World Business News

Wednesday, 15 December 2010

Unit 3: Two Reasons India Will Overtake China By 2025

Interesting article HERE making big predictions about two of the BRIC economies, India and China. One of the major issues China faces (along with much of the developed world) is a declining birth-rate and an aging society and the strain this situation will put on the economy in terms of productivity and government finances. On the other hand, India has a young and vibrant workforce “giving India a very important advantage over China as it has a much healthier dependency ratio.” See graphic below.





Furthermore, the “IT services industry in India is thriving on their cheap labour costs, educated and English-speaking workforce, and their entrepreneurial bosses.”

It seems companies from developed countries are tapping into this resource and according to THIS REPORT, India was “ranked third place in global foreign direct investments in 2009 and will continue to remain among the top five attractive destinations for international investors during 2010-11.” With this in mind, perhaps such a bold prediction is not so far from the truth!

Monday, 6 December 2010

Unit 3: Starbucks, extending product life cycle & China

Howard Schultz talks in the video below about how Starbucks has performed strongly during 2010 and about his objectives for Starbucks’ growth in China.


You may remember the launch of Starbucks 'Via' - the brand’s first entry into the instant coffee market. 'Via' has proved a great success, conributing to 15% revenue growth for the firm in the USA and even stronger growth (21%) overseas.

Starbucks is aiming to triple the number of stores in China within the next 5 years - an incredible growth rate, if it can achieve this objective. Schultz admits that growing the brand in China will not be easy (the business has already been trading there for 12 years). Still, it looks like a tremendous opportunity

Here is the video interview:

Sunday, 5 December 2010

Unit 3: EU, China & Import Tariffs

The EU imposes tariffs on imports from China, Vietnam and Cuba, because it considers that they are not market economies. The World Trade Organisation allows importers to place extra duties on goods which are being ‘dumped’ on the world market - that is, being sold at a price which is below the price in the country of origin. These two issues came together at the beginning of 2009, when the EU decided to impose anti-dumping duties of up to 87 percent for the next five years on screws, nuts and bolts imported from China - but in mid-2009 China claimed to the WTO that the threshold price had been wrongly calculated, and that the tariff breaks international trade rules.

Over a year later, the WTO has finally reached a decision in China’s favour, saying that the tariffs must be removed - marking a victory for China in its first WTO dispute against the European Union. In a trade dispute between the two, China has imposed its own tariffs on imports from the EU. This story, reported by the BBC and China Daily amongst others, gives evidence for the economic theory that import tariffs tend to lead to retaliation and there is a net reduction in trade - and also for the practical economics which shows that, however sensible the theory may sound, in practice countries often make decisions which suit their own domestic purposes.

Sunday, 28 November 2010

Unit 3: June 2010 Mark Scheme

Unit 3: Jan 2010 Question Paper

Unit 3: Globalisation and Indian and Coffee Houses

India is one of the emerging markets which is being targeted by the multinational coffee chains. But the likes of Starbucks will face intense competition from state-subsidised coffee houses, as this excellent video below demonstrates. Some cracking business studies concepts in there.


From the BBC intro:

The Indian Coffee House in Kolkata has been an institution for more than 50 years. It has been a place where politicians, activists and intellectuals have come to converse over a cup of coffee. But as the number of modern western cafes increases, it is feeling the squeeze of competition.

Wednesday, 24 November 2010

Unit 3: The best countries to set up a business!

This link in the Wall Street Journal provides a “fascinating snapshot of entrepreneurship around the globe” and will be a great resource when studying the supply-side of an economy and looking at ways a government can improve the environment businesses operate in.

The report, compiled by the Small Business Administration, compares all sorts of data from red tape costs (in Surinam it takes on average 694 days to clear government red tape and get a company off the ground) to what countries have the biggest percentage of female entrepreneurs (Peru with 26.1% of women who own a small early-stage business).

Sunday, 21 November 2010

Unit 3: Starbucks expands in China

A big week of announcements for Starbucks as it continues to emerge from the global economic downturn. It has announced plans to accelerate its store opening programme, with 400 new stores outside the USA alone. And it has also decided, for the first time, to start growing its own coffee beans, as a way of supporting its ambitious growth plans in China.
The video below describes the Chinese expansion strategy well. Here is the link to an article in the Independent which explains the background to the move back to international expansion.

Also click on you tube link to see short piece on how starbucks are not just selling coffee in China, but are now growing it as well. An excellent example of Vertical integration and 'Glocalisation'!
 
http://www.youtube.com/watch?v=BYSiGomkGdg
 

Friday, 19 November 2010

Unit 3: Past Paper Homework

Better late than never, you need to complete ALL the questions (we have done some of them already, so don't panic!!) during this first week back.

Therefore, the work is in for Thursday close of play. Do not leave it until last minute as there are many questions to complete!


Sunday, 14 November 2010

Unit 3: China Vs USA Currency Rap!

A slightly different take on the China Vs USA currency war. There is lots of theory in the rap, so keep with it!

Saturday, 13 November 2010

Unit 3: Business Strategy, M & S in the UK, India & China

You can go straight to the story and video clip by clicking here, but here’s a summary:
Up to £900m is to be invested over the next three years in new and existing stores to try to boost profits. Some clothing brands are to dropped or brought back under the main M&S label.

