your business

An easy way to keep business records

2011-10-25T19:26:00.000-07:00

A simple system to keep your business records under control. Buy seven cardboard A4-size storage boxes. Label them:

§ Bank statements, cheque books, deposit books

§ Invoices - paid

§ Invoices - unpaid (that is, your debtors)

§ Bills - unpaid (that is, your creditors)

§ Bills - paid (including invoices for purchases, credit card purchases)

§ Petty cash receipts

§ Others.

Each box should be dated for the current tax year.

You'll also need:

§ A wages book for employees

§ A cashbook for day-to-day operations

§ A business diary.

How you actually file things is up to you.

A suggested simple method to file things

Invoices

Make two copies of each invoice you send out. Send one to the person/business who owes you money and file the other copy in the 'Invoices - unpaid' box.

When payment is received (perhaps a cheque arrives or payment is made electronically) pull out the relevant invoice and write the date and relevant the cheque number on it, then transfer it to the 'Invoices - paid' box.

Store these paid invoices for seven years, as required Inland Revenue, and then recycle the box back into your system.

Bank statements

Check these against your cheque butts and then store them in the 'Bank Statements' box. Before you store them, transfer the information concerning bank charges, automatic payments etc into your cashbook, and then do a bank reconciliation.

It's a good idea to code the entries on the statement so your accountant can check them quickly. For example, the telephone payment might be coded 01, the power payment 02, car expenses 03, and so on. The best way to save money on accounting fees is to use the same code as your accountant (so it's familiar to them), so ask them for their coding system before you start.

Keep your used cheque butts and deposit books in this same box. An accountant's tip: the clearer the details on your deposit and cheque butts, the easier it is for your accountant to follow what you've done. That means lower accounting fees. So remember to fill in those cheque and deposit butts with a full explanation of what the money was spent on, or where it came from (in the case of a deposit) and which invoice it settled.

If you are paying using internet banking, include as much information as you can in the references boxes (such as which invoice you are paying) as this will show up on your bank statements.

Bills

When tax invoices arrive, file them in the 'Bills - unpaid' box.

As you file each bill, make a note of the amount and its due date on the relevant page of your business diary.

Jotting down due payment dates for bills in your business diary helps you:

§ manage your cashflow (you can page through the diary to check on your future cash commitments)

§ pay on time and thus keep your credit lines secure

§ avoid missing any discounts on offer for early payment.

When you're ready to pay the bill, take it out and write the date paid and your cheque number on it. If you are paying using internet banking, then print out the 'confirmation' page and attach it to the invoice in lieu of a cheque number. Then transfer the invoice to the 'Bills - paid box' and keep it for the required seven years.

This box should also contain invoices for items you paid for using eftpos, credit cards or internet banking. Remember, if you buy something using eftpos or your credit card make sure you get a tax invoice as well as transaction record as you need this for invoice for your records.

Others

This box can be used to store other information you are required to keep. Some of this information may be kept electronically. But you may want to print out hard copies for back-up purposes.

§ cashbook (and other any bookkeeping workings such as journals and ledgers)

§ wage book, if you're an employer

§ details of entertainment expenses for clients, staff or suppliers

§ till tapes and day books

§ stocktake figures

§ list of debtors and creditors

§ interest and dividend statements

§ list of assets and liabilities

§ depreciation schedules

§ final profit and loss statements and balance sheets

§ any other documents that confirm entries in your accounts, such as worksheets.

Preparing a business plan

2011-10-24T19:22:00.000-07:00

Your business plan is a management tool and is designed to suit the structure and needs of your particular business. There is not a one-size-fits-all business plan, or a set formula that you have to follow.

This leeway to design your own business plan can feel quite daunting at first, but this is easy to solve if you identify the reasons why you need a business plan. These could include setting business goals and objectives, establishing performance requirements and assessing whether these have been achieved, or communicating messages to people inside or outside your company.

