This business law article discusses the basic legal environment of the agency relationship in the world of business.
Agency Relationship
An agency relationship describes a two party relationship in which the agent is authorized to act on behalf of the principal. This relationship is created by an agreement between two parties in which one party (agent) will act for the benefit of, and under the control of, the other (principal).
For such a relationship to exist and for the agreement to be legally valid both parties must have "capacity" or the ability to make coherent decisions for themselves.
Agent Authority
There are four main types or key concepts of agent authority.
Actual Authority - Is the right to make decisions for the principal given to the agent. It is delegated or communicated to the agent by the principal party.
Express Authority - This is authority expressed by the actual words of the principal party.
Apparent Authority - This is authority communicated by the principal to a third party about the agents authority. This would be like a company explaining an affiliates role to a customer. Take note that an agent can not give itself this apparent authority.
Implied Authority - This is authority that can be reasonable assumed given the validity and understanding of the expressed authority.
Types or Class of Agents
There are three main types of agents.
General Agent - describes a party that is continuously employed to conduct transactions or business operations and actions on the principles behalf.
Special Agent - A party that is employed or authorized to conduct a specific, single, or temporary activity on the behalf of the principal party.
Sub-Agent - This is an agent of an agent appointed to assist with the role given to the agent by the principal party
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Showing posts with label business. Show all posts
Showing posts with label business. Show all posts
Wednesday, March 30, 2011
Saturday, January 1, 2011
Thoughts on Sales and Sales People
A high performance sales person is one of the most valuable assets a company can have.
The purchase opportunity a consumer will pass up if left to their own isolated mind and will, the consumer will buy and pay twice the price if helped by a good sales person.
To better explore this notion let's take a look and explore some thoughts on home loan lending and the loan agent.
The loan agent for the modern day private lender is there for one reason. They are there to hold the borrowers hand, keep them happy, and most importantly to see them through the entire closing process. This is important because the borrower and home buyer has a lot to deal with. The never ending list of closing costs can be overwhelming and borrowers often want to back away as they become overwhelmed with all the financial obligations and contracts.
Because good sales people are hard to find and historically impossible to control, the typical employee to employer arrangement has proved a poor performance strategy.
Salary is a commitment and if the employer is wrong about the hired employee than they are out quite a bit of money. Sales people have a reputation of taking their own interest to the extreme. If they are guaranteed money this is gonna make managing them even worst. Why go the extra mile if there is no perceived self benefit?
Thus the commission has proven to be a great fit for the marketing and sales side of business operations.
Sales people are also good at extracting the highest price tolerable by any one given borrower. Thus loan origination points are a great match for originating loans. The sales guy is able to pull huge commissions and thus make a fruitful living and the lender carries zero risk.
By giving sales people a optional margin and commission take depending on the price obtained for any given product a company is able to give their sales reps greater opportunity for tremendously less risk. The price and risk is passed on to the consumer. If the consumer or borrower negotiates the price down to the bare minimum than they have avoided the extra cost of the reps allowable premium. The rep in this scenario still gets a commission. The commission is not as high as it could have been if they were able to get the consumer to purchase the product for a higher premium.
Sales people learn to live and cope with this uncertainty.
Related Articles
Understanding Risk and the Certainty of Uncertainty
The purchase opportunity a consumer will pass up if left to their own isolated mind and will, the consumer will buy and pay twice the price if helped by a good sales person.
To better explore this notion let's take a look and explore some thoughts on home loan lending and the loan agent.
The loan agent for the modern day private lender is there for one reason. They are there to hold the borrowers hand, keep them happy, and most importantly to see them through the entire closing process. This is important because the borrower and home buyer has a lot to deal with. The never ending list of closing costs can be overwhelming and borrowers often want to back away as they become overwhelmed with all the financial obligations and contracts.
Because good sales people are hard to find and historically impossible to control, the typical employee to employer arrangement has proved a poor performance strategy.
Salary is a commitment and if the employer is wrong about the hired employee than they are out quite a bit of money. Sales people have a reputation of taking their own interest to the extreme. If they are guaranteed money this is gonna make managing them even worst. Why go the extra mile if there is no perceived self benefit?
Thus the commission has proven to be a great fit for the marketing and sales side of business operations.
Sales people are also good at extracting the highest price tolerable by any one given borrower. Thus loan origination points are a great match for originating loans. The sales guy is able to pull huge commissions and thus make a fruitful living and the lender carries zero risk.
By giving sales people a optional margin and commission take depending on the price obtained for any given product a company is able to give their sales reps greater opportunity for tremendously less risk. The price and risk is passed on to the consumer. If the consumer or borrower negotiates the price down to the bare minimum than they have avoided the extra cost of the reps allowable premium. The rep in this scenario still gets a commission. The commission is not as high as it could have been if they were able to get the consumer to purchase the product for a higher premium.
Sales people learn to live and cope with this uncertainty.
Related Articles
Understanding Risk and the Certainty of Uncertainty
Simple Thoughts On Mortgage Lending
When you take out a home loan you are literally buying a dollar for three dollars. By the time you are done paying the mortgage you will have paid the lender three times the money they lent you. This is how most businesses work.
Businesses purchase inputs, transform them into an output that is worth more. Business operations create value through this transformation process.
Lenders find people who need more money than they could possibly come up with themselves by the time they need it. This person is the borrower. They also find people who have more money than need during this same short term window. The lender than connects these two. They act as a broker.
Lending money is easy. Managing the risk of losing money in a way that consistently yields more return than loss is the trick.
Thus the real trick that lenders typically and historically do so well is to find opportunities to loan money to those who will do their best to pay back that money plus interest over a period time. One payment at a time. They do this by finding folks with steady consistent income that have a history of paying their bills and following through with their past financial obligations.
Middle class consumers who are the typical mortgage borrowers are by themselves to risky to be trusted with such a sizable loan over such a long period of time. A lot can happen in thirty years.
The asset being purchased with the loan is what creates the security for the lender and allows the American dream to be more than a dream. The fact that the lender is able to obtain the right to force a sale of the property secured by the mortgage loan is what allows the American dream to become an American reality.
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How Homeowners Stop Foreclosure
Home Buyer Considerations
Business Basics - Understanding the Certainty of Uncertainty
Businesses purchase inputs, transform them into an output that is worth more. Business operations create value through this transformation process.