In food, the aim is to become a “specialist high-quality retailer”. Key changes will include cutting the range of non-M&S branded foodstuffs - only recently introduced to the stores - from 400 lines to 100. These would mainly consist of products which the company itself could not replicate - such as Marmite. They will also be adding another 100 “distinctive international brands” which will be exclusive to M&S.

Longer term, the company plans to add to its 337 stores overseas in order to reduce its dependency on the UK economic cycle. The hope is that if the UK economy is in difficulties, profits could be supported from growth elsewhere.

The new boss told the BBC: “For the mid-term we believe we should be more international. We want to put more stores down in places like India, where we already are, but could be stronger.” He also said the company was thinking of opening more stores in China.

The company has a growing 11.2% market share of the UK clothing market and it reported half-year pre-tax profits of £348.8m, up from £306.7m last year.

Sunday, 7 November 2010

Unit 3: Definitions Revision

You should aim to understand the following key terms by the end of the Eid break. Please fill in ALL the boxes.


Saturday, 6 November 2010

Unit 3: Widening wealth gap in China

Great podcast on inequalities of wealth being generated in China.

China’s booming economy delivered 49 new billionaires last year alone as the country became the world’s second largest economy - where the gap between rich and poor is bigger than any other sizeable country in the world.

The report opens on the floor of the stock exchange, which is not what you would expect – the trading room is open to anyone who wants to play the game of gambling on the stock market, with nurses dropping in for an hour in their lunch break, and pensioners taking their knitting with them as they sit watching the screens showing movements in the prices.

This is a fascinating 10-minute report which covers everything from the risk of high inflation to unequal access to cutting edge medical facilities. It includes the dilemma for the government as they trade off the desire of workers to earn more and be able to afford the type of goods that they are making for export to richer economies against the growth of the economy, with low wages as the basis of their competitiveness, and the risk of currency and trade wars as the west seeks to protect its industries from cheap Chinese imports.

Thursday, 4 November 2010

Business Exam: Command Words

Command words


With the January exams approaching you need to thinking about getting used to some of the command words you will encounter in the exams and the assessment criteria being assessed.

In general,


* for knowledge expect: describe, identify, what, name, state


* for application expect: how would X, how might X, describe how X (where X relates to the context)


* for analysis expect: explain, comment on, why might X (analysis is essentially about consequences or causes of business behaviour)
* for evaluation expect: assess, evaluate, examine, 'to what extent' and 'recommend'

Wednesday, 3 November 2010

Unit 3: A great interactive piece on the BRIC's.

This would look great on the IWB as a stimulus piece for interaction and discussion.

Click on Link for a terrific interactive guide to the economic profiles of the BRICs here (Brazil, Russia, India & China).. Compare the progress of the Bric states’ gross domestic product over time alongside the major global economies and the “next 11” developing nations in the graphic provided.

Unit 3: Outsourcing to India

An interesting and topical example of outsourcing here, which should get teachers and students into a lively discussion during lessons on operations…


Click here for full article.

Outsourcing as a strategy has been around for a long time, but it is not associated with the UK education system as closely as it is with, say, financial services and other customer-service operations.

This primary school is outsourcing the teaching / tutoring of maths support to a team of tutors in India. Sounds like the service costs around £3-4k for the support provided, which is a good deal less costly than having a specialist maths tutor physically in the classroom.

Is it a good idea?
Might we see more of this as schools find their budgets tightening further?
How does the school ensure that students are getting the right quality of tutoring?

Students often get confused with the difference between outsourcing and offshoring. The use of India-based tutors above is an example of both.

Outsourcing involves the use of a third party (supplier) to provide services rather than have people employed within the business/organisation to do them. So outsourcing can occur both in the UK (domestically) and overseas.

Offshoring involves the provision of services from a differerent country. That might be by a firm’s own employees, or by a supplier/contractor.

Monday, 1 November 2010

Unit 3: Global branding in emerging markets - Ikea tolerates window shoppers

Click on this link to show how the Swedish retailer is relaxed about the store visitors tendency to only window shop and even cheap imitation.

What are the reasons for this relaxed attitude?

Will it pay off in long run?

Unit 3: The Marketing Mix Challenge in reaching the Muslim Market

Click on this fantastic 3 minute video  which examines how businesses adapt their marketing mix to targeting the emerging global market for Muslim consumers. An ideal lesson starter video.

Companies wanting to sell to a mass market have traditionally looked at the potential of the huge populations of India and China.


But now businesses are turning their attention to a new audience: the global Islamic community.

With nearly a quarter of the world's population being Muslim, it is a big draw.

Why is marketing to Muslims any different to selling to other communities, and what is the key to success in cracking the market?

Unit 3: Is China that important???

Here is another graphic from The Economist which shows the value of exports of individual economies to China.

% of exports to China – 2009

Australia – 21.8%

Japan – 18.9%

Brazil – 12.5%

South Africa – 10.3%

Thus exports to China are only 3.4% of GDP in Australia, 2.2% in Japan, 2% in South Africa and 1.2% in Brazil (see below). Export earnings can, of course, have a ripple effect throughout an economy but the multiplier effect is rarely higher than 1.5 or 2 – this means that they hardly ever double the contribution to GDP.

Recently, the Bank Credit Analyst, an independent research firm, asked what would happen if China suffered a “hard landing”. Its answer to this “apocalyptic” question was quite “benign”. As it pointed out, Japan at the start of the 1990s accounted for a bigger share of GDP than China does today. Its growth slowed from about 5% to 1% in the first half of the 1990s without any discernible effect on global trends.

