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M.CHKHEIDZE

TEXT FILE FOR TRANSLATION (BUSINESS)

TBILISI

2011

BUSINESS LEADERS

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The business leader is confident, persistent and inventive in business. He can launch a new business and will devote all his energy to getting it established. A talent for inspiring people is one of his outstanding features. He is a good communicator. He knows exactly how to conduct business policy. The business leader actively and persistently strives for success. He knows how to set goals and strives to reach them as quickly as possible. This dynamic approach to reaching his goal quickly develops and promotes the business.

However, this approach may also have a negative side. Because the business leader strives quickly to reach success, he sometimes doesn't have enough endurance to develop his business in unfavorable conditions. Under such conditions he will sometimes close his enterprise in order to start a new business, which seems to him more promising in the current situation. He flourishes best in a fast-paced environment.

During the start-up period of the company, the business leader can develop the business himself. At this time he can temporarily carry out the work of manager and analyst in addition to his primary function of business promoter.

The business leader may meet with problems because sometimes he does not anticipate obstacles in a given situation. His tendency to risky operations also presents another danger to him. The business leader will find himself in a tight spot if he does not weigh all the pros and cons while making a decision. Sometimes the business leader cannot refrain from attempting solutions which are strongly influenced by current circumstances.

Necessary Steps to Success in Your Business

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You evaluate information quickly. As a rule, you quickly find a way to achieve your goal. Be careful that you do not underestimate the difficulties expected in your way. Always carefully consider the possible negative consequences of achieving your goal. Occasionally stop in your intense activities to evaluate once again your path to the goal. Also try to foresee what problems may arise when the project has been realized.

Analyze carefully the needs of the consumers and design your commercials in such a manner that they meet the present requirements of your potential customers. Referrals of professionals and recommendations are essential for your business. Publish them in your commercials. They may have a critical impact on the customer's decision to buy your product, because in many cases he has no other way of judging the quality of your product. Always be in contact with your customers. Send them catalogues or samples of your latest goods.

Create and support the brand of your business. Give your business a name which reflects the essence of your enterprise, or your own name. Develop a logo or picture which represents your business. Create and run commercials. Distribute badges of your business among your customers. Remember that low sales may be due to customers' lack of knowledge about the product. Continuously promote your goods and carefully analyze customer feedback. This will help you to discover the reason for the low demand – insufficient advertising or a shortage of the product.

If you have enough funds at your disposal, it makes good sense to launch an intensive advertising campaign with commercials on TV, radio, internet etc. It will greatly promote your business. Sales can be increased by offering each customer who buys your product a

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chance to win a valuable prize. Sell your product in one package together with the products of other businesses. Look for a way to sell your product at a discount to another business who will add it, free of charge, to a popular product of theirs, thus making your product known to a wider circle of customers and profiting both parties at once.

Do not push your product too persistently to a customer when talking to him but point out the product's advantages – better quality or lower price. If you can, give interviews in which you can explain the advantages of your product or service.

The business leader can start a new business or buy an established one. In some cases the business leader will start a new business based on his own technology and development.

It is important to have a detailed business plan when you start a business. You should assess the market and find a niche for your business in the market. Your business plan should point out the weak points of your enterprise and suggest tools and ways to eliminate or reduce them. Carefully consider the investments required to expand your business. The investment plan will strengthen your position in negotiations with potential investors.

If you need to strengthen your enterprise by skilful management then the innovative manager may be considered as the right partner for you.

THE KNOWLEDGE ECONOMY

The knowledge economy, as Prime Minister Tony Blair of Great Britain has said three years ago, is really about one economy. There

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is, he says, "no new economy…there is one economy, all of it being transformed by information technology…it is a profound economic revolution."

What this means is that business must be in a constant process of change and adaptation to the new economic realities. In this new economy, it is evident that the key to success is "knowledge". For governments they are going to have to invest in, and develop, knowledge workers. This is going to mean that government budgets must allocate funds for skills development and education. What is important to realize, from the perspective of knowledge as a capital tool, is that the Internet has tipped the scales in favour of both businesses and governments. For example, for scientists in business and government, the Internet is a major tool to assist in the sharing of research and the findings. Scientists can now do this in an increasingly global environment. Exchange of research and ideas has accelerated innovation, inventions, and creation of new goods and products, at a rate never before known in human history.

The rapid development of the Internet in the past ten years has resulted in an escalation of the global economy. This globalisation has had a profound impact on both the economies of nations and the pressures on countries to compete effectively in this new global environment. Globalisation of the economy has also raised new issues of nationalism and protection of local culture. Yet, the pressures for change, brought by this new phenomenon, have also meant that countries can compete on a global scale. In this new environment two of the most important commodities of a nation are becoming information and knowledge.

Globalisation has been spurred on by the Internet, which operates 24 hours a day, 7 days a week (24/7, as it known). This has meant

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that ideas and innovation can be occurring around the clock. In this new environment, it will be important for government to development mechanisms to encourage the private sector, and public sector research organizations, to be innovative and able to deploy knowledge. Increasingly, as Prime Minister Blair has pointed out, more and more individuals and companies are engaged in businesses that are connected to the Internet. In 1999 it was estimated that Britain was the leader in e-Commerce in Europe, spending Ј2 billion online. It is predicted that by the year 2004, the United States might reach sales of $1 trillion online. But this is not just about the Internet, or e-commerce for that matter. The Knowledge economy is about how the new technologies have transformed the way we think and act, and the ways in which we use the Internet and ICTs which are transforming our world economies.

Yet, despite these glowing accolades about the benefits of the transformed world economies, there are the deeper issues as to whether or not many of the developing nations can also benefit, as well as the less well off in the developed countries. The digital divide, economies of scale, trans-global organizations dominating the world markets, powerful economic engines of a few rich countries, and other concerns, can leave the impression that the gap in the world between the rich and the poor will widen over time. There is an argument to be made that the gap will widen over time if developed countries and international organizations do not move faster to narrow the gaps and bring in policies that will benefit all the peoples of the world. The evolving, powerful new technological tools, and the Internet, are media that can be harnessed to benefit developing countries. But this cannot happen in a vacuum. To succeed in the knowledge economy there are certain very basic

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policies that are needed. The first is to create a cultural change within the institutions of the country.

Joseph Stigliz, Senior Vice President and Chief Economist, the World Bank Group, in London, UK, maintains, in a speech in 1999, that "in industry, the shift towards a knowledge-based economy involves a shift in organization away from top-down hierarchical systems to horizontal structures such as networks of semi-autonomous teams." He maintains that it is essential for any country, in developing structures for their knowledge-based economies, to develop their own best practices based on their history and cultural development. Best practices from other jurisdictions cannot simply be imposed on a country. Stigliz points out that any attempts by external agencies to impose their own set of "Best Practices" for a knowledge economy, "will not produce lasting change. It will undermine people's incentives to develop their own capacities and weaken their own confidence in using their own intelligence. The external development agency, instead of acting as a catalyst or midwife to empower change, will only short-circuit people's learning activities and reinforce their impotence. The external incentives may temporarily overpower the springs of action that are native to the institutional matrix of the country but that will probably not induce any lasting institutional reforms."

This is an important principle to understand as, for any country to succeed, it must, by necessity, rely on its own internal understanding and the wisdom of its culture. There is much evidence surfacing in Asia that many countries there are becoming disillusioned with organizations such as the World Bank and the International Monetary Fund. Many countries see globalisation as a threat to their centuries old cultures. To many in the world,

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globalisation benefits the rich and powerful nations and is perceived as another form of colonialization. Obviously, individual countries are the ones best suited to change their own culture. But, the lesson is the same, for any country to transform itself into a viable, knowledge-based economy, internal, institutional change will be crucial. Who better to develop its own strategy but the government of a particular country?

One of the prime tools a government needs, in order to embrace as much of their citizenry as possible, is wide access to both the Internet and Information and Communication Technologies (ICTs). Thus, to achieve this, connectivity programs, funded by government, are necessary. Also, where there is access in the school, or in the workplace, or in the community, programs are needed to widen computer literacy. Of course, in many countries, raising the overall literacy of the population is a primary goal. Part of this should be built into programs to ensure that the current and next generations become computer literate or are in a position to benefit from the changes technology is bringing.

