?????? Fundamentals of Business

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??????Fundamentals of Business

• Lecture 1
• Introduction
• ??????

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What to cover today

• Course description
• The nature of business
• Forms of business ownership
• Franchising
• Business mission and company profile
• Exercises

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1. Course description
A map of your exploration in this course
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company
money (capital profit)
products (goods services)
people
What is business?
market
communication
countries cultures
conferences, negotiations trips
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2. The nature of business

• Business is
• the exchange or trade for things people want or
  need
• the production, distribution and sale of goods
  and services for a profit
• a goal-directed behaviour aimed at getting and
  using productive resources to buy, make, trade,
  and sell goods and services that can be sold at a
  profit (Source Jones, 2007. Introduction to
  Business How Companies Create Value for People)

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land
productive resources
enterprise
capital
labor
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3. Forms of business ownership

• Three basic legal (vs. organizational) forms of
  business ownership
• sole proprietorship (??)????
• partnership ????
• company ??
• Unlimited Liability Company ??????
• Limited Liability Company (LLC) ??????
• S corporation S???????
• C corporation C???????
• enterprise gt company gt corporation

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3.1 Factors to be weighed in decision-making

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

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3.2 Sole proprietorship

• advantages disadvantages
• D4 lack of continuity
• If the owner dies or becomes too ill to manage
  the business, there is no separate legal entity
  in existence with which the public, creditors,
  suppliers or employees can deal to ensure the
  continuity of the business.

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3.3 Partnership

• 3.3.1 Oral vs. written agreement
• articles of partnership ????
• names of the partners
• name of the partnership
• location of the partnership
• purposes of the partnership
• duration of the partnership
• capital contributions by partners
• rights and responsibilities of partners
• allocation of profits and losses among partners
• dissolution (????) procedures

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• 3.3.2 General partnership ?????? vs. limited
  partnership ??????
• 3.3.3 Advantages disadvantages

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• 3.4 Company

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• publicly owned companies established by the
  government, e.g. the U.S. Postal Service, big 4
  banks in China, CNPC, Sinopec, CNOOC
• quasi-publicly owned companies established
  privately, but operated for public service and
  with high degree of government regulation and
  protection, e.g. private schools and hospitals
• private companies established privately and
  operated for private interests including the
  bulk of existing companies

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• profit private companies established to carry
  out business for profit-making purposes
• non-profit private corporations established for
  charitable or religious purposes

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• privately held profit private companies LLC or S
  corp. do not publicly offer their stock owned
  by one or a few shareholders who normally have
  family or other close ties and also manage the
  business
• publicly held profit private companies C corp.
  (also called LLC by share, public company,
  publicly traded company, public listed company)
  publicly offer and freely trade their shares on
  stock exchanges????? owned by a number of
  unrelated shareholders who do not actively manage
  the company (passive investors, cf. limited
  partners) go public, IPO ??????
• 2015??????19?????? http//news.mydrivers.com/1/
  372/372103.htm

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3.4.1 C corporation
Proportion of Business Revenue Generated by Each
Form of Ownership
Proportion of Existing Businesses under Each Form
of Ownership
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3.4.1.1 Corporate structure and management

• incorporators/shareholders
• board of directors
• president/GM/CEO/managing director
• other officials

owners
managers
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• 3.4.1.2 Corporate charter legal person

• Corporate charter ???? a document used to
  incorporate a business, and filed with the state
  government
• The charter describes important aspects of the
  corporation, e.g. the name of the firm, the stock
  issued, and the firms operations
• Bylaws ???? are established to provide general
  guidelines for managing the firm

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3.4.1.3 Advantages disadvantages

• A4 continuous life (perpetual continuity)
• Theoretically, a corporation has a perpetual
  existence it continues until dissolved, merged,
  or terminated for other reasons.
• D4 agency problem
• High-level managers may make decisions that
  are in their best interests, at the expanse of
  shareholders.

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3.4.2 S corporation S ??

• for United States Federal income tax purposes, an
  S corporation is a corporation that makes a valid
  election to be taxed under Subchapter S of
  Chapter 1 of the Internal Revenue Code.
• has 100 or fewer owners and satisfies other
  criteria
• the owners have limited liability, which may be
  restricted by various rules
• the earnings are distributed to the owners and
  taxed at the respective personal income tax rate
  of each owner

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3.4.3 Limited liability company (LLC)

• not a corporation in nature
• a hybrid business entity blending a corporation,
  a partnership, and even a sole proprietor
• has all the favorable features of a typical
  general partnership, but also offers limited
  liability for the partners (members)
• the primary characteristic an LLC shares with a
  corporation is limited liability, and the primary
  characteristic it shares with a partnership is
  the availability of pass-through income taxation.
  