The structure of your business plan

A business plan usually serves a number of purposes. It is a good idea to identify the purposes you’d like your business plan to achieve because this could affect how you choose to structure and write your plan. For example, you’re likely to focus on different information depending on whether your plan is intended as an internal document for management to refer to, or to raise finances from an external source.

Use the three business plan structures in the table below to find the best structure for your business. Since there is not a set way to structure a business plan, the format is one of personal preference. You might find one outline is more suited to your business than another.

If you’re writing your business plan as part of the process of applying for a loan, it is a good idea to include a one-page cover letter. The cover letter should include the following:

§ The type of loan you are looking for

§ The amount of the loan and period you wish to borrow the money

§ What you need the money for

§ A reference to the business plan attached.

If you are applying for a loan, you will probably also need to include more detailed personal information, including your IRD number, bank accounts, assets, liabilities and other business interests.

Writing your business plan

Keep your business plan as short and simple as possible. Use simple language and short sentences so that it is easy to understand, and edit your draft to remove unnecessary words. Use bullet points or tables if this makes ideas easier to read or understand.

Present your facts and information so that they flow logically rather than jump around, and make sure that the information presented in different sections supports each other. You don’t want to present information that does not add up or raises questions about the accuracy of your plan.

Do not give in to the temptation to overstate the truth, and bear in mind that the figures you present will need to back up the words in your business plan.

Start by jotting down points and ideas under each of the headings you plan to include in your business plan. Then sort these ideas so that there is a logical flow. At the same time, look out for any gaps or weaknesses and fill them in with the necessary research.

Start writing your business plan as soon as possible and keep refining and editing your work to keep it as short, simple and easy to understand as possible.

Writing your executive summary

Your executive summary is a very important part of your business plan. It is the first section people will read, and provides a brief but complete overview of your entire business plan. Because it contains reference to the entire business plan, the executive summary is usually written towards the end of the business plan writing process.

Your executive summary should be less than three pages, simply written and to the point, with an emphasis on the key issues of your business plan and a focus on the areas that will make your business successful in a competitive market.

Use your plan’s table of contents to map out your summary, and elaborate on the areas that are important. It is a good idea to end your executive summary with a short statement of why your business is poised to be a success.

The table of contents

The table of contents will appear before or after the executive summary. It is a list of headings with page number references that help your reader locate specific information in your plan. The numbering of the headings in your table of contents is one of the last things you will do when finalising your business plan.

The presentation of your business plan

The presentation of your business plan could be one of the first impressions someone gets of your business. It is a good idea to include a cover page and to bind your business plan with a cardboard or plastic front and back cover so that it is professionally presented.

It is also important that the layout is neat and professional looking and that the pages are numbered. Spend a little extra time on the presentation of your business plan to ensure it presents your business in the best possible light.

Does my business plan need an external review?

Your business plan does not need to be approved or verified by anyone, but it is a good idea to let a few people read your draft business plan before you finalise it and print it out.

Paying to have your business plan professionally proof read will ensure that it is free of embarrassing spelling and grammatical errors. Asking your accountant and a few business acquaintances or mentors to read through your plan will also help to identify any inconsistencies or gaps in the information.

Why is business planning important?

2011-10-23T19:15:00.000-07:00

Setting out to build or grow your business without a business plan is like switching on the ignition and driving out your driveway without knowing where you are going, or how you plan to get there.

Business planning helps you define an agreed route-map for your business. It identifies your key objectives for the next three-to-five years and how they will be achieved. A business plan gives directions and timelines in which to achieve your goals, and provides a guideline for your day-to-day operations and decisions.

Why do I need a business plan?

There is no logical reason to wait for external motivation, like your bank manager asking to see your business plan, before you write one. Committing your plans to writing helps to sharpen your focus and identify your priorities, and can be used as a benchmark to measure your progress towards achieving your goals.

Business plans are an essential management tool that tells you what you plan to achieve, how you plan to achieve it, and when you hope to achieve it by. Set time aside to assess actual progress against your business plan to keep your business on track, and update your plan as economic, market and individual circumstances change.

