I-CAN-DO-THIS.pdf

PLACEMENT EXAM REVIEWER take advantage of business opportunities and transform them into profits. 5. Create E...

PLACEMENT EXAM REVIEWER take advantage of business opportunities and transform them into profits. 5. Create Employment TOPIC MM FM BE a. The biggest employer is the private Entrepreneurial 40% 5% 10% sector. Millions of jobs are provided by Management factories, service industries, agricultural enterprises and the numerous Business Communication 25% 10% 10% small-scale businesses. International Business and 15% 15% 40% 6. Provides Taxes into the Economy Trade a. Every entrepreneur contributes to the economy a kind of income out of the Strategic Management 10% 10% 30% real estate, income tax, sales tax, fees and all other forms of payment to the Systems Thinking 5% 20% 5% national, as wells as local government Personal Finance 5% 40% 5% units. 7. Empower Individuals a. The real indicator of economic ENTREPRENEURIAL MANAGEMENT well-being among citizens and the masses are in some ways gauged by the Entrepreneurs amount of financial resources that every The American Heritage Dictionary defines an citizen accumulates. entrepreneur as a person who organizes and 8. Enhance National Identity and Pride directs a business enterprise and assumes all the a. The quantity and quality of products and risks for the sake of profit. services produced by every entrepreneur comes from the French word “entreprendre” is a source of pride and identity for a which means to begin something, or country. undertake. 9. Enhance Competitive Consciousness the person who undertakes entrepreneurial a. Innovation, being the essence of activities. entrepreneurship is a catalyst to a consciousness and culture of Enterprise competition, which in the long term An establishment that supplies us with products breeds quality and international/ global and services in exchange for payment is an competitiveness. enterprise or business. 10. Improves Quality of Life a. The entrepreneur’s desire for innovation Entrepreneurship and development of new product, as Entrepreneurship is the act or process of well as creation of new markets, results organizing and directing a business enterprise. to the betterment of the products and the capacity for innovation, investment and services and hence the quality of life. expansion in new markets, products, and 11. Enhances Equitable Distribution of Income techniques. and Wealth a. With entrepreneurs succeeding in their 11 Entrepreneurial Functions respective endeavors, chances are that 1. Develop New Markets the distribution of income and wealth a. They can create customers or buyers. can be likewise expected. This makes entrepreneurs different from ordinary businessmen who only perform Types of Entrepreneurs traditional functions of management like SOLO SELF-EMPLOYED INDIVIDUALS. planning, organizing, and coordinating. Entrepreneurs who work alone or with only a 2. Discover New Sources of Materials few employees a. Due to their innovative nature, they They generally perform the work themselves persist in discovering new sources of rather than assigning it to other people. materials to improve their enterprises. Their ranks include small store and repair shop 3. Mobilize Capital Resources owners, independent sales representatives, a. Entrepreneurs are the organizers and attorneys, and physicians. coordinators of the major factors of production such as land, labor and TEAM BUILDERS capital. They properly mix these factors Entrepreneurs who expand small, usually of production to create goods and one-person businesses into larger companies services. An example is a self-employed electrician who 4. Introduce New Technologies, New Industries gradually hires additional employees until a and Products full-scale electrical contracting firm is a. Aside from being innovators and established. reasonable risk-takers, entrepreneurs INDEPENDENT INNOVATORS Sole Owner Individuals who create companies to No right of succession manufacture and sell products they have Lower Tax invented are independent innovators. Owner’s Equity Account FRANCHISERS PARTNERSHIP Entrepreneurs who build several units of an Agreement effective business are known as franchisers. 2 or More People Articles of Partnership (SEC) ECONOMY-OF-LARGE-SCALE EXPLOITERS Managing Partners Entrepreneurs who can sell a large volume of Partners (unlimited liability except limited) goods at reduced prices are Gen Partners: Unli Liability; Limited Partners: economy-of-large-scale exploiters. Lim Liability Profit and Loss Ratio CAPITAL AGGREGATORS No right of succession Entrepreneurs who take the lead in establishing Same as Corp (except GPP) financial institutions that require a large amount Partners’s Equity of start-up capital CORPORATION ACQUIRERS Created by operation of law People who become entrepreneurs by buying an Not Exceeding 15 (One Person Corp) existing business are acquirers. Articles of Incorporation (SEC) Board of Directors BUY-SELL ARTISTS Shareholders’ limited Liability turn a profit by buying a business and then Separate Juridical Personality selling it at a higher price. Stock Ownership Rights of Succession Small Business Higher Tax one which is independently owned and operated Shareholders’ Equity and which is not dominant in its field of operation. Entrepreneurial Traits and Characteristics Magna Carta for Small Enterprise (RA 6977) 1. Take moderate risk - Indicates that the firm must have total assets a. Entrepreneurs are willing to take valued at above P 1.5 million to be considered middle-of-the-road or moderate risks. small business. Moderate risks means the chances of winning are neither too small nor too Types of Small Business: great. Manufacturing- It is one involved in the 2. Have Self-Confidence conversion of raw materials into products a. believing you can achieve what you set needed by society. out to do. You are not afraid to take Services- Those that provide service in one way chances. You know you can get the job or another. done. Wholesaling- Refers to the activities of persons 3. Work hard or establishments which sell to retailers and a. Helping customers, keeping accounting other merchants, and/or to industrial, records, and cleaning are just a few institutional and commercial users, but who do duties you may have to perform on a not sell in large amounts to final consumers. given day. Retailing- Covers all activities involved in the 4. Goal-Oriented sale of goods and or/ services to the final a. Successful entrepreneurs know where consumers. they are going by setting goals. A goal is General Construction Firms- Those are an objective, something you plan to engaged in the construction of buildings, achieve. whether for private individuals or firms, or for 5. Responsible the government. a. You answer or account for what happens. You accept blame for failure, FORMS OF BUSINESS OWNERSHIP and you accept credit for success. 6. Innovative SOLE PROPRIETORSHIP a. They try to improve existing products Legal Registration and services or create new products and 1 Owner services. DTI Registration 7. Knowledgeable about Technical Factors Sole Proprietor a. what you know about a product or Unlimited Liability service. Owner and Business the same 8. Knowledgeable about Business Factors  a. knowing how to operate the enterprise. 5. Controlling Entrepreneurs must see that all tasks are a. process of checking whether or not performed appropriately. proper progress is being made. Resources used in Business: Basic Skills Entrepreneurs Need: 1. Capital 1. Business Skill – the ability how to create and 2. Manpower manage a business. 3. Technology 2. Communication Skill – the ability to listen 4. Market well, write well and speak well. 5. Skills 3. Computer Skill – the ability to use 6. Information technological tools effectively. 