Sunday, 31 October 2010

Unit 3: Great article on tips on expanding overseas....

PA Consulting’s head of emerging markets Dean White has contributed a recent article to The Times Business Section on how to expand into emerging markets. The article gives a ten point guide on how to overcome the risks that come with trying to expand overseas…


Lots of practical advice in the brief article - very relevant for students preparing for BUS 3 (Jan 2011).

Click on this link!

The ten tips in summary are:
- Research

- Have an exit plan

- Choose the right place

- Everything will be different

- Take a test run

- Don’t think like a colonialist

- Know the rules

- Relationships are critical

- Learn from others’ mistakes

- Employ the right people

Unit 3: 'Yum' and Chindia!!!!

An excellent feature article in the Independent this week provides a rich source of information to help explain the international business strategy of a US-based fast food multinational.

You may not have heard of Yum! But you will almost certainly have come across its key fast food brands, including KFC, Taco Bell and Pizza Hut.

This article describes how a rapid and significant expansion into emerging markets such as China, Russia and India has enabled Yum! to overtake McDonalds to become the world’s largest restaurant chain (as measured by number of outlets).
Lots of great business studies material in the article, including:
- Yum! invested in China earlier than competitors (first-mover advantage?)
- The rise of the middle-class consumer in emerging markets is driving demand for the products and services of global brands
- Product - traditional KFC & Pizza Hut menus have been adapted to suit local tastes
- Yum! increasingly looking to franchising for profitable expansion rather than operating owned-outlets

A2: Business Strategies

I like this two-minute video which highlights the competitive challenges facing Microsoft as the consumers and businesses increasingly opt for non-PC computing products and services. A good lesson introduction for students who want to research the impact of changing technology on established markets.


Wednesday, 27 October 2010

Sundays Lesson in Buso

Remember ladies, we are looking at pros and cons of multi national companies setting up in forwign countries.
Ah, the Sony Walkman, what a piece of kit that was. But Sony have just announced that they have stopped production of these icons, after what I can only imagine has been a relatively long decline stage.


I was actually surprised that they were still being produced, but as the article says, there is still some demand in Japan (and other places) from the elderly. Thirty plus years is a pretty decent run for a product (introduced in July 1979) and lifetime sales were 220 million units although this can be compared to ipod sales with 270 million units in the past nine years. And it is worth noting that the cassette player is not completely dead, while production in Japan has stopped, there will still be some production in China for those consumers around the world that still think that music through a cassette is worth listening to, although somehow I don’t think it will ever match the nostalgia of vinyl!


It may also be worth a discussion in terms of extension strategies of a brand vs a product - the walkman brand lives on in sony’s range of mp3 players and is using Kareoke to gain a unique selling point.

Monday, 25 October 2010

Business Objectives: It's not always about money!!!!

A friend of mine has just returned from a showing of the very excellent “The Social Network” – the story of Facebook. 

He was very impressed by its founder, Mark Zuckerberg. After our discussion, I was left wondering about the business objectives facebook. The film repeatedly suggests that Zuckerberg was not motivated by money, for example describing how an early application that he developed was uploaded to Microsoft for free. In a recent interview discussing criticisms of Facebook he suggested:
“It bums me out that people immediately go to “You must be doing this to make money.” Because that’s just so different from the ethos of the company. It is so different from how we actually think about stuff, that you feel so misunderstood.”
This interview with Wired then continues to discuss how the site could provide a greater proportion of the page to advertising than it currently does.

This is an excellent example for all DBS Business Studies students, of a firm looking for increased market share rather than profit maximization.

The book version of the Facebook story is entitled “The Accidental Billionaires” but is this an accurate portrayal? Perhaps Mark Zuckerberg is more of a shrewd businessman than he lets on. Did he play the long game, recognising the importance of reputation and market share before reaping the profits?

With recent estimates of the value of Facebook at over $30 billion and profits of tens of millions it seems it is unlikely that investors are anything less than profit satisficed to date!

Friday, 22 October 2010

Lets solve the problem of football......

Being a Business teacher and a massive fan of Leeds United (my hometown clunbtw!!!), I would like to solve the problem that is football....


Football, as we all know, is losing its soul, lets face it. If we care about this, how as Economists/Business Studies students can we provide the correct incentive mechanisms to fix it?

You have heard me talk about this in class. Here are some possible ideas:

- The exorbitant salaries at the top end of the game act as a disincentive to care about performances at the national level. Too many of our pampered professionals don’t seem to care, despite professing a love for the national shirt. Let’s test their levels of motivation by asking them to pay a refundable deposit every two years, based on a % of their salaries. If they perform, they get the money back. If they don’t, the money is kept and distributed to the grass roots of the game. If they don’t want to pay this deposit, fine. Give the so-called ‘lesser’ players a chance to show what they can do.

