Japanese Business Culture Essay

Japanese Business Culture Essay.

What do you do to prepare for this meeting?

In order to prepare for this meeting, apart from the usual prepaparation with regards to presentations, brochures and other information material, information about the product as well as the company, etc, I need to gather extensive information about the Japanese business culture as the peculiar characteristics of this particular trading company with whom we are meeting. It is extremely important in international business that one should pay attention to prevailing business culture, customs and peculiarities of the companies from other countries in order to conclude a successful business deal.

Therefore, I need to peep into material describing the Japanese way of doing businesses, their negotiation styles, things which one should avoid during the meetings, etc.

What do you want to know about the trading company?

The first thing which I would like to know about the trading company is its similarity to the traditional Japanese companies which possess certain typical characteristics. For example, one of the important things to know about this trading firm will be whether it is part of Japanese Keiretsu or not.

The knowledge of this information in advance will help me to identify key features of Japanese trading firms who are still part of the large groups or Keiretsu. Knowledge about few characteristics of the firm will help us to present ourselves in a more comfortable manner at deal stage.

I am presenting below few important characteristics of Japanese firms:

1) Connections are very helpful in this country, but choose your intermediaries carefully: the Japanese will feel obliged to be loyal to them. Select someone of the same rank as the person with whom he or she will have dealings. Moreover, an intermediary should not be part of either company involved with the deal.

2) If you know a highly respected, important person in Japan, use his or her endorsement and connection. Before you enter into negotiations, request a consultation, and then ask if you can use the endorsement and connection to further your business efforts. This method of using connections is standard practice among Japanese businesspeople.

3)Generally, the Japanese are not receptive to “outside” information. They will consider new ideas and concepts only within the confines of their own groups.

4)The Japanese tend to think subjectively, relying on feelings rather than empirical evidence.

5)Getting acquainted is the purpose of the initial meetings. You may, however, introduce your proposal during these preliminary discussions.

During presentations, and especially during negotiations, it is essential that one maintain a quiet, low-key, and polite manner at all times. The highest-ranking individual may appear to be the most quiet of everyone present. For a persuasive presentation, you must describe how your product can enhance the prosperity and reputation of the Japanese side. Making these claims effectively requires a thorough knowledge of Japanese economy, business, and product lines.

The Japanese will commit themselves to an oral agreement, which may be acknowledged by a nod or slight bow, rather than by shaking hands. Contracts can be renegotiated; in Japanese business protocol, they are not final agreements.

After gathering knowledge about these typical characteristics of Japanese firms, we will try to compare this particular firm with these characteristics by analyzing the available information.  source: http://www.executiveplanet.com/business-etiquette/Japan.html Comment to student: click on the link above. You will find many links on this page with respect to business culture in Japan.

The Japanese have been raised to think of themselves as part of a group, and their group is always dealing with other groups. This is viewed on many angles — internationally it is “We Japanese” vs. everyone else (more on that later), but in schools, companies, sections of companies etc. there are many groups and sub-groups — and not always in perfect harmony and cooperation as it may look on the surface. Dealing with Japanese on a one-to-one basis usually comes very easy to non-Japanese, but dealing with Japanese as a group can be a different matter altogether. source: http://www.thejapanfaq.com/FAQ-Primer.html

about the V.P. and his/her delegation?

There are certain things which we need to know about the VP and his delegation. The strong hierarchical structure in Japanese business is reflected in the negotiation process. They begin at the executive level and continue at the middle level. However, decisions will often be made within the group. Generally speaking, in business meetings the Japanese will line up in order of seniority, with the most senior person at the front and the least senior person closest to the door. In addition to this rule however, you may find that the most senior person chooses where to sit. It is important to bear in mind that in contemporary Japan, even a low ranking individual can become a manager if his or her performance is good. (source: http://www.communicaid.com/japan-business-culture.asp )

Further, it is important to know few personal information about the visiting team. For example, their level of proficiency with English, whether or not a translator will be required, the age as it is directly related to seniority in Japanese culture, whether they have travelled abroad to US or other Western Countries before because it may have serious implications with respect to few culturally sensitive issues such as some Japanese men who have not been abroad are not used to dealing with women as equals in a business setting.

..about their inquiry?

