How Much of that Business is Yours, Anyway?

Even if your business is as huge as an international corporation or as small as the lemonade you and your kids put up in front of your home every summer- the whole thing operates under one mechanism: a producer produces and a consumer consumes that which was produced.

The customers apparently take the role of the consumers. You, being the business owner are obviously a producer. But does that side contain just you? Well, you may own the place but your business is not all YOU… another integral part of this exchange between you and your customers are the people who work for you. The middlemen who literally work on your business.

The role that your employees play in the success of your enterprise is just as important as the role that you yourself play. You need a reliable work force to carry out your decisions, you need a group of people to support you and to do the leg work that you cannot personally perform.

This means that if you wish to be a successful a business owner, you have to be responsible in create a healthy working atmosphere for your people. You have to set the bar on the level of service that you expect from them. Treat them fairly and always invite respect. You also need to keep them satisfied and always be reminded of their value.

Import or Export?

The corporate world has been expanding for the past millennium. During the earlier days, people only did business with their neighbors, then their neighboring town, the neighboring island, then the neighboring country, and now, any country is intertwined with the economic stability of any other country in the world. This expansion was made possible by trade.

Nowadays, a company, no matter what the size may be, is affected by the growth of the corporate world. Knowing this, a business should always try to grow and be competitive in order that it may cope with the rate of growth of the economy. In order to do this, a company should try its hand on trading with other firms outside the country.

In trading, choosing whether to import or export a good depends entirely on the world price, the domestic price and the comparative advantage of a country (home country of the company). The world price is the price of the product that prevails in the world market. The domestic price is the price by which a certain good is sold in the country. On the other hand the comparative advantage of a country is measured by the ability to produce a product at a lower opportunity cost than another country.

If the home country of a company has a domestic price lower than the world market, the company has a comparative advantage in producing the good (compared with other producers in other countries), and the company should export their product for a higher profit. On the other hand, if the domestic price is higher than the world price, other producers in other countries has the comparative advantage and the company should not bother to export its product. Trade has always been a good way by which a company augments its profit; however, this should be done with pre-analyses in order to be successful in trading.

Pricing It Right

It has always been a difficult task for a business to price their goods and services. In pricing a company’s products, there are many things to be considered; however, the most important thing to take into account is the cost of the resources the company allocated for the production of the good and services it manufactures. Nonetheless, though the cost is the major determinant of the price of a product, the aim of the company (just like any other company) should be noted: to earn profit.

The profit the company makes is the amount of the difference of the total revenue and the total cost. Saying this, it could be said that a company should price a product equal to or more than the cost of its production; this reflects the company’s willingness to sell. However, the company’s willingness to sell is not the only thing to be considered in pricing; the consumer’s side, being the counter part of the producers, should also be distinguished. While the company has its willingness to sell, the consumers, in turn, has its willingness to buy. This aspect is the maximum amount the consumers are willing to spend on a product.

Only by intertwining these elements can a company price their good justly. The price should not exceed the consumer’s willingness to buy, and should not be lower than the company’s willingness to sell; doing this the company prices its goods fairly.

Why Businesses Outsource

For a business to operate, it would require different functions such as human resource, manufacturing, marketing, sales, etc. But with the advent of globalization, more and more companies aspire to be competitive by reducing their expenses to gain more profits. And to reduce expenses, companies now resort to outsourcing these functions.

During the earlier times, companies have all these functions available in house. This means that they have their own set of employees dedicated to human resource functions and etc. But recent times showed that majority of companies are now outsourcing as many as possible of these functions. They only leave what is core to their operations and outsource all auxiliary functions.

Majority of American companies do outsourcing now. And according to recent surveys, human resource, accounting and customer relations management are the frequently outsourced functions. Some even resort to offshore outsourcing to countries with lower labor costs which translates to more savings on the part of the company. Furthermore, with outsourcing companies do not have to maintain a large workforce. They can just simply pay the outsourcing fee and impose to the outsourcing partner the expected level of quality from the outsourced function. By doing this, the company can dedicate more time and resource to its core functions to compete better.

The Great Sale of Real Estate Properties

The evidences of the financial crisis effects span from all over the world and to all businesses and industries. Its catastrophe is well described by the bankruptcy of many companies, aborted investment plans, massive job layoffs resulting to a high unemployment rate and more. The workforce sector suffers from layoffs while the elite ones endure the pain of investment losses and decreasing profits. Another evident pain to the elite sector is selling off their large assets called real estates. But this loss on their part could be a gain to others.

The financial crisis damage started with the bankruptcy of companies and layoff of workers. But as its effect spreads wider, selling of real estate properties has become more and more rampant. Recent times reported some rich people selling off their large real estate properties and resorting to simpler ways of living. And because these real estates are sold during a difficult market condition, its prices are expected to be lower than their real market value. It is a loss on the seller’s part but a gain to the buyer’s. Now the question lies on who is capable of taking this gain.

Not all businesses are damaged by the financial crisis and some of these businesses are those in the mining and information technology industries. Owners of these businesses have the capability to buy on this great sale of real estate properties as they do not experience severe losses from the crisis. Or people who have lumps of money saved can buy one of these and wait till the market recovers and their real market value is back before selling them off.