Business & Society

Working Capital means the capital available for running the day-to-day operations of an organization. It is the excess of current assets over current liabilities. In other words, working capital is the excess of permanent capital plus long term liabilities over the fixed assets of a company. The control of working capital can be divided into areas dealing with inventory, receivables, payables and cash. In order to continue trading, an organization should be in a position to meet its immediate obligations. Therefore, sufficient cash must be generated by the organization. Even the most profitable business can quickly go under if it does not have sufficient liquid resources. But an unprofitable company can survive for quite some time if it has sufficient liquid resources. This means, working capital is essential for the organization's long term success and development. The greater the extent to which current assets cover the current liabilities, the more solvent the organization.

Sam Walton and his brother opened the first Wal-Mart discount store in 1962 at Rogers, a small town in Arkansas, USA. They sold everything from apparels to automotive supplies to small appliances in this large warehouse type store. Their prices were very low. Although the conventional wisdom suggested that discount stores could succeed only in large cities, Wal-Mart, from the modest beginnings, exploded onto the national retailing scene. Today, Wal-Mart is not just the world's largest retailer, but also the world's largest company. Their annual sales are around $300 billion. They are the number one seller in multiple categories of consumer products. Wal-Mart sells 30% of the disposable diapers purchased in US each year, 30% of hair-care products, 26% of toothpaste, and 20% of pet food. Wal-Mart's total sales per day is larger than the GDP of some countries. The company is now expanding rapidly into international markets. The giant retailer has a substantial impact on the U.S. economy. What are the secrets behind their spectacular success? Mostly, day in and day out, Wal-Mart lives up to its promise: Always Low Prices, Always. Its mission is to "lower the world's cost of living". To deliver on this promise, they listen to their customers and take care of them, treat employees as partners and keep tight rein on costs. The company stays close to the customers, talks directly with them and delivers what customers want: a broad selection of carefully selected goods at unbeatable prices.

The success story of Valkswagen continues: with the new Walkswagen Passat Car. Volkswagen has presented the new generation of one of the world's most successful cars. Walkswagen says "with its unmistakable shape, an irresistibly spacious interior and a wide range of highlights, it offers a first-class driving experience that is both innovative and comfortable. Discover a professional functionality paired with a fascinating design in its purest form." "The Passat has the power to indugge you: It not only inspires because of its elegant exterior appearance but it also convinces with its generous space. Its interior equipment is as notable for its ergonomic design as for its functionality and makes each trip with the Passat special" said Volkswagen. Volkswagen Passat comes in four elegent models with different sets of characteristics : * Volkswagen Passat * Volkswagen Passat Estate * Volkswagen Passat R36 * Volkswagen Passat CC Volkswagen Passat Car The striking design, impressively dynamic proportions and expressive lines flowing from the chrome-plated radiator grille have given this model with a strong and powerfully authentic look. The Passat delivers top-class comfort in every respect starting with the 12-way massage seats, and draught-free Climatronic climate control system.

Do you know that certain products are born and die quickly. Other products seem to defy the product life cycle enduring for decades or even generations. Skillful product life cycle management can keep them fresh, relevant and appealing to customers. Here is an example of a long time market winner with plenty of staying power. The original Volkswagen Beetle Click edit above to add content to this empty capsule. In year 1949 the original Volkswagen Beetle came to America. With its simple bug-like design and economical operation, the Beetle was the antithesis of Detroit's chrome-laden gas guzzlers. Young baby boomers in thousands were buying their first cars during 1960s. With this, the demand for the Beetle exploded and the anything-but-flashy Beetle blossomed. It became the most popular car in American history with sales peaking at 423,000 cars in 1968. However by the late 1970s the boomers had moved on, bug mania faded and Volkswagen dropped Beetle production for the US.

What's the first name that comes to your mind when someone asks about fast-food restaurant? Most probably, it is McDonald's, the world's largest food service organization. McDonald's holds more than 40% share of the US fast-food burger market, many times the share of its nearest competitor. However, if you ask the same question in the Philippines, the answer that you'll get will be Jollibee. Jollibee Foods Corporation is not a household name when it comes to the global market. But in the Philippines, it's the king of the burger market. One industry analyst said "if McDonald's is the Goliath of fast food, Jollibee is its Filipino David." The rivalry between Jollibee and McDonald's looks like no contest. McDonald's has more than 31,000 outlets in more than 100 countries out of which 3,000 outlets are in Asia. Jollibee has only 600 outlets and over 50 international outlets. But despite these numbers, in the Philippines, small Jollibee has humbled the global giant. Jollibee has captured more than 65% share of the hamburger market in the Philippines. This is more than half of the fast-food market as a whole and about twice McDonald's sales in the country. Its revenues are growing rapidly and profitably. They claim that they are the undisputed leader of the fast-food market in the Philippines. Their secret is Smart Niching. Jollibee concentrates on serving the unique tastes of Filipino consumers whereas McDonald's exports largely standardized fare to consumers around the world.