7. Interest 4. Decision making and Problem Solving Skills – 8. Materials/ Supplier of Inputs knowing how to apply logic, information and past experiences to new decisions and problems. Innovation- creating new product, uniqueness designs 5. Mathematical Skill – using math to create new way or creates new market. budgets, keep accurate records and analyze financial statements. Profit- the first consideration in investment. 6. Organizational Skill – the knack of keeping It depends on: tasks and information in order, the ability to plan Population well and manage your time. Income 7. People Skill - the ability to persuade and Peace and Order motivate people; knowing both how to be a Political Stability leader and work in a team. Government Policies Internal Economies of Scale Intellectual Property - It is artistic and industrial ○ Management creations of the mind protected by law. ○ Technology ○ Working Conditions Copyright - The exclusive right to perform, display, ○ Financial Incentives copy or distribute an artistic work. It applies External Economies of Scale automatically as soon as a work is created. ○ Energy ○ Transportation Patent - The exclusive right to make, use, or sell a ○ Communication Facilities device or process. Five Managerial Functions: Trademark - Symbol that indicates that the use of a 1. Planning brand or brand name is legally protected and cannot be a. the act or process of creating goals and used by other businesses. objectives as well as the strategies to meet them. BUSINESS PLAN 2. Organizing Growth and sustainability a. the systematic process of structuring, External and internal components in starting an integrating, coordinating task goals and enterprise activities to resources in order to attain Implementation objectives. a written document prepared by the entrepreneur 3. Staffing that describes all the relevant external and a. recruiting, selecting, appointing the internal elements involved in starting a new employees, assigning duties, venture maintaining cordial relationships and taking care of the grievances of Parts of Business Plan employees. 1. Executive Summary 4. Directing a. Key Details of the Business Plan a. giving direction or instruction to b. Concise and Powerful employees to get the job done. c. Glimpse of the Paper b. Supervision - implies overseeing the 2. Organization and Management work of subordinates by their superiors. a. Company Overview c. Motivation - inspiring, stimulating or b. VMGO encouraging the subordinates with zeal c. Ownership and Management Structure to work. 3. Internal-External Analysis d. Leadership - process by which manager a. Degree of Competition guides and influences the work of b. PESTEL and SWOT subordinates in desired direction. c. Industry-Environment Analysis e. Communication - process of passing 4. Marketing Plan information, experience, opinion, etc. 5. Operational Plan from one person to another. 6. Financial Plan FEASIBILITY STUDY BUSINESS COMMUNICATION Idea viability Identify growth potential ORIGIN OF THE WORD COMMUNICATION Workability, Profitability derived from a Latin word ”communis” meaning "common“. (Cambridge Dictionary) STRATEGIC ANALYSES (SWOT) natural activities of all humans, which is to It is a tool evaluating the strengths, weaknesses, express opinions, feelings, information, and opportunities and threats of a particular product ideas through words (written or spoken), body or service. language or signs. Communication is a multi-dimensional STRATEGIC ANALYSES (PESTEL) process. 1. POLITICAL The basic purpose of communication is to be a. Government understood. b. Tarrifs, Taxes, Fiscal Policies, Monetary Policies Communication in Business 2. ECONOMIC It is a process of linking superiors and a. Inflation, Interest, FOREX subordinates in various departments of an b. Employment, Disposable Income organization to one another and to management. 3. SOCIAL It is a dynamic interactive process of relating a. Demographics, Religion, Buying people to other people relying on feedback. Patterns Sharma (1991) b. Preferences, Media, Attitudes 4. TECHNOLOGICAL In the world of work as in life, the way we have a. Automation, Tech Dev, R & D learned to think is central to the way we communicate b. IT, Communication with others and ourselves. How completely we are able 5. ENVIRONMENTAL to communicate well, to a large extent, determines our a. Climate, Location, Stakeholder success in business. b. Weather, Climate Change Angell (2007) 6. LEGAL a. Employment laws, Consumer protection Business Communication is a private written b. Industry Regulation, Environmental communication, which is designed to accomplish a laws, Taxes specific purpose. Janis et al. (1970) Factors of Production 1. Land ELEMENTS OF COMMUNICATION 2. Labor 1. Sender 3. Capital a. is the originator or the source of the 4. Entrepreneurship message/information. b. he encodes the message to an intended 4 P’s of Marketing listener/reader (receiver). 1. Product 2. Receiver 2. Price a. refers to the intended recipient of the 3. Place message communicated or sent by the 4. Promotion sender. b. he decodes or interprets the message received. 3. Message a. is a transmissible combination of information. b. it serves as a link, which connects both to the sender the receiver toward meaningful understanding. 4. Channel a. is the medium used by the receiver to transmit the idea after being encoded into a message. b. it is the avenue or means by which a message is transmitted or conveyed. 5. Noise a. refers to all kinds of disturbances or distractions that present a gap in the communication process during the transmission of the message from sender to receiver.  b. the result of noise is generally a loss or Basic organization for the body of a business letter distortion of the meaning of the A. Part 1 – state your purpose message, which can affect the reception. B. Part 2 – explain what you want to happen or explain the information you have; and Two general types of noise: C. Part 3 – request action, conclude, or thank the Channel Noise – includes any disturbance, which reader for his response. interferes with the physical transmission of a message. Semantic Noise – refers to disturbance, which interferes GOALS OF BUSINESS COMMUNICATION with the receiver’s interpretation of the meaning of the 1. It carries a message of importance. message sent (semantics is the study of changes in the 2. It must deliver the message promptly so that the meaning of words). recipient of the letter will reply favorably at once. 6. Feedback 3. It should sell either goods, goodwill, or both, or a. is the reaction or response of the pave the way for future business transactions. receiver, which is communicated to the 4. It is a business letter. sentence. b. it could be in a form different from the BASIC PRINCIPLES OF WRITING form in which the original message was transmitted. 1. Unity 7. Situation It means consistency or oneness. A sentence has a. refers to the communication setting or unity if it expresses only one main idea. the time and place as to when and where such communication took place. a. Consistency of Tense. Tense means time. Consistency of tense or unit of tense may be achieved by observing proper tense sequence. BASIC CRITERIA OF EFFECTIVE BUSINESS b. Consistency of Voice. Voice is that aspect of COMMUNICATION the verb which indicates whether the subject performs 1. It is clear. The meaning the reader gets is the the action (active) or receives it (passive). meaning the writer intended. c. Consistency of Mood. Mood is the form a 2. It is complete. All of the reader’s questions are verb takes to show how it is be regarded answered and the reader has enough information Consistency of Subject. Avoid unnecessary to evaluate the message adequately and to act shifts of subjects in a sentence. upon it. e. Consistency of Number and Person. The 3. It is correct. All the information in the message pronoun will have to agree in number and person with its is accurate. The message is free from errors in antecedent. spelling, grammar, word order, and sentence f. Consistency of Ideas. Maintain consistency structure. of the ideas by excluding loosely related or irrelevant 4. It saves the reader time. The information can ideas from the sentence by avoiding too many details be read, understood, and acted upon as quickly and by using the proper connective or conjunctive word as possible. to relate the ideas expressed in the sentence. 