The primary purpose of your business plan is to map out a strategy and action plan for your business, but it also serves a useful secondary purpose as a reference document for external parties with an interest in your business.

Your business plan is likely to be read by people in your company as well as other people and businesses who are entering some form of partnership or association with you. Since your business plan contains your strategy and action plan for your business, it will be referred to by your staff to ensure that the decisions they make match the overall plans and objectives of your business.

Your business plan (or selected portions of it) is also likely to be shown to people outside your business, like your bank manager or other lenders, when looking to raise finance or investment capital. Similarly, if you are looking to employ a new senior staff member, for example, a professional business plan could help clinch the deal.

Potential business partners or representatives are also likely to be favourably impressed by a comprehensive business plan, and your plan will also play an important role in presenting your business to potential buyers when it comes time to sell your business.

People from outside your company or organisation will primarily be interested in using your business plan to assess the viability and profitability of your business.

Setting your goals

Your business will not operate as efficiently and effectively as it could without specific and defined goals. Your business plan is likely to outline goals for some, or all, of the following:

§ Financial objectives – for example, to increase turnover or reduce operating costs by 5% this year

§ Strategic objectives – for example, to increase the number of corporate clients by 20% within two years

§ Operational objectives – for example, to increase output by 10% within six months

§ Marketing objectives – for example, to increase total sales to existing customers by 10% next year

§ Social / Environmental objectives – for example, decreasing your carbon footprint by 5% each year for three years.

Holding a staff brain storming session is a good way to benefit from the expert knowledge of your staff and get their buy-in and support for your business goals and objectives. Depending on the size of your business you might hold only one brainstorming session, or several, to cover the objectives for various business units.

Keep your goals realistic, and pertinent to current general economic conditions, as well as your specific industry conditions. For example, in a period of global economic downturn it is more effective to look at ways to decrease costs than to increase sales.

Identify your strategy

Your business plan will also include your business strategy and will outline the steps you plan to following order to achieve the goals and objectives you have identified. This in turn, will direct the day-to-day operations of your business. Each of your business goals will need a plan of action that needs to be followed in order to achieve the objective.

As a rule of thumb, your strategy will outline the most practical and cost-effective way to achieve each objective. It will detail any extra equipment or personnel that might be required to achieve this.

For example, you might need an extra staff member and an additional computer to increase output by 10% within the next six months, or you might consider enrolling your sales staff on a course to achieve the objective of increasing sales to existing customers next year.

Forecast the financial implications

The financial implications of your goals and strategies will be reflected in the financial forecasts in your business plan. Your goals will identify the areas of improvement, like an increase in sales or a reduction in costs, and your strategy will identify any additional expenditure in order to achieve these goals.

Most business plans will include a 12-month cash flow forecast, a profit and loss forecast, and a two- or three-year projection.

Your cash flow forecasts will identify whether you have sufficient financial resources to implement your plans immediately, or whether you will need to explore other financing options. Monitoring your actual spend against your projections is a way to ensure that new project costs do not escalate much beyond planned expenditure.

Review your business plan

Your business plan is a living document that grows and changes over the lifespan of you business. It’s objective is to identify your key goals and how to achieve them, while taking market and technological trends into account.

The effectiveness of your business plan as a management tool depends on you referring back to it as a reminder of your plans and objectives, and updating your plans in order to keep them relevant.

Reviewing your progress against your business plan, on an annual basis, is a good way to measure actual performance and will form the basis for revising and updating your plans.

Because the nature of your business and the market you operate in will change over time it is a good idea to review and update your business plan once a year. The most efficient way to achieve this is to set aside a few days every year, at the same time, to do this.

Interactive online business plan

2011-10-22T19:09:00.000-07:00

Quick start business plan

This business planner helps you turn your idea into a reality. It includes a break even template, a cashflow forecast and builds into a comprehensive business plan.