Lenders find people who need more money than they could possibly come up with themselves by the time they need it. This person is the borrower. They also find people who have more money than need during this same short term window. The lender than connects these two. They act as a broker.
Lending money is easy. Managing the risk of losing money in a way that consistently yields more return than loss is the trick.
Thus the real trick that lenders typically and historically do so well is to find opportunities to loan money to those who will do their best to pay back that money plus interest over a period time. One payment at a time. They do this by finding folks with steady consistent income that have a history of paying their bills and following through with their past financial obligations.
Middle class consumers who are the typical mortgage borrowers are by themselves to risky to be trusted with such a sizable loan over such a long period of time. A lot can happen in thirty years.
The asset being purchased with the loan is what creates the security for the lender and allows the American dream to be more than a dream. The fact that the lender is able to obtain the right to force a sale of the property secured by the mortgage loan is what allows the American dream to become an American reality.
Related Articles
How Homeowners Stop Foreclosure
Home Buyer Considerations
Business Basics - Understanding the Certainty of Uncertainty
Sunday, December 19, 2010
Business Basics - Understanding Risk and the Certainty of Uncertainty
Anyone who has been responsible for a business for some amount of time knows or quickly finds out that one of the biggest mistakes a business operator can make is not expecting to make a mistake. It can even get worst at times. Sometimes disaster will strike with no notice and no fault. This potential disaster, this uncertainty, this certainty of uncertainty is known as risk.
This post will outline some potential risks of doing business and more specifically the typical horizons of which risk tends to rise.
A key to risk management is to catch problems early. The best way to do this is to be looking for the problem before the problem even exists.
Below are seven common horizons where risk in known to arise.
Seven Potential Risks of Doing Business
1) Industry Demand
Perhaps this is the worst. Nothing is worst than trying to sell that of which no one wants to buy. Depending on your product and industry you may be likely to encounter a fluctuation in market demand (not in your favor). The best way to hedge this risk is to use one or a combination of three risk adverse safeguards prior to the strike of a lacking market demand.
a) Have savings and a cost cutting plan for the occasion and wait out the storm. Extra financing does not hurt.
b) Diversify your revenue and have plenty of sources
c) Tweak your revenue streams to yield a residual income
2) Outside Regulation from Authorities
Nothing sucks more then the government stepping in and suddenly squashing your means of making a living. The only way to beat them is to join them (aka getting into politics some how and beating them at their own game.)
3) Fluctuating Demographics and Populations
This can creep up on you if you have been in business for a long time. If the surrounding market population steadily gets older, or changes some how with out replenishing the "meat and potatoes" of your target market then you better move or find a new business.
4) Competition of the Third Kind
Everyone in business typically has a good nose for the direct competition. However if you are the unfortunate soul to encounter a new competitive technology that you have never seen before because ... well... they never existed before (aka new competitive technology) then you can be in for a very rude and humbling experience.
For example = NY Times meet my friend she is called "the Internet".
5) Long Term Supply Disruption
If you rely on something that suddenly goes out of style or perhaps worst is suddenly used for something totally different and totally more profitable thus increasing your costs out of your league then you are gonna have to figure out how to do what ever is smarter then what you were doing.
6) Loss of Competitive Edge such as Patent
Did you invent something? Time sure does fly huh?
7) Legally Taken to the Cleaners
Lawyers suck. No doubt about it. If one sees a way to gut you for everything you got expect a bill for at least twice that. This may be the worst and most infuriating.
Related Articles
Business Basics - The 3 Fundamental Functions of Every Business Explained
This post will outline some potential risks of doing business and more specifically the typical horizons of which risk tends to rise.
A key to risk management is to catch problems early. The best way to do this is to be looking for the problem before the problem even exists.
Below are seven common horizons where risk in known to arise.
Seven Potential Risks of Doing Business
1) Industry Demand
Perhaps this is the worst. Nothing is worst than trying to sell that of which no one wants to buy. Depending on your product and industry you may be likely to encounter a fluctuation in market demand (not in your favor). The best way to hedge this risk is to use one or a combination of three risk adverse safeguards prior to the strike of a lacking market demand.
a) Have savings and a cost cutting plan for the occasion and wait out the storm. Extra financing does not hurt.
b) Diversify your revenue and have plenty of sources
c) Tweak your revenue streams to yield a residual income
2) Outside Regulation from Authorities
Nothing sucks more then the government stepping in and suddenly squashing your means of making a living. The only way to beat them is to join them (aka getting into politics some how and beating them at their own game.)
3) Fluctuating Demographics and Populations
This can creep up on you if you have been in business for a long time. If the surrounding market population steadily gets older, or changes some how with out replenishing the "meat and potatoes" of your target market then you better move or find a new business.
4) Competition of the Third Kind
Everyone in business typically has a good nose for the direct competition. However if you are the unfortunate soul to encounter a new competitive technology that you have never seen before because ... well... they never existed before (aka new competitive technology) then you can be in for a very rude and humbling experience.
For example = NY Times meet my friend she is called "the Internet".
5) Long Term Supply Disruption
If you rely on something that suddenly goes out of style or perhaps worst is suddenly used for something totally different and totally more profitable thus increasing your costs out of your league then you are gonna have to figure out how to do what ever is smarter then what you were doing.
6) Loss of Competitive Edge such as Patent
Did you invent something? Time sure does fly huh?
7) Legally Taken to the Cleaners
Lawyers suck. No doubt about it. If one sees a way to gut you for everything you got expect a bill for at least twice that. This may be the worst and most infuriating.
Related Articles
Business Basics - The 3 Fundamental Functions of Every Business Explained
Thursday, December 16, 2010
Chapter 11 Bankruptcy
Chapter 11 bankruptcy allows businesses to obtain debt relief by restructuring the existing financial obligations of the distressed business. This type of bankruptcy is ideal for businesses that would be profitable if not for unmanageable levels of debt.
What is Chapter 11 Bankruptcy?
Chapter of bankruptcy that is used for businesses that have to much debt but are worth more as an operating business then the sum of all proceeds that could be raised from a total asset liquidation sale.
How Chapter 11 Works
A trustee will overlook the reorganization of the debt and efficiency of a business.
Once this process is complete the business is simply to follow the terms of the restructured debt agreements.
Remember...