This is essential for the development of knowledge workers at all levels of society. Importance is placed on computer literacy because in many countries, such as Canada, the United States, Great Britain, Singapore, and Australia, it is now estimated that over 60% of production is created by knowledge workers. This does not mean that 60% of the workforce is creating knowledge that can be bartered and sold on the world markets. Though this is partly true, the fact is that information technologies are now driving the economic engines in most of the industrialised world. Chips embedded in the infrastructure now drive most technologies in the workplace and home. Technology pervades our lives, from the

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kitchen, to our means of transportation, to the workplace. Some form of information technology drives nearly all facets of life. This is not just isolated to developed countries, but is evident in most of the developing countries, though in much smaller numbers. In the case of the latter, the technology, and the economic prospects they bring, are not as universal. But to thrive in the global knowledge economy it is going to be important to change the whole educational system to ensure a wide base of knowledge workers who understand and use these information technologies. Thus, education is a key, in order to ensure the skills for the knowledge economy exist in abundance. It is important that there be an army of skilled technical experts who understand and can apply technical knowledge. These workers are the underpinnings of the knowledge economy.

Part of the challenge in allowing wide access to the rich resources that exist through the Internet and other ICTs, is ensuring that there are sufficient opportunities for businesses to be online. This is a step beyond providing the education of citizens to create opportunities. There need to be programs to fund businesses to get them online. This is an important lesson many of the developed countries have had to learn. Getting businesses online is not just ensuring wide access to the Internet. It also requires extensive educational programs so business leaders understand the opportunities and benefits of having an online presence. This is important so that they can take advantage of the world as a potential customer.

Equally crucial is that business be able to thrive in a competitive environment, and can compete, not only within their own country, but in the wider global economy. Diversity is a key characteristic of the knowledge economy. It is important that there be intellectual property laws, to protect businesses and innovators. However, the

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laws themselves must be flexible to ensure that monopolies do not develop. It is important that there be innovation, creativity and diversity in the emerging knowledge economy.

POPULATION

A very important world problem, if not the most serious of all the great world problems which affect us at the moment, is the increasing number of people who actually inhabit this planet. The limited amount of land and land resources will soon be unable to support the huge population if it continues to grow at its present rate.

Why is this huge increase in population taking place? It is really due to the spread of the knowledge and practice of what is becoming known as "Death Control". You have no doubt heard of the term "Birth Control" - "Death Control" is something rather different. It recognizes the work of the doctors and scientists who now keep alive people who, not very long ago, would have died of a variety of then incurable diseases. Through a wide variety of technological innovations that include farming methods and sanitation, as well as the control of these deadly diseases, we have found ways to reduce the rate at which we die - creating a population explosion. We used to think that reaching seventy years old was a remarkable achievement, but now eighty or even ninety is becoming recognized as the normal life-span for humans. In a sense, this represents a tremendous achievement for our species. Biologically this is the very definition of success and we have undoubtedly

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become the dominant animal on the planet. However, this success is the very cause of the greatest threat to mankind.

If we examine the amount of land available for this ever-increasing population, we begin to see the problem. Not all land is useful to humans as it cannot produce food. We can cut out about one fifth of land because it is permanently covered by snow and ice. Then we can cut out another fifth because it is desert. Another fifth is too mountainous or is too great a height above sea-level. A tenth doesn't have enough soil for crops to grow - it is bare rock.

Obviously, with so little land to support us, we should be taking great care not to reduce it further. But are we? Mankind seems to be unable to accept that we live on a finite planet - we act as if its resources were infinite. Because of overpopulation and over-consumption, humanity is incapable of supporting itself on its "income" - the energy arriving continuously from the sun. Instead, we are consuming its "capital" - its nonrenewable fossil fuels and other mineral deposits that took millions of years to form but which are now being destroyed in decades. We are also doing the same with other vital resources not usually thought of as being nonrenewable such as fertile soils, groundwater and the millions of other species that share earth with us.

Man is constantly destroying the very resources which keep him alive. He is destroying the balance of nature which regulates climate and the atmosphere, produces and maintains healthy soils, provides food from the seas, etc. In short, by only considering our needs of today, we are ensuring there will be no tomorrow.

An understanding of man's effect on the balance of nature is crucial to be able to find the appropriate remedial action. It is a very

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common belief that the problems of the population explosion are caused mainly by poor people living in poor countries who do not know enough to limit their reproduction. This is not true. The actual number of people in an area is not as important as the effect they have on nature. Developing countries do have an effect on their environment, but it is the populations of richer countries that have a far greater impact on the earth as a whole.

The birth of a baby in, for example, Hong Kong, imposes more than a hundred times the amount of stress on the world's resources as a baby in India. Most people in India do not grow up to own cars or air-conditioners - nor do they eat the huge amount of meat and fish that the Hong Kong child does. Their life-styles do not require vast quantities of minerals and energy. Also, they are aware of the requirements of the land around them and try to put something back into nature to replace what they take out. The Hong Kong person simply takes without any thought as to what effect he is having on nature.

For example, tropical forests are known to be essential to the balance of nature yet we are destroying them at an incredible rate. They are being cleared not to benefit the natives of that country, but to satisfy the needs of richer countries. Central American forests are being destroyed to make pet food in the United States cheaper; in Papua New Guinea, forests are destroyed to supply cheaper cardboard packaging for Japanese electronic products; in Burma and Thailand, forests have been destroyed to produce more attractive furniture in Singapore and Hong Kong. Therefore, a rich person living thousands of miles away may cause more tropical forest destruction than a poor person living in the forest itself.

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In short, it is everybody's duty to safeguard the future of mankind - not only through population control, but by being more aware of the effect his actions have on nature. Nature is both fragile and powerful. It is very easily destroyed; on the other hand, it can so easily destroy its most aggressive enemy – man.

CONFUSING POLITICAL IDEOLOGY WITH ECONOMIC IDEOLOGY

The mainstream often mixes concepts such as democracy, authoritarian/totalitarian regimes, with free markets and communist economic ideologies. The terms of “left” and “right” wing politics is a gross oversimplification.

In summary, democracy does not automatically require free markets and free markets does not automatically require democracy. Many western governments supported dictatorships during the Cold War that practiced free market economics in a dictatorial/fascist manner, for example.

Leading up to World War II, a number of European nations saw their power determined by fascists, often via a democratic process. Today, many European democracies attempt a social model of economic development ranging from socialist to somewhat managed markets.

During the beginnings of free markets, the major European powers promoting it were themselves hardly democratic. Instead they were dominated by imperialist, racist, colonialist and aristocratic views and systems.

The point here is that by not making this distinction, policies can often be highlighted that appear democratic, or even could undermine democracy as many African countries have experienced,

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for example. As a recent example, as South Africa came out of apartheid, it was praised for its move to democracy, its truth and reconciliation approach and other political moves. Less discussed however, were the economic policies and conditions that followed.

A report describing a conference celebrating 10 years of South African independence from Apartheid noted how difficult a democratic system is to establish when combined with factors like regional and international economics which were identified as being “responsible for some of the problems” in the region:

In the conditions of a unipolar world and the development of multinationals, which are highly technologically advanced, it is hard for Africa to find an entry point into this ‘globalised’ context.... The conference examined the implications of the globalisation context for the prosperity of the region’s economic structure and the implications for the consolidation of democracy. The question of how the international world relates to and indeed is responsible for some of the problems was also deliberated at the conference. While the consensus was on Africans ... taking responsibility for their own welfare and problems, the conference acknowledged the interconnectivity among local, regional, continental and international economies. Indeed, some of the economic problems of the countries in the region can be traced back to their relationships with former colonial masters. More recently, the structural adjustment programmes of the 1980s continue to affect the economic stability of SADC countries.... provisional relief of debt has been linked to certain conditions, including political conditionality, which is basically a commitment to a narrow form of democracy, and economic policies, which have created deeper disempowerment. Some African scholars have dubbed this phenomenon ‘choiceless democracies’.

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SUCCESS AND FAILURE IN THE SMALL BUSINESS WORLD

Growth is the number one cause of failure in the small business world. However, if managed appropriately, growth can be positive for a small business.

“Manage Growth”

A small business owner must be able to teach and share his wisdom and experiences with others or risk destroying the business. By teaching and sharing, the owner/manager is able to focus attention on the "big picture" and allow others to worry about the details. Another key is adapting to the new situation. To manage growth of a business, some entrepreneurs suggest:

Allow the new manager to make some mistakes - growth does not come without mistakes;

Delegate responsibility with accountability.