How to use this tool

§ You will be presented with a series of pages containing practical information, examples, tips and downloadable templates to help you implement your ideas.

§ As you navigate your way through the pages, you will be prompted to answer key questions and select items.

Creating your Action Plan

§ Your answers and selections will be added to an Action Plan which you can download in Word format.

§ This Action Plan will be automatically generated, based on the action points which you recorded as you navigated through the pages, so it's important to think carefully about all the information that you add.

Templates

As you navigate your way through the pages, you can download practical templates to help you implement your Action Plan.

Tax obligations when setting up a business

2011-09-24T19:00:00.000-07:00

When setting up a business so that you can pay the correct amount of tax, as well as claim the business expenses and deductions you are entitled to receive you need to consider the structure you will use to run your business. You also need to understand which forms and records you will need to complete and maintain and if you will be required to register as an employer or for GST.

§ The Tool for business
The Tool for business helps you get all your small business tax issues sorted quickly and simply.

§ Determining if you are actually in business
Identifies some important criteria for determining whether someone is in business.

§ What structure will you use to operate your business?
Explains basic requirements and liabilities for operating your business as a sole trader, a partnership, or a company.

§ What registrations might you need to complete?
When setting up your business you may need to apply for a different type of IRD number. You may also need to register as an employer, or for additional tax types such as goods and services tax (GST) or fringe benefit tax (FBT).

§ Your business tax obligations
Learn about the records you need to keep while running your business, the importance of budgeting for tax payments and your balance date.

§ Where to go for more help
Some sources of business advice and the areas they advise on.

§ Kaitakawaenga Maori
Kaitakawaenga Maori work out of most Inland Revenue offices. They offer a free advisory service to help meet the needs of Maori individuals, organisations and businesses.

§ Business tax information officers
Inland Revenue's specialist Business tax information officers offer free tax education and advice to new businesses and smaller organisations.

§ Where to go for more help
Some sources of business advice and the areas they advise on.

Is your business idea viable?

2011-09-23T18:47:00.001-07:00

Most people start a business in a flush of enthusiasm. While enthusiasm is an important ingredient for business success, it is not the only one. You need to find out if there is demand for your product, and whether there is enough demand at a price that ensures your business will be profitable.

There's obviously no way to guarantee that your idea is going to succeed, but thorough market research will go a long way to ensuring that you'll be investing your time and effort in a business venture that should offer a reasonable return on investment.

If you can answer yes to the following questions, there is a good chance that your business idea is a viable proposition, which means your next step would be to draw up a business plan.

Do you have a unique selling point?

Unless you've been lucky to find a gap in the market, your product or service is going to have to compete against other similar products for customers and market share. To compete, your business has to stand out from the competition – it has to have a unique selling point that you can use to encourage customers to buy from you.

This doesn't mean you have to invent a totally new product or service. Your offering might:

§ Be cheaper or more economical to use.

§ Smell better or work better.

§ Come in a more fashionable design or appealing colour range.

§ Weigh less, or be made of better material.

§ Anything else that compares favourably with similar products on the market.

If you have a unique selling point, it's worth doing further research into the viability of your business. If you're not sure if your product or service adds value that customers can’t find elsewhere, it might be better to brainstorm a few more business ideas before you forge ahead.

Do you have a market?

Knowing who will buy your product and what motivates their purchasing decisions is vital to the success of your business. Not only will you need to make sure that your product appeals to your target market segment, but you'll need to find out how large your potential market is, whether it is stay-at-home mums, business people, teenagers or retirees.

Think about the size of your market in your area or wider (if you plan to sell online, for example). How many people will be interested in your offering, at the price you're likely to need to charge?

The next step is to look at your potential competitors. Find out what their respective competitive advantages are, and examine their pricing and marketing strategies. Looking at their website, physical Yellow Pages advert or printed advertising material is a good start. Many businesses have social media offerings so check to see if they have a Facebook or Twitter profile to get a feel for how they interact online.

