3rd Chapter (Unit3) Working Capital

Today I am going to summarize chapter 3.3 Working Capital of unit 3
Every business needs cash in order to keep running. It is needed to pay regular costs for example wages. The amount of working capital shows the stock of money that is available for a business to pay for its immediate costs and expenditure (running costs) .A lack of working capital means that a firm has not enough money to finance its regular operations. Based on that information it is easy to guess that most business collapse due to a lack of working capital
So due to the information above it is important to know the following terms :
The term liquidity refers to how an asset can be turned into cash so highly liquid assets can be converted to cash easily without losing their value.
The term insolvency simply refers to the inability for a company to pay off its debts.
The term liquidation is the result of insolvency. A firm has to sell off all assets so that the money owed can be repaid.
Cash is a current asset and is the money that a business receives from the sale of goods and services.
The term debtor refers to organizations/ people that owe money to a business as businesses sometimes allow customers to buy something but pay later.
Stocks are for example raw materials, half-finished or finished goods that can be used in the manufacturing process.
It is also good to know about the term current liabilities that are considered liabilities of the business that are to be settled in cash within the fiscal year . This includes overdraft, creditors and tax.
A business has to manage their working capital very carefully as there is often a delay between paying costs of production and receiving the actual cash from the customer.

On the other hand side holding the many current assets in the business could be wasteful because it could be invested in expansion for the business for example in other words it should not have too much liquidity. Liquidity is measured in current ratio which compares the value of current assets with the value of current liabilities.
Cash flow forecasts show the expected movement of cash into and out of a business per time period and are based on cash inflow (inflow from sales revenue), Cash outflow (outgoings, expenses) and net cash flow which is the difference between cash inflows and cash outflows.
Reasons for making a cash flow forecast are that banks and other lenders require a cash flow forecast to evaluate financial health of the business seeking external finance, it helps managers to identify periods of potential cash shortage and also helps the planning process for a business.

2nd Chapter (Unit 2) Motivation

I have to apologize for my delayed post but better late than never. Last time I summarized chapter 1.7 of unit 1 about Growth and Evolution in business of the IBD book Business and Management.
Today I will talk about Motivation, chapter 2.5 of unit 2.
What is motivation? Motivation is the desire, passion and willingness to complete a task or a job with enthusiasm. It can be also defined as a way of getting people to do something you want or people want to do for themselves. Motivation is really important for businesses and managers need to understand how to motivate their staff in order to achieve the business’s organizational objectives and aims.
Benefits of a motivated workface are:
-higher profit
-higher job satisfaction which leads to improved product and better quality
-better industrial relations as it reduces the chances of conflict
-reduces the cost of hiring staff
On the opposite sides demotivated workforce prevents a good performance of a business. So managers have to be aware of the following demotivation signs:
-low quality output
-poor punctuality
-disciplinary problems
-high percentage of workforce that miss work
-high wastage level
Motivation can be classified in intrinsic or extrinsic.
Intrinsic motivation means that people engage in an activity out of their own desire. It is for example challenging stimulating or satisfying for them.
Extrinsic motivation means people engage or participate in an activity because of the benefits and rewards such as wages, salaries, bonuses or recognition and praise.
Theories have been developed over the years investigating how to motivate people.
One of those famous theories was made up by Frederick Taylor an American engineer and inventor who assumed that employees get motivated by money. He also believed that higher productivity could be achieved by setting output and efficiency targets related to pay.
Maslow an American psychologist believed in the psychological need of workers. He made up five levels of needs which he called the hierarchy of needs. Starting with lowest level from Physiological need (water, food, air, warmth and sleep)to Security needs ( daily structure and routine, protection from harm as well as retirement income) to Social needs ( being accepted) and can be satisfied by communication for example, to esteem need ( recognized by others) up to the last level of self-actualization( forces that drive a person to become the best that they can be)
Another theory was made up by Frederick Herzberg that there are two categories of factors affecting the level of motivation one are hygiene factors (physical) and the other ones are motivator ( psychological)
He said that Motivators like achievement, advancement, personal growth, responsibility, recognition and interesting tasks are causes of satisfaction and hygiene factors such as company policy, rules, relationship with peers or supervisors, security, salary and wages and working condition are causes of dissatisfaction.