- The American draft system is an excellent idea – bring it into the top levels of football – level the playing field (did you see what I did there?);

- Please hurry up and bring in a system whereby clubs cannot live beyond their means: institute an enforceable system whereby any breaches of a salary/revenue percentage maximum are dealt with harshly, via points deduction and enforced relegation if necessary;

- Re-brand the Champions’ League, for obvious reasons. Back in the day, it was only champions who could win it. 1967 and 1982 are excellent examples. I understand the need for revenue generation in the modern game, but call the competition something else, like the ‘Snouts in the Trough Challenge’;

- Good people of the Home Counties, Manchester United is not for you! There are only two acceptable reasons for supporting a football team: either you have a geographic connection, or a familial one. Any other reason, such as liking the team because they win things, is unacceptable. Fans that are discovered to be breaking these rules should be forced to watch only rugby for the rest of their lives as a punishment.

keep the comments clean please.......

The story of the i pod...so far!

Click here for an excellent graphic charting the growth in sales of the i pod.

Wednesday, 20 October 2010

Unit 1: Google Offices

Would you want to work here?

Why do google do this?

Would it work for every business?

Would it work at DBS?

So what are Commodities???

Great film, Trading Places with Eddie Murphy (when he was funny!)

Tuesday, 19 October 2010

Unit 3: Google, Profits & Diversification!

The story is simple. The global recession simply hasn’t dampened Google’s performance. It has announced continued growth in its core business - the display and sale of online advertising. It is generating stunning profits nearly all of which are retained and reinvested in a wide range of internal development projects and external acquisitions.
Indeed Google has made dozens of acquisitions in the last 12-18 months and it is also investing heavily in internal R&D projects with the aim of “solving the world’s problems using technology”. The savvy business student will see that Google is now much more than a search engine - it is using its massive retained profits to diversify into a wide range of seemingly unrelated industries.

Will it succeed? Wher does it go next?......

Monday, 18 October 2010

China & India Worksheet

The classwork/homework sheets you have been given can also be found below!


Unit 3: China & India slideshow

Strategic Planning: Tesco - Activity

Tesco is a success story - it was the first UK business to make £2 billion in profits when it announced the feat early in 2005. Despite this, the share price fell when its results were announced. Why?

Task

This Activity will provide you with a review of the growth of Tesco over the last 80 years. Use the information to present a report, using an appropriate format, to assess the future strategic opportunities open to the supermarket giant.

Tesco opened its first store in Edgware, North London in 1929. It gets its name from the combination of the founder of Tesco, Sir Jack Cohen and a partner in a firm of tea suppliers who Cohen worked with, T.E. Stockwell. Since that time, the company has grown and has reflected the changes in retailing. Prior to the Second World War, most grocery stores served customers but self service stores were on their way and, once introduced, allowed stores to grow bigger to become the superstores we know today.

The company floated on the stock exchange in 1947 with an initial share price of 25p. Tesco became a familiar name on the high streets of the UK and whilst it was able to take advantage of commercial economies of scale through bulk purchase of supplies, the existence of resale price maintenance restricted the ability of Tesco to be as competitive as trading conditions now allow. The system allowed suppliers to insist that retailers sold their products for a set price. Tesco used other strategies to build customer loyalty including the use of stamps that could be exchanged for cash or goods.

The Tesco strategy up to this time was encapsulated by the title of Cohen's autobiography, 'Pile it high and sell it cheap', but the increasing affluence of customers and the changing needs meant that Tesco altered its approach and moved into opening out of town stores with more attractive interiors. Such refurbishment was also carried out in the existing stores and with the onset of selling petrol at some of its stores it broke the £1 billion turnover level in 1979.

The 1980s saw a continuation in the growth of new stores and also the development of new initiatives. In 1985, Tesco announced its Healthy Eating options with nutritional information and advice on some of its own branded foods. By the 1990s, the move to overtake the other major supermarkets was well under way. The emphasis was on finding new ways of satisfying consumer needs and building customer loyalty. A range of new services and facilities were introduced, including Tesco Metro, a store concept aimed at the high street customer but offering the benefits of a large supermarket. In some respects, this was Tesco returning to the high street after selling off many stores in the 1960s and '70s in the move to join the out-of-town shopping trend.

Strategy

"We have continued to make strong progress with all four parts of our strategy - a strong UK core business, non-food, retailing services and international - by keeping our focus on trying to improve what we do for customers:


•making their shopping trip as easy as possible

•constantly seeking to reduce our prices to help them spend less

•offering the convenience of either large or small stores

•bringing simplicity and value to complicated markets"



A similar move saw the advent of Tesco Express, a petrol station with a supermarket providing local shoppers not only with petrol at competitive prices but also a range of essential grocery items. This type of approach also extended to the Tesco Extra stores where both food and non-food items were sold. This proved a direct challenge to some of the larger Asda supermarkets that had sold non-food items like white goods (washing machines, fridges, etc.), gardening equipment, kitchenware, clothing, CDs and so on for some time. Sainsbury's meanwhile kept its food and non-food services separate with the development of the Homebase chain.





In 1995, Tesco introduced the Clubcard, a loyalty card for customers who were able to collect points from purchases and use them to exchange for goods. It also gave Tesco a massive amount of information about the customers who visited its stores, what they bought, the regularity with which they bought them and how they responded to the in-store promotions and special offers. Sainsbury's dismissed the card as a gimmick but were soon to lose out on sales to Tesco and in the latter part of 1995, Tesco became the market leader with a market share of 17%.


Throughout the 1990s, Tesco introduced further measures to improve its service and the range of goods and services it offered its customers. This included such things as making staff available to help customers pack bags and take them to the car, having a policy of opening checkouts if there was more than one person in a queue, linking in with the Airmiles group in relation to its Clubcard and the provision of facilities such as baby changing units, restaurants and coffee bars.