The foremost thing about their inquiry which I will like to know is the nature of relationship they are looking to establish with our company with respect to selling our products in Japan. For example, are they looking for some kind of manufacturing joint venture in Japan, or are they looking to take distributorship or license for our products. Such information will help us to present ourselves in a better and precise manner and will help us in coming to common ground with them.

One of the sources for finding such information will be the local Santa Clara office of the company. Further, internet can prove to be a useful source for finding more information about the company such as its web portal, its partners and vendor relationships as displayed over the website, press releases and third party comments available on the web, etc.

When starting business in Japan and entering into initial distributor contract negotiation, many foreign executives are probably unaware of the potential value of their products in Japan, but you can guarantee that the Japanese distributors on the other side of the negotiation will have a very good idea of the value. source: http://www.venturejapan.com/japanese-distributors.htm

If you are doing business in Japan with a Japanese distributor, then you absolutely must negotiate a strong agreement before starting in the Japanese market.  Another issue to be aware of, and which if uncontrolled will have a significant impact on the final percentage of revenue you receive, is that the Japanese market is awash with multi-layered distribution channels.

Your Japanese distributor may in fact be a ‘master distributor’ who will pass your products through one or more layers of sub-distributors prior to it reaching its intended consumer or corporate buyer destination. In some situations its unavoidable – for example, if your distributor sells to a large Japanese company you can expect that the customer will mandate a trading company (usually one of it’s subsidiaries) to handle the purchase and take a 5% – 15% fee for its efforts.

source: www.venturejapan.com/japanese-contract-negotiation.htm

What do you want to highlight in the meeting with the V.P.?

As discussed in the above paragraphs, it is very important in Japanese business negotiations with a distributor to explain to them the potential value of our products in Japan. It is important to present them with some revenue forecasts with respect to sales in Japan.

First, you must know the Japanese value, not the US, UK, German, French or Italian value but the Japanese value of your product or service before you can negotiate a win-win relationship with a Japanese distributor. If you spent your first month doing business in Japan aggressively networking and information gathering you should have a pretty good idea of your product’s value. By comparing with your home market statistics you should also be able to extrapolate some reasonable revenue forecasts: idealized of course but an invaluable benchmark for contract negotiation with a Japanese distributor.

Armed with the results of your first month’s Japanese business analysis, you stand a good chance of convincing a reputable distributor that they should put your product into their lead portfolio and invest in aggressively promoting it. Your ability to assert the potential Japanese value of your product and your ability to defend that value will support your justifiable contract negotiation claims to require transfer fees calculated on net revenues, not on your home market price list. The result is that you have a chance to get the best possible distribution deal for your company and a deal that could only ever be bettered by a direct entry into the Japanese market using a Japanese subsidiary company or office.

source: www.venturejapan.com/japanese-contract-negotiation.htm

If things look positive in that meeting, what would you expect to happen at the next stages of the discussions?  Even if the things look positive in that meeting, Japanese generally take time time finalize their decision as the decision making process can be very slow for Japanese firms. I expect the Japanese trading firm to extensively discuss the issue within their group in order to arrive at the final

From the pre-meetings, to the informal parties, the Japanese style of doing business will take the shape of an intricate spider’s web, where few outsiders can fully understand the implications of what exactly is occurring. Japanese culture effects every aspect of daily life. The cultural tradition of Japan reflects a strong desire to be harmonious, efficient, and most important, to promote group solidarity, and this is best achieved by making decisions based on consensus. Robert Marshall elaborates by saying that, “…group decision making in Japan promotes unanimity in result through consensus” {Marshall},[p. 7].

source: http://www.earlham.edu/~consense/scott2.shtml

Comment to student: The above mentioned link is an excellent article on group decision making in Japan. Please read through it to gather more information on decision making in Japanese culture. How are your actions in this situation different from the situation in which you make the first move in order to find a licensee?

The actions in this situation is different from my first move because I have a more informed and better view along with a clear understanding of the Japanese business culture and negotiation process now. My first move was a sort of unorganized effort to explore the Japanese markets. This situation is different in the sense that I am now preparing myself for specific company which has already shown little interest in our products and are ready to explore more about our company.

It is very important to have clear understanding of Japanese culture, prevailign market conditions, information about the industry and knowledge of other peculiar characteristics before one can enter into a successful negotiation with a Japanese company. My initial failures have made me realize that in order to successfully conclude a deal with a Japanese company, one needs to present him in a manner that proves the value of our product with respect to Japanese market.

