Modern Means of Business Communication
Modern Means of Business Communication
Market and Market Relation
8) Modern Means
of Business Communication
What is business
is a word which is commonly used in many different languages. But exactly what
does it mean? The concepts and activities of business have increased in modern
times. Traditionally, business simply meant exchange or trade for things people
wanted or needed. Today it has a more technical definition. One definition of
business is the production, distribution and sale of goods and services for a
profit. To examine this definition, we will look at its various parts.
production is the creation of services or the changing of materials into
products. One example is the conversion of iron ore into metal car parts. Next
these products need to be moved from the factory to the marketplace. This is
known as distribution, A car might be moved from a factory in Detroit to a car
dealership in Miami.
is the sale of goods and services. Sale is the exchange of a product or service
for money. A car is sold to someone in exchange for money. Goods are products
which people either need or want, for example, cars can be classified as goods.
Services, on the other hand, are activities which a person or group performs
for another person or organization. For instance, an auto mechanic performs a
service when he repairs a car. A doctor also performs a service by taking care
of people when they are sick.
then is a combination of all these activities: production, distribution and
sale. However, there is one other part important factor. This factor is the
creation of profit or economic surplus. A major goal in the functioning of an
American business company is making a profit. Profit is the money that remains
after all the expenses are paid. Creating an economic surplus or profit is,
therefore, a primary goal of business activity.
business includes all business transactions that involve
two or more countries. Such business relationships may be private or governmental.
are three primary motivations for firms to pursue international business: to
expand sales, to acquire resources, and to diversity sources of sales and
concept of international business includes the
balance of trade (the relationship between exports and imports) and balance of
payments (the difference between inward and outward cash flows).
company can engage in international business through various means, including
exporting and/or importing of merchandise and services, direct and portfolio
investments, and strategic alliances with other companies.
exports are tangible goods sent out of a country; merchandise imports are
tangible goods brought in. Since these goods visibly leave and enter they are
sometimes referred to as visible exports and imports.
exports and imports are international earnings other than those derived from
goods sent to another country. Receipt of these earnings is considered a
service export, whereas payment is considered a service import. Services are
also referred to as invisibles. International business comprises many different
types of services: travel, tourism, and transportation; performance of
activities abroad; use of assets from abroad.
investment is the ownership of property abroad. Direct investment is a subset
of foreign investment that takes place when control follows the investment.
When two or more organizations share in the ownership of a direct investment,
the operation is known as a joint venture.
investment can be either debt or equity but the factor that distinguishes
portfolio from direct investment is that control does not follow this kind of
What is a bank
bank is a safe place to keep money. It's also much more than that. People save
money in banks, banks have money to lend. Loans to people help them buy things.
Loans to business help them buy, build and expand, and keep people working.
These loans help the country's economy in making, distribution and use of our
banks were little more than moneychangers, exchanging coins and bullions from
one form to another for a fee.
way in which a bank is organized and operates is determined by its objectives.
A bank may not necessarily be in business to make a profit.
are different types of banks but their names may vary from one country to
banks such as the National Bank (Ukraine), the Bank of England (UK) or the
Federal Reserve System (US) look after the governments finance and monetary
policy and are responsible for issuing banknotes.
banks deal directly with the public. The aim of commercial banks is to earn
commercial bank provides a wide variety of services. There are three main
functions of banking:
three functions are the bases of the services by banks. They make it possible
for banks to generate profits and to achieve their operating aims:
opening savings and current accounts
offering credit services to customers:
personal loans and different credit cards
providing their customers travelling
abroad with foreign currencies, travelling checks
investment advice: banks open ways to
find and invest large amount of money
providing brokerage services
offering a wide range of trust services
for individuals and businesses.
banks don’t deal with the public. They provide services for companies.
banks are firms that control the issue of new secrities (shares and bonds).
banks are financial institutions in providing services such as savings accounts
as opposed to general banking services.
