New business

Dealing with numbers

New business represents the modern way of doing business:

Face-to-face contact is of vital importance (if you are a potential business partner it is better for you to present yourself in person than to e-mail your presentation)

Video-conferencing is effective, but expensive. Still, many companies prefer flying to meetings.

Relationship building is important for mutual benefits:

Clients and suppliers are called partners to underline the fact that they are in the business together

Their connection is good for both sides: the supplier is making money out of helping the client to make money by providing products or services to customers

In the past the sitaution was different:

Companies worked with large number of suppliers

For example, car manufacturers worked with numerous component suppliers which enabled them to demand lower and lower prices from them

The modern tencency is:

To work more closely with fewer suppliers

This also means that it is difficult for new suppliers to break into the privileged circle and get new business

If a company works with fewer organisations it is easier to make improvements and the overall quality improves

Total quality management (TQM) makes an imporatnt part of modern business:It is an approach that motivates,

supports and enables quality management in all activities of an organisation. It seeks continuous improvement.

It focuses on the needs and expactations of internal and external customers

One important objective of TQM is complete elimination of product defects

Another form of new business is start-ups:

It is a one-person operation often started by someone who previously gained knowledge as a salaried employee in an organisation

This person decides to start a new company on his/her own

Start-up is also a term for any newly formed company

At the other end, there are serial entrepreneurs:

These people found a number of start-ups and they transformed ideas into business

They move on from one start-up to another, leaving each as that business becomes viable (productive)

Their talent lies in combining ideas with people and finances

They are not interested in running established operations

New business also consists of breaking into new markets:

This particular area is very risky: a company may spend large amounts of money trying to break into e-commerce and have low profits

Another company might spend a lot trying to establish itself in a country where it hasn’t been present before and make large losses before any return on investment

There are many business factors which encourage new business:

Flexible labour market, where there are not only low taxes on companies, but also low social costs (low payments from companies and employees for benefits such health care and unemployment benefit), where it is easy to fire people when activity decreases, and where people quickly find new jobs when activity increases again

Skilled staff is also important as a result of a good national education system and good company training of employees (the availability of skilled staff is smaller in poor countries)

Low interest rates are desirable because it means that it is cheap to borrow money to develop new business activities

Cheap rents for office and factory space are more attractive than expensive ones, but having your office in the right place at a higher rent may be more effective than having it in the wrong place at a lower one

A stable economy is beneficial because business people are able to plan better when there is less uncertainty about future inflation, taxes...

Good transport links are important for your employees to get to work and for salespeople to get to customers, but also for distribution of goods if your business does this

Training courses provided or funded by the government can be helpful in developing the skills of entrepreneurs

High unemployment may mean two things: you can pay lower wages to your workers, but you may not be able to find the people with the skills you want if you set up your business in an area with a high level of joblessness

Strong currency means that imported raw materials are cheaper but that your exports will be more expensive than those from competing countries

Government grants (supports in form of money) may be used to try to persuade companies to set up in areas with high unemployment, but if the area is unsuitable for other reasons (unskilled staff, distance from markets) these grants will not be enough

Other conditions: the importance of language in setting up abroad. Countries such as India where English is widely spoken in business may be attractive for this reason (see, for example, the growth of India’s software business)

An example: Success in the shadow of Etna

The Sicilian port city of Catania is being transformed into a Mediterranean Silicon valley.

“Catania has become the most competitive place in Europe for high-tech investments” says Pasquale Pistorio, the Sicilian chairman of ST Microelectronics.

Mr.Pistorio invested in Catania because he felt from the start that the Sicilian city had all the ingredients to develop into a competitive high-tech centre.

Like California’s Silicon Valley, the city had a good university working closely with a leading enterprise. In turn, this provided the basis for stimulating new entrepreneurial, research and academic activities.

Thanks to European Union incentives, the help from the Italian government and Mr.Pistorio’s personal commitment, Catania grew into a high-techonogy centre.

Pasquale Pistorio remembers when he first joined the company 20 years ago. The Catania plant was losing a lot of money, but the island also had a well-educated population and offered high-tech companies what he calls “ample brain power resources”.

When there are few jobs, young people tend to study more. Thanks partly to its high unemployment rate, the island had a large supply of intellectual labour.

Thanks to the high rate of unemployment and government and EU incentives, Mr.Pistorio quickly found the brain-power needed for the expansion of business. The results have exceeded all expectations.

Dealing with numbers

Some useful language

BE and AE differences: Fractions,

precentages, currencies:

320= three hundred and twenty (BE)/ three hundred twenty (AE)

0= nought/oh (BE)/ zero (AE)

1.25= one point two five 0.754= nought point

seven five four (BE)/ zero point seven five four

5/7= five sevenths 2/5= two-fifths ½= a half ¼= a quarter 65%= sixty-five percent £ 3,000,000= three million

pounds € 16,000= sixteen

thousand euros

Passives

Form:

TO BE + PAST PARTICIPLE of the main verb

It is done, It is being done, It was done, It has been done, It will be done

It is not done (negative), Is it done? (interrogative)

We can also form passives with modal verbs: Can it be done? It would be done.

Use:

We choose a passive structure when we focus on the action itself rather than who performs the action:

Tea is grown in Sri Lanka.

Our quality procedures are strictly monitored.

The new machine has been installed.

We can use by to mention who performes the action:

All her clothes are designed by Armani.We often use the passive to decribe a

process, system or procedure:

Before a product is launched focus groups are set up and a name is chosen.

We often use the passive in impersonal constructions beginning with it:

It was agreed that the budget should be increased.

It was decided to implement the new policy immediately.

Make these sentences passive:

They make Suzuki cars in Hungary too.__________________________________ Someone is repairing your washing machine

now.__________________________________ Bayer developed this new drug.___________________________________ They were still researching into the effects of

Alkaphen.___________________________________

Bayer has retained all selling rights.

________________________________The question is, have we promoted our

new range enough?

________________________________If sales continue to fall, we will have to

discontinue it.

___________________________________

We should test this new product immediately.

_________________________________We could improve its distribution.

_________________________________We definitely have to improve the

packaging.

________________________________