Japanese Business Culture Essay

The Study of Ikea’s Business Strategy Essay

The Study of Ikea’s Business Strategy Essay.

Price and promotion

Ikea is not only a furnishings market brand, but also a furniture brand. Through a series of operations, in people’s eyes, Ikea is not simply a purchase house ware places, it represents a way of life. In our mind, Ikea’s success not only depends on its integration of the trade, logistics, but it used to integrate the core idea of trade, logistics-lifestyle (Margonelli, Lisa 2002). As we said before: using Ikea’s products is just like eating McDonald’s, drinking starbucks coffee, becoming a symbol of a lifestyle.

Ikea’s management idea is “provide various kinds, beautiful and practical products, promising that most people can afford the household articles for use”. In Britain, Ikea position himself into the provider of the household articles for the mass. Because of its relatively low price and effective promotion, Ikea is well received by the low- and middle-income families.

Ⅰ. Pricing decision

According to Pratt, Alex, an key point to effective pricing is to find ways of placing yourself in the shoes of the customer, patient enough to spend the indispensable time to consider that what it is that they worth enough to cost, accordingly , then to build your pricing model(Pratt, Alex.

2007, p.20). Therefore, Ikea lists prices that are 30 to 50 percent lower than completely assembled competing products.

Ⅱ. Price strategies

It is the low price that based of Ikea’s ideal, business inspiration and conception (Kumar, Nirmalya. 2006). All the production of Ikea is involved the basic idea that low price can make household items, various in kind, attractive and useful, reached by everybody. So Ikea is always emphasizing the strategy of low price (Åsa Thelander 2009). Thus, it constantly strives to put every one thing to do better through more simple and efficient way, in order to make it more cost-effective. It is difficult to set at a very low price by the designers themselves to finish a designing,. Behind Stylist, there is a team, which is consisted of designers, product developers, purchasing personnel, etc. These people cooperate together to determine the best solution in the range of cost, making various performance variables within the scope of the optimal solution. They debate about product designing, used materials, and choose appropriate suppliers.

Ⅲ. How to make low price

How to realize the strategy of low price while keeping the quality of the products is not only a slogan. Actually, low price strategy is put in effect throughout from product design to model, selection, OEM choice, logistics management design, store management and the whole process (De Melim, Rrchard 2007). Ikea’s designing concept is “the same price products, whose design cost less”. Ikea created “module” type of furnishings designing technique .Ikea furniture is divided into assembly goods, distributed into different modules and block designing. Different module can be based on costs in different area production; simultaneously, some module in diverse furniture can also be used (Brian Leavy 2004). Thus not only lower the costs, the entirety cost of products can also get reduced. To cut down the cost, Ikea makes a close cooperation with OEM, mainly manifested in two points: the process of merchandise design and the construction (De Melim, Rrchard 2007).

With the aid of the factory, it is possibly that Ikea has found cheaper substitute material, easier to lower the price of figure, dimension, etc. When product designing is completed, to persuade the OEM to invest the equipment, Ikea promised them a certain quantity of order (Burt, S, Johansson, U, Thelander, A 2010). So this factory is willing to purchase equipment for Ikea production. For Ikea, it saves investment. IKEA products are packed in flat packages, compact, which helps reduce transport costs and the direct reduction of carbon dioxide emissions from land transport (Eleanor R.E, O’Higgins 2003). The company seeks to transport products from suppliers to retailers by sea and rail. Therefore, the customers save some of fees and Ikea is saving cost and maintain the advantage of low price product.

Global production management and logistics system of Ikea is advantageous to reduce costs. In the aspect of product cost, Ikea not only cooperates with OEM supplier, but also encourages competition (Kumar, Nirmalya 2006). Ikea tend to take order presented to those manufacturers whose general prices are relatively lower – selecting suppliers for products in the Ikea, overall considering generally lowest cost. Each product is calculated according to the cost of central repository as a benchmark, and then based on each regional sale potential, Ikea selects suppliers, referring to quality, production capacity, and other factors at the same time.