Is there room for you to muscle in and get a large enough share of the market to break even and start making a profit? Does your product or service really fill a need that is not met by the competition?

If you're still answering yes, then it's time to crunch some numbers to test if your idea is really viable.

Find out more about understanding your customers.

Do the numbers add up?

What costs will you incur in producing the goods or providing the service? What is your selling price? How much demand do you anticipate? Is there enough demand and are the margins high enough for you to break even after a few months and then start trading at a profit?

Work out a cash flow forecast using your anticipated costs, selling prices and sales quantities. How long will it take to build up your sales to a point that your business is able to break even? How long before your business starts to generate a profit?

Perhaps most importantly, once your business is established, what sort of return-on-investment will you get? There's little point in investing a lot of money, time and effort in running a business if you earn less than the returns you'd get from putting your money into a term deposit. Is your business venture going to do more than keep you busy? Is it going to make you money?

Do you have enough money to last until your business is profitable?

If you're satisfied that your business idea should bring in a good return-on-investment once it is established, the last question you need to consider is whether you have enough money available to meet the start-up costs and operate the business until it is turning a profit.

Work out a cash flow forecast to see how much money you will need. Remember, you might need to rent premises, buy equipment, employ staff and pay salaries, fit out an office, purchase stock or supplies, and get your marketing campaign off the ground. These costs can add up to a sizeable amount.

In addition, you'll need to be able to cover your operational costs, and your personal expenses, for quite a few months before you break even or turn a profit. If you're borrowing money, you will also need to be able to make the interest payments when they fall due.

If you've answered this with another yes, chances are you have a viable business idea. But before you go charging ahead with entrepreneurial enthusiasm and set up your business, it makes senses to formalize your plans and thinking by drawing up a detailed business plan.

2011-09-23T18:47:00.000-07:00

If you can answer yes to the following questions, there is a good chance that your business idea is a viable proposition, which means your next step would be to draw up a business plan.

Do you have a unique selling point?

This doesn't mean you have to invent a totally new product or service. Your offering might:

§ Be cheaper or more economical to use.

§ Smell better or work better.

§ Come in a more fashionable design or appealing colour range.

§ Weigh less, or be made of better material.

§ Anything else that compares favourably with similar products on the market.

Do you have a market?

Think about the size of your market in your area or wider (if you plan to sell online, for example). How many people will be interested in your offering, at the price you're likely to need to charge?

If you're still answering yes, then it's time to crunch some numbers to test if your idea is really viable.

Find out more about understanding your customers.

Do the numbers add up?

Do you have enough money to last until your business is profitable?