is a corporate enterprise that operates as one single unit, in the success of
which all the members participate. Company is made of a number of people united
in an industrial or commercial enterprise. Each company works out its own
policy. It is a selected, planes’ line of conduct in the light of which
decisions are made and co-ordination of work achieved. There is a difference
between a corporation, a sole trader and a partnership. The principle difference
is that a sale trader end a partnership are not corporations but limited
companies are. A corporation is a company that is publicly registered and
legally separated from its owners. It means that the corporation stays in
existence even after the death of any of its owners. An incorporated company is
a legal person in its own right, able to own property. Limited Liability
Company is a joint-stock company, the financial liability of whose members is
limited by law. An unlimited company is one in which the liability of the
members is not limited in any way. A registered company is the most common type
of company. A company may be registered either as a public limited company or a
private company. Private Limited Company is a limited company, which must not
invite the public to subscribe for its shares or debentures, and does not allow
its members to transfer their shares without the agreement of the other
shareholders. It must have at least two but usually not more than fifty
members. Public Limited Company is a limited company, which can offer its
shares and debentures to the public; there is normally no limit to the right of
its members to transfer their shares to other persons. There is no limit to the
total number of members except that there must be at least seven. A public
limited company must have a name ending with the initials "Pic" and
have an authorized share capital. The regulation of such companies is stricter
than of private companies. Most public companies are converted from private
companies, under the registration procedure laid down in the Companies Act.
Subsidiary Company is a company of which more than half the share-capital is
owned by another company, called either a holding company or a parent company.
The subsidiaries of the same parent or holding company are said to be
affiliates. Many well-known companies are multinationals, these are companies
which operate in a number of countries. A joint-stock company is a company in
which the members pool their stock, trading on the basis of their joint stock. People
in a company, its employees hold different positions. The relationship between
those employees with different positions makes organization structure. At
present most firms are divided into three major parts: capital (shareholders),
management and labor. Let us take a typical company. There is a director who is
a senior manager. He sits on the Board under the authority of the President.
The Board decides what company policy and expenditure must be. The chief
executive officer (CED) is the link between the Board and senior management. As
for the middle managers, they run departments of a firm. They account to senior
management for their area of work done. There is a difference between executive
directors and non-executive ones. The directors, who run their firm on
day-to-day basis are called executive directors. Those who sit on the Board and
do not run the firm directly are called non-executive directors. In modern
American English they use also the term inside directors for executive and outside
directors for non-executive ones.
Product, Market and Market Relation
is everything that one receives in exchange. Some products are tangible and
satisfy individual desires, while others are intangible but also important in
satisfying individual interests. Products are divided into two classes: goods
and services. For example, a hamburger is a good, while a doctor's examination
is a service. When you buy an automobile, you are purchasing a good. When you
have someone adjust a carburetor, however, you are purchasing a service. So
good is a real, physical, tangible thing that produced and consumed. A service
is an intangible attribute that involves selling help and advice, or delivering
goods for customers.
definition of the term product is based on the concept of a market. The market
is an extension of the ancient idea of a market as a place where people gather
to buy and sell goods. In former days part of a town was kept as the
marketplace, and people would travel many kilometers on special market days in
order to buy and sell various commodities. Today, however, markets such as the
gold market or the cotton market do not need to have any fixed geographical
location. Such a market is a set of transactions in which the transactions for
this commodity among different individuals and firms are related.
people come to a market because they want to buy (demanders), others come
because they want to sell (suppliers). A market is created when those who
willingly supply a good exchange with those who desire to use, control or
consume a good or service.
and demand are the twin factors which determine the price in any market. Supply
is the quantity of goods or services sellers will offer for sale at different
prices at a particular time and place. Demand is the total amount of a type of
goods or services that people or companies buy at a particular time and place.
reallocate commodities from supplies to demanders. What if suppliers want to
provide more than demanders want to purchase? Or, what if demanders want more
than suppliers are willing to provide?
supply occurs when, at a particular market price, the quality of demand. Excess
demand occurs when, at a particular market price, there is more demand for
something than available suppliers of it.
market is equilibrium when the quantity that suppliers are willing to provide
to the market at a specific market price is exactly equal to the quantity that
demanders desire to purchase in the market at the same market price.
importance of equilibrium is that the equilibrium relative price is the only
price at which the interests of demanders happen to coincide precisely with the
interests of the suppliers.
is the function in a business that is responsible for obtaining funds, managing
funds, within if and controlling them. Most organizations have finance managers
or financial departments in charge of financial operations. Financial
management performs the following finance functions.
