increase costs and complexity. **Fairtrade and Sustainability** - **Objectives of Sustainability**: 1. Economic growth. 2. Environmental protection. 3. Reducing social inequality. - **Sustainability Processes**: 1. Using renewable resources. 2. Reducing waste and emissions. **Operations** - **Barriers to Entry**: - High costs, strict regulations, brand loyalty. - **Business Operations**: - Day-to-day processes to deliver goods/services efficiently. - **Product Life Cycle**: - **Introduction**: High costs, low sales. - **Growth**: Increasing sales, reduced costs. - **Maturity**: Peak sales, high competition. - **Decline**: Decreasing sales. - **Diagram**: Include the product life cycle curve. - **Commercial Opportunity**: - Identifying market gaps for growth. **Marketing** - **Ethical Marketing**: - Honest and responsible practices. - **Marketing Strategy**: - Aligning campaigns with customer needs. - **4 P's of Marketing**: - **Product**: Quality, design, features. - **Price**: Competitive pricing. - **Place**: Distribution channels. - **Promotion**: Advertising and sales promotions. - **Additional P's**: - Physical Evidence, Process, Positioning, Packaging, People. - **Barriers to Marketing Opportunities**: - Budget constraints, regulation, cultural differences. - **Socially Responsible Marketing**: - Promoting sustainability and ethical practices. Finance section **Stock Exchange** - **Importance of a Stock Exchange**: - Facilitates the buying and selling of securities (e.g., stocks, bonds). - Provides companies with a platform to raise capital. - Boosts economic growth by mobilizing savings for investment. - Promotes transparency and investor confidence. - **Functions**: - Liquidity: Enables quick conversion of securities into cash. - Price discovery: Determines share prices based on supply and demand. - Regulation: Ensures fair trading and compliance. - **London Stock Exchange (LSE)**: - Key global stock exchange. - Main market for established companies. - Alternative Investment Market (AIM) for smaller or growing businesses. - **Securities**: - Tradable financial assets like stocks, bonds, and derivatives. - **Types of Shares**: - **Ordinary Shares**: Ownership with voting rights; dividends vary. - **Preference Shares**: Fixed dividends, no voting rights. **Sources of Finance** - **Equities**: - Ownership in a company in exchange for funding. - **Types of Markets**: - **Main Market**: Established companies (LSE\'s primary platform). - **AIM**: For smaller, growth-oriented companies. - **Primary Market**: Companies issue new shares to raise capital (e.g., IPOs). - **Secondary Market**: Investors trade existing shares. - **Par Value**: - The nominal value of a share, typically set when issued. - **Share Capital**: - Total value of shares issued by a company. - **Limited Liability**: - Shareholders are not personally liable for company debts beyond their investment. **Issuing Shares** - **Rights Issue**: - Existing shareholders can buy additional shares at a discount. - **Formula**: - **Prospectus**: - Document providing information for investors in IPOs. - **Regulation**: - Governs IPOs and Secondary Equity Offerings (SEOs). - **IPO (Initial Public Offering)**: - First time a company sells shares to the public. - **SEO (Seasoned Equity Offering)**: - Additional shares offered by a listed company. **Sources of Finance (Debt)** - Borrowed funds for business operations or growth. - Examples: Bank loans, bonds, debentures. - Pros: Fixed repayment terms, no ownership dilution. - Cons: Interest payments, potential default risk. **Financial Pages (Reading and Calculations)** 1. **Dividend Yield**: - Measures return on investment from dividends. - **Formula**: - Dividend Yield (%)= Annual Dividend per Share % Market Price per Share ×100 2. **Price-to-Earnings (P/E) Ratio**: - Compares share price to earnings per share (EPS). - **Formula**: P/E Ratio=Market Price per Share % EPS 3. **Earnings Per Share (EPS)**: - Profit attributable to each share. - **Formula**: EPS=Net Profit % Number of Outstanding Shares 4. **Dividend Cover**: - Indicates how many times dividends are covered by net profit. - **Formula**:  - Dividend Cover= Earnings per Share (EPS)​% dividend per share -  5. **Dividend Payout Ratio**: - Proportion of earnings paid as dividends. - **Formula**: - Dividend Payout (%)=\[ Dividend per Share % earnings per share \]​×100 - **Role of a Finance Director** - **For-Profit Organisations**: - Oversee budgeting, forecasting, and financial planning. - Ensure profitability and compliance. - **Not-for-Profit Organisations**: - Manage funds efficiently to achieve organisational goals. - Focus on sustainability over profit. - **Evolving Role**: - Increased emphasis on strategic decisions and data-driven insights. **Personal Finance** **Savings and Pensions** - **Defined Benefit Pension Scheme**: - Provides a fixed income post-retirement based on salary and years of service. - **Types of Pensions**: - Workplace Pensions. - Personal Pensions. - **Investment of Pension Funds**: - Invested in stocks, bonds, and other financial instruments. - **Taxation on Pensions**: - Contributions often tax-deductible, but withdrawals may be taxed. **Borrowing and Credit** - **Credit Cards**: - High-interest short-term borrowing. - **Mortgages**: - Long-term loans for property. - **Types**: - Fixed Rate: Stable interest. - Variable Rate: Changes with the market. - Capped Rate: Variable but within a fixed limit. - **Calculating APR (Annual Percentage Rate)**: - Includes interest and other charges. - **Formula**: - APR=(total cost of borrowing % loan amount​)×100 - **Cost = Interest Rate**: - Total interest payable = Loan Amount × Interest Rate × Time. - **Payday Loans**: - Short-term, high-interest loans. **Additional Sources of Finance** - **Preference Shares**: - Fixed dividends; priority over ordinary shares in liquidation. - **Formula**: - Dividend (Preference)=Nominal Value × Dividend Rate - **Ordinary Shares**: - Variable dividends; based on company performance.