“Sell Service, Give Away Product”

In today's society, it is the entrepreneurs’ job to "sell their service and give away their product." This philosophy can be accomplished with honesty and by "going the extra mile." Honesty is a good customer service. It is the commitment to tell the truth about the products sold and services available and to deal fairly with the public. Another key to good business is "going the extra mile" making a genuine effort to meet customers’ needs. Meeting customers' needs starts with understanding the cultures and groups

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of the local community. If their values, wants, and beliefs are understood, it is possible to better satisfy their needs.

Some tips to remember when investing in customer service are:

Most small business owners indicated that word-of-mouth advertising was the most important means of expanding the business.

A small business owner must invest 15 percent of his net earnings and time into new products and services to stay on the cutting edge.

"Attract and keep good employees"

Human resource management is another major challenge for the small business. First, most small business people have never worked under another's supervision. Secondly, the business firms are small, and, as a result, a professional personnel manager is not employed. To remedy this, entrepreneurs recommend the following:

Allow the workers to prioritize and create their own schedules. As a manager, hold them to their agreements.

Always look for an opportunity to praise an employee in public, but always correct him/her in private.

"People just need to talk to each other"

Small business owners suggest that networking with other owners and having a "professional team" are essential to the continuing success of a business. Having and utilizing fellow business people as

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contacts helps a manager to stay abreast of industry happenings and changes.

All organizations have several elements in common. The most obvious of these basic elements is a goal or purpose. The goal will vary but without it no organization would have a reason to exist. All organizations also have some program or method for achieving their goals. Organizations must also acquire and allocate the resources necessary to achieve their goals. All organizations are made up of people and depend on other organizations for the resources they need. Finally, all organizations have leaders or managers responsible for helping them achieve their goals.

Organizations serve society!

They are important because they are social institutions that reflect certain culturally accepted values and needs. They allow us to live together in a civilized way and to accomplish goals as a society. Organizations serve society by making the world a better, safer, cheaper and more pleasant place to live.

How successful an organization achieves its objectives and satisfies social responsibilities, depends on its managers. If managers do their jobs well, the organization will probably achieve its goals. And if a nation’s major organizations achieve their goals, the nation as a whole will prosper.

According to Peter Drucker, one of the most respected writers on management, “efficiency” and “effectiveness” are the essential concepts for evaluating managers.

Efficiency is the ability to do things right!

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An efficient manager is one who achieves results that measure up labor, materials and time used to achieve them. Managers who are able to minimize the cost of the resources needed to achieve goals are acting efficiently.

Effectiveness is the ability to do the right things to achieve the right goals!

A manager who selects an inappropriate goal is an ineffective manager. Effectiveness is the key to an organization’s success.

Management has been called “the art of getting things done through people”. This definition, by Mary Parker Follett, calls attention to the fact that, managers achieve organizational goals by arranging for others to perform whatever tasks may be necessary – not by performing the tasks themselves.

Management is the process of planning, organizing, leading and controlling the efforts of organization members and using all other organizational resources to achieve stated organizational goals.

Planning is the process of defining an organization’s objectives and determining how to achieve them. Managers plan today based on their assumptions about what will happen in the future. They look for the opportunities for improving their organizations and solutions to current problems in order to prevent future problems. In other words, managers plan so that organizations can move forward with the best probability of success.

Once managers are armed with good plans, they must organize human and material resources to carry them out. Resources must be gathered and allocated. Gathering resources includes staffing and organizing human resources. It also includes purchasing materials,

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securing financing and providing facilities. “Getting organized” means much more than defining structures, assigning jobs and bringing together essential resources. “Getting organized” implies the creation of a harmonious work environment and harmony is the result of effective leadership.

Leadership implies a system of inequalities in which superiors influence subordinates – in other words, managers direct human behavior to achieve organizational objectives. Several terms have been used interchangeably to describe the leadership function. These include “motivating”, “actuating” and “directing”. They all have in common the assumption that managers influence behavior.

Managers have the daily responsibility “to keep things on track”. This function of steering performance toward desired results is called controlling. Managers must evaluate performance, recognize problems and make hundreds of decisions. One aspect of the control process involves setting standards for performance, especially determining the quality of products and services. Another aspect of control process involves monitoring results. Yet another aspect consists of making adjustments to improve performance.

Managers can be classified in two ways: by their level in the organization and by the range of organizational activities they are responsible for.

The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management.

First-line managers direct operation employees only; they do not supervise other managers.

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The term middle management can include more than one level in an organization. Middle managers direct the activities of lower-level managers and sometimes those of operating employees as well. Middle managers’ principal responsibilities are to direct the activities that implement their organizations’ policies and to balance the demands of their superiors with the capacities of their subordinates.

Top manager is responsible for the overall management of the organization.

The hierarchy of management described as top, middle, and supervisory management is a vertical division of labor. Management is also divided horizontally along functional lines of authority. Functional management reflects a kind of specialization in which authority is vested in managers according to their fields of expertise.

Managers are organizational planners, organizers, leaders and controllers. Actually, every manager takes on a much wider range of roles to move the organization toward its stated objectives. In a broad sense, “a role” consists of the behavior patterns expected of individuals within a social unit.

Three interpersonal roles – figurehead, leader, and liaison – help managers keep their organizations running smoothly.

As a figurehead, the manager performs ceremonial duties such as representing the firm at public affairs and overseeing official company functions. Managers are symbols and personify for both organizational members and outside observers an organization’s success and failures.

Since leaders work with and through other people, they are responsible and accountable for their subordinates’ actions as well

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as for their own. In fact their subordinates’ success or failure is a direct measure of their own success or failures.

All managers act as liaisons between groups and individuals that are part of an organization. All effective managers play “politics” in the sense that they develop networks of mutual obligations with other managers in the organization.

Receiving and transmitting information are the most important aspects of a manager’s job. Managers need information to make intelligent decisions and other people in the organization depend on information received from or transmitted through managers. There are three informational roles: monitor, disseminator, and spokesperson.

Monitor

Managers are constantly looking for useful information both within and outside the organization. They question subordinates and collect unsolicited information. The role of monitor often makes managers the best-informed members of their groups.

Disseminator

Managers distribute important information to subordinates. It is the manager’s responsibility to be sure subordinates have the information they need to carry out their duties.

Spokesperson

Managers also transmit information to people outside their work units. Keeping superiors well-informed is one of the most important aspects of this role. Managers may also speak for their work unit

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within the organization or represent the entire organization in dealing with customers, contractors or government officials.

The innovative manager (IM) maintains the functional stability of his business and can develop it in the appropriate direction. He can estimate the possible risk of innovations in his business. Even in a high-risk business he first and foremost strives to achieve the results he has planned for. He is persistent in making necessary arrangements and considers possible complications and alternatives. He encourages creative thinking in a group and has little use for those who need instructions.

The negative aspect of the IM may be his impatience with those who wish to postpone making decisions. He shows his annoyance openly and this sometimes hurts the self-respect of his associates. The innovative manager may face difficulties in finding a way out of unusual or risky situations.

As a rule, IM actively and persistently strives for success. He knows how to set practical goals and implement them on time.

You easily analyze a situation. You know that you should formulate your goal precisely before taking the first step towards it. The various ways leading to the goal should be defined and assessed and then the most appropriate one selected. If, after weighing the positive and negative consequences of the goal achievement, you should decide that they are acceptable, you may begin implementing your decisions. This should be done quickly because various circumstances can slow down or stop your efforts towards achieving your goal.

It is very important to place your ads with those mass-media agencies which have access to as many people as possible. Very

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valuable for this purpose are various Internet advertising tools, including solicited commercial e-mails sent to professionals and other customers. It is highly desirable to contact the centers which you expect will be your customers, by mail, telephone or other means of communication.

Analyze carefully the needs of the consumers and design your commercials in such a manner that they meet the present requirements of your potential customers. Referrals of professionals and recommendations are essential for your business. Publish them in your commercials. They may have a critical impact on the customer's decision to buy your product, because in many cases he has no other way of judging the quality of your product. Always be in contact with your customers.

Try to personalize your relations with the customer. Let him feel that you are selling your product personally to him, considering his wishes and demands. Do not push your product too heavily to a potential customer while speaking to him. Point out the advantages of your product and why it would be especially useful to your customer. Provide the customer with an additional service free of charge. Pay attention to details like these will make your customers happy and will encourage them to return to you for repeat purchases and to recommend your business to others. There are various ways of showing your interest and friendly concern to the customer.