5. It builds goodwill. The message presents a g. Consistency of Tone. Tone refers to the style positive image of the writer and fosters a good or manner of expression. Maintain the consistency of relationship between the writer and the reader. tone throughout the sentence. h. Consistency of Language. This refers to the FOUR CONSIDERATIONS OF A BUSINESS use of the same language throughout the sentence. If a LETTERS foreign term has been used, it should either be enclosed 1. Subject. In business writing, the subject should in quotation marks or underlined to maintain/preserve be specific. the consistency of language within the sentence. 2. Audience. This area is crucial. It is fraught with dangers since most often, the audience is not 2. Coherence known. It means the quality of putting ideas together. Make sure 3. Purpose. The purpose must be well-defined. that modifiers are placed closely to the words they Numerous letters are sent to many people and modify. specific subject matter and audience in mind, yet they are not clear with their purpose. 3. Emphasis 4. Style/Organization. The first three areas alone It refers to special and significant stress of voice dictate the content, direction, and emphasis of laid on particular words or syllables. the letter. A. know what you are writing about – THE WRITING PROCESS - Steps in Writing subject Process B. know who you are writing for – audience Step 1: Prewriting C. know why you are writing – purpose It involves answering the four key questions of letter writing:  What is my purpose? a. Modern: Letterhead and date (name. the Who is my audience? return address, date) What should the letter cover be? b. Conventional: Address and date What desired action or response do I B. Inside address - address of the receipt /double want? space/ C. Salutation - greetings (dear) /double space/ Step 2: Writing D. Body - Main idea of the letter. It involves writing the rough copy all the way E. Complimentary close - Sincerely yours, through the end. F. Signature - Name (upper case or sentence case) The first draft is just a working draft. Just write Signature until the letter is finished. G. Miscellaneous parts a. Attention line Step 3: Revising b. Subject line It means reading the draft and organizing the c. Reference or file line letter so that it flows logically from point to point. 6. Mailing and Carbon Copy Notations Check the grammatical lapses, double-check the Sending of letter other than the regular mail accuracy of facts and figures, eliminate should be indicated bellow the identification line or unnecessary words and irrelevant ideas, and below the enclosure mark. proofread or edit the final copy. When a writer wishes to say that a carbon copy of the letter is being mailed to another person, a notation Presentation of the Letter Proper copy or c.c. may precede the name of the person to 1. Margin whom the letter is being mailed with the appropriate title A. No letter head; equal margin - top and bottom and should be written flush with the left-hand B. With Letterhead; top margin should be wider margin below all other notations. than that of the bottom margin Carbon copy notation (c.c) - give me the same C. The two side margin should be equal ( 1 inch - 1 letter ½ inches) D. Margin at the bottom, should be 1 ½ time bigger 7. Folding the Letter than those at the sides It depends upon the size of the stationery and the E. Margins at the top and bottom should not be less style of the envelope used. than 1 ½ inch, 2 inches is better. 2. Spacing 8. Addressing the Envelope There should be double spacing between the The envelope should always have the sender’s paragraphs and between other units. Body of short letters return address. The outside should be the same as the may be double-spaced, but others must be single-spaced inside address and should be double-spaced. The Date line expression Air Mail, Special Delivery, or Registered Salutation should be written in capital letters above the address in Body the upper right. Complimentary Close Type Name Parts of a Business Letter Signature 1. Letterhead or Return Address. If no printed (A4 or Legal yung typical na ginagamit sa corporate letterhead is available, type your return address world) so that it ends at the right-hand margin. Start one and one-half inches from the top. 3. Punctuation 2. Dateline. Place the dateline at the center two A. Open (Dear Miss Davenport) lines below the letterhead. If you type your B. Closed (Dear Miss Davenport:) return address, type the date immediately below the last line of the address. The position of the 4. Forms of Indention dateline depends on the style and the length of Indented form the letter. Fully block form: all parts of the letter flush 3. Inside Address. Put four to eight spaces below with the left hand margins of the page. the dateline, place the name, title, and mailing Block form: Heading, complimentary close, and address of the person to whom you are writing. signature should be at the right. The inside address may require three, four, or Semiblock form: Same as the block form, only five lines, each starting at the left margin. When that the paragraphs are indented. addressing an individual in a company, write Hanging or overhanging form: same as the his/her name followed by the company name. block form, only that the lines following the first according to standard form line of every paragraph are indented. 4. Salutation. Write the salutation flush with the left margin two spaces below the inside address. 5. Essential Parts of the Letter If an attention line issued, type the salutation A. Heading: May be of two kinds: two lines below the attention line.  5. Body. Begin the body two lines below the executive-size letterhead. The inside address, salutation. Either indent the first line of each which is written in block form and often has paragraph five spaces or start it at the left open punctuation, goes below the signature. margin. There should be double-space between the paragraphs. 5. Simplified Style. The simplified style, like the 6. Complimentary Close. Put the complimentary full-block style, has all parts flush against the close two lines below the end of the body, left margin. However, the salutation and starting five spaces to the right of the center. complimentary close are omitted. Open Capitalize the first word and put comma after punctuation is common in this modern format. the last. Note that the complimentary close varies with the tone of the letter, as well as the Different Types of Business Letter degree of its formality. 7. Signature. Type your name four spaces directly Sales and Promotional Letters below the complimentary close. 8. Written Signature. Sign your name in the space Types of Sales and Promotional Letters between the complimentary close and the typed 1. Reminder That a Sale is about to End –Remind a signature. customer that a sale or sales campaign is about to end. In addition to these eight requisites, certain others are 2. Announcing a Sales Campaign, Promotion, or sometimes needed. Incentive Program –This type of letter informs clients 1. Identification Line. When typing some else’s of an upcoming sales promotion, incentive program, or letter, list that person’s initials followed by you special sales packages that are available. It is followed own. by a personal call from the salesperson. 