MGMT 105 1st Edition Lecture 7Outline of Last Lecture I. Visiting Executive Series Speakersa. Clayton Rhoades, CRJ Lucky, Inc., dba Chicken Expressb. Cliff Latham, Personal Fitness TrainerOutline of Current Lecture II. The Global Context of BusinessCurrent Lecture- 44% of new start-ups can expect to survive for at least 4 yearso Almost half businesses fail - Reasons for failureo Managerial incompetence or inexperience o Neglect o Weak control systemso Insufficient capital- Reasons for successo Hard work, drive, dedication o Market demand for prudcts or services are being providedo Managerial competence o Luck- Non-corporate Business Ownershipo Sole Proprietorship is when one individual is responsible for business and wants to be their own boss. Advantages: freedom, simple to form, low standards, and tax benefits Disadvantages: unlimited liability, limited resources, limited fundraising capability, lack of continuity- A partnership is when 2 or more people come together to make a business successful.o Advantages: more talent and money, more fundraising capability, relatively easy to form,limited liability for limited partners, tax benefitso Disadvantages: unlimited liability for general partners, disagreements among partners, lack of continuity- A limited partnership is an individual who invests money but are liable for debts only to the extent of their investments- A master limited partnership is when a master partner has majority ownership and runs the business, minority partners have no management voice.- About 70% of businesses today are sole proprietorships- Larger revenue comes from corporations- Corporations o Advantages: continuity (the owner dies, the corporation will continue and the ownershipwill be turned over to someone else), limited liability, stronger fundraising capabilityo Disadvantages: can be taken over against the will of its management (Hostile Takeover), double taxation of profits- Globalization is the process by which the world economy is becoming a single interdependent system- An import is a product being brought into a country.- An export is a product being given to another country.- An absolute advantage is the ability to produce something more efficiently than any other country o Example: Saudi Arabia and oil- A comparative advantage is the ability to produce SOME products more efficiently than otherso Example: the U.S. in agriculture and automobiles- Barriers to International Tradeo Social and cultural differences Example: commercials that mean peace in our country could mean something completely different in another country (Bush holding up 2 fingers) Example: Ford Pinto – they had to change their marketing technique when they marketed it to Brazil because pinto in Brazil means tiny male genitals o Economic differenceso Legal and political differences- An embargo is a government order banning exportation- A tariff is a government payment to help a domestic business compete with foreign firmso Example: there was a tariff in Russia on Vodka and Russians drink Vodka