Bankruptcy is not usually thought of as a nice or relieving experience, nor is the process of bankruptcy cheap. There are many consequences to bankruptcy that can last a long time.
Bankruptcy is a legal process and decision so one should discuss bankruptcy with there own qualified attorney.
What is Chapter 11 Bankruptcy?
Chapter of bankruptcy that is used for businesses that have to much debt but are worth more as an operating business then the sum of all proceeds that could be raised from a total asset liquidation sale.
How Chapter 11 Works
A trustee will overlook the reorganization of the debt and efficiency of a business.
Once this process is complete the business is simply to follow the terms of the restructured debt agreements.
Remember...
Bankruptcy is not usually thought of as a nice or relieving experience, nor is the process of bankruptcy cheap. There are many consequences to bankruptcy that can last a long time.
Bankruptcy is a legal process and decision so one should discuss bankruptcy with there own qualified attorney.
Wednesday, December 15, 2010
Small Business Marketing - A Warning to Small Business Owners
As you may or may not know there are many outlets for dentist, family physicians, lawyers, and any other common local business owners to obtain professional help with advertising, marketing, and related efforts and needs.
What you may not know is that there is most likely no other consumer with in the marketing and advertising industry that is more sought out by marketing firms then this target market.
The reasons behind this is simple.
They meet the perfect sales and marketing business model.
Professionals such as yourself have a lot of money and excellent sources of cash flow. This is true of many folks. There are much bigger and fatter wallets out there that firms don't bother with because those “wallets” don't have the other key characteristic.
The consumer (you) has no idea of what to expect or what is possible in terms of results, cost (margins or the premiums you guys pay), or knowledge of what is involved in terms of providing the marketing and advertising services. This is really appealing when you couple that notion with the idea that you guys are as busy as you can possibly be. No time to explore your options.
These services, that local dentist and other medical professionals buy into, will charge very high prices for services the sales guy will promise to do for you. The services provided will often be much different and will account for much less of the firms cost then probably any other type of expense.
On top of this they will be sure to lock you down on some sort of residual service that will be about as much as a cell phone bill or a little less. This is so that in large volume the fees will add up but the amounts are small enough that the customer (you) will more or less forget about, not think about, or perhaps not care about. The margins are enormous.
If you own a small business you may find it more beneficial in both a financial sense as well as the overall marketing performance.
Related Articles
Articles of Organization - LLC
How to Market and Advertise Small Local Business
What you may not know is that there is most likely no other consumer with in the marketing and advertising industry that is more sought out by marketing firms then this target market.
The reasons behind this is simple.
They meet the perfect sales and marketing business model.
Professionals such as yourself have a lot of money and excellent sources of cash flow. This is true of many folks. There are much bigger and fatter wallets out there that firms don't bother with because those “wallets” don't have the other key characteristic.
The consumer (you) has no idea of what to expect or what is possible in terms of results, cost (margins or the premiums you guys pay), or knowledge of what is involved in terms of providing the marketing and advertising services. This is really appealing when you couple that notion with the idea that you guys are as busy as you can possibly be. No time to explore your options.
These services, that local dentist and other medical professionals buy into, will charge very high prices for services the sales guy will promise to do for you. The services provided will often be much different and will account for much less of the firms cost then probably any other type of expense.
On top of this they will be sure to lock you down on some sort of residual service that will be about as much as a cell phone bill or a little less. This is so that in large volume the fees will add up but the amounts are small enough that the customer (you) will more or less forget about, not think about, or perhaps not care about. The margins are enormous.
If you own a small business you may find it more beneficial in both a financial sense as well as the overall marketing performance.
Related Articles
Articles of Organization - LLC
How to Market and Advertise Small Local Business
Articles of Organizaton - LLC
In the wake of the economy and the correlating loss of employment that has effected many Americans more and more professionals are taking matters into their own hands. Folks are going into business on their own and many of these folks plan on starting a LLC to work under.
This is generally a smart decision as a LLC provides some legal protection and limits exposure to both legal and financial liability.
To form a LLC one must first write and file the Articles of Organization.
The Articles of Organization is the most important document of an LLC. In fact this document is what makes an "LLC" a "LLC". Given this notion it has been suggested that anyone whom starts an LLC take great care and concern when writing the Articles of Organization.
This article is here as a step by step guide outlining the fundamental process and components one needs to follow in order to write and structure the "Articles of Organization" for an LLC. The exact requirements for this document vary from state to state so you need to use this guide along side your own research.
How to Write the Articles of Organization for an LLC
Article 1
First section consists of just some very basic information; the LLC name.
Article 2
The second section is a outline and description of who will manage the LLC. Nine times out of ten this is the members of the LLC.
Article 3
The third section is dedicated to the members, managers, and resident agent of the LLC. The members are the ones with a financial stake in the company. The members generally are the managers as well. However in the case that the managers of the LLC are different from the members then the managers need to be listed. Finally the resident agent needs to be listed. Along with the names of all the applicable individuals the addresses as well as any contact info that you wish to include.
Article 4
Finally the agents office address must be documented. This will be filed as the registered office of the LLC that will be on file.
Monday, December 6, 2010
Long Term Decline in Manufacturing Jobs
There has been a long term trend of declining manufacturing jobs in the United States. This article will discuss the downward trending track of US manufacturing jobs.
Manufacturing jobs have been on the decline for some time now in the United states. This article will explore the reasons for this decline in manufacturing employment opportunities.
Productivity
Increasing productivity allows companies to maintain or increase their output using fewer workers. As new technologies are created fewer workers are required to carry out the operations of the applicable firm.
Outsourcing
Some manufacturing work has been outsourced to more productive companies. Some times a firm will outsource jobs to another country where labor prices are considerably cheaper.
Manufacturing jobs have been on the decline for some time now in the United states. This article will explore the reasons for this decline in manufacturing employment opportunities.
Productivity
Increasing productivity allows companies to maintain or increase their output using fewer workers. As new technologies are created fewer workers are required to carry out the operations of the applicable firm.
Outsourcing
Some manufacturing work has been outsourced to more productive companies. Some times a firm will outsource jobs to another country where labor prices are considerably cheaper.