Apart from the basic services it was providing, it was building on the range of products it was offering. It opened pharmacies in some stores, developed a range of financial services including a Visa card, mortgages, insurance and a bank account all in conjunction with the Royal Bank of Scotland. The expansion of the non-food side included offering entertainment goods such as TVs, DVD players and home entertainment systems as well as white goods, household products, clothing and so on. Its well-publicised battle with Levi's over the selling of jeans at prices considerably below that of Levi's outlets was lost but not before Tesco had presented itself as a champion of the customer in its battle to bring quality and value for money to the retail supermarket scene.

In the new century, further developments pushed Tesco's profits higher still; it introduced shopping via the Internet and home delivery, Internet service provision, and a range of foods reflecting different qualities from the 'Value' range which had been introduced in 1993 through to its 'Finest' products as well as a brand called 'Free from' for customers with special dietary needs.

Tesco has also taken steps to expand abroad. It has acquired stores in Japan, China, Taiwan, Poland, Slovakia, Ireland, Turkey, South Korea and Malaysia amongst others and has links with Safeway Inc in the United States. It continues to try to improve the quality of its customer service provision and the range of goods and services it is offering. It did make a bid to takeover the Safeway group when Morrisons initially put in a bid. However, it was unlikely to ever succeed in this given the market share it now has in the supermarket business.


Given this massive growth, Tesco announced a profit of over £2 billion for 2004 - the first UK supermarket to break this barrier. The fall in the share price reflects what analysts expect to happen in the future rather than what has happened in the past.

So where does Tesco go from here? Have they reached a peak from which there is now only a downward trend or are there strategies that Tesco can put in place to cement their position in the market and continue to expand in the future?

Sunday, 17 October 2010

Unit 3: Research question

My group will be attempting this question over this week. In addition to the theories you have studied, it will involve some research on your part.

Tesco

Despite being the UK’s largest supermarket, Tesco has put in place an international expansion strategy. They now have stores in, for example, Poland, Slovakia, Japan, South Korea and China. You should investigate Tesco’s domestic competition within the UK, why they think Tesco has decided to expand abroad, and how they have achieved this.

Sunday, 10 October 2010

A2 Unit 3: The Clear & Simple gains from Trade

To hear most politicians talk, you’d think that exports are the key to a country’s prosperity and that imports are a threat to its way of life. Trade deficits—importing more than we export—are portrayed as the road to ruin… US Politicians are always talking about the necessity of other countries’ opening their markets to American products. They never mention the virtues of opening U.S. markets to foreign products.

This perspective on imports and exports is called mercantilism. It goes back to the 14th century and has about as much intellectual rigor as alchemy, another landmark of the pre-Enlightenment era.

The logic of “exports, good—imports, bad” seems straightforward at first—after all, when a factory closes because of foreign competition, there seem to be fewer jobs than there otherwise would be. Don’t imports cause factories to close? Don’t exports build factories?

But is the logic really so clear? As a thought experiment, take what would seem to be the ideal situation for a mercantilist. Suppose we only export and import nothing. The ultimate trade surplus. So we work and use raw materials and effort and creativity to produce stuff for others without getting anything in return. There’s another name for that. It’s called slavery. How can a country get rich working for others?

Then there’s the mercantilist nightmare: We import from abroad, but foreigners buy nothing from us. What would the world be like if every morning you woke up and found a Japanese car in your driveway, Chinese clothing in your closet, and French wine in your cellar? All at no cost. Does that sound like heaven or hell? The only analogy I can think of is Santa Claus. How can a country get poor from free stuff? Or cheap stuff? How do imports hurt us?

We don’t export to create jobs. We export so we can have money to buy the stuff that’s hard for us to make—or at least hard for us to make as cheaply. We export because that’s the only way to get imports. If people would just give us stuff, then we wouldn’t have to export. But the world doesn’t work that way.

It’s the same in our daily lives. It’s great when people give us presents—a loaf of banana bread or a few tomatoes from the garden. But a new car would be better. Or even just a cheaper car. But the people who bring us cars and clothes and watches and shoes expect something in return. That’s OK. That’s the way the world works. But let’s not fool ourselves into thinking the goal of life is to turn away bargains from outside our house or outside our country because we’d rather make everything ourselves. Self-sufficiency is the road to poverty.

And imports don’t destroy jobs. They destroy jobs in certain industries. But because trade allows us to buy goods more cheaply than we otherwise could, resources are freed up to expand existing opportunities and to create new ones. That’s why we trade—to leverage the skills of others who can produce things more effectively than we can, freeing us to make things we otherwise wouldn’t be able to afford.

Discussion Questions:

“Self-sufficiency is the road to poverty” – Discuss…
Explain the logical economic fallacy of the mercantilist philosophy of “exports good, imports bad”
“…because trade allows us to buy goods more cheaply than we otherwise could, resources are freed up to expand existing opportunities and to create new ones”. What basic economic principle is Professor Roberts alluding to here?

More on Yuan....

Click on link...watch video and leave a comment!

Wednesday, 6 October 2010

Web sites you MUST sign up to...

Please can all Business Studies students in Y12/13 sign up to the following sites:

www.prezi.com - Prezi

www.twitter.com - twitter

http://db.tt/ANbmfjr - dropbox

www.voicethread.com - Voicethread

www.diigo.com - Diigo

Tuesday, 5 October 2010

The Divorce between ownership & control!