With the purpose of further reduction of the price in the global scope, Ikea adjust its construction layout worldwide, it has nearly 2,000 home suppliers (including Ikea self-owned plant), and vendors will deliver various products from all over the world to the international central repository, followed by delivered from the midpoint to the malls for sale. Ikea also constantly adjust its manufacture orders in the global circulation owing to a variety of product sales with continuous changes,

Ⅳ.Communication and Advertising

Ikea’s communication is centered on the catalog, website and loyalty program Ikea. Printed in 28 languages, the catalog is has a worldwide circulation of 190 million copies, in 35 countries. In Europe, the catalog is delivered to 200 million people annually and has more than 300 pages, presenting more than 12000 products. It is distributed free in stores and by mail. IKEA also will release advertisement through room magazines and internet, as a source of information. In 2005 the IKEA site has attracted 125 million visitors from all over the world. The global site allows access to the other sites.

They both offer information about IKEA products, customer services and their availability in stores. Ikea pays much attention to the promotion of enterprise image. One of the communicating strategies is the emphasis of ecological protection to improve the enterprise image. With reference to a decade ago, Ikea started in a planned way to involve itself in the ecological protection affairs, including: material and market environment, suppliers, forest, products, transportation, etc.

Ⅴ. Sales promotion

Ikea has a relatively comprehensive sales approach, which includes online sales, one-stop procurement, sales calls, and cooperative sales and so on. The display in the store has rich skills, promoting purchase (Rosner, D. 2009). In the Ikea exhibition, the display unit is separated independently, respectively shows how to match different furniture to make unique effect. Unit display (function display) strategy is called “vivid marketing” (Profits and perils 2005), for the reason that this kind of demonstrates method is lively, displays of each product completely. On another aspect, “joint purchase” can be produced in this decoration, which is entire bedroom exhibition displaying rather than single display. As a result, the effect of “joint purchase” is easy to bring into being (Yang, Y 2009).

There are also other promotion skills. Taking gift card for example, for every £1000 you spend on an IKEA kitchen, you will get £100 back on an IKEA gift card. Besides, Ikea is also adept at “color” sales promotion. Ikea promotes dramatic combination with “red fiction”, “orange alliance” and “blue fondness” in the Spring Festival and Valentine’s Day period, making whole market filled with human kindness.

The advantage of these theme promotion is creating the derivative point with the use of theme built-up clientele imagine, transplanting the customer emotion on the Spring Festival and valentine’s day into the exquisite products of Ikea (Pratt, Alex 2007). It makes customers attach to its exclusive products implication for a long time. With the aim of making the whole store appear more lively and to let consumers obtain more profound genuine purchase experience, Ikea assorted more various products, designed different styles among examples, to fully displays each product in the field effect.

Margonelli, Lisa. 2002, ‘How Ikea Designs Its Sexy Price Tags’, Business 2.0, pp.106. Åsa Thelander. 2009, ‘A standardized approach to the world? IKEA in China Ulf Johansson’, International Journal of Quality and Service Sciences, pp.199-219. Brian Leavy.2004, ‘Outsourcing strategies: opportunities and risks, Strategy & Leadership’, Strategy & Leadership, 2004, Vol.32(6), pp.20-25. Profits and perils. 2005, ‘Nike, IKEA and IBM’s outsourcing and business strategies’, Human Resource Management International Digest, pp.15-17. Kumar, Nirmalya. 2006, ‘Strategies to fight low-cost rivals’, Harvard Business Review, pp.104. Burt, S, Johansson, U, Thelander, A. 2010, ‘Standardized marketing strategies in retailing? IKEA’s marketing strategies in Sweden, the UK and China’, Journal of Retailing and Consumer Services. De Melim, Rrchard. 2007, ‘Go green or pay the price’, Cabinet Maker, pp.9. Pratt, Alex. 2007, ‘The price is right (or is it?)’, Director (00123242), pp.20. Rosner, D. 2009, ‘Learning from IKEA Hacking: “I’m Not One to Decoupage a Tabletop and Call It a Day.”’, CHI2009: proceedings of the 27th annual chi conference on human factors in computing systems, VOLS 1-4 :
419-422. BOŞCOR, Dana, BRĂTUCU, Gabriel. 2009, ‘Transnational strategies adopted by furniture manufactories, Case study: Ikea’, Pro Ligno, pp.55. Yang, Y. 2009, ‘A Study on Novelty-Centered Business Model Based on Value Co-Creation of IKEA’, 2009 international conference on e-business and information system security, vols 1 and 2: 909-912. Eleanor R.E, O’Higgins.2003, ‘Global business means global responsibilities; Research: Global strategies – contradictions and consequences’, Corporate Governance, pp.52-66.