Business cycle

2011-09-22T17:27:00.001-07:00

Business cycle behavior has been relatively synchronized since the mid-nineties. In 2001, the dispersion of economic growth rates across the industrialized economies even fell to its lowest level in over 30 years, as the global economy experienced a downturn that was unusually wide-spread across countries. Broadly speaking, the observed degree of output comovement reflects both the nature of the shocks that have occurred and the degree of economic interdependence. Output developments will be more correlated if common shocks happen to be predominant, while they will be more asymmetric if idiosyncratic shocks are most important. Because of economic relations among economies, countryspecific shocks may get transmitted to other countries, enhancing output comovement indirectly. The higher degree of output comovement in recent years has partly been driven by common shocks, such as large changes in crude oil prices, the rise and fall of the information technology boom and restrictive monetary policies (Peersman 2002). However, it is widely felt that common shocks are not the whole story, raising the question to what extent deeper economic linkages, and what kind of linkages, may have contributed to the more synchronized nature of economic fluctuations. The rise in international economic interdependence has occurred along three dimensions. The first is international trade in goods and services, which is the ‘traditional’ channel through which economies may affect each other. Although imports and exports as a share of GDP have in general increased, there has been no marked across-the board acceleration of this trend recently. It is therefore unlikely that deeper trade interdependencies have contributed significantly to the recent rise in output correlations. The second type of link is provided by international trade in financial assets, such as equity and bonds, and cross-border credit relations. Cross-border holdings of portfolio assets have mushroomed in recent years. For example, foreign holdings of US long-term securities amounted to 42% of US GDP in March 2000, having tripled in less than 2½ years (Griever, Lee and Warnock 2001). Correlations between stock markets of the major countries have greatly increased over the last twenty years, with the exception of Japan (Goetzmann, Li and Rouwenhorst 2001, Berben and Jansen 2002). Financial markets have thus gained importance as a channel for the international transmission of shocks. The third dimension of interdependence is the internationalization of production through foreign direct investment (FDI). Foreign direct investment has grown at rates far beyond those of international trade or output since the late 1980s. Especially in the second half of the 1990s, firms were exceptionally active in cross-border mergers and acquisitions (M&A). The outstanding global stock of FDI more than doubled in ten years time from 8.3% of world GDP in 1990 to 17.5% in 2000 (UNCTAD 2002). At present, about 11% of world output is produced by foreign affiliates (UNCTA 2002). It is conceivable that the larger presence of FDI is partly responsible for the observed increase in cross-country business cycle comovement. The empirical literature on the effects of FDI is often based on firm-level data and mainly deals with supply-side effects on host economies in the longer run, focusing on the transfer of technology, management techniques and business models. This paper focuses on another aspect of FDI, namely the possible role FDI may play in the transmisssion of economic shocks across borders. Using aggregate data, we examine to what extent the rapid expansion of FDI and the internationalization of production can be related to the phenomenon of more synchronized business cycles. Our basic empirical question is: Do countries that have comparatively intensive FDI ties tend to have more synchronous business cycles? To our knowledge we are the first to investigate this issue. To preview the results, we find that before 1995 there is no strong evidence in favor of an independent role of FDI (next to foreign trade) in explaining cross-country business cycle correlation patterns. But after 1995, FDI linkages are much better able to explain the pattern of international business cycle linkages than foreign trade relations. Moreover, FDI is associated with the vulnerability to foreign output spillovers that occur with a lag, but international trade is not. This result holds for the complete sample as well as the more recent years.

Business cycle

2011-09-22T17:27:00.000-07:00

Ethical

2011-08-24T17:14:00.000-07:00

ETHICAL PROBLEMS IN INTERNATIONAL BUSINESS

Getz (1990: 567-577) analyzed international codes of conduct in four entities: (1) the Organization for Economic Cooperation and Development (OECD), which is the primary policymaker for industrialized nations, (2) the International Chamber of Commerce (ICC), which is concerned with fair treatment among multinational corporations, (3) the International Labor Organization (ILO), which is concerned with direct investment in developing countries, and (4) the Center for Transnational Corporations (CTC), whose objective is to maximize the contributions of transnational corporations to economic development and growth and to minimize the negative effects of the activities of these corporations. These various codes were developed in order to establish order among multinational corporations; although, some organizations refuse to abide by these codes, mainly because national governments have not sanctioned them completely. Without uniform and full enforcement, multinational organizations could have rampant choice in international ethical issues. Underlying this lack of consensus is the issue of national as well as corporate culture (See Hofstede, 1980: 46-47). Every nation is different and every multinational organization is in one way or another distinct in the way they do business, especially in other countries.

In addition to these codes, the moral corporation should address human rights and whistle blowing and the international ethics code under which it operates. These issues are not very new. In a survey of 300 multinational corporations, 80 percent agreed with seven items being ethical issues for business: (1) employee conflict of interest, (2) inappropriate gifts to corporate personnel, (3) sexual harassment, (4) unauthorized payments, (5) affirmative action (6) employee privacy; and (7) environmental issues (Brooks, 1989; Berenheim, 1987, 1989: 117-129).