The innovative manager can succeed not only in starting a new business but also when he purchases an established business. Often it is to his advantage to acquire a running business. For example, if you are a newcomer in the field, when you buy the business you also acquire the contacts and contracts with suppliers as well as the

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customers. Usually a newcomer is not familiar with local customs, and this can be a serious obstacle when starting a business and acquiring customers.

A market survey should be carried out thoroughly in order to evaluate the sales potential of your goods or service. Become familiar with the expenses and income of companies producing products similar to yours. It is useful to obtain the opinion of experts experienced in the sales of your kind of goods or service. Make decisions about the necessity and the volume of investments only after thoroughly considering this information. Consider the possibility or necessity of a partnership for expanding or updating your enterprise. If you are considering significantly expand your business, then it may be advantageous to have business leader as a partner.

MANAGEMENT

All organizations have several elements in common. The most obvious of these basic elements is a goal or purpose. The goal will vary but without it no organization would have a reason to exist. All organizations also have some program or method for achieving their goals. Organizations must also acquire and allocate the resources necessary to achieve their goals. All organizations are made up of

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people and depend on other organizations for the resources they need. Finally, all organizations have leaders or managers responsible for helping them achieve their goals.

Organizations serve society. They are important because they are social institutions that reflect certain culturally accepted values and needs. They allow us to live together in a civilized way and to accomplish goals as a society. Organizations serve society by making the world a better, safer, cheaper and more pleasant place to live.

How successful an organization achieves its objectives and satisfies social responsibilities, depends on its managers. If managers do their jobs well, the organization will probably achieve its goals. And if a nation’s major organizations achieve their goals, the nation as a whole will prosper.

According to Peter Drucker, one of the most respected writers on management, “efficiency” and “effectiveness” are the essential concepts for evaluating managers.

Efficiency is the ability to do things right. An efficient manager is one who achieves results that measure up labor, materials and time used to achieve them. Managers who are able to minimize the cost of the resources needed to achieve goals are acting efficiently.

Effectiveness is the ability to do the right things to achieve the right goals. A manager who selects an inappropriate goal is an ineffective manager. Effectiveness is the key to an organization’s success.

Management has been called “the art of getting things done through people”. This definition, by Mary Parker Follett, calls attention to the fact that, managers achieve organizational goals by arranging for

26

others to perform whatever tasks may be necessary – not by performing the tasks themselves.

Management is the process of planning, organizing, leading and controlling the efforts of organization members and using all other organizational resources to achieve stated organizational goals.

Planning is the process of defining an organization’s objectives and determining how to achieve them. Managers plan today based on their assumptions about what will happen in the future. They look for the opportunities for improving their organizations and solutions to current problems in order to prevent future problems. In other words, managers plan so that organizations can move forward with the best probability of success.

Once managers are armed with good plans, they must organize human and material resources to carry them out. Resources must be gathered and allocated. Gathering resources includes staffing and organizing human resources. It also includes purchasing materials, securing financing and providing facilities. “Getting organized” means much more than defining structures, assigning jobs and bringing together essential resources. “Getting organized” implies the creation of a harmonious work environment and harmony is the result of effective leadership.

Leadership implies a system of inequalities in which superiors influence subordinates – in other words, managers direct human behavior to achieve organizational objectives. Several terms have been used interchangeably to describe the leadership function. These include “motivating”, “actuating” and “directing”. They all have in common the assumption that managers influence behavior.

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Managers have the daily responsibility “to keep things on track”. This function of steering performance toward desired results is called controlling. Managers must evaluate performance, recognize problems and make hundreds of decisions. One aspect of the control process involves setting standards for performance, especially determining the quality of products and services. Another aspect of control process involves monitoring results. Yet another aspect consists of making adjustments to improve performance.

MANAGERS

Managers can be classified in two ways: by their level in the organization and by the range of organizational activities they are responsible for.

The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management.

First-line managers direct operation employees only; they do not supervise other managers.

The term middle management can include more than one level in an organization. Middle managers direct the activities of lower-level managers and sometimes those of operating employees as well. Middle managers’ principal responsibilities are to direct the activities that implement their organizations’ policies and to balance the demands of their superiors with the capacities of their subordinates.

Top manager is responsible for the overall management of the organization.

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The hierarchy of management described as top, middle, and supervisory management is a vertical division of labor. Management is also divided horizontally along functional lines of authority. Functional management reflects a kind of specialization in which authority is vested in managers according to their fields of expertise.

Managers are organizational planners, organizers, leaders and controllers. Actually, every manager takes on a much wider range of roles to move the organization toward its stated objectives. In a broad sense, “a role” consists of the behavior patterns expected of individuals within a social unit.

Three interpersonal roles – figurehead, leader, and liaison – help managers keep their organizations running smoothly.

As a figurehead, the manager performs ceremonial duties such as representing the firm at public affairs and overseeing official company functions. Managers are symbols and personify for both organizational members and outside observers an organization’s success and failures.

Since leaders work with and through other people, they are responsible and accountable for their subordinates’ actions as well as for their own. In fact their subordinates’ success or failure is a direct measure of their own success or failures.

All managers act as liaisons between groups and individuals that are part of an organization. All effective managers play “politics” in the sense that they develop networks of mutual obligations with other managers in the organization.

Receiving and transmitting information are the most important aspects of a manager’s job. Managers need information to make

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intelligent decisions and other people in the organization depend on information received from or transmitted through managers. There are three informational roles: monitor, disseminator, and spokesperson.

Monitor. Managers are constantly looking for useful information both within and outside the organization. They question subordinates and collect unsolicited information. The role of monitor often makes managers the best-informed members of their groups.

Disseminator. Managers distribute important information to subordinates. It is the manager’s responsibility to be sure subordinates have the information they need to carry out their duties.

Spokesperson. Managers also transmit information to people outside their work units. Keeping superiors well-informed is one of the most important aspects of this role. Managers may also speak for their work unit within the organization or represent the entire organization in dealing with customers, contractors or government officials.

INNOVATIVE MANAGER

The innovative manager (IM) maintains the functional stability of his business and can develop it in the appropriate direction. He can estimate the possible risk of innovations in his business. Even in a high-risk business he first and foremost strives to achieve the results he has planned for. He is persistent in making necessary arrangements and considers possible complications and

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alternatives. He encourages creative thinking in a group and has little use for those who need instructions.

The negative aspect of the IM may be his impatience with those who wish to postpone making decisions. He shows his annoyance openly and this sometimes hurts the self-respect of his associates. The innovative manager may face difficulties in finding a way out of unusual or risky situations.

Necessary Steps to Success in Your Business

As a rule, IM actively and persistently strives for success. He knows how to set practical goals and implement them on time.

You easily analyze a situation. You know that you should formulate your goal precisely before taking the first step towards it. The various ways leading to the goal should be defined and assessed and then the most appropriate one selected. If, after weighing the positive and negative consequences of the goal achievement, you should decide that they are acceptable, you may begin implementing your decisions. This should be done quickly because various circumstances can slow down or stop your efforts towards achieving your goal.

It is very important to place your ads with those mass-media agencies which have access to as many people as possible. Very valuable for this purpose are various Internet advertising tools, including solicited commercial e-mails sent to professionals and other customers. It is highly desirable to contact the centers which you expect will be your customers, by mail, telephone or other means of communication.

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Analyze carefully the needs of the consumers and design your commercials in such a manner that they meet the present requirements of your potential customers. Referrals of professionals and recommendations are essential for your business. Publish them in your commercials. They may have a critical impact on the customer's decision to buy your product, because in many cases he has no other way of judging the quality of your product. Always be in contact with your customers.

Try to personalize your relations with the customer. Let him feel that you are selling your product personally to him, considering his wishes and demands. Do not push your product too heavily to a potential customer while speaking to him. Point out the advantages of your product and why it would be especially useful to your customer. Provide the customer with an additional service free of charge. Pay attention to details like these will make your customers happy and will encourage them to return to you for repeat purchases and to recommend your business to others. There are various ways of showing your interest and friendly concern to the customer.

The innovative manager can succeed not only in starting a new business but also when he purchases an established business. Often it is to his advantage to acquire a running business. For example, if you are a newcomer in the field, when you buy the business you also acquire the contacts and contracts with suppliers as well as the customers.Usually a newcomer is not familiar with local customs, and this can be a serious obstacle when starting a business and acquiring customers.