Both public sector and private sector organizations have objectives and missions. But depending on the type of organization, there are differences between the public and private sectors of a country. Some of them are discussed below. * Public sector organizations are established by statute or a similar vesting document passed by the government or other law making bodies. Therefore, managers cannot change them according to the changing conditions. On the other hand, directors of a private sector organization may determine its objectives and change them whenever necessary. * Output of a private sector entity can be valued by the paying customers and therefore can be incorporated in its objectives, missions and decision criteria. It may not be possible to allow the market to determine the income of a public sector entity. * When a private firm fails to meet the aspirations of its stakeholders, it can result in serious consequences which can lead to even closure of the firm. In the public sector, disbelief can be suspended for long periods, with the result that some stakeholders' aspirations are ignored. * Private sector firms should earn a satisfactory return on investment otherwise the investors might withdraw the investment in the firm. Public sector organizations still consider that their capital is free and therefore, the need to earn a return is always ignored. * Public entities do not expect profits. They are established not for profits but to achieve different objectives of the society. But, can these organizations operate without identifying and satisfying the needs? Can they operate without adequate investments in resources and therefore can they refrain from attracting funds? Can they continue if the value of their outputs is less than the value of their inputs? No. Certainly not. So, is the expression not-for-profit somewhat misleading? Profit is the legitimate reward for the commitment of funds. Then, why should all these organi

When a market is not competitive, there is a need for regulators. Their role is to balance the interests of various stakeholders. Business organizations can use a monopoly position to create extremely high added value for the benefit of their shareholders, employees etc. Customers need to be protected by limiting these monopoly powers. At the same time, it is necessary for the businesses to price their products at a sufficient margin. Regulatory bodies are established in countries according to the policy of the government with different types of authorities. Regulatory rules are designed to meet government objectives. Those rules should be understood by the regulator and the regulated industry. Objectives of regulatory authorities can be classified under the following: * To protect customers from monopoly power * To promote social and macroeconomic objectives * To promote competition When the players in regulated market have significant market power, the regulator has to focus on price or tariff controls or control on quality of service. Certain social objectives such as availability and affordability of services to particular groups like disabled or people in rural areas, cannot be achieved from macroeconomic objectives of the government. Therefore regulatory bodies are established to control and monitor these areas. Actions can be taken by regulatory authorities to assist the development of market segments where there is scope for competition.

The survival of profit-seeking entities depends on their being able to identify the needs and to offer them an adequate financial return. Adequate return means a situation in which value of outputs exceeds the value of inputs of all kinds. All parties such as investors, employees, customers, suppliers, and many others should get a good return for their price or efforts. That's about profit-seeking entities like privately owned companies. But what about the not-for-profit entities? When we think about not-for-profit entities, you might think of: * Government organizations like public schools, hospitals and other public sector organizations * Trade associations, trade unions, employers' federations * Professional organizations * Housing associations, clubs, societies, cooperatives * Charity organizations * Religious organizations

Rate of interest is the price of money which is lent or borrowed. It is always expressed as a percentage of the sum lent or borrowed. It is generally calculated on an annual basis. Generally, the longer the time period of a loan, the higher the rate of interest because of the greater risk and uncertainty involved. However, two loans for the same time period might carry different rates because some borrowers are safer than others. Term Structure of interest rates Long term rates are normally higher than short term rates due to the additional risks borne by the lender. An interest premium is therefore required to attract investors to longer-term securities. However, this effect may be magnified or reversed by investors expectations of future rates. The difference between long and short term rates is called as Term Structure. It is shown graphically by the Yield Curve. Graph below shows an upward sloping yield curve which is the normal situation. This shows that the long term rates are to be higher than the rates available in the short term. Upward sloping yield curve compensates investors for tying up their money for longer periods.

In simple language, inflation means rising prices and it shows the increase in cost of living. In economics, inflation is explained as rise in the general level of prices of goods and services in an economy over a period of time. With the rise in price levels a unit of currency will buy fewer goods and services. As a result, the purchasing power of money will be reduced with inflation. In other words the real value of money will be lost day by day along with inflation. Inflation is measured by the Rate of Inflation or Inflation Rate which is the percentage change in a general price index calculated as an annualized figure. A low inflation rate is beneficial to a country and zero or negative inflation is considered as bad. Also, a high inflation is harmful to an economy and it affects an economy in many ways. * High inflation distorts consumer behavior. Because of the fear of price increases, people tend to purchase their requirements in advance as much as possible. This can destabilize markets creating unnecessary shortages. * High inflation redistributes the income of people. The fixed income earners and those lacking bargaining power will become relatively worse off as their purchasing power falls. * Trade unions may demand for higher wages at times of high inflation. If the claims are accepted by the employers, it may give rise to a wage-price spiral which may aggravate the inflation problem. * During a high inflation period, wide fluctuations in the inflation rate make it difficult for business organizations to predict the future and accurately calculate prices and returns from investments. Therefore, it can undermine business confidence. * When inflation in a country is more than that in a competitive country, the exports from former country will be less attractive compared to the other country. This means there will be less sales for that country's goods both at home and abroad and that will create a larger trade deficit. At the