ETHICAL CLIMATE & ETHICAL PROBLEMS

Strategies, such as these codes of ethics, are only one means of achieving the ultimate goal of having ethical international responsibility in the engagement of business worldwide. As stated above, there are many ethical responsibilities faced by multinational organizations. Theorists generally agree that situational variables such as organizational climate can affect ethical behavior of individuals (Kelly et al., 1989: 327-340). However, there have been no attempts to study the relationship of ethical climate of an organization and ethical behavior of its members. Ethical climate, it must be emphasized, is not the same as culture is commonly perceived, but rather a broader concept of culture (Schein, 1990, pp. 109-119). Culture is believed to be more associated with deeper beliefs, values and assumptions (Denison, 1996, pp. 619-654). Therefore, just as one can value an individual’s culture by his or her actions and personal activities, ethical climate can be observed on a larger scale; in this case, the organization. Ethical climate is, in essence, the employee’s perception of the norms of an organization (Bartels et al.1998: 799-804).

As Bartels and others have shown (1998:799-804), organizations with a strong ethical climate experienced few serious ethical problems, and were more successful coping with such problems. Their research suggests that it is imperative for managers to consider developing strong

ethical climates if they aim to provide organizational members the ability to handle ethical dilemmas and to avoid any inherent liabilities. Managers must create and maintain a clear and strong set of norms to promote good ethical behavior.

In this approach, a person’s own beliefs and values and their influence on his/her perception and behavior are not taken into account. Nonetheless, ethical climate is a very potent tool in steering the behavior of an organization’s members. As Mahdavi has shown (2003, 2005), an organization’s codes of ethics and enforcement of rules go a long way to control and direct behavior of social entities.

Based on the above discussion, global corporations must recognize the need for a uniform code of business ethics since without such a code, behavior of actors in this arena remains unpredictable. Furthermore, national governments must realize that probably the most effective means of protecting their citizens, their national interests, and the global environment against the ravages of the over-reaching global business rest in the development, adoption and enforcement of such a code. Until then, it is not realistic to hope for any such international agreement to be adopted.

However, a growing momentum for such a movement is observable. As stated in previous pages, international organizations, especially those involved in international business, finance, labor, economics and environment are developing rules and policies that can be regarded as the building blocks of a universal code of business ethics. Until such a uniform body of rules is drawn, signed and enforced, global corporations and organizations will be doing well to develop their own codes of conduct, applicable to all of their officers regardless of location.

An international business strategy approach

2011-08-23T17:08:00.000-07:00

Globalization and development: an international business strategy approach

The early debate on the role of foreign direct investment (FDI) in developing countries has been neatly characterized as “colourful and fluid” (Balasubramanyam, 1985, p. 159). One reason for the colourfulness of this debate was its emergence within the politically-charged birth of development economicsper se and related attempts to co-opt it into disparate wider p o l i t i c a l - e c o n omi c p o s t u r e s T h i s p o i n t s f o rwa r d t o my, hopefully calmer, concern here with the parallel need to evaluate t r a n s n a t i o n a l c o r p o r a t i o n s ( TNC s ) a s p a r t i c i p a n t s i n t h e processes of globalization. Another factor in leaving the early debates open and fluid was the lack of a commonly agreed methodology for analyzing, in a convincing manner an observable mode of international transaction (FDI) with an obvious potential for a wide-ranging diversity of often intangible or unmeasurable implications. This meant that much early analysis of the developmental effects of FDI fractured around detailed investigations of specific aspects of a wide range of separate areas of concern (e.g. extent and appropriateness of technology transfer; job generation and employment conditions; the allegation of decapitalization; balance-of-payments and trade effects; bargaining mechanisms; spillovers; industry structure). The emergence of a separate analysis of the TNC (as the principal source of FDI ) and its immediate association with market imperfections further undermined attempts (e.g. MacDougall,1960) to formalize the evaluation of FDI around the constructs of orthodox trade theory and, in particular, perfect competition.