A market survey should be carried out thoroughly in order to evaluate the sales potential of your goods or service. Become

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familiar with the expenses and income of companies producing products similar to yours. It is useful to obtain the opinion of experts experienced in the sales of your kind of goods or service. Make decisions about the necessity and the volume of investments only after thoroughly considering this information. Consider the possibility or necessity of a partnership for expanding or updating your enterprise. If you are considering significantly expand your business, then it may be advantageous to have business leader as a partner.

MARKETING

Marketing is the process of planning and executing, pricing, promotion and distribution of ideas, goods, and services to create exchange that satisfy individual and organizational objectives. Marketing begins and ends with marketing information about customers – first to determine what customers need, and later to evaluate how well the firm is meeting those needs.

A market consists of people with their needs, the ability to buy, and the desire and ability to sell. A business firm controls four important elements of marketing called a marketing mix.

A firm’s marketing mix is the combination of the product, the price of the product, the means for its distribution, and the promotion of the product to reach a firm’s target market.

The product ingredient of the marketing mix includes decisions about the product’s design, brand name, packaging, and the like.

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The pricing ingredient includes both base price and decisions of various kinds. Pricing decisions are intended to maximize profit.

The distribution ingredient involves not only transportation and storage but also the selection of intermediaries.

The promotion ingredient focuses on providing information to target markets. The major forms of promoting include advertising and publicity.

The ingredients of the marketing mix are controllable elements. A firm can vary each of them to suit its organizational goals, marketing goals, and target markets.

A marketing strategy is a plan for the best use of an organization’s resources to reach its objectives. Developing a marketing strategy involves selecting and analyzing a target market and creating a marketing mix that will satisfy that market.

A target market is chosen through the market segmentation approach. A market segment is a group of individuals or organizations within a market that have similar characteristics and needs. The market segmentation approach directs a marketing mix at a segment of a market.

Market measurement and sales forecasting are used to estimate sales potential and predict product sales in specific market segments. Strategies are then monitored and evaluated through marketing research and marketing information system, which stores and processes internal and external data in a form suitable for marketing decision making.

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Managers can be classified in two ways: by their level in the organization and by the range of organizational activities they are responsible for.

The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management.

First-line managers direct operation employees only; they do not supervise other managers.

The term middle management can include more than one level in an organization. Middle managers direct the activities of lower-level managers and sometimes those of operating employees as well. Middle managers’ principal responsibilities are to direct the activities that implement their organizations’ policies and to balance the demands of their superiors with the capacities of their subordinates.

Top manager is responsible for the overall management of the organization.

The hierarchy of management described as top, middle, and supervisory management is a vertical division of labor. Management is also divided horizontally along functional lines of authority. Functional management reflects a kind of specialization in which authority is vested in managers according to their fields of expertise.

Managers are organizational planners, organizers, leaders and controllers. Actually, every manager takes on a much wider range of roles to move the organization toward its stated objectives. In a broad sense, “a role” consists of the behavior patterns expected of individuals within a social unit.

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Three interpersonal roles – figurehead, leader, and liaison – help managers keep their organizations running smoothly.

As a figurehead, the manager performs ceremonial duties such as representing the firm at public affairs and overseeing official company functions. Managers are symbols and personify for both organizational members and outside observers an organization’s success and failures.

Since leaders work with and through other people, they are responsible and accountable for their subordinates’ actions as well as for their own. In fact their subordinates’ success or failure is a direct measure of their own success or failures.

All managers act as liaisons between groups and individuals that are part of an organization. All effective managers play “politics” in the sense that they develop networks of mutual obligations with other managers in the organization.

Receiving and transmitting information are the most important aspects of a manager’s job. Managers need information to make intelligent decisions and other people in the organization depend on information received from or transmitted through managers. There are three informational roles: monitor, disseminator, and spokesperson.

Monitor. Managers are constantly looking for useful information both within and outside the organization. They question subordinates and collect unsolicited information. The role of monitor often makes managers the best-informed members of their groups.

Disseminator. Managers distribute important information to subordinates. It is the manager’s responsibility to be sure

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subordinates have the information they need to carry out their duties.

Spokesperson. Managers also transmit information to people outside their work units. Keeping superiors well-informed is one of the most important aspects of this role. Managers may also speak for their work unit within the organization or represent the entire organization in dealing with customers, contractors or government officials.

EGOCENTRIC MARKETING

Let’s face it; we humans are egocentric by nature. We approach everything from our own perspective. And we spend most of the time thinking and talking about what’s important to us. It’s only natural. After all, we spend all our time dealing with our own life, family, health and body. And you know what? Your potential customers are no different. Here’s the rub though…

You, by your very nature, want to talk about yourself and what you do in your marketing materials. But your clients are not really all that interested in you—at least not initially. In the beginning, what they really want to know is “What is in it for me?” Because they have their own set of needs, problems and desires occupying their minds. And chances are they are hoping your products or services are going to help them in some way. Here’s a good example of what

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I’m talking about... Let’s say you are shopping around for new Customer Resource Management software. And your main priority is to start tracking your email marketing.

What would you want to know first about the software?

The name of the manufacturer?

Their history and background?

Their mission?

If I ended up on a page that said:

“Acme software is the premier developer of robust CRM applications for small to Mid sized businesses. Our company is made up of thirty of the nation’s top software engineers who specialize in creating powerful relational database software for account management…”

I’d likely click away.

But, if I ended up on a page that said: “Entrepreneurs…Manage your contacts and automate all your email marketing campaigns quickly and easily with Marketing Manager! Designed especially for small businesses, this full-function software takes all your time-consuming contact management tasks and streamlines them into one, easy-to-use dashboard.”

Well, now you’ve got my attention. After this I’d look for a list of the features and benefits. Then, if it looked like this software might fit

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the bill, I’d probably want to learn a bit more about the company. On the other hand, if the first page had been all about the company, I never would have read past the headline. So, where do your marketing materials fall? Are they egocentric or not? If you write your own marketing materials, chances are you’re guilty of Egocentric Marketing.

How can you tell for sure?

1) Read through your marketing materials and count the number of “I’s” and “We’s” (plus any time you use your company name).

2) Count the number of “You’s” and “Your’s.” If either the “You’s” or “We’s” are in a headline or subhead, or at the start of a sentence or paragraph, count them twice.

3) Compare the two numbers. If you’ve got more “I’s” and “We’s” than “You’s” and “Your’s”, then you are indeed guilty of egocentric marketing!

Luckily, there’s no time like the present to change your focus. The best way to do that is to put yourself in your customers’ shoes. Then write about the things that matter most to them instead of what’s important to you.

FINANCIAL MANAGEMENT AND ACCOUNTING

Financial management consists of all those activities that are concerned with obtaining money and using it effectively. Effective

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financial management involves careful planning. It begins with a determination of the firm’s financial needs.

Money is needed to start a business. Income from sales could be used to provide a profit. But sales revenue does not generally flow evenly. Income and expenses may vary from season to season or from year to year. Temporary financing may be needed when expenses are high or income is low. Then, the need to purchase a new facility or expand an existing facility may require more than is available within a firm. In these cases the firm must look for outside sources of financing. Usually it is short-or-long-term financing.

Short-term financing is money that will be used for one year or less and then repaid. There are many short-term financing needs. The two deserve special attention. First, certain business practices may affect a firm’s cash flow and create a need for short-term financing. Cash flow is the movement of money into and out of an organization. A second need for short-term financing that is related to a firm’s cash-flow problem is inventory.

Inventory requires considerable investment for most manufacturers, wholesalers, and retailers. The borrowed money is used to buy materials and supplies, to pay wages and rent, and to cover inventory costs until the goods are sold. Then, the money is repaid out of sales revenue.

Long-term financing is money that will be used for longer period than one year. Long-term financing is needed to start a new business. It is also needed for executing business expansions and mergers, for developing and marketing new products, and for replacing equipment that becomes obsolete or inefficient.

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Today, it is impossible to manage a business operation without accurate and timely accounting information. The primary users of accounting information are managers. The firm’s accounting system provides the information dealing with revenues, costs, profits, return on investment, and the like. Accounting information helps managers plan and set goals, organize, motivate, and control. Lenders and suppliers need this accounting information to evaluate credit risks. Stockholders and potential investors need this information to evaluate soundness of investments.