https://www.ibid.com.au/ibid/web.nsf/authorslookup/83?opendocument
http://www.ib-source.com/title_info.php?id=4531

Business and Management written by Paul is an excellent Business studies book used for the International Baccalaureate Diploma which includes absolutely all basics on over 700 pages you need to know about business. I love it!
There are a few chapters I was particular interested in and I think it is worth to summarize some of them.
Starting with UNIT 1
Chapter 1.7 Growth and Evolution of unit 1 (BUSINESS ORGANIZATION AND EVIRONMENT) looks at encouraging forces for growth and evolution of different businesses as they pursue to expand the size of their functioning state. Established businesses have many reasons why they aspire to grow. Examples for this are economics of scale, gain a larger market share to gain more market power and simply for survival reasons as they are risks by only focusing on one market and rivals in the industry. These reasons summarized are determined to gain more profit. There are two methods of business growth known as internal (organic) and external (inorganic) growth. Internal Growth means that a business grows internally by using its own resources to raise the scale of its operations and sales revenue and is financed by the profit of the business. This includes also reducing or raising the price, advertising and promoting, improving product and selling in different locations. External growth however occurs through dealing with outside organizations so the growth comes from alliances or takeovers of other businesses. This method is much faster and it is a fast way of reducing competition by simply taking over a rival. Also working with other businesses means sharing practice and good ideas. A big disadvantage of this method is the high costs especially the takeover bids. Last but not least a method of growth called franchise is introduced which is a form of business ownership where a person/ business buys a license to trade using another firm’s name, logo, brand and trademarks. The benefits of franchising are that the parent company experiences rapid growth without having to risk huge amounts if money as the franchisee pays for the outlet itself, allows national and international occurrence and growth of economic of scale. Nevertheless it is expensive for individuals to buy a franchise and they have to pay a significant percentage of their revenues but in the other hand they have lower start-up costs and they benefit from the large scale advertising used by the famous parent company.
Next chapter is following tomorrow :D

Revision

In today's business lesson we heard a really intersting presentation about NLP.
I would like to revise a bit about this presentation and explain what NLP is.

NLP means neuro-linguistic proramm and is a discipline that enables people to unblock the structures of human communication and execllence by doing so they are able to communicate and think in a more effective way.It explores the way we think (neuro), we communicate ( linguistic) and als our behaviour and emotions ( programm).

Learning from these relationships persuades people to change the way they traditionally think and act, adopting new, far more successful models of human excellence, more effectively. This action is also called modelling. Because NLP is such a powerful way of transforming the way people think and act it is used in business management, psychology, sales and all forms of personal development.

You want more inormation about NLP? Check out this videos....

A lesson about NLP with Michael Beale

25 points about the impact on a business of developments in technology

• easy commuication e.g : telephone,mobile phone, Internet, e-mail, fax)
• less face to face communication
• higher costs for companies as communicational divces have to be provided
• easy marketing on the internet
• easy selling on the internet
• easy to set up a business via websites
• web design infuences the amout of sold products
• easy market reseach
• easy to contact potential customers via telephone, adverts on TV, magazine
• people often ignore advert via telephone and TV as they prefer to see a product for real
• easy to come across and controle competative companies
• more competition as it is easy for everybody to set up a business
• easy distribution (cars, lorries,airplane)
• easy to sell a product international
• affiliation with other companies
• easy financial controle (calculator,computer programms)
• stock market
• as the product has to improve to be competative the costs of prduction become higher
• workers can be replaces by machines
• lower costs for workers
• companies spend a lot of money in machines,marketing,electonical devices,distribution,internet etc.
• as it is easier to produce things there is a bigger production
• professional writing with computer programms
• documents can be saved on a computer less paper work
• large data bases