Basic Types of Business Operations
List of Catagory and Type of Business Operations with Business Examples
Goods Producing
Goods Producing
- Farming
- Mining
- Manufacturing
- Power Generation
Storage and Transportation
Exchange
Renting
Entertainment
Communication
- Warehousing
- Trucking
- Mail service
- Moving
- Taxis
- Buses
- Hotels
- Airlines
Exchange
- Retailing
- Wholesaling
- Banking
Renting
- Leasing
- Library
- Loans
Entertainment
- Films
- Radio and Television
- Concerts
- Recording
Communication
- Newspapers
- Radio and Television
- Newscasts
- Telephone
- Satellites
- Finance Blog
Creating Value through Business Operations
This post discusses creating value through process and operations of businesses.
Operations as a Value-Added Process
Operations start with raw materials and services much like dinner starts with ingredients and the cook's labor. The ingredients and the cook's labor translate to Input(s) in reference to operations.
Operation Inputs
Transformation Process of Business Operations
Just as a cook must "cook or bake the food to "transform the ingredients and effort into whatever is for dinner so to must a business transform inputs into outputs. In the world of business operations and operations management this is known as the transformation process.
Operation Outputs
The goods and services that a company produces are known as the output.
Finance Guy's Final Thoughts
I have a great way to sum up the very nature of business and operations as an added value through process concept.
Here it goes...
"Business is essentially nothing more than buying something for a dollar and figuring out how to sell it for two."
- Finance Guy
Operations as a Value-Added Process
Operations start with raw materials and services much like dinner starts with ingredients and the cook's labor. The ingredients and the cook's labor translate to Input(s) in reference to operations.
Operation Inputs
- Material
- Machines
- Labor
- Management
Transformation Process of Business Operations
Just as a cook must "cook or bake the food to "transform the ingredients and effort into whatever is for dinner so to must a business transform inputs into outputs. In the world of business operations and operations management this is known as the transformation process.
Operation Outputs
The goods and services that a company produces are known as the output.
Finance Guy's Final Thoughts
I have a great way to sum up the very nature of business and operations as an added value through process concept.
Here it goes...
"Business is essentially nothing more than buying something for a dollar and figuring out how to sell it for two."
- Finance Guy
Challenges of Managing Services
Managing a service based business is complicated through a variety operational characteristics. In this post I wanted to discuss why and how managing services is challenging.
Compared to their counter part services are much harder to manage and much harder to keep consistent productivity and quality levels.
Input and Output Variability
Input and output variability is higher and less stable than a typical manufacturer operation.
Loosely Structured Job Duties
Service jobs are often less structured than manufacturing jobs. This is for several reasons. One big one is the sales aspect of service orientated operations. both the typical pay structures as well as the nature of the agents responsibility lend them selves to flexible and agile activity structures.
Customer Relations
Customer contact is higher. Typically services orientated operations have to "court" or service the customer from time to time.
High Employee Turn Around
Services hire many entry-level workers. This is because the employee turnover seems to be much higher then a manufacturing job. Employees burn out and move on. Many new employees just are not cut out for the work. But there is often no clear way to screen applicants so companies need to constantly subsidize the folks leaving with new employees. This is amplified during a growth period for a service orientated firm.
Service performance can be affected by worker’s personal factors. Because employees must often play a part that requires them to be engaged and also deal with customers that are not happy or high maintenance yet the agent must maintain the image that best represents the company. This can be difficult if the agent is having a period of depression or if they are sick or just having a bad day.
Finance and Profitability Variations
The service industry experiences large fluctuations in demand and profitability which are some times not anticipaited. This makes it hard to deal with complicaited financial decisions.
Compared to their counter part services are much harder to manage and much harder to keep consistent productivity and quality levels.
Input and Output Variability
Input and output variability is higher and less stable than a typical manufacturer operation.
Loosely Structured Job Duties
Service jobs are often less structured than manufacturing jobs. This is for several reasons. One big one is the sales aspect of service orientated operations. both the typical pay structures as well as the nature of the agents responsibility lend them selves to flexible and agile activity structures.
Customer Relations
Customer contact is higher. Typically services orientated operations have to "court" or service the customer from time to time.
High Employee Turn Around
Services hire many entry-level workers. This is because the employee turnover seems to be much higher then a manufacturing job. Employees burn out and move on. Many new employees just are not cut out for the work. But there is often no clear way to screen applicants so companies need to constantly subsidize the folks leaving with new employees. This is amplified during a growth period for a service orientated firm.
Service performance can be affected by worker’s personal factors. Because employees must often play a part that requires them to be engaged and also deal with customers that are not happy or high maintenance yet the agent must maintain the image that best represents the company. This can be difficult if the agent is having a period of depression or if they are sick or just having a bad day.
Finance and Profitability Variations
The service industry experiences large fluctuations in demand and profitability which are some times not anticipaited. This makes it hard to deal with complicaited financial decisions.
Business Operations - Productivity
Business Productivity
This article discusses operations productivity and measuring business productivity.
The founder of Godaddy.com is famous for saying that anything watched and measured tends to go up. Keeping track of company productivity is essential to running a successful business venture.
Productivity
Productivity is a measure of the effective use of resources, usually
expressed as the ratio of output to input.
Productivity measures are useful for tracking an operating unit’s performance over time. Productivity tracking is also used to rate the performance of an entire industry or country.
Process Yield
Process yield is the ratio of output of good product to input. Defective products are not included in the output.
Process yield is also used in service orientated industries. For example the ratio of hotel rooms sold to rooms vacant.
Outsourcing
Higher productivity in another company is a key reason organizations outsource work. Improving productivity may reduce the need for outsourcing.
There are other considerations as well. For example, a company may take a PR hit if they outsource jobs to another country.
Managing the Finance Side
It is very important that a business have an intimate understanding of what they are getting per dollar invested in the company. This is the responsibility of the finance department.
Once a business is able to accurately track what a dollar is worth to them than they are able to easily make common financial decisions involving loans, debt, and proposed investments.
This article discusses operations productivity and measuring business productivity.
The founder of Godaddy.com is famous for saying that anything watched and measured tends to go up. Keeping track of company productivity is essential to running a successful business venture.
Productivity
Productivity is a measure of the effective use of resources, usually
expressed as the ratio of output to input.
Productivity measures are useful for tracking an operating unit’s performance over time. Productivity tracking is also used to rate the performance of an entire industry or country.
Process Yield
Process yield is the ratio of output of good product to input. Defective products are not included in the output.
Process yield is also used in service orientated industries. For example the ratio of hotel rooms sold to rooms vacant.