The basis for the accounting process is the accounting equation. It shows the relationship among the firm’s assets, liabilities, and owner’s equity.

Assets are the items of value that a firm owns – cash, inventories, land, equipment, buildings, patents, and the like.

Liabilities are the firm’s debts and obligations. Owner’s equity is the difference between a firm’s assets and its liabilities.

A balance sheet is a summary of a firm’s assets, liabilities, and owner’s equity accounts. A balance sheet must show that the firm’s assets are equal to its liabilities plus its owner’s equity. The balance sheet is prepared at least once a year.

An income statement is a summary of firm’s revenues and expenses during a specific accounting period.

ECONOMIC ACTIVITY

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Most people work to earn a living, and produce goods and services. Goods are either agricultural (like maize and milk) or manufactured (like cars and paper).Services are such things as education, medicine and commerce. Some people provide goods, some provide services. Other people provide both goods and services.

The work people do is called economic activity. All economic activities together make up the economic system of a town, a city, a country or the world. Such an economic system is the sum total of what people do and what they want. The work people undertake either provides what they need or provides the money with which they can buy essential commodities.

Economic activity is the production and distribution of goods and services. Economic Activity is also correlated with employment. If unemployment increases than the demand for goods and services decrease, however, if it decreases than on the other hand we have a higher demand for goods and services. Economic activity and expected future levels of it have an important influence on security prices because of the interrelationship between economic activity and corporate profits, inflation, interest rates, and other variables. One frequently used measure of economic activity is the gross domestic product.

The Science of Economics

Economics is a science. This science is based upon the facts of our everyday lives. Economists study our everyday lives. They study the system which affects our lives. The economist tries to describe the facts of the economy in which we live. He tries to explain how the system works. His methods should be objective and scientific. We

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need food, clothes and shelter. If we could get food, clothes and shelter without working, we probably would not work. But even when we have these essential things, we may want other things. If we had them, these other things might make life more enjoyable. The science of economics is concerned with all our material needs and wants.

Most simply put, economics is the study of making choices. We need economics because we as individuals and as a society experience scarcity (of raw materials, of goods and services, of time, and so on) in relationship to our ever-growing needs and wants. Economics examines how we make choices: a new car or college tuition? more hospitals or more highways? more free time or more income from work? It gives us a way of understanding how to make best use of natural resources, machinery, and people's work efforts.

Economics is the study of how people choose to use resources. Resources include the time and talent people have, the land, buildings, equipment, and the knowledge of how to combine them to create useful products and services.

Important choices involve how much time to devote to work, to school, and to leisure, how much money to spend and how much to save, how to combine resources to produce goods and services, and how to shape the level of taxes and the role of government.

Often, people appear to use their resources to improve their well-being. Well-being includes the satisfaction people gain from the products and services they choose to consume, and the security and services provided by effective governments. Sometimes, however, people appear to use their resources in ways that don't improve their well-being.

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In short, economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures. Economists seek to measure well-being, to learn how well-being may increase overtime, and to evaluate the well-being of the rich and the poor.

Although the behavior of individuals is important, economics also addresses the collective behavior of businesses and industries, governments and countries, and the globe as a whole.

Here are some definitions of economics:

"Economics is the study of people in the ordinary business of life." (Alfred Marshall)

"Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses." (Lionel Robbins)

Economics is the "study of how societies use scarce resources to produce valuable commodities and distribute them among different people." (Paul A. Samuelson)

People work because ...

Some believe that that the most important aspect of a job is the money a person earns. Although people work to earn money, money is not the main reason people stay in their jobs. They also work because they enjoy working, they receive job satisfaction, and they like the sense of accomplishment. Money is nice, but it is not the only reason people get up and go to work each day. Most people work for work’s sake. They like to interact with other people. They

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like to help people solve problems, learn something, or get a product.

People are never satisfied with what they have!

I think it’s probably true that people are never satisfied with what they have. They always want something different from what is theirs. This seems to be part of our human nature. We are always striving for a better job, a nicer place to live, or more expensive clothes. The problem comes when we won’t let ourselves be satisfied with anything we have. If we have a comfortable life and still feel as if something missing, then we need to look inward. This something that’s missing may be in our spirit.

The Limits on Economic Freedom

If a person can do what he wishes with his own property, time, and energy, then economists say that he is “economically free”. In all communities, of course, limits are imposed upon the personal freedom of their citizens and these limits are in some cases very complex but in others relatively simple. All individuals are required to conform to the laws made by their governments.

Complete economic freedom of action can create great difficulties, because the freedoms exercised by various individuals often conflict. If citizens were completely free, some landowners might build factories in unsuitable places. If there was no system of control, factory-owners might make their employees work too long each day. If they were completely free, workers might stop working when they got their first pay, and come back only when they needed more

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money. Such economic anarchy could cause instability (unemployment; loss of production etc.) in the whole economy of the country.

Laws related to economic conditions are sometimes concerned with contracts between employers and employees. Sometimes they are concerned with workers’ health, wages and pension, and sometimes with the location of places of work. Sometimes they protect the interests principally of the workers, while at other times they may be beneficial towards the employers.

Scarcity Scarcity refers to the tension between our limited resources and our unlimited wants and needs. For an individual, resources include time, money and skill. For a country, limited resources include natural resources, capital, labor force and technology. Because all of our resources are limited in comparison to all of our wants and needs, individuals and nations have to make decisions regarding what goods and services they can buy and which ones they must forgo. Of course, each individual and nation will have different values, but by having different levels of (scarce) resources, people and nations each form some of these values as a result of the particular scarcities with which they are faced.

So, because of scarcity, people and economies must make decisions over how to allocate their resources. Economics, in turn, aims to study why we make these decisions and how we allocate our resources most efficiently.

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MACRO AND MICROECONOMICS

Macro and microeconomics are the two vantage points from which the economy is observed. Macroeconomics looks at the total output of a nation and the way the nation allocates its limited resources of land, labor and capital in an attempt to maximize production levels and promote trade and growth for future generations. After observing the society as a whole, Adam Smith noted that there was an "invisible hand" turning the wheels of the economy: a market force that keeps the economy functioning.

Macroeconomics examines the economy as a whole and answers questions such as 'What causes the economy to grow over time?', 'What causes short-run fluctuations in the economy?' 'What influences the values various economic indicators and how do those indicators affect economic performance?

Macroeconomics can be best understood in contrast to microeconomics which considers the decisions made at an individual or firm level. Macroeconomics considers the larger picture. An understanding of microeconomics is crucial to understand macroeconomics. Once we understand how an individual, on average, will change their behavior we will then understand the large scale relationships in an economy.

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Microeconomics looks into similar issues, but on the level of the individual people and firms within the economy. It studies the parts that make up the whole economy. Analyzing certain aspects of human behavior, microeconomics shows us how individuals and firms respond to changes in price and why they demand what they do at particular price levels.

WHAT IS MONEY?

Money is a good that acts as a medium of exchange in transactions. Classically it is said that money acts as a unit of account, a store of value, and a medium of exchange.

What Is Money? It Is More Than Pieces of Paper.

So money isn't just pieces of paper. It's a medium of exchange that facilitates trade.

What Is Money And How Is It Measured?

So there are several different classifications of money. Note that credit cards are not a form of money.

Note that money is not the same thing as wealth. We cannot make ourselves richer by simply printing more money.

What Is Money?

Most people don't spend much time wondering what money is, their major concern is how much they have, and how to get more. Usually, the question of what money IS arises only when money ceases to function properly. In economics (properly understood), the answer to the question - what is money? - consists of three words:

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Money is a "medium of exchange"

That's all. Yet the conception of a "medium of exchange" ranks below only language as the greatest intellectual discovery in history.

Exchange

Animals don't exchange (or trade) amongst one another. They are self-sufficient, or they take from each other, or they exercise the prerogative of superior strength and/or cunning. There are some human beings who get along in a very similar fashion, but the overwhelming majority recognise the benefits of voluntary exchange. Strictly speaking, the use of the word "voluntary" in this context is redundant. The phrase "your money or your life" is not the precursor to an exchange. The first rule of any voluntary exchange is simplicity itself. If two people are willing to exchange, each must view the results of the exchange as being beneficial. If either of them is not of that view, the exchange will not take place.