Here is a fine that the guilty party may find tough to repay.

Jerome Kerviel - rogue trader for Société Générale has been found guilty of breach of trust, forgery and entering false data into computers all linked to covering huge and illicit stock bets that are estimated to have cost France’s second biggest bank just under Euro 5 billion in losses. Kerviel faces three years in jail - in other words, plenty of time to organise the bring and buy sales, whip-rounds and begging letters to make a chink in the Euro 4.9bn bill.



One of the aspects of the case is that bank’s defence that it did not know what Kerviel was doing - in other words we see here an example of the principal agent problem, a massively costly failure of information and back office controls and systems.

The presiding judge told the court that he was confident that Société Générale was not aware of Jerome Kerviel’s fraudulent activities. The trader had taken speculative positions on selected stocks without the knowledge of the bank. Societe Generale has already been fined four million euros after admitting to lax financial controls. Kerviel himself was something of a loner and took home a meagre salary by city standards.

The principal agent problem stems in part from a separation of owners from managers where the agent (or manager) acts in their own self-interest, not in support of the aims of the principal (stockholder). Much has been written in recent years about the incentives to cheat (Dan Ariely has plenty of say on this in his two recent books - see this talk - “Finding Cheating’s Comfort Level ). For many the pressure or incentive to cheat is greatest when you are given the chance to ‘Play’ with other people’s money (you do not have the same sense of ownership). The Kerviel case highlights just how risky this can be for huge financial organisations if there is a failure of control over the trading floors.

A2 Unit 3: China's emergence in the global economy

Check out video on the emergence of China in the global economy, essential for Unit 3 Business students:



Monday, 4 October 2010

Unit 3: International Trade debate

Paul Krugman in his book, Naked Economics writes;

“You could say that globalization, driven not by human goodness but by the profit motive, has done far more good for more people than all the foreign aid and soft loans provided by well-intentioned governments and aid agencies.”

I would like you to think whether this is true or not. Below are some of the arguments you should think about;

Anti-trade arguments

80% of the toys sold in America are made in China.
Foreign companies make toys in factories operated and owned by Chinese.
Working conditions in China are horrible with a minimum wages that is far too low.
In addition to low wages, standards of worker safety are lower than the United States, leading to exploitation of labor to produce cheap toys for Americans.
To make matters worse, the prices of a certain toy may vary greatly from rich country to rich country. For example, a doll that sells for $29 in the USA sells for $64 in Holland. How is this fair?
The cost of labor makes up less than 5% of the price of the toy.
Free trade only increases the profits of the capitalists, but does not help the workers in the poor countries where products are manufactured.
The Negative Impact of Free Trade eHow.com
Due to free trade, demand for labor in more developed countries decreases since production occurs in other countries where it’s cheaper to produce.
This means jobs lost in rich countries, so less economic growth, less consumption, lower incomes.
Growth in some countries comes at the expense of growth in other countries. There are winners and LOSERS in free trade.
Doha trade deal ‘will hurt Africa’ Environment The Guardian
Under free trade as we call it today, subsidies to farmers in Europe make it difficult for African farmers to compete.
Africa accounts for less of the total trade in the world today than it did in 1990, mostly because of its inability to export produce due to subsidies to farmers in Europe.
With less access to advanced capital and the lack of government subsidies, African farmers find it difficult to compete on the global produce market.
Free trade hurts poor countries’ farmers and therefore increases the gap between rich and poor. Trade liberalization creates some losers as it increases the gap between those with skills to work in the global market and those who don’t have those skills.
Trade leads to an increase in inequality and more relative poverty.
Trade creates severe tensions between big and small firms and workers who succeed and those who lag behind.
Export growth can exacerbate the exploitation of natural resources. Without environmental protection, trade may make us richer but at the price of future development.

Pro-trade arguments

allAfrica.com: Africa: Free Trade Area for East, Southern Africa Making Progress
Africa is establishing Free Trade Areas to improve the flow of goods and services across country. If trade were not beneficial, then why would so many countries be clamoring to enter a free trade area?
When workers can move freely in a region it can lead to better, more efficient resource allocation. The same is true of capital, goods and services. Larger markets lead to more efficiency and greater opportunities for employment and for business operators.
Reducing tariffs, quotas and other barriers to trade increases efficiency and allows for more opportunities for all those who live within a free trade areal.
Foreign Trade, Not Foreign Aid « John Stossel
If we help developing countries improve and increase their trade with each other and the rest of the world, it will create jobs, allow entrepreneurs to start companies and therefore reduce unemployment.
Greater opportunities and less unemployment leads to more social stability, reduction in poverty, and less likelihood that the poor people of the world will become “extremists” or result to violence and terrorism to express their dissatisfaction with the world.
More trade and international relationships reduces likelihood of conflict between and within poor countries.
We should expect to see social and political stability arising from increased economic opportunity.
Free trade WILL increase economic opportunities in poor countries.
General comments from the class after both sides have presented their arguments
Unlike aid, free trade cannot be “used up”. Aid is a one-off, when it’s gone it’s over, but trade can be self-perpetuating.