Outsourcing
Higher productivity in another company is a key reason organizations outsource work. Improving productivity may reduce the need for outsourcing.
There are other considerations as well. For example, a company may take a PR hit if they outsource jobs to another country.
Managing the Finance Side
It is very important that a business have an intimate understanding of what they are getting per dollar invested in the company. This is the responsibility of the finance department.
Once a business is able to accurately track what a dollar is worth to them than they are able to easily make common financial decisions involving loans, debt, and proposed investments.
Competitiveness, Strategy, and Productivity
Organizational Strategy Formulation Explained
Businesses compete using operations and more importantly their operational strategy. This article discusses strategy and operations planning.
Product and Service Design Considerations
Environmental scanning is a task that one must do before they are able to effectively plan operations strategy.
Core Competencies
The special attributes or abilities that give an organization a competitive edge. To be effective, the core competencies and strategies need to be aligned to compliment one another.
Types of Strategy for business Operations
Agile Operations
Agile operations is a strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change.
Involves the blending of several core competencies:
Measuring productivity and operational performance is a must for any successful business.
Businesses compete using operations and more importantly their operational strategy. This article discusses strategy and operations planning.
Product and Service Design Considerations
- Cost
- Location
- Quality
- Quick response
- Flexibility
- Inventory management
- Supply chain management
- Service
- Managers and workers
Environmental scanning is a task that one must do before they are able to effectively plan operations strategy.
Order Winners & Qualifiers
Order Qualifiers
Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase
Order Winners
Characteristics of an organization’s goods or services that cause it to be perceived as better.
Distinctive Core cCompetencies
Core Competencies
The special attributes or abilities that give an organization a competitive edge. To be effective, the core competencies and strategies need to be aligned to compliment one another.
Types of Strategy for business Operations
Agile Operations
Agile operations is a strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change.
Involves the blending of several core competencies:
- Cost
- Quality
- Reliability
- Flexibility
Measuring productivity and operational performance is a must for any successful business.
Operations Management
Core Fundamentals of Operations Management
This article will discuss the basics of operations management as it pertains to business.
What is operations?
The part of a business organization that is responsible for producing goods or services. Operations, in a sense, is business.
How can we define operations management?
The management of systems or processes, including financial matters, that create goods and/or provide services.
At the core of operations management is the supply chain.
Supply Chain
The supply chain is a sequence of activities and organizations involved in producing and delivering a good or service.
For a better idea of how a supply chain works take a look at the list of typical supply chain components or parties below.
Supply Chain Hierarchy
The management of the supply chain may be the most important aspect of operations management.
The other function of operations management that rivals supply chain management in importance is the overall planning and purpose of the company.
This must be planned and constantly reviewed and revised as needed.
Hierarchical Planning Process
I have posted an article worth reading if you are interested in learning more about operations planning for organizational strategy
This article will discuss the basics of operations management as it pertains to business.
What is operations?
The part of a business organization that is responsible for producing goods or services. Operations, in a sense, is business.
How can we define operations management?
The management of systems or processes, including financial matters, that create goods and/or provide services.
At the core of operations management is the supply chain.
Supply Chain
The supply chain is a sequence of activities and organizations involved in producing and delivering a good or service.
For a better idea of how a supply chain works take a look at the list of typical supply chain components or parties below.
Supply Chain Hierarchy
- Supplier for suppliers
- Direct suppliers
- Producer
- Distributor
- Final customers
The management of the supply chain may be the most important aspect of operations management.
The other function of operations management that rivals supply chain management in importance is the overall planning and purpose of the company.
This must be planned and constantly reviewed and revised as needed.
Hierarchical Planning Process
- Mission
- Goals
- Organizational Strategies
- Tactics
- Functional Strategies
I have posted an article worth reading if you are interested in learning more about operations planning for organizational strategy
Wednesday, December 1, 2010
Cash, Credit, or Cell?
"Hey can you cover me I left my charger at work?"
This is how you will sucker your friend in to paying for your night out in a year or two.
Confused?
Yeah... you, Master Card, Visa, and American Express too.
In just a few short months consumers will have the option to pay with cash, credit card, or their smart phone.
That's right soon your smart phone will be just like a credit card except better; it won't be a credit card.
Who Is Behind This New Payment Method?
More then several players are going to be directly offering a cell phone payment method.
Below is a quick list of the bigger companies creating an alternative credit method for your smart phone.
Isis
AT&T, Verizon, and T-Mobile are all joining forces to form a company or entity or whatever they are call such a partnership. This new transaction processing company will be called Isis.
Google and the Android Operating System
Google is developing a system that will integrate with their Android operating system. All a phone will need is the embedded chip.
New Start-Ups
There are several new companies that have already formed that are going to offer solutions for both consumers and merchants as an alternative to paying with the old credit card.
Why the Push to Create a New Payment Method and Credit Card Alternative?
Mobile Networks
This is the obvious answer. All the big data networks such as AT&T, Verizon, and T-Mobile will expand their offered services in a big way. The electronic transaction solution business is one hell of an extra business to get in to. They will get a cut of every transaction just like the credit card companies do now.
Consumer Choice
Then of course there is the consumer demand for an alternative to credit cads. there is an obvious benefit to being able to pay with your smart phone in addition to the other two choices that we already have. though this is an obvious motive for coming up with another merchant transaction solution and alternative to credit cards it is not even close to the main driver of this new industry.
Merchant Incentive - A Cheaper Better and Smarter Alternative
Merchants are going to welcome this thing with open arms. Merchants have a real love hate relationship with credit cards. The problem that merchants have with the existing credit card transaction solutions is the price they are charged by the credit card companies. It really puts a dent into the margins.
Also the credit card companies have been increasing rates on the merchants to make up losses that the banks have incurred during the credit crunch and massive waves of loan defaults.
To top it off the credit card companies have made it a breach of contract for merchants to say anything about the expense to consumers.
In fact many people have no idea how credit card companies make money. It's not the interest we all pay.
Merchants will be able to cut the transaction expense in half. This means bigger gains in margin. This thing will be huge for merchants.
Credit Card Companies are in Trouble
The one thing that is crystal clear amidst all this new possibility and choice that consumers, networks, and merchants will have in the very near future is that credit card companies are not going to fair well.