Direct And Indirect Exchange

Direct exchange, or barter, is exactly that - my good or service for your good or service. The problem is that I might want what you have to offer, but you might not want what I offer in exchange. With no "medium" of exchange, there is no deal. Indirect exchange takes place when one party has a "medium" that is always acceptable, not for what it is, but for what can be done with it. If you offer me money, I will accept it, because I know that I can exchange it for what I want, whenever I want it.

Indirect exchange involves the use of MONEY - the "medium" of exchange. Money is the universal key, it fits all locks. And the world it has unlocked is the world we live in today. Money has made the

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division of labour possible. It has made the accumulation of wealth. Perhaps most important of all, it has hugely advanced the potential for amicable interaction between people. To survive as such, and to prosper, a rational animal must exchange. He or she has language, to exchange ideas, and money, to exchange the fruits of ideas. From that foundation, everything else we see around us has been built.

What Should Be Used As Money?

What is money? It is a medium of exchange. What does it do? It ensures the success of exchange by being the one item on offer that is ALWAYS acceptable. Why is it necessary? Because human beings must exchange to live together in peace, and to prosper. How important was the discovery of the idea of money? Look around you.

What Is Money?

This question divides economists even more than it divides voters. Voters do not think much about this question. Economists think about it throughout their careers. They do not agree with each other regarding the answer.

The economists are not agreed.

THE DEBATE OVER MONEY

What is money? These three words introduce one of the most baffling areas of economic thought. I can think of no other area of economics in which there is greater confusion, leading to greater economic disruptions, than this one.

A characteristic feature of all systems of economic thought except the Austrian School is a failure to integrate monetary theory with general economic theory. With the exception of the Austrian School,

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all schools of thought create exceptions to the laws of economics that they say apply in all of the other areas of the economy. They insist that the government is necessary to intervene into the free market in order to bring order to monetary affairs.

They argue that money is not part of a system of economic practice and theory. They also imply that monetary theory is not part of an integrated system of economic cause-and-effect. The explanations given for economic causation in every other area of the economy are not accepted as valid in the realm of money.

Monetary theory, when coupled with an explanation of how banking works, provides a case study of the unwillingness of economists to pursue the logic of economic causation. This should be a tip-off to the fact that there is something fundamentally wrong with either their theory of money or their general economic theory.

NOKIA PARTNERS WITH MICROSOFT ON WINDOWS PHONE

Nokia, the world's largest-volume cell phone maker, and software giant Microsoft are joining forces. As part of a new agreement, Nokia will adopt Windows Phone as its choice smartphone platform, and Bing will become the default search engine on all of Nokia's phones.

In return, Nokia will provide services such as mapping programs and other software to help flesh out Microsoft's offerings, as well as leverage the handset giant's relationships with cellular carriers.

The companies' chief executives jointly penned a news release that went out early Friday morning in advance of the formal

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announcement in London. The materials describe the strategic partnership as "long term," though no timeframe was given. Some experts say Nokia may be better served by looking to Google's Android platform instead. Android, a system provided to manufacturers for free, has quickly risen as the biggest challenger to Nokia's mobile dominance.

The Symbian platform from Nokia has shown versatility, but it hasn't aged well. The system is criticized for being clunky and especially awkward in an increasingly touchscreen-focused environment.

Still, Nokia remained the top seller of smartphones last year, with 37.6%, according to a report from research firm Gartner. But the cell phone giant had dropped from the 46.9% it held the year before, the data shows. Meanwhile, Android phones had 22.7% of the market in 2010, compared to about 4% the year prior.

Like Nokia, Microsoft's global share of the heating smartphone segment fell during the same period -- by more than half, the Gartner data shows.

But Microsoft unleashed a major new smartphone system late last year, called Windows Phone 7. Microsoft's hope is that this will turn the company's fortunes in the mobile industry around.

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In the few months it's been available, Windows Phone has gotten off to a slow start. Major manufacturers including Samsung Electronics and HTC initially pledged support for the software with launch devices, but most are now banking on the success of Android.

Nokia had begun developing a new system called MeeGo, along with Intel. This initiative will be dropped in favor of Windows Phone.

With a global juggernaut like Nokia signed on, Microsoft's chances at success have improved, experts say. Stephen Elop, Nokia's first non-Finnish CEO, was formerly an executive at Microsoft.

Elop sent employees a dramatic message this week saying that Nokia is "standing on a burning platform." In the e-mail, he highlighted the limitations of Symbian and contrasted it with Apple's and Google's successes at stealing away market share over a short time.

"Nokia, our platform is burning," Elop wrote in the widely circulated memo. "We are working on a path forward -- a path to rebuild our market leadership."

Elop, along with Microsoft CEO Steve Ballmer, will expand on this path in the meeting with analysts Friday morning.

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"Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale," Elop said in a statement. "It's now a three-horse race."

FOR SALE

‘You name it, we’ll get it for you,’ Baki said, waving his mobile phone as if to show delivery was just a quick call away. ‘Monkeys, birds, turtles, orang-utans, whatever you want. Tigers and rhinos are a bit harder but shouldn’t be a problem.’ What was so shocking about this conversation was not that it was taking place – I wasn’t so naive as to think the problem of illegal animal trading had been solved – but how openly it was happening.

The next shock came when we started discussing prices. Most of the species on offer are endangered, and so listed as protected, anyone caught trading them faces five years in prison and up to £7,000 in fines. ‘It’s like this, mister,’ Baki began, clearly trying to justify a very high price. ‘Orang-utans are getting pretty hard to find these days, so I’m going to have to charge you at least two million rupiah.’ Seeing the surprise on my face, he added hurriedly, ‘But we can offer you a discount.’ Baki had completely misunderstood my look. Two million rupiah – a complete bargain, I thought, considering there are perhaps only 15,000–20,000 orang-utans left in the wild.

Someone trying to make a difference to all this is conservationist, Yunus Makasau, who runs an animal rescue centre. When I visited, there were three bears, several monkeys and four orang-utans. Two

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of these were seized in a raid on an illegal animal show at a local zoo. The zoorefused to comment on the case, but Yunus finds it hard to believe the people in charge knew nothing about it. ‘How can they not be aware of what is going on in their own zoo? This just shows the size of the problem we are facing.’

Most of the animals are kept at the centre for a week or two before being shipped to larger rehabilitation centres where they are trained to survive in the wild. I accompanied Yunus on a mission to a nearby factory to rescue two orang-utans. When we arrived we found Lucky and Lulu imprisoned in a tiny cage. Like inquisitive children they took a lively interest in cameras and watches. Their bright red fur sparkled in the sunlight but they were close to starvation. They had been bought by one of the factory workers about two years earlier and kept in captivity here.

The staff had decided to take action. ‘We saw Yunus on the TV rescuing the orang-utans from the zoo, so we decided to contact him,’ said Leong, another of the workers. He couldn’t explain why no one had reported the orang-utans’ owner earlier.

Yunus said the staff would not be prosecuted. ‘Our policy is that we do nothing when people hand the animals over voluntarily. After all, the most important thing is to get the animals back and to encourage people to give them back. But if we have to take them back by force, then we

prosecute whoever we can.’ An hour later, Lucky and Lulu were enjoying a nourishing meal of tomatoes and lettuce leaves at the

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centre – two of the fortunate few that had survived the clutches of the traders.

WARNING ON GLOBAL WARMING

1. Global warming could cause drought and possibly famine in China, the source of much of Hong Kong's food, by 2050, a new report predicts. Hong Kong could also be at risk from flooding as sea levels rose. The report recommends building sea-walls around low-lying areas such as the new port and airport reclamations. Published by the World Wide Fund for Nature (WWF), the report, which includes work by members of the Chinese Academy of Meteorological Sciences, uses the most recent projections on climate change to point to a gloomy outlook for China. 

2. By 2050 about 30 to 40 per cent of the country will experience changes in the type of vegetation it supports, with tropical and sub-tropical forest conditions shifting northward and hot desert conditions rising in the west where currently the desert is temperate. Crop-growing areas will expand but any benefit is expected to be negated by increased evaporation of moisture, making it too dry to grow crops such as rice. The growing season also is expected to alter, becoming shorter in southern and central China, the mainland's breadbasket. The rapid changes make it unlikely that plants could adapt.