2. Enclosure. If you enclose anything with the letter, place an enclosure notation two spaces 3. Announcing a Sales Campaign to Preferred below the identification line or typed signature. Customers –Announce a sales campaign to preferred 3. Carbon Copy Notation. If anyone other than customers to give them a head start in purchasing or you and the addressee is to receive a copy of the offering them further reduced prices. letter, include a carbon copy notation. Put it on the left margin two spaces below the previous 4. Announcing a Price Increase or Price Adjustment notation. Announce a price increase and soften the blow to the 4. Second Page Heading. If a letter requires more customer. A price adjustment lowering/ reducing the than one page, use plain paper instead of price, on the other hand, is welcome news among letterhead for the second and subsequent pages. customers. Leave a one-inch margin at the top, type a second page heading, skip three spaces, then 5. Announcing New Products to a Select Group of continue the letter. Customers –Announce new products to a select group of regular customers. It may be seen as sales pitch. TYPES OF LETTER STYLE/LAYOUT 1. Full-Block Style. A letter set in the full-block Credit and Collection Letters style is distinguished by the absence of any indentions; all structural parts begin flush with Writing Credit and Collection Letters the left margin, which gives a neat, uniform The twin purposes of credit and collections appearance. This is comparatively trouble-free letters are to maintain goodwill while collecting what is construction because it requires very few owed. tabulations. It is easier, for example, to have the complimentary close and dateline aligned with Collection letters are generally characterized as firm in the paragraphs at the extreme left rather than tone, yet it should at the same time be tactful or shifted to the right. diplomatic. 2. Block Style. The block style differs from the Types of Credit and Collection Letters full-block style in that the date and reference 1. Notification –This letter is to notify the recipient lines are flush with the right margin and the along the following concerns: the amount owed, the date complimentary close begins slightly to the right or purchase, and the dateline of payment, among others. of the center page. The inside address and the paragraphs are blocked, flush with the left 2. Reminder –This letter reminds the reader that the bill margin. is overdue and the payment still has not been received. A reminder letter should be written under the assumption 3. Semiblock Style. The semiblock style is like the that some minor problems occurred, which caused the block style except that the first word of each delayed payment. In other words, the customer has every paragraph is indented five to ten spaces. intention of paying and needs only to be reminded (Bovee and Thill 1989). 4. Official Style. The official style is used by many executives for personal letters written on 3. Inquiry –This letter inquires why the bill is not being MEMORANDUM paid. At assumes that the bill is overdue. It is a good idea A memorandum is generally used to to follow this letter with a personal phone call inquiring communicate with people inside the about the payment delay. If another agreement is organizations. reached, send a copy of the new payment plan to the It is a form of inter-office communication. recipient. Continue to follow up letters with phone calls It travels within a company between and among to maintain open communication. employees. According to Angell (2007), it is used to 4. Urgent Notice – This stage according to Bovee and communicate changes in policy, notifications, Thill represents a significant escalation. Both further belief, reports, queries, among other things. emphasized that the purpose of this letter is to convey the desire (on the part of the creditor) to collect the overdue payment immediately. In sum, this letter carries a message, which communicates a sense of urgency. 5. Final Notice/Ultimatum –This letter is the final notice the customer receives. It gives the customer an ultimatum: “if you do not respond, this will happen.” This letter finally encourages the debtors as pointed out by Bovee and Thill, to reevaluate their priorities and send the payment immediately. Claim and Adjustment Letters Claim Letter A claim letter is a persuasive letter sent by a customer to a business; or Agency Purpose: To identify a problem with a product or service Claim Letter can also be referred to as a letter of complaint. What is an Adjustment Letter? It is type of letter addressed in response to a customer's claim or complaint letter, written by a representative of an organization or a group. RECOMMENDATION, REFERENCE LETTERS AND MEMORANDUM LETTER OF RECOMMENDATION Letter of recommendation about employees or friends take two forms. 1) One is the solicited recommendation requested by a business organization. 2) Unsolicited letter, which is requested by the individual to incorporate in an employment dossier. Generally, the solicited letter will reply to specific concerns of a prospective employer as outlined in a request. The unsolicited letter will be broader in nature and contain generalities about work performance, attitude, and potential. REFERENCE LETTERS These are letters written by employers who would request some pertinent document for background information about persons who are applying for job opportunities in their companies or firms. INTERNATIONAL BUSINESS AND TRADE - Political Benefits - Opens communication lines across the world International Business- all business transactions necessary for creating, shipping, and selling goods and Cost services across national borders. - Human Rights and Labor Abuses - Environmental Degradation- resources being used Domestic Transactions- selling of goods produced in faster than recovery. the same country. International Transaction- Selling goods produced in Offshore Outsourcing- the practice of hiring another country. individuals from countries where labor costs are lower. Child Labor- Regular Employment under the age of 16. Economy- The financial health of a place (Municipal, International Labor Organization- a UN specialized Provincial, Regional, National, Continental, Global) agency that seeks the promotion of social justice and Note: The health of the economy is generally defined by: human and labor rights. - Employment Rates Barriers to International Business: - Gross Domestic Product 1. Tariffs or Custom Duties- A form of tax on certain - Trade Deficits vs. Surplus types of imports. Imports- a good or service brought into a country 2. Non-Tariff Barriers- Legal and policy standards for originated from another country. the quality of imported goods. 3. Increased Cost of Importing and Exporting- ex. Export- a good or service produced by a country and Landed Cost- actual cost for an imported purchased sold to another country. item. 4. Excise Taxes- Taxes on the manufacture, sale, or Trade Deficit- Imports > Exports consumption of a particular product produced in a Trade Surplus- Exports > Imports country. 5. Currency Fluctuations- Converting the value of Benefits to Business Participating in International one currency to another. Business: 1. Access to Many Markets- different target Factors Affecting Exchange Rates: markets 2. Access to Cheaper Labor- decreased cost, - Financial Health of a country’s economy vs. other increased sales country. 