Sure there is going be a place for credit cards. Trust me when I tell you that credit cards are not going anywhere. I am actually surprised that the bigger credit cad companies are not more involved with this new movement but the again I guess these phone networks have a pretty solid infrastructure already in place.
My next post is going to be on what this will mean for consumers and merchants as well as the data networks. The positive impact and benefits of ths shift is going to be a lot bigger then most people would think and I really want to paint a vivid picture for everyone.
So check back soon!
Related Articles
Verizon vs AT&T - Comparing iPad Data Plan Financial Value
DIY - Credit Card Debt Management Plan
Consumer Credit Declines
This is how you will sucker your friend in to paying for your night out in a year or two.
Confused?
Yeah... you, Master Card, Visa, and American Express too.
In just a few short months consumers will have the option to pay with cash, credit card, or their smart phone.
That's right soon your smart phone will be just like a credit card except better; it won't be a credit card.
Who Is Behind This New Payment Method?
More then several players are going to be directly offering a cell phone payment method.
Below is a quick list of the bigger companies creating an alternative credit method for your smart phone.
Isis
AT&T, Verizon, and T-Mobile are all joining forces to form a company or entity or whatever they are call such a partnership. This new transaction processing company will be called Isis.
Google and the Android Operating System
Google is developing a system that will integrate with their Android operating system. All a phone will need is the embedded chip.
New Start-Ups
There are several new companies that have already formed that are going to offer solutions for both consumers and merchants as an alternative to paying with the old credit card.
Why the Push to Create a New Payment Method and Credit Card Alternative?
Mobile Networks
This is the obvious answer. All the big data networks such as AT&T, Verizon, and T-Mobile will expand their offered services in a big way. The electronic transaction solution business is one hell of an extra business to get in to. They will get a cut of every transaction just like the credit card companies do now.
Consumer Choice
Then of course there is the consumer demand for an alternative to credit cads. there is an obvious benefit to being able to pay with your smart phone in addition to the other two choices that we already have. though this is an obvious motive for coming up with another merchant transaction solution and alternative to credit cards it is not even close to the main driver of this new industry.
Merchant Incentive - A Cheaper Better and Smarter Alternative
Merchants are going to welcome this thing with open arms. Merchants have a real love hate relationship with credit cards. The problem that merchants have with the existing credit card transaction solutions is the price they are charged by the credit card companies. It really puts a dent into the margins.
Also the credit card companies have been increasing rates on the merchants to make up losses that the banks have incurred during the credit crunch and massive waves of loan defaults.
To top it off the credit card companies have made it a breach of contract for merchants to say anything about the expense to consumers.
In fact many people have no idea how credit card companies make money. It's not the interest we all pay.
Merchants will be able to cut the transaction expense in half. This means bigger gains in margin. This thing will be huge for merchants.
Credit Card Companies are in Trouble
The one thing that is crystal clear amidst all this new possibility and choice that consumers, networks, and merchants will have in the very near future is that credit card companies are not going to fair well.
Sure there is going be a place for credit cards. Trust me when I tell you that credit cards are not going anywhere. I am actually surprised that the bigger credit cad companies are not more involved with this new movement but the again I guess these phone networks have a pretty solid infrastructure already in place.
My next post is going to be on what this will mean for consumers and merchants as well as the data networks. The positive impact and benefits of ths shift is going to be a lot bigger then most people would think and I really want to paint a vivid picture for everyone.
So check back soon!
Related Articles
Verizon vs AT&T - Comparing iPad Data Plan Financial Value
DIY - Credit Card Debt Management Plan
Consumer Credit Declines
Monday, November 29, 2010
Business Basics - Taking a Look at the Competition
All businesses have competitors. All businesses must compete for customers and their market share. If there is any room for competing firms then you can rest assured that the applicable industry will see new competing firms.
For all those notions expressed above exploring the competition and the competitive environment of your industry is a necessary activity for any business.
Business competition can come in many different shapes and forms.
Competition can come from a local business, it can come from web based company. It may come from a substitute product or service. It may come from a vast variety of sources.
No matter what shape or form competition comes in one thing that is absolutely concrete and necessary for any small business is that one must understand the competition on a intimate level if you are to have any sort of chance at maintaining a long term competitive edge over your competition.
Considering Competition
What and how you go about examining and considering the competition will depend on your business. Below I have prepared a list of key areas to explore when considering the competition.
Local Competition
If local competition exists then this should be a definite focus of competition consideration. Taking a look at factors such as location, local advertising mediums, community reputation, and operation history are some very important aspects of local competition.
Competing Alternatives
Explore alternative products or services does the consumer have to choose from. Explore the strengths of these alternatives. Find the weaknesses of these choices. Figure out how you can exploit the weaknesses and offer one of your strengths that makes your product or service the superior solution to what ever problem or need your product fulfills.
Future Competition
What does the future competitive landscape look like?
Take a look at how new technologies will influence the competition. Examine the barrier to entries. How sturdy are those barriers. How can you make it harder for new competitors to get started. Try and create a generic game plan for dealing with a new competitor.
Related Articles
How to Prepare a Marketing Plan
Business Basics - Stay Competitive
3 Key Aspects of Every Business
For all those notions expressed above exploring the competition and the competitive environment of your industry is a necessary activity for any business.
Business competition can come in many different shapes and forms.
Competition can come from a local business, it can come from web based company. It may come from a substitute product or service. It may come from a vast variety of sources.
No matter what shape or form competition comes in one thing that is absolutely concrete and necessary for any small business is that one must understand the competition on a intimate level if you are to have any sort of chance at maintaining a long term competitive edge over your competition.
Considering Competition
What and how you go about examining and considering the competition will depend on your business. Below I have prepared a list of key areas to explore when considering the competition.
Local Competition
If local competition exists then this should be a definite focus of competition consideration. Taking a look at factors such as location, local advertising mediums, community reputation, and operation history are some very important aspects of local competition.
Competing Alternatives
Explore alternative products or services does the consumer have to choose from. Explore the strengths of these alternatives. Find the weaknesses of these choices. Figure out how you can exploit the weaknesses and offer one of your strengths that makes your product or service the superior solution to what ever problem or need your product fulfills.
Future Competition
What does the future competitive landscape look like?
Take a look at how new technologies will influence the competition. Examine the barrier to entries. How sturdy are those barriers. How can you make it harder for new competitors to get started. Try and create a generic game plan for dealing with a new competitor.