3. "China will produce smaller crops. In the central and northern areas, and the southern part, there will be decreased production because of water limitations," Dr. Rick Leemans, one of the authors of the report, said during a brief visit to the territory yesterday. Famine could result because of the demands of feeding the

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population - particularly if it grows - and the diminished productivity of the land. "It looks very difficult for the world as a whole" he said. 

4. Global warming is caused by the burning of large amounts of fossil fuels, such as coal and oil, which release gases that trap heat in the atmosphere. World temperatures already have increased this century by about 0.6 degrees Celsius and are projected to rise by between 1.6 degrees and 3.8 degrees by 2100. 

5. Dr. Leemans said China's reliance on coal-fired power for its industrial growth did not bode well for the world climate. "I think the political and economic powers in China are much greater than the environmental powers, and (greenhouse gas emissions) could accelerate," Dr. Leemans said. "China is not taking the problem seriously yet, although it is trying to incorporate this kind of research to see what is going to happen."

6. The climate change report, which will be released tomorrow, focuses on China but Mr. David Melville of WWF-Hong Kong said some of the depressing scenarios could apply to the territory. Food supplies, for instance, could be affected by lower crop yields. "Maybe we could afford to import food from elsewhere but you have to keep in mind that the type of changes experienced in southern China will take place elsewhere as well," he said. Sea levels could rise as glaciers melted and the higher temperatures expanded the size of the oceans, threatening much of developed Hong Kong which is built on reclaimed land. Current projections are that sea levels worldwide will rise by 15 to 90 centimeters by 2100, depending on whether action is taken to reduce greenhouse gas emissions. 

7. "Hong Kong has substantial areas built on reclaimed land and sea level rises could impact on that, not only on Chek Lap Kok but

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the West Kowloon Reclamation and the Central and Western Reclamation - the whole lot," Mr. Melville said, adding that sea-walls would be needed. Depleted fresh water supplies would be another problem because increased evaporation would reduce levels. Mr. Melville said the general outlook could be helped if Hong Kong used water less wastefully and encouraged energy efficiency to reduce fuel-burning. He also called on the West to help China improve its efficiency.

AIRBUS CRISIS OVER

Airbus says it has turned the corner after a crisis connected to production problems and turmoil in the boardroom at its A380 super-jumbo project that has gone on for the past year. Speaking at the Paris air show, Louis Gallois, CEO of the European planemaker, said, "Airbus is back.

Airbus, which announced a raft of orders on the first day of the show, is competing with Boeing, its American rival, for the title of the largest planemaker in the world.

Boeing is expected to reveal the numbers of orders for its 787 Dreamliner soon. Airbus orders unveiled on Monday included Qatar Airways confirming a $16bn order for 80 A350 Airbus planes and ordering three A380 super-jumbos for about $750m.

Boeing and Airbus are also competing for orders from aircraft leasing firms. Orders from these companies - who rank highly among the biggest global buyers of aircraft - are often regarded as an indication of how successful a model will be in the long term.

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Airbus also secured orders from US Airways that are worth $10bn for 22 of its A350 jets, 60 A320s and ten of its A330-200 wide-body planes. A few months ago, Airbus unveiled a major cost-cutting programme aiming to reduce the workforce in Europe by 10,000, as well as announcing a group restructuring. "I can tell you with full confidence that Airbus is back and fully back, as you have started noting yesterday as demonstrated by our first day announcements," said Mr. Gallois on the second day of the air show. However, Boeing also announced a deal with General Electric (GE) on the show's first day. GE's commercial aviation services placed an order for six 777 Boeing freighters valued at around $1.4bn, to be delivered in the last quarter of 2008. A Wall Street Journal website report, quoting the Delta operating chief yesterday said that Delta Air Lines were on the verge of ordering as many as 125 Boeing 787 jetliners by the end of this year. However, a spokesman for Delta later said that it had been having conversations "with several aircraft makers" and that "no final decision" had been made on future fleet purchases.

NEITHER A BORROWER NOR A LENDER BE

Both borrowers and lenders in the sub-prime mortgage market are wishing they had listened to the old saying: neither a borrower nor a lender be.

Last year people with poor credit ratings borrowed $605 billion in mortgages, a figure that is about 20% of the home-loan market. It includes people who cannot afford to meet the mortgage payments on expensive homes they have bought, and low-income buyers. In some cases, the latter could not even meet the first payment.

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Lenders include banks like HSBC, which may have lost almost $7 billion.

Both sides can be blamed. Lenders, after the 2-3 percentage point premium they could charge, offered loans, known as 'liar loans', with no down payments and without any income verification to people with bad credit histories. They believed that rising house prices would cover them in the event of default. Borrowers ignored the fact that interest rates would rise after an initial period.

One result is that default rates on these sub-prime mortgages reached 14% last year- a record. The problems in this market also threaten to spread to the rest of the mortgage market, which would reduce the flow of credit available to the shrinking numbers of consumers still interested in buying property.

So, the housing market will remain weak; borrowers with weak credit histories will find the credit window closed; people with adjustable-rate mortgages will have to spend less so they can meet their increased payments; tighter lending standards and falling home prices will reduce consumers' ability to tap the equity in their homes.

But as long as the labor market remains strong, which it has done despite job losses in housing-related industries, and as long as real incomes continue to go up, consumers might complain, but they are unlikely to go on a buyers' strike on a scale that will make this slowdown become a recession. Therefore, we should not be too worried, but, at the same time, we should be a bit cautious and watch closely how things develop.

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GLOBAL ECONOMIC GROWTH SLOWS

The International Monetary Fund says the global economic recovery from the worst recession in decades is moving forward, but the pace of growth will slow a bit this year.Tuesday's report from the IMF says global economic growth will probably hit 4.4 percent in 2011, which is six-tenths of a percent slower than the previous year.The IMF's experts say Europe's debt problems need "urgent" attention so they do not hurt the overall recovery.

The global financial institution said emerging economies are growing more strongly than developed nations, but face a risk of inflation as food and oil prices rise.  These expanding economies are also attracting significant investment from other countries, which could prompt prices to rise even faster than economic growth.   

The IMF says U.S. economic growth will speed up slightly and hit three percent this year.  The IMF's experts say the United States is benefiting from expensive efforts to stimulate the economy, but must soon mount a credible program to cut its debt to more manageable levels.

TAILORING A SALES STRATEGY TO GET RESULTS

1. How can an organization’s sales operation be improved? One of the keys to becoming more effective is to first determine the type of " selling process" which needs to be used. In other words, the role

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the salesperson must play has to be identified. There are three different processes sales staff can adopt: narrative, suggestive and consultative. 

2. The narrative approach depends on the salesperson moving quickly into a standardized presentation. Every buyer receives the same presentation. Emphasis is on highlighting benefits and how the product or service can help the buyer. This is an effective approach if the buying motive for all customers is basically the same. This process is well suited where there are a great number of prospects to be called on. 

3. The suggestive approach depends on the seller being in a position to offer alternative recommendations. This is quite different from the narrative approach as the presentation is tailored to the individual customer. Here, the salesperson must initiate some discussion in order to get the buyer in a positive frame of mind. 

4. An example of this process would be a restaurant wine steward who has checked with the waiter what food the customer has ordered and then opens by saying that either "this or that" particular wine would go best with the food ordered. 

5. This is an excellent approach where one doesn't have much time with the customer but is able to acquire some basic information and then offer a particular recommendation. This process is well suited for products and services. However, it does require the salesperson to acquire basic information from the customer before moving on to the presentation. 

6. The consultative approach requires the salesperson to have a thorough understanding of the customer and what the customer is

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trying to achieve. The role of the salesperson is to become an adviser or consultant and she must acquire a great deal of information from the customer. With this information the salesperson can plan what to offer the customer. 

7. In this case, the salesperson must tailor the presentation to highlight how the salesperson's product or service can be of help. This approach will usually require a number of sales calls as the buying process may be complex. The consultative approach requires a wide variety of skills, including probing, listening, analysis, creativity and persuasiveness. The other two approaches typically require fewer skills. 

8. Hiring, training, motivating and rewarding salespeople need to be linked to the type of sales process being used and this is where the problem starts. Many organisations which should be using a consultative approach use a narrative approach. They use standardized methods and do not tailor presentations to individual customers. You see this in many industries. When this is the case, price becomes a key criterion for the customer. 

9. A key issue in developing a professional sales organisation is in first establishing the sales process. When that decision has been made, all other sales decisions, including hiring, training and rewards can be linked to it.