3. Increased Quality or Quantity of Goods- high - Interest Rates quality resources collected from different Balance of Trade- relationship between a country’s total countries. Increased job opportunities, high imports and total exports. production rate. 4. Access to Resources that may not be Direct Exporting- A kind of exporting business that Available at Home- Natural, Human, Capital directly deals with the company that will wishes to Resources import the goods to his/her country. Global Product- A standardized item that is offered in Indirect Exporting- Goods move from the exporter to the same form in all countries which it is sold. an intermediary. Intermediary- someone who helps the exporter find a company who wants to purchase and import the Five P’s of International Business company’s goods. 1. Product- A country’s resources determine what International Trade Agreements- Legal contract goods and services it can produce. between countries who voluntarily agree to conduct 2. Price- Cost of producing goods and services varies business affairs in each other’s country based on the in different countries. terms set. 3. Proximity- Giving benefit from doing business across the border. General Agreement on Trade in Services- came into 4. Preference- Specialization in certain goods or effect in 1995. Sets guidelines for the trade of services services. such as banking across international borders. 5. Promotion- Informing people about the product Regional Trade Agreement- trade agreements across the globe (Internet/ Satellite) involving groups of countries. Benefit and Cost of International Trade: Bilateral Trade Agreements- Trade agreement between two countries or groups. Benefits - Availability of goods and services unavailable to Trading Bloc- Group of countries that share with the the country same trading interests. - Broader ranges of prices offered - Job Creation World Trade Organization- Main international Corporate Social Audit- Tool for the evaluation of organization that deals with the rules of trade between social responsibility effectiveness. nations. Steps in Corporate Social Audit: Future of International Business: 1. Define social goals Protectionism- a term describe when countries seek to 2. Analyze resources devoted to each goal protect their individual economic interest. 3. Determine degree of achievement for each goal 4. Make recommendation European Union- 27 countries in one single market. North American Free Trade Agreement- came into International Trade and Investment: effect in 1994 between Mexico, Canada and US. All products produced in the free-trade zone are tariff free. Trade- voluntary exchange of goods, services, assets, or money between one person or organization and another. Cultural Differences- the sum of a country’s way of life, beliefs, customs. International Trade- trade between two residents of two countries. Global Dependency Why does International Trade Occur? Ethical and Social Responsibility: - Both parties to the transaction benefits. - Exports spark additional economic activity Ethical Behavior- refers to behavior that conforms to - Improve competitiveness. generally accepted social norms. Code of Ethics- written statements of values and ethical Classical Country-Based Trade Theories: standards that guide the firms’ action. Early Country-Based Theory: - Focused on the individual country Areas of Social Responsibility: - Useful for describing trade in commodities - Organizational Stakeholders - Price is an important component of the customer’s - Natural Environment purchase decision. - General Social Welfare Modern Firm-Based Theories: - Focus on the firm’s role in promoting international Approaches to Social Responsibility: trade 1. Obstructionist Stance- do as little as possible to - Useful in describing patterns of trade in address social or environmental problems. Avoid differentiated goods. responsibility. - Brand name is an important component of the 2. Defensive Stance- Do what is required legally but customer’s purchase decision. nothing more. 3. Accommodative Stance- Meet ethical and legal Mercantilism: requirements. - Gold and Silver 4. Proactive Stance- Strong support of social - Increased Exports responsibility. - Reduced Imports - Neomercantilistsor Protectionist Managing Social Responsibility: Absolute Advantage: - Planning -Adam Smith advocated free trade among countries - Decision Making because it enlarges a country’s wealth. - Consideration - Evaluation Comparative Advantage: - David Ricardo stated that it is better to buy other Implementing Social Responsibility: goods who are relatively better at producing them - Legal Compliance than you are. - Ethical Compliance - According to Heckscher-Oblin Theory, there are - Philanthropic Giving differences in relative factor endowments. Modern Firm-Based Trade Theories: Theoretical Development Informal Dimensions of Social Responsibility: - Growing importance of MNCs in the postwar - Leadership international economy - Organizational Culture - Whistle Blowing Vernon’s Product Life Cycle Theory: 1. New Product Stage 2. Maturing Product Stage  3. Standardized Product Stage - Business practices of foreign firms operating outside the country’s borders Product Life Cycle: 1. Introduction Laws Directly Affecting International Business 2. Growth Transactions: 3. Maturity 4. Decline Sanctions Embargos Linder’s Country Similarity Theory: Export Control of Dual-Use Products - Interindustry vs. Intraindustry Extraterritoriality- Borders - Differentiated goods vs. Undifferentiated goods Laws Directed Against Foreign Firms: New Trade Theory: Nationalization - Incorporated the impact of economies of scale on trade in differentiated goods Expropriation - Predicts that intraindustry trade will be Confiscation commonplace. Privatization Repatriation Competitive Advantage: Owning Intellectual Property Rights Impact of MNCs on Host Countries Investing in Research and Development - Economic Achieving Economies of Scope - Political Exploiting the Experience Curve - Cultural Porter’s Theory of National Competitive Advantage: The Technological Environment: - Factor Conditions Foundation and Determinants - Demand Conditions - Resource Base - Related and Supporting Industries - Investments in infrastructure and human capital - Firm Strategy, Structure, and Rivalry - Technology transfer Types of International Investments: - Protection of intellectual property rights 1. Foreign Portfolio Investments (FPI)- Passive The Accounting Environment: holdings of securities Differences in Accounting Practices: 2. Foreign Direct Investments (FDI)- Acquisition of Valuation and Revaluation of Assets foreign assets for the purpose of controlling them. Valuation of Inventories Dealing with the Tax Authorities Global Marketplace and Business Centers: Use of Accounting Reserves Other Differences Central America and the Caribbean Economic Development hindered by: Impact on Capital Markets: 1. Political Instability Evaluating the performance of firms incorporated in 2. Chronic US military intervention different countries 3. Inadequate Educational Systems Assessing the riskness of potential loans 4. Weak Middle Class 5. Poverty The Political Environment 6. Import Limitations Political Risk: Ownership Risk The Legal Environment: Operating Risk Differences in Legal Systems: Transfer Risk Macropolitical 1. Common Law Micropolitical 2. Civil Law 3. Religious Law 4. Bureaucratic Law Domestically Oriented Laws: Impacts: - Firm’s domestic operations - International competitiveness of domestic firms STRATEGIC MANAGEMENT Facebook Vision Statement : People use Facebook to stay connected with ANALYSIS friends and family, to discover what’s going on 1. Analysis of External and Internal Factors in the world, and to share and express what a. External Factors - things that are out of matters to them. the control. McDonald’s Vision Statement : b. Internal Factors - things that are withing Our vision is to be the world’s best quick service our control. restaurant. 