Protecting the environment is considered nowadays as a key issue affecting everyone. Business organizations are pressurized to ensure that the environment suffers minimum damage due to their processes, products and services. Business organizations use recyclable materials, monitor pollution levels, and take various other measures to protect the environment and to comply with increasing customer demand for green products. The work of the business manager is changing so as to encompass environmental issues. Businesses report information about their actions with regard to maintaining the environment in their annual financial report. This includes energy usage, level of toxic waste, noise, policies regarding environmental care etc. Although the annual report is traditionally a report of financial information about the organization, the users of it represent a wide audience. Therefore, businesses consider the annual report as a public relations document. As a result, businesses tend to report information regarding their products, policies etc. and now that has been extended to report information about their actions on preserving the environment.

Protecting the environment is considered nowadays as a key issue affecting everyone. Business organizations are pressurized to ensure that the environment suffers minimum damage due to their processes, products and services. Business organizations use recyclable materials, monitor pollution levels, and take various other measures to protect the environment and to comply with increasing customer demand for green products. The work of the business manager is changing so as to encompass environmental issues. Businesses report information about their actions with regard to maintaining the environment in their annual financial report. This includes energy usage, level of toxic waste, noise, policies regarding environmental care etc. Although the annual report is traditionally a report of financial information about the organization, the users of it represent a wide audience. Therefore, businesses consider the annual report as a public relations document. As a result, businesses tend to report information regarding their products, policies etc. and now that has been extended to report information about their actions on preserving the environment.

In simple language, inflation means rising prices and it shows the increase in cost of living. In economics, inflation is explained as rise in the general level of prices of goods and services in an economy over a period of time. With the rise in price levels a unit of currency will buy fewer goods and services. As a result, the purchasing power of money will be reduced with inflation. In other words the real value of money will be lost day by day along with inflation. Inflation is measured by the Rate of Inflation or Inflation Rate which is the percentage change in a general price index calculated as an annualized figure. A low inflation rate is beneficial to a country and zero or negative inflation is considered as bad. Also, a high inflation is harmful to an economy and it affects an economy in many ways.

When a market is not competitive, there is a need for regulators. Their role is to balance the interests of various stakeholders. Business organizations can use a monopoly position to create extremely high added value for the benefit of their shareholders, employees etc. Customers need to be protected by limiting these monopoly powers. At the same time, it is necessary for the businesses to price their products at a sufficient margin. Regulatory bodies are established in countries according to the policy of the government with different types of authorities. Regulatory rules are designed to meet government objectives. Those rules should be understood by the regulator and the regulated industry. Objectives of regulatory authorities can be classified under the following: * To protect customers from monopoly power * To promote social and macroeconomic objectives * To promote competition When the players in regulated market have significant market power, the regulator has to focus on price or tariff controls or control on quality of service. Certain social objectives such as availability and affordability of services to particular groups like disabled or people in rural areas, cannot be achieved from macroeconomic objectives of the government. Therefore regulatory bodies are established to control and monitor these areas.

Rate of interest is the price of money which is lent or borrowed. It is always expressed as a percentage of the sum lent or borrowed. It is generally calculated on an annual basis. Generally, the longer the time period of a loan, the higher the rate of interest because of the greater risk and uncertainty involved. However, two loans for the same time period might carry different rates because some borrowers are safer than others. Term Structure of interest rates Long term rates are normally higher than short term rates due to the additional risks borne by the lender. An interest premium is therefore required to attract investors to longer-term securities. However, this effect may be magnified or reversed by investors expectations of future rates. The difference between long and short term rates is called as Term Structure. It is shown graphically by the Yield Curve. Graph below shows an upward sloping yield curve which is the normal situation. This shows that the long term rates are to be higher than the rates available in the short term. Upward sloping yield curve compensates investors for tying up their money for longer periods.

The survival of profit-seeking entities depends on their being able to identify the needs and to offer them an adequate financial return. Adequate return means a situation in which value of outputs exceeds the value of inputs of all kinds. All parties such as investors, employees, customers, suppliers, and many others should get a good return for their price or efforts.\n\nThat's about profit-seeking entities like privately owned companies. But what about the not-for-profit entities?\n\nWhen we think about not-for-profit entities, you might think of:\n\n * Government organizations like public schools, hospitals and other public sector organizations\n\n * Trade associations, trade unions, employers' federations\n\n * Professional organizations\n\n * Housing associations, clubs, societies, cooperatives\n\n * Charity organizations\n\n * Religious organizations