If early theorizing of the TNC helped to explain the indecisiveness of attempts to evaluate the implications of FDI, then the subsequent analysis of these firms, now most usefully positioned at the interface of business strategy and economics, provides methodologies that are highly attuned to elucidation of issues of globalization and development. Central to this analysis, and to the lines of argument developed here, is a preference for organizing an understanding of diversity, rather than simplifying it or assuming it away. Two vectors of diversity define the structure of our subsequent analysis.

Firstly, the aims of an evaluation of TNCs in a globalized economy are seen as still having logical origins in the diversity of concerns addressed in early analysis of FDI. However, to organize these into a more functional structure, I suggest that these variegated concerns can be subsumed into an evaluation framework of four distinct generic issues (Dunning and Pearce, 1994). Within globalization, the opening of national economies (with an increasing freedom of trade) has been interpreted as a l lowing TNCs to improve the ways in which productive resources are used, so that efficiency becomes an element of the framework through which we evaluate their performance. By contrast the “flexibility and adaptability” (Balasubramanyam,1985, p. 160) provided to TNCs by globalization may limit their need for positive embeddedness in the growth and development processes of individual national economies. This provides another concern for the evaluation framework. However, an important insight of analysis of the growth of TNCs was thatorganizing globally through “an internal bureaucracy of the enterprise transcending the market” (Balasubramanyam, 1985,p. 161) gave them powers “in areas of pricing of products and technologies”, and in bargaining more generally, that raised issues of the distribution “of gains between [TNCs] and host countries”; furthermore, these characteristics of TNCs give them control over dispersed elements of a global strategy that can be “seen to pose a threat to the economic sovereignty of new nation states in the Third World” (Balasubramanyam, 1985, p. 161). The core of this article, therefore, seeks to evaluate the implications of TNCs in terms of the four broadly-defined issues of efficiency, distribution, sovereignty, and growth and development. To do this, it is useful to characterize the strategic posture of the contemporary TNC as one of seeking to use the increasing freedoms of international transfers, reflecting the essence of economic globalization, to leverage the differences between economic are as. Such are as may, in practice, be national economies ( especially where policy factors are influential), regions defined by the capacity to support costeffective production, or the type of technology- and skill-based agglomerative clusters that build around creative interdependencies and tacit-knowledge spillovers (Porter, 1998, chapter 7 ; Birkinshaw and Hoo d, 2000; Cantwell and lammarino,1998; Balasubramanyam and Balasubramanyam, 2000).

Employers and business

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A county's health affects its economic competitiveness. Achieving lower health care costs, fewer sick days, and increased productivity are all critical to economic growth. Here are some basic ways you can help:

· Make your business a healthy place to work, e.g., offer physical activity plans and smoking-cessation programs to your employees, offer healthy foods in your cafeteria, and motivate employees to make healthy choices through financial incentives.

· Encourage employee fitness by subsidizing gym memberships, offering onsite gym facilities, and promoting use of stairways.

· Educate all managers about the link between employee health and productivity.

Here are some other ways you can help:

· Get the word out. Reach out to people you know and see every day about the County Health Rankings report, e.g., at a local Chamber of Commerce breakfast or a staff meeting.

· Organize. Meet with other local leaders and community residents to discuss barriers to health and ways to overcome them. Host a town hall meeting or invite people to one.

· Get policymakers to pay attention. Tell them about how their county or counties ranked and open a dialogue about ways to improve health in your community.

· Be an advocate. Step out as a leader in your community’s efforts to prevent illness and promote health.

· Contact your local public health department about participating in a local task force or, if none exists, organize one to tackle these pressing issues in your community.

· Ask your local or state health department about what they’re doing in response to the report to make sure you aren’t duplicating efforts.

· Share your resources. Offer your time, staff, and/or funding with community partners. These are resources that can go toward community plans and programs aimed at tackling factors that affect health.

· Communicate your message. Write an op-ed or talk to local media about the Rankings and what needs to be done to improve the health of your community.

· Start a conversation. Talk to your friends, colleagues, neighbors, and family members about the health of your community and what everyone collectively can do to make it healthier.