2. Create Vision and Mission a. Our desire for our Organization MISSION Purpose of existence STRATEGY A mission specifies the businesses in which the 3. Strategy Formulation/Strategy Implementation firm intends to compete and the customers it a. Selecting the possible ways to create intends to serve. action to achieve our vision and mission A firm’s mission is more concrete than its vision 4. Identify the best way to implement the best Together, the vision and mission provide the strategy. foundation that the firm needs to choose and implement one or more strategies. PERFORMANCE Mission should answer the question: What is our 5. Performance and Execution of the Strategy Business? 6. Feedback It is an enduring statement of purpose that distinguishes one organization from other Strategic Management Process similar enterprises. The full set of commitments, decisions, and Contributing factor in making your vision actions required for a firm to achieve strategic Reason for Existence competitiveness and earn above-average returns Business ethics are a vital part of the firm’s discussions to decide what it wants to become (its Strategy vision) as well as who it intends to serve and how it is an integrated and coordinated set of desires to serve those individuals and groups (its commitments and actions designed to exploit core mission).. competencies and gain a competitive advantage. MISSION STATEMENT Vision & Mission Is a declaration of an organization’s “reason of The key purpose of vision and mission statements is to being”. inform stakeholders of what the firm is, what it seeks to A clear mission statement is essential for accomplish, and who its seeks to serve. effectively establishing objectives and formulation strategies. VISION Sometimes called CREED STATEMENT, a is a picture of what the firm wants to be and, in statement of purpose, a statement of philosophy, broad terms, what it wants to ultimately achieve. a statement of beliefs, a statement of business a vision statement points the firm in the principle, or a statement of “defining our direction of where it would like to be in the business” years to come. It reveals what an organization wants to be and Vision Statement should answer the question: whom it wants to serve What do we want to become? A business mission is the foundation for A clear vision provides the foundation for priorities, strategies, plans and work assignment. developing a comprehensive mission statement. Establishing objectives and implementing Vision statement must be formulated first and strategies should not be rushed. Vision and foremost. statements should be established first. Example: Consideration in creating a Vision Statement Facebook Mission Statement : It should be short "Facebook's mission is to give people the power Preferably one sentence to share and make the world more open and It’s a must that as many manager as possible connected. People use Facebook to stay should have an input in developing the connected with friends and family, to discover statement. what's going on in the world, and to share and express what matters to them". VISION STATEMENT McDonald’s Mission Statement : It is also important to recognize that vision " Be the best employer for our people in each statements reflect a firm’s values and aspirations community around the world and deliver and are intended to capture the heart and mind of operational excellence to our customers in each each employee and, hopefully, many of its other of our restaurants. stakeholders. Example: What are OBJECTIVES? Related dapat sa mission Are the specific measurable results of the Kung ang objective ay maggaral, dapat mag aral initiative. ka Answers the questions, How much of what will be accomplished by when. Timed Ex. one of several objectives for the community Your organization has developed a timeline (a initiative to promote care and caring for older portion of which is made clear in the objectives) adults might be. “By 2024 (by when), to by which they will be achieved. increase by 20% (how much) those elders reporting that they are in daily contact with Challenging someone who cares about them (of what). They stretch the group to set its aims on significant improvements that are important to 3 basic types of objectives members of the community. Process Objective These are the objectives that provide the Strategy Formulation groupwork or implementation necessary to Strategic Management: the process of achieve your other objectives. determining an organization’s basic mission and For example, the group might adopt a long-term objectives, then implementing a plan of action comprehensive plan for improving for pursuing the mission and attaining objectives neighborhood housing. In this cas adoption of the plan itself is the objective. Strategy a comprehensive plan guiding resource Behavioral Objectives allocation to achieve long-term organization goals. These objectives look at changing the behaviors of people (what they are doing and saying) and Strategic Intent the products (or results) of their behaviors. focuses organizational energies on achieving a For example, a neighborhood improvement compelling goal. group might develop an objective for having an increased amount of home repair taking place Competitive Advantage (the behavior) and fewer houses with broken or operating in successful ways that are difficult to boarded-up windows (result) duplicate Community-level Outcome Objective Corporate Strategy These are often the product or the result of Sets long-term direction for the total enterprise behavior change in many people. They are focused on change at the community level Business Strategy instead of and individual level. Identifies how a strategic business unit or For example, the same neighborhood group division will compete in its product or service might have an objective of increasing the domain percentage of people living the community with adequate housing as community-level outcome Functional Strategy objective. Guides activities within one specific area of operations Objectives should be S.M.A.R.T. + C Specific Growth Strategy That is they tell how much (e.g 10%) of what is Expansion through current operations to be achieved (e.g., what behavior of whom or what outcome) by when (e.g, by 2025) Concentration Anong school, kelan, anong course Expansion within an existing business area Measurable Diversification Information concerning the objective can be Expansion occurs by entering new business collected, detected, or obtained areas If it is not measurable, it cannot be controlled Vertical Integration Achievable Expansion by acquiring existing suppliers or It is feasible to pull them off. distributors Dapat kaya mo magawa at possible Restructuring and Retrenchment Strategies Relevant/Realistic Relevant to the mission. Your organization has a Retrenchment clear understanding of how these objectives fit Changes operations to correct weaknesses in with the overall vision and mission of the Liquidation group.  