Related Articles
How to Prepare a Marketing Plan
Business Basics - Stay Competitive
3 Key Aspects of Every Business
Monday, November 22, 2010
Small Business - Why Most Small Businesses Fail
The vast majority of small businesses fail. Why is this?
Starting, running, maintaining, managing, and growing a small business is no easy task. In fact it is absolutely grueling, and at times will seem impossible impossible.
Why do so many small businesses fail?
I have come up with ten common reasons why most small businesses fail. By taking a look at some of the known small business killers we can learn from the mistakes others have made in the past and learn from their mistakes.
Below is a list of the top ten reasons that small businesses fail.
10 Reasons Why Small Businesses Fail
Starting, running, maintaining, managing, and growing a small business is no easy task. In fact it is absolutely grueling, and at times will seem impossible impossible.
Why do so many small businesses fail?
I have come up with ten common reasons why most small businesses fail. By taking a look at some of the known small business killers we can learn from the mistakes others have made in the past and learn from their mistakes.
Below is a list of the top ten reasons that small businesses fail.
10 Reasons Why Small Businesses Fail
- Lack of a Long Term Company Vision
- Failure to Establish Goals and Business Objectives
- Inadequate Financial Planning
- Not Listening to the Consumer
- Underestimating the Competition
- Lack of Leadership
- Ineffective Operations Procedure and Process
- Lack of Skilled and or Seasoned Business Talent
- Lack of Company Agility
- Failure to Communicate Internally
Related Articles
Online Retail Sales are Booming
Well business on the Internet has been booming like always. The online retail sales and finance figures for the third quarter of 2010 are in. The figures are very impressive.
Nearly 42 billion dollars of retail commerce took place over the three month period ending in September. This figure is up 15% year over year. If that was not impressive enough take the following notion into consideration. During that same period when Online retail increased by 15% retail sales in general dropped by almost 5%.
WOW. That is some steady growth.
Online retail sales are up 33% since the lows of the recession. Further online retail sales have doubled since 2005.
Related Articles
Online Advertising Revenue
History of Online Advertising
Brand Development
Nearly 42 billion dollars of retail commerce took place over the three month period ending in September. This figure is up 15% year over year. If that was not impressive enough take the following notion into consideration. During that same period when Online retail increased by 15% retail sales in general dropped by almost 5%.
WOW. That is some steady growth.
Online retail sales are up 33% since the lows of the recession. Further online retail sales have doubled since 2005.
Related Articles
Online Advertising Revenue
History of Online Advertising
Brand Development
Sunday, November 21, 2010
Business Basics - Staying Competitive
To survive as an ongoing entity, a business must stay competitive. The free market dictates that if there is room for competition someone, some company, will try to squeeze their way in. That company, or new competition, won't stop there.
Competitors will always look for ways to take a bigger share of the market.
This is why, as a business, one must do as your competitors do, you always have to look for that edge. You want to find that competitive advantage. You have to keep an eye out for a way to stay one up on the competition.
This post takes a broad look at how business operations influence the competitiveness of a business.
Business Competitiveness
The competitiveness of a business refers to how effectively a business or organization meets the needs and wants of their target market in comparison to their competition.
There are 10 basic areas of business operations that yield themselves as opportunities to stay competitive. Below I have lusted these ten competitive areas of business operations
10 Competitive Areas of Business Operations
Competitors will always look for ways to take a bigger share of the market.
This is why, as a business, one must do as your competitors do, you always have to look for that edge. You want to find that competitive advantage. You have to keep an eye out for a way to stay one up on the competition.
This post takes a broad look at how business operations influence the competitiveness of a business.
Business Competitiveness
The competitiveness of a business refers to how effectively a business or organization meets the needs and wants of their target market in comparison to their competition.
There are 10 basic areas of business operations that yield themselves as opportunities to stay competitive. Below I have lusted these ten competitive areas of business operations
10 Competitive Areas of Business Operations
- Product and Service Design - The design of a product or service can have a large impact on how competitive a business is when compared to their peers. Every detail can have a big influence on how a consumer thinks or feels about your product in comparison to your competitors.
- Costs - A companies management of costs is a huge factor in the competitiveness of any one business comparison to it's peers or competitors. If costs are to high then that firms margins or that firms price will suffer and the competitor will have an opportunity to exploit the issue whether by reducing their price to a level that the you will not be able to compete or simply by doing nothing and raking in the big margins until it feels it needs to exploit the competitive advantage that it has looming in the shadows.
- Location - Location, location location. Location is a huge factor in the competitive world. How convenient is your location relative to your competitor. How much more or less are you paying for a certain location compared to your competitor.
- Quality - The quality of your service or product is a big factor for obvious reasons. The factor of quality really comes to the forefront when you compare the cost difference to the consumer. Is the extra quality worth the increase in cost that the client must pay?
- Response - How quickly a company can respond to new opportunities and developments with in a industry will have a huge impact on how competitive that business is and becomes
- Agility - the agility of a company in terms of response to consumer wants and concerns will have a large impact o that companies competitiveness
- Inventory - How efficient a company is at maintaining inventory levels will effect many variables such as price, wait time and the company product availability all of which will greatly impact the firms ability to stay competitive.
- Supply Chain - the management of the company supply chain ill effect the firms competitiveness and can even effect how competitive their competitors are able to be through contractual obligations and exclusivity agreements. The management of a supply chain can also have huge implications on the finance and overall financial matters of a company. This of course has a huge impact on a firms ability to stay competitive amidst a ever growing competitive landscape.
- Service - whether a company is a service or whether a company sells a physical product either way a company will have some degree of service that attaches itself to the primary product or service. this may bet the front line sales team or perhaps he consumers retail experience when shopping n the stores of the company. there is a lot that can happen from the moment a consumer steps in a store to that point of purchase and their is still more during the life of the product or service. Thus the overall servicing that a firm provides it's consumers has a tremendous effect on the competitiveness of a firm.
- Employees - The behavior of a companies employees has many influences on the overall competitiveness of a firm.
Related Articles
Wednesday, November 10, 2010
Business Basics - The 3 Fundamental Functions of Every Business Explained
No matter what type of business, or organization for that matter, you can rest assured that there are three fundamental functions that run that business and dictate how that business behaves.
This post explains the 3 basic functions of every business. These functions are Finance, Marketing, and Operations.