Collecting funds (Credit management)
funds Managing taxes
funds Advising top management on financial matters
the main task of finance manager is to obtain money, then plan it, use and
control money effectively.
must be sure that without a carefully calculated financial plan and budget the
firm has little chance for success.
funds - is a very important finance function, because the amount of money
needed for various time periods and its sources are fundamental questions in
sound financial management.
control means that the revenues, costs and expenses are periodically reviewed
and compared with projection.
management gives a firm chance to earn money having an interest on credits and
taxes means tax implications of various financial transactions.
finally, financial people help management in decision making. All this
functions depend greatly on the information provided by the accounting
Accounting & Auditing
is often called the language of business. It is used in the business world to
describe the transactions entered into by all kinds of organizations.
Accounting is the recording, classifying, summerising and interpreting of
financial events and transactions to provide management and other interested
parties, (owners, investors, bankers, lawyers and accountants) with the
information they need to make better decisions.
recording the transactions into the journal they are classified into groups
(accounts) that have common characteristics.
are 5 accounts in accounting: assets, liabilities, owner's equity (capital),
revenues and expenses. The double-entry system divides each page into two
halves. The left-hand side, value, received, is called a debit side, the
right-hand side, value parted with, the credit side.
is an accounting function that involves the review and evaluation of the financial
records and financial position of a company. Audits' are performed by highly
qualified accountants (auditors) and are ordered by the management of the
company or by state authorities (revision and control). Not so many years ago
an audit suggested that a company had financial difficulties or some
irregularities in the records. At present, audits are a normal and regular part
of business practice
are two types of auditing: internal and independent.
auditing is a system of internal control which provides accounting controls;
against errors and misappropriations. Many companies employ their own
accountants to maintain the internal audit.
auditing is done by certified accountants who are not employees of the
organization whose books they examine. Independent auditors review the
business's operating activities: they examine financial statements, the
accounting records and other business papers to determine the accuracy and
completeness of the records.
auditor's judgement or opinion on the fairness of the records is written in a
document sent to the client upon completion of the audit. It consists of a
letter addressed to the-client that consists of a scope paragraph j(a list of
documents that the auditor has examined and the standards that were used for
the audit) and an opinion paragraph (the auditor's opinions).
can help the business set up a reliable accounting system.
Modern Means of Business Communication
have always tried to convey information. Now, they send letters and documents
by post, by fax, by computer and they make phone calls from home or the office
or, thanks to mobile phones, from wherever they happen to be.
list of services, thanks to advanced technology, is long and presumably will grow.
People can phone and fax from trains and planes. They can buy things, carry out
financial transactions, get information - all without leaving their chairs.
is the global information age. The worldwide computer network known as the
Internet connects millions of people worldwide. It connects many computer
networks and uses common addressing system.
most popular Internet service is e-mail. Using e-mail, you can send messages to
anyone with an internet account. Most businesses today have electronic address
because e-mail provides cheap and rapid communication.
the mid-1990s electronic commerce has become one of the most rapidly growing
retail sectors involving the use of computer telecommunication networks for
maintaining business relationships and selling information, services and
commodities. Although e-commerce usually refers only to the trading of goods
and services over the Internet, it actually includes broader economic activity
such as business-to-consumer and business-to-business commerce as well as
internal organizational transactions that support these activities.
new form of collaboration known as a virtual company is flourishing now. This
type of company is actually- a network of firms, each performing some of the
processes needed to manufacture a product or deliver a service.
is cheap and easy to use. E-mail is the transmission and distribution of
information through personal computers linked to the telephone system, which
allows subscribers to send a message directly to another subscriber that will
appear in their electronic mail box.
use continues to grow and develop in all spheres of our life. Its applications have
had a great impact on the business world. Computers have helped society by
increasing productivity and simplifying many services, such as checking, credit
cards, and telephone service.