An extreme form of retrenchment wherein the a. The External environment has three business closes and sells off its assets major parts: 1. The general environment (segments Restructuring and elements in the broader society that Reduces the scale or mix of operations affect industries and the firms competing in them) Downsizing 2. The industry environment (factors Decreases the size of operations that influence a firm, its competitive actions and responses, and the industry’s Divestiture profitability potential) Sells off part of the organization to focus on core 3. The competitor environment (in businesses which the firm analyzes each major competitor’s future objectives, current Steps to strategic management strategies, assumptions, and Environmental analysis capabilities). Establish organizational direction 3. INTERNAL ENVIRONMENT Strategy formulation a. The Internal environment in strategic Strategy implementation management refers to the conditions and Strategic control resources within the organization. b. Members of the firm itself, investors in SWOT Matrix the firm, and the assets a firm has are all part of the internal environment. STRENGTHS WEAKNESS 4. Business-Level Strategy INTERNAL EXTERNAL - Positive attributes - Internal factors a. Business-level strategy is an integrated internal to the within an organization /team/ organization and coordinated set of commitments and project that are within /team/project’s actions the firm uses to gain a its control. control that may reduce its competitive advantage by exploiting ability to meet objectives core competencies in specific product markets. OPPORTUNITIES S-O W-O - External factors that b. (1) Customers: Their Relationship with - Use strengths to - Overcome the take advantage of Business-Level Strategies organization /team or weaknesses by project opportunities taking advantage of c. (2) The Purpose of a Business-Level should (or could) opportunities Strategy develop. d. (3) Types of Business-Level Strategies THREAT e. S-T W-T - External factors - Use strengths to - Minimize (a) Cost leadership Strategy: is an beyond the organization /team’s avoid threats weaknesses and integrated set of actions taken to control avoid threats produce goods or services with features that could place the project or that are acceptable to customers at the organization at risk. lowest cost, relative to that of competitors. The 7 simple rules for successful SWOT analysis (b) Differentiation Strategy: is an 1. Be Specific: Avoid vague descriptions or fuzzy integrated set of actions taken to definitions. produce goods or services (at an 2. Be Objective: Ask for input from well-informed acceptable cost) that customers perceive and objective sources as being different in ways that are 3. Be Realistic: Be realistic about strengths and important to them. weaknesses, be practical in judging sections. (c) Focus Strategies: The focus strategy 4. Apply Context: Distinguish between where the is an integrated set of actions taken to organization or project actually is today, and produce goods or services that serve the where it could be in the future. needs of a particular competitive 5. Contrast and Compare: Relate strengths and segment weaknesses to critical success factors. (d) Integrated Cost 6. Short and Simple: Avoid needless complexity Leadership/Differentiation Strategy: and over-analysis. Keep it brief ― never more involves engaging in primary than a page value-chain activities and support 7. Update plans and goals: Once the key issues functions that allow a firm to are identified, define the action steps to achieve simultaneously pursue low cost and change differentiation 5. Competitive Rivalry and Competitive Dynamics THE STRATEGIC MANAGEMENT PROCESS a. Competitors are firms operating in the 1. Vision & Mission same market, offering similar products, 2. THE EXTERNAL ENVIRONMENT and targeting similar customers.  b. Competitive rivalry is the ongoing set strategy often is called a collaborative or of competitive actions and competitive relational advantage. responses that occur among firms as they maneuver for an advantageous 10. Corporate Governance market position. a. Corporate governance is the set of c. Competitive behavior is the set of mechanisms used to manage the competitive actions and responses a firm relationships among stakeholders and to takes to build or defend its competitive determine and control the strategic advantages and to improve its market direction and performance of position. organizations d. Multimarket competition occurs when b. Corporate governance is concerned with firms compete against each other in identifying ways to ensure that decisions several product or geographic markets. (especially strategic decisions) are made e. Competitive dynamics refer to all effectively and that they facilitate a competitive behaviors—that is, the total firm’s efforts to achieve strategic set of actions and responses taken by all competitiveness. Governance can also firms competing within a market. be thought of as a means to establish 6. Corporate-Level Strategy and maintain harmony between parties a. A Corporate-Level Strategy specifies (the firm’s owners and its top-level actions a firm takes to gain a managers) competitive advantage by selecting and 11. Organizational Structure and Controls managing a group of different a. Organizational structure specifies the businesses competing in different firm’s formal reporting relationships, product markets. procedures, controls, and authority and b. The related diversification decision-making processes. A firm’s corporate-level strategy helps the firm structure determines and specifies the create value by sharing activities or decisions that are to be made and the transferring competencies between work that is to be completed by different businesses in the company’s everyone within an organization as a portfolio. result of those decisions. 7. Merger and Acquisition of Strategies b. Organizational controls are an important a. A Merger is a strategy through which aspect of structure. Organizational two firms agree to integrate their controls guide the use of strategy, operations on a relatively coequal basis. indicate how to compare actual results b. An Acquisition is a strategy through with expected results, and suggest which one firm buys a controlling, or corrective actions to take when the 100 percent, interest in another firm difference is unacceptable with the intent of making the acquired 12. Strategic Leadership firm a subsidiary business within its a. Strategic leadership is the ability to portfolio. After the acquisition is anticipate, envision, maintain flexibility, completed, the management of the and empower others to create strategic acquired firm reports to the management change as necessary. of the acquiring firm. b. Strategic change is change brought 8. International Strategy about as a result of selecting and a. An international strategy is a strategy implementing a firm’s strategies. through which the firm sells its goods or 13. Strategic Entrepreneurship services outside its domestic market. In a. Strategic Entrepreneurship involves some instances, firms using an taking entrepreneurial actions using a international strategy become quite strategic perspective. In this process, the diversified geographically as they firm tries to find opportunities in its compete in numerous countries or external environment that it can exploit regions outside their domestic market through innovations. 9. Cooperative Strategy a. Cooperative strategy is a means by which firms collaborate to achieve a shared objective. Cooperating with others is a strategy firms use to create value for a customer that it likely could not create by itself. b. Firms also try to create competitive advantages when using a cooperative strategy. A competitive advantage developed through a cooperative  are known as vicious cycles—depending on the SYSTEMS THINKING impact of the change. In causal loop diagrams, reinforcing loops are labeled with an “R.” What is a system? consists of a group of interacting, interrelated, or A causal loop is a reinforcing causal loop if the interdependent components that form a complex relationship is even number or zero ex. RE0 and unified whole. (Reinforcing, Even, Zero) A system’s components can be best exemplified as physical objects that a human person can A causal loop is a reinforcing causal loop if the actually touch, like parts that make up a vehicle. relationship is odd number or one ex. BO1 (Balancing, The components of a system may also be Odd, One) regarded as intangible. How to Draw Causal Loop Diagram (CLD) Characteristics of Systems 1. Formulate the core problem. 