• has fewer restrictions on the number and type of
  owners and on the liability protection than S
  corporation

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4. Franchising ????

• budding period the early 1900s, filling
  stations, car dealerships
• growth period since the mid-1960s, paralleling
  the enormous expansion of the fast food industry

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Three basic types of franchising

• product franchising licensing for the right to
  sell trademarked goods purchased from the
  franchiser and resold by the franchisee, e.g. car
  dealers, gasoline stations
• manufacturing franchising licensing for the
  right to produce and distribute products, using
  supplies purchased from the franchiser, e.g.
  soft-drink bottling plants
• business-format franchising licensing for the
  right to open a business using the franchisers
  name and format for doing business, e.g. fast
  food chains

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Advantages of franchising

• triple benefits of franchising according to
  the president of the International Franchise
  Association
• The franchiser wins because he builds a
  strong foundation for his company. The franchisee
  wins because he can take advantage of the
  franchisers proven business system. And the
  general public benefits from the consistency of
  the product or service.

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Case study A Godsend
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5. Business mission and company profile

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

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• Sample mission statements

• Starbucks
• Our mission to inspire and nurture the human
  spirit one person, one cup and one neighborhood
  at a time.
• Dell
• Dell's mission is to be the most successful
  computer company in the world at delivering the
  best customer experience in markets we serve. In
  doing so, Dell will meet customer expectations
  of
• Highest quality
• Leading technology
• Competitive pricing
• Individual and company accountability
• Best-in-class service and support
• Flexible customization capability
• Superior corporate citizenship
• Financial stability

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Sample mission statements

• Nike
• Our mission for the Nike brand is To bring
  inspiration and innovation to every athlete in
  the world.
• Alibaba
• Alibaba Group (Alibaba for short) is a global
  e-commerce leader basing in China. Alibaba has 7
  subsidiary companies, business involving the B2B,
  C2C, online payments, software service, search
  engine, online advertising, local living and
  consumption community etc. Alibaba is committed
  to building the worlds leading e-commerce
  infrastructure and high quality online living
  platform.

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5.2 Company profile

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

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• Listening
• Listen to a presentation delivered by the PR
  Department Manager of Oracle China and fill in
  the blanks in the company profile

Word bank headquarters ?? headcount ????
annual revenue ???
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Oracle China Profile

• Status the worlds ____ enterprise software
  company, ____ global software giant in ____
• Established in ____
• Headquarters Redwood Shores, ______
• Headcount ______
• Annual revenue ____
• Launched on Chinas market in ____
• Oracle China branches Beijing, Shanghai,
  Guangzhou, ____
• Services 9i E-Business platform, E-Business
  Suite, consulting services, ______, and support
  services

largest
China
first
1977
California
42,000
11billion
1989
Chengdu
education
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Sample company profile

• GM
• http//www.gm.com/corporate/about/company.jsp
• Ecolab
• http//www.ecolab.com/CompanyProfile/
• Philips
• English version http//www.philips.com/about/comp
  any/companyprofile.page
• Chinese version http//www.philips.com.cn/about/c
  ompany/companyprofile.page
• Alibaba
• English version
• http//news.alibaba.com/specials/aboutalibaba/inde
  x.html?tracelog24581_foot_company_info
• Chinese version
• http//page.china.alibaba.com/shtml/about/ali_chin
  a1.shtml

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Exercises

• 1. Translation
• 1. ?????? 2. ?????
• 3. ????? 4. ????
• 5. ???? 6. ??
• 7. ??? 8. ??
• 9. ???? 10. ??
• 11. ???? 12. ????

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

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(No Transcript)
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• 3. Compile the mission statement and/or company
  profile of a well-renowned MNC currently
  operating in China
• 4. Group project observe and guess the business
  forms of shops or companies operating on your
  campus or in Guangzhou, and collect necessary
  information (e.g. through interviews or Internet
  surfing) to verify your guessing

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• 5. Supplementary reading
• Chapter 1 What Is Business? (Jones)