The 3 Basic Business Functions
Finance
The finance function of a business is responsible for securing and distributing funds for operations.
This function also is typically in charge of purchasing goods, supplies, and services that are necessary to carry out marketing and operational activities.
Budgeting and forecasting expenses, revenue, profits, costs, losses and debt are crucial tasks that the finance function of any business must be able to perform successfully.
Managing cash flow and the financial assets of a company is no easy task. To stay competitive a business must be able to manage their money effectively. This could mean developing investment strategies that produce a significant short term yield with out taking on excess risk.
Some businesses owe their success in large part to their finance department. For instance Amazon.com originally made their money not by selling books but by simply investing sales revenues for the short term between the time of purchase and the time of payment to the seller. During that period which was a time frame of 30 - 60 days for any given transaction Amazon.com invested the money for the short term and "made their living" off the investments resulting return or yield.
Most people don't know that.
Marketing
The marketing function of a business is ultimately responsible for ensuring the business has customers. The marketing activities and efforts of a company must focus on ensuring that the products and or services of the business are able to meet the needs and wants of the customer. Perhaps just as important, the marketing department must ensure that the target market is aware that the companies goods and services, and further, are aware that the products are able to meet their needs and wants. This "awareness" must be strong enough to convince an acceptable portion of the target market to purchase the goods or services as a means to meet their needs and wants.
The marketing side of a business must focus on developing strategies and plans that effectively create this awareness. For instance how a company advertises their products and services is developed and executed by the marketing department. Much of the customer experience is a focus of marketing. Whether it be designing a strategy to cross sell candy and other tasty treats to customers at a video rental store such as Block Buster or creating an overwhelmingly positive emotional experience for those touring a time share resort the marketing function of a business attempts to create a consumer experience that is optimized for selling the products and services of a business.
Just as the finance department will create forecasts and budgets a marketing department will prepare a marketing plan which forecasts sales and more importantly acts as the blue print of how a company will entice customers to purchase a firms products and services.
Operations
Operations is the function of a business that is responsible for cresting the goods and services of a business. Operations is responsible for producing what the company sells with in the boundaries of the budgets and forecasts supplied by the finance department as well as the supply and demand forecasts of determined by the marketing department. Operations must produce products and services in line with what the marketing department has dictated is necessary to meet the needs and wants of the consumer.
Operations is also the biggest player in running and managing the supply chain. Supply chain management is a crucial aspect of any business and the proper operations management approach can make or break a business. For instance despite Block Buster having multiple times the amounts of revenue as Red Box, Red Box stock is selling for extremely high multiples of their earnings per share while Block Buster is in bankruptcy trying to restructure their debt. This is because Red Box has a lean and mean well managed supply chain and Block Buster is still working on optimizing a clunky retail cross selling approach.
Just as a side note Red Box is owned and managed by the same folks who manage coin star.
So there you have it folks the three basic functions of any business explained. If you like reading about this kind of stuff I have decided to do another post directly relating to this topic. As a way to better explain and see the concepts at work I am going to post how each of these fundamental business operations relate to this very finance blog. This should give folks a practical application of the fundamentals at work by using Young Finance Guy as an example.
This post explains the 3 basic functions of every business. These functions are Finance, Marketing, and Operations.
The 3 Basic Business Functions
Finance
The finance function of a business is responsible for securing and distributing funds for operations.
This function also is typically in charge of purchasing goods, supplies, and services that are necessary to carry out marketing and operational activities.
Budgeting and forecasting expenses, revenue, profits, costs, losses and debt are crucial tasks that the finance function of any business must be able to perform successfully.
Managing cash flow and the financial assets of a company is no easy task. To stay competitive a business must be able to manage their money effectively. This could mean developing investment strategies that produce a significant short term yield with out taking on excess risk.
Some businesses owe their success in large part to their finance department. For instance Amazon.com originally made their money not by selling books but by simply investing sales revenues for the short term between the time of purchase and the time of payment to the seller. During that period which was a time frame of 30 - 60 days for any given transaction Amazon.com invested the money for the short term and "made their living" off the investments resulting return or yield.
Most people don't know that.
Marketing
The marketing function of a business is ultimately responsible for ensuring the business has customers. The marketing activities and efforts of a company must focus on ensuring that the products and or services of the business are able to meet the needs and wants of the customer. Perhaps just as important, the marketing department must ensure that the target market is aware that the companies goods and services, and further, are aware that the products are able to meet their needs and wants. This "awareness" must be strong enough to convince an acceptable portion of the target market to purchase the goods or services as a means to meet their needs and wants.
The marketing side of a business must focus on developing strategies and plans that effectively create this awareness. For instance how a company advertises their products and services is developed and executed by the marketing department. Much of the customer experience is a focus of marketing. Whether it be designing a strategy to cross sell candy and other tasty treats to customers at a video rental store such as Block Buster or creating an overwhelmingly positive emotional experience for those touring a time share resort the marketing function of a business attempts to create a consumer experience that is optimized for selling the products and services of a business.
Just as the finance department will create forecasts and budgets a marketing department will prepare a marketing plan which forecasts sales and more importantly acts as the blue print of how a company will entice customers to purchase a firms products and services.
Operations
Operations is the function of a business that is responsible for cresting the goods and services of a business. Operations is responsible for producing what the company sells with in the boundaries of the budgets and forecasts supplied by the finance department as well as the supply and demand forecasts of determined by the marketing department. Operations must produce products and services in line with what the marketing department has dictated is necessary to meet the needs and wants of the consumer.
Operations is also the biggest player in running and managing the supply chain. Supply chain management is a crucial aspect of any business and the proper operations management approach can make or break a business. For instance despite Block Buster having multiple times the amounts of revenue as Red Box, Red Box stock is selling for extremely high multiples of their earnings per share while Block Buster is in bankruptcy trying to restructure their debt. This is because Red Box has a lean and mean well managed supply chain and Block Buster is still working on optimizing a clunky retail cross selling approach.
Just as a side note Red Box is owned and managed by the same folks who manage coin star.
So there you have it folks the three basic functions of any business explained. If you like reading about this kind of stuff I have decided to do another post directly relating to this topic. As a way to better explain and see the concepts at work I am going to post how each of these fundamental business operations relate to this very finance blog. This should give folks a practical application of the fundamentals at work by using Young Finance Guy as an example.
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