On the other hand, “but it all depends on the kind of aid and how it is used!”
Aid can be invested responsibly, but often times it is not.
So maybe there is room for BOTH aid AND trade.
“In extreme circumstances, aid is necessary. In other, trade is better as a long-run means of achieving growth and development”

Discussion questions:

Is it possible that free trade has increased not only the relative poverty in the world, but also the number of people living in absolute poverty? In other words, trade makes the rich get richer, but does it make the poor get poorer? Or do the poor just feel poorer due to increased wealth and income of the rich?

In 1970, the economies of China and Africa were roughly the same size, and the average income of a Chinese person was around the same as an African’s. Today, China’s economy is more than three time’s the size of Africa’s. What has China done differently than Africa to lead to such a huge income gap between the two regions?

Why should people in Europe, America and other high income regions of the world care about the economic development of the world’s poorest countries? Does improving the lives of Africans require that we in Europe and the rich West make sacrifices in our own standards of living?
African countries want Europe to stop subsidizing its farmers to make it easier for African farmers to compete. But doing so would mean the loss of an important part of European history and culture. Why would less subsidies to farmers in Europe help Africa, and should Europe listen to Africa on this issue or not?

Wednesday, 29 September 2010

New Book in the library: Business Strategy

The hare and the tortoise : an informal guide to business strategy

Most business books are bland or dull, or both. This volume is neither. John Kay combines insightful analysis with wit and verve. In this book, we meet heroes as diverse as Sun Tzu, Jacques Derrida, and Jack Welch. We study businesses as diverse as Honda Motors, the grandes marques of Champagne, and Jenners department store in Princes Street, Edinburgh. We learn why size doesn't matter, why brakes are different from signals, how to value businesses, and why the author was wrong to tell students that Boeing's position in the civil aircraft market was unassailable.

In less than two hundred pages, John Kay provides a lively introduction to business strategy and a guide to many of the key issues in business today.

Tuesday, 28 September 2010

Y13: Culture & Change: The Nokia Story

This has to be one of the best newspaper articles for a Year 13 business student in many a long year…

A fascinating insight from the International Herald Tribune into the (claimed) prevailing corporate culture at Nokia which seems to have contributed to their loss of competitive advantage over Apple, RIM (Blackberry), Samsung and others.

http://www.nytimes.com/2010/09/27/technology/27nokia.html?_r=1

Nokia, it is said, were actively considering the development of a touch-screen smartphone five years ago - which might have killed off the iPhone in its tracks. But the prevailing culture of risk avoidance, conservatism, inertia, acted against the investment. How they must wish they had been bolder.

The article is packed full with core strategic terms and concepts. A great starting point would be for students to highlight the main themes and then explain why they are significant to Nokia.
The approach to take in ant essay would be ......

...this theme (e.g. conservative, risk-averse decision-making) is significant to Nokia BECAUSE...and THEREFORE…

I think Nokia should be right up there at the top of list of “firms to follow” for Year 13 students.
The appointment of a new CEO (Stephen Elop) provides the extra leadership/change management angle to the case study which examiners might be quite attracted too!

Monday, 27 September 2010

All Business students.....watch this clip...awesome!

Check out the clip below, it explains the reasoning why Capitalism (free market Economics) has failed.....excellent!



Questions

What is the authors main argument?
Do you agree?
Would you rather live in an economy that was controlled by governments?
If not, why not?

Friday, 24 September 2010

A2 Unit 3: Euro debate

Ireland did everything the EU asked of it. It slashed spending, it cut jobs, it cut public sector wages. Ireland was praised for its 'courage' in implementing austere fiscal policy which would reduce the deficit and 'improve confidence' in the economy.

Apparantely, some people are now surprised, that Ireland is now facing a shocking collapse in GDP. The Irish economy shrank by 1.2pc in the three months between April and June compared (an annual decline of 4.8%)

Has no one in the EU heard about Herbert Hoover and the initial response to the Great Depression?

Of course, being in the Euro makes it even more difficult because as well as fiscal retrenchment there is no possibility of exchange rate devaluation or loosening of monetary policy to help the economy.

So the EU response has been to

•precipitate a second recession
•Cause interest rates on Irish bonds to rise to a record 6.3%
•leave possibility of debt default.

The talk is of Ireland implementing further cuts or a partial debt default. But, there is depressingly little talk of the ECB implementing quantitative easing, which is what they need to do.

Saturday, 18 September 2010

Friday, 17 September 2010

A2 Unit 3: Best Global brands 2010

The updated list has been published by Interbrand (the people who brought you the slogan “a Mars a day helps you work, rest and play”) and they describe it as the ‘definitive ranking of the world’s most valuable brands’.

There are several activities to think about before you actually start looking at the list.

Firstly, set yourself the quick challenge of trying to anticipate which brands you’ll see in the Top 10 or Top 20. Next, try to think who is on the way up and who has had a difficult year. The league table helpfully compares the ranking this year with last.

http://www.interbrand.com/en/knowledge/best-global-brands/best-global-brands-2008/best-global-brands-2010.aspx

The last question is the most interesting. How would you compile a league table like this? What factors might you rake into account? Helpfully, here's how 'Interbrand' did it:-

http://www.interbrand.com/en/best-global-brands/best-global-brands-methodology/Overview.aspx

Tuesday, 14 September 2010

A2 Unit 3: Outsourcing & Offshoring...

An interesting and topical example of outsourcing here, which should get teachers and students into a lively discussion during lessons on operations…

Outsourcing as a strategy has been around for a long time, but it is not associated with the UK education system as closely as it is with, say, financial services and other customer-service operations.