1. The parts of a system must all be available for 2. Tell the story of the problem behavior the system to fulfill its purpose effectively. 3. Select the key variables you want to work with 2. A system’s parts must be organized in a precise 4. Assign a name for the variables specifically. manner for the system to accomplish its purpose Remember to: 3. Systems definitely have a purpose within larger a. Use nouns or noun phrases systems. b. Make sure that your variable name fits 4. Systems provide for their stability through into phrases like “level” or “size of” fluctuations and adjustments. c. Use neutral or positive terms whenever 5. Systems ought to have feedback. possible d. Take account of intangible variables, General Component of a Causal Loop Diagram such as morale, where applicable, as (CLDs) well as tangible variables One or more feedback loops (reinforcing or 5. Graph the variables’ behavior overtime balancing processes) (BOTG) Cause-and-effect relationships between the 6. Hypothesize about how the variable might be variables interconnected or correlated. Delays Topic/issue CLDs Definition Something you want to understand better. In our A CLD is comprised of 2 or more variables that case our topic is Global warming are connected by links, which generally take the form of an arrow. Additionally, a closed circle of Polarity variables and links constitutes a feedback loop, Is described the term “the more or the less”. as illustrated in the two loops in Figure 1.1, “Links and Variables. Rule of causality Node one cause node two or changes in node Feedback loops result changes in node two. Are closed circuits of interconnection between variables, and as sequences of mutual cause and Relationship/links effect. The links between each variable illustrate May be a positive or negative. Like/same how the variables are interconnected, and the polarity result to a positive relationship, unlike signs (s or o)/positive or Negative (+ or -)show polarity result negative relationship. how the variables impact one another In addition, every feedback loop depicts either a Delay (//) reinforcing process or a balancing process. Reinforcing and Balancing kinds of loops are the building blocks of any dynamic system structure, and they combine in an interminable variety of ways to produce the complex systems at work within and around us. Reinforcing Loops Reinforcing loops can be viewed as the engines of growth and collapse. They form a combination of change in one direction with even more change in that direction. Several reinforcing loops possess a quality of accelerating movement in a precise direction, a sense that more than one variable changes, the more another changes. As a result, these loops PERSONAL FINANCE 3. Fine Tuning/ Asset Allocation- 30-60% of income is from savings or investments. What is Personal Finance? 4. Retirement Stage- when income from savings and investments are the only income to support. A financial management which an individual or a family performs to budget, save and spend monetary resources over time taking into account of various “Growing your money is as important as managing it.” financial risk and future life events. Keys to Financial Success: Components of Finance: 1. Know your financial needs 1. Income 2. Know how to meet those needs 2. Taxes 3. Know how to manage your earnings and expenses. 3. Insurance 4. Debt 5. Expenses 6. Wages Four accounts and when to use them: 7. Retirement 1. Checking Accounts- use of unrestricted spending, 8. Investment doesn’t have interest, have maintaining balance. 2. Savings Account 3. Money Market Account Steps to Manage your Money: 4. Certificate of Deposits 1. Create a budget. 2. Understand your expenses. 3. Consolidate your debt. Advantages and Disadvantages of Joint Account: 4. Create emergency fund. Advantages 5. Save 10-15% for retirement. 1. Convenience 6. Review your credit report. 2. Easy to keep track of bills 3. Teamwork Disadvantages Common Financial Problems: 1. Potential for fights about money 2. Highlights different spending styles 1. Not planning. 3. No privacy 2. Overspending 4. Difficulty to separate 3. Buying with consumer credit. 4. Falling prey to financial sales. 5. Making decisions based on emotions. 6. Not doing your Five ways to boost your income: 7. Exposing yourself to risk 1. Get a second job. 8. Focusing too much on money. 2. Freelance 3. Drive around town 4. Join a direct company 5 Steps for creating a budget: 5. Rent out your home 1. Start with your goals 2. Know your income 3. Total your monthly expenses Uses for your tax refund: 4. Create a realistic budget 1. Put in toward your retirement 5. Revisit your goals and expense. 2. Pay off your credit and debt 3. Add it to your emergency fund 4. Save for big ticket purchases- ex. Car Note: 5. Buy stocks 6. Invest for yourself- ex. Improve your career Anticipate your needs Plan for your resources Understand how you can adjust to your needs to the reality of your resources When to reevaluate your budget: 1. Getting a raise 2. Buying a house- adjust mortgage budget Financial Life Stages: 3. Getting married and living together 4. Having a baby 1. Start-up stage- The source of income is from the 5. Recover from a financial emergency salary. 6. Move in to a new city 2. Build-up Stage- Income from savings and 7. Pay off debt investments comes to interest (20% of savings) 8. Lose a job 6. Decide how long to freeze your spending -‘ Dos and Donts in Better Spending Habits: Hidden Cost and how to avoid them: DONTs BLOATED DATA PLAN 1. Buy brand name products 1. Review your data usage 2. Use an out of network ATM 2. Don’t pay for your data that you really need every 3. Buy lottery tickets month, it’s cheaper to upgrade data plan than to 4. Buying too many appliances keep paying high average fees. 5. Impulse shopping MONTHLY PHONE PAYMENTS 6. Run a cab EARLY UPGRADES DOs 1. Buy generic 2. Use an ordinary ATM Types of Spending: 3. Buy stocks instead of gambling 4. Avoid temptation for low price 1. Spending less on your grocery bills: 5. Start shopping ✔ Cook from scratch 6. Pay as you go and know exactly what your ✔ Think about your food choices spending ✔ Get coupons and discounts ✔ Check up for deals ✔ Buy sale items in quantity ✔ Join a wholesale club When to Pay with Cash: ✔ Grow a garden even a small one 1. Bills with charge fees 2. Paying of debt 3. Pay with cash with small everyday purchase Financial Independence- planning, saving, and building wealth using what you have right now. When to Use your Credit Card: Types of Income: 1. Price protection 2. Extended warranty for electronics Active Income- income that comes directly as a result of 3. Hotel stays and extended rental car hardwork, skill, talent, and time. 4. International travel 5. Large purchases Two Types of Active Income: 1. Primary Income- main source of income. It could be salary, allowances, etc. Easy Ways to Spend Less at Home: Note: Only the primary income should be used to fund 1. Turn the thermostat down your living expenses 2. Get your books and movies at the library 3. Invest in a water filter 2. Additional Income- Income from sidelines or 4. Make your own cleaning products pay. It will be used to fund your savings and 5. Cut your cable services investment to generate future income for you. 6. Switch to LED lights Passive Income- the income that is generated by your 7. Avoid extended warranty earning assets and investment. 8. Shop online saves auctions and resales 9. Buy produce products Three steps to shop for the perfect credit card: 1. Identify your needs Insurances you need: Interest rate 1. Car insurance Credit limit 2. Life insurance Penalties 3. Health insurance 2