This primary school is outsourcing the teaching / tutoring of maths support to a team of tutors in India.

http://www.telegraph.co.uk/education/educationnews/7992178/School-outsources-teaching-to-India.html


Sounds like the service costs around £3-4k for the support provided, which is a good deal less costly than having a specialist maths tutor physically in the classroom. Is it a good idea? Might we see more of this as schools find their budgets tightening further? How does the school ensure that students are getting the right quality of tutoring?

Students often get confused with the difference between outsourcing and offshoring. The use of India-based tutors above is an example of both.

Outsourcing involves the use of a third party (supplier) to provide services rather than have people employed within the business/organisation to do them. So outsourcing can occur both in the UK (domestically) and overseas.

Offshoring involves the provision of services from a differerent country. That might be by a firm’s own employees, or by a supplier/contractor.

Monday, 6 September 2010

Year 11 Business Studies: Dragons Den Exercise (Part 1)

Part 1

You are about to watch a clip from ‘The Dragons Den’. Whilst you are watching the clip I want you to try and answer the following questions.

This is not a test, some of the questions will be open ended and based on your opinions.



What is the company name?

Give a brief synopsis of the business?

What was the valuation the directors placed on the company?

Do you think they have a 'unique selling point' (USP)?

What is the estimated market size? (ie number of potential customers)

What is their estimated market value?

How many customers do they have at present?

How many restaurants are on board and what % of London does this make?

What would they do with the money?

Would you invest?

Part 2

What was the turnover figure for the last financial year?

What are the turnover projections, expenses and net profit estimates for years 1 - 3?

Would you invest?

Would you invest now?

Now work in pairs: I want you to discuss what was good about this model, what was bad about the model and the reason why you as a pair decded to invest or not in the business?

Part 3

You are now going to split into 4 groups. I want you to discuss and come up with a potential business idea. Eventually you will present to myself, Mrs McCormack and Miss Meeajan. (The Dubai Dragons)

In the presentation, you will have a valuation of the company, an estmated sales projection and profit figure for 3 years.

This will be a competition. You will be presenting to the Dubai dragons, but your peers will also comment on the positives and negatives of your pitch.

NB During the pitch you will be expected to dress appropriately...you decide!

Mr Bentley

Monday, 31 May 2010

IGCSE Revision Site (Year 11)

I have added another revision site onto the blog. It appears on the right hand side as 'IGCSE Revision Site'

I have also included the link below:

http://www.dineshbakshi.com/igcse-gcse-business-studies.html

Wednesday, 31 March 2010

IGCSE Business Studies - holiday work

Please visit the following site and download as many past papers and mark schemes as you require;



If you require a 'Secure download', the username is my e mail address;




and the password is;


fa1thful (thats a 1 not an i)


NB Revision skill a) look at the question, b) revise the relevant topics, c) attempt the past paper under timed conditiond and d) check your answers with the mark schemes.


Good luck, see you all after the break.

Wednesday, 24 March 2010

Quality control - the old fashioned way!!


I am sure you have seen the 'Quality Control'clip at the Nissan factory....well here is a similar car manaufacture doing it slightly differently!!



Y12 Applied: The web: vital statistics

Excellent article on the web and its history;

BBC News - The web: vital statistics

New Videos for Business

Check out the clips below;

Creating a brand;



Developing a product;



Exporting products profitably

Wednesday, 17 March 2010

Y12 Applied Business - Unit 4

This presentation will help you with section C of Unit 4.



Mr. Bentley

Monday, 8 March 2010

TQM - Scenarios to discuss

What is TQM?

TQM refers to an integrated approach by management to focus all functions and levels of an organization on quality and continuous improvement. Over the years TQM has become very important for improving a firm's process capabilities in order to achieve fit and sustain competitive advantages. TQM focuses on encouraging a continuous flow of incremental improvements from the bottom of the organization's hierarchy. TQM is not a complete solution formula as viewed by many – formulas can not solve managerial problems, but a lasting commitment to the process of continuous improvement.

The main driving force of TQM is customer satisfaction.

Quality is not just product related. Quality is not just the product; it's a combination of the product and "add-ons," i.e. packaging, availability, convenience of use and value adding customer service, etc. The same applies to you in the employment market. Possessing a tertiary qualification may only get you 50% of the way towards being internally promoted or externally employed. The other 50% will depend upon what your acquired "add-ons" are, i.e. what makes you more valuable than your competitor in the mind of potential employers/customers.

Check out the clip below and assess what the issues are with each scenario....how would you improve the situation????



Saturday, 27 February 2010

Y12/13- Financial Ratio Practice Resource - Apple Inc

A set of financial accounts from Apple Inc, using 'Ratio Analysis' comment on the companies performance....

Business Studies - Financial Ratio Practice Resource - Apple Inc

Tuesday, 16 February 2010

Y12 - Excellent Production Video

I think I use the Nissan car plant in Sunderland as an example of successful FDI at least a dozen times a year, so I do have an affinity for the car plant which is one of the most efficient in the world.

Check out this clip which shows the building of the Qashqai from start to finish (squeezed into just over 7 minutes).

Not only that, it covers issues such as labour productivity, quality control, value added etc. Perfect for developing students skills of analysis.

Also ideal for BUSS2 when delivering the use of technology in operations.

Fantastic, fantastic, fantastic....

Enjoy............