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The Study of Ikea’s Business Strategy Essay

Government Support of E-Business Essay

Government Support of E-Business Essay.

In this assignment I am going to explain how the government supports the development of e-business and I will use example to support my answers. Also I am going to produce a personal development plan to aid an individual to prepare for increased use of business online. Government e-commerce regulations about online business

The E-commerce Regulations apply to businesses which sell goods or services to businesses or consumers through a number of different ways. These can include though the internet, by email or Short Message Service.

Also the e-commerce regulation also includes advertisement through the internet, emails or SMS. The e-commerce regulations do not cover businesses who advertise through direct marketing by phone or fax. The regulations specify the vital information which businesses must give to customers when you sell online. The regulation provides several guidelines on advertising and promotions. “Commercial communications” must:

* Be clearly recognisable as such
* Say on whose behalf they are sent
* Clearly identify promotional offers and any qualifying conditions.

Government support for online businesses

The government currently offers free training and helpful advice to businesses who are adapting to online business. Business Link is the government’s online resource for businesses. Business links website is very helpful which provides individuals and businesses with advice for setting up, funding and many other things. Government support for staff in an online business

The government supports staff through providing employees with essential training such IT, maths and English qualifications. Learn direct provides individuals with these qualifications helping them to run their online business. Also there is a regulation such as the consumer protection distance selling regulations which is a type of protection applied to goods sold to a consumer by an individual through phone, mail order, the internet and digital TV. This regulation gives the right to receive clear information about the goods and a service being given before the 7 day cooling period is over. Security and data protection issues to be considered

Several issues needs to be considered, the data protection act 1988, this is a type of law that protects the processing of personal information which is held on identifiable individuals. Many businesses need to comply with this act if they need to process and handle their customers personal data, this means that the business must be very open and not secretive about the use of the valuable data and make sure that they follow the certain rules for processing the information. Businesses can get support for security and data protection from the Department for Business, Enterprise and Regulatory Reform which both offers online help and support.

How the Government has helped to prepare customers for an online operation of a business The government has helped significantly to prepare customers for the online operation of a business by providing them with guidance from many different government funded businesses such as business link which is a very useful website to use for businesses which are just starting out online. Their website provides each business with nearly everything which will support them with their first few months of trade as an online business.

Task 2- P7
Personal development plan- Unfamiliar issues when trading online
What training is needed?
IT training such as Microsoft office for programmes such as excel so that invoices and sales can be recorded on to a database. Microsoft word for any administrative letters can be created to send out to consumers and other businesses.

Emails can be improved by showing the correct way of how to address emails in a formal manner, this well help to increase the standard of communication between online customer relations.  Microsoft outlook for keeping up-to-date with customer orders and the day to day running of the company, any important notes and messages can be left securely on Microsoft outlook.  The companies own software- employees must be shown how to use any company software so that they can source for product information about any orders which comes through any employee can deal with it and get it shipped out as quickly as possible.

Searching for information on the internet, this is basically searching for the correct information which can help a business carry out their work. For example a home delivery company will need to search for customers addresses so that they know where they are going.

What will the employee do after they have completed the training?

Once the employee has completed the training courses they will become more multi skilled, this means that they will be able to carry out other activities within the business and become more confident when carrying out each job as they will know what to do.

What do I have to do to help me meet this training need?

The most important reason is to support each employee who is gaining extra training; this will make them more committed to carry out their job to the highest standard.
To meet this training need all the courses need to be arranged so that they don’t clash with any important meetings or arrangements. A certain number of employees must attend each class.
How long will it take to complete the training?
I think that the training will take a few months to complete, as the training could be spread out so that each topic is covered in detail.
How important is it this for the business and its development?
This is important to the business and for its development because their level of customer service will increase due to employees knowing what to do and customer’s orders can be dealt with accordingly. Searching for product information for enquiries can easily be done as they will know how to use the company software to search the database.

Whose support maybe needed to ensure that I am successful in my training?
Business link will be a good support which will be needed if the training courses are successful as they provide you with extra information and advice on what you can do next.
Also employees will be good supports as I am provide training courses for their benefits and for them to become more successful in their workplace. They need to know why I am providing the training courses and how it will affect their work.

What difficulties might I have to overcome to be able to carry out this training?
Employees may not want to attend the training courses so they won’t be able to carry out any extra work. To overcome this I may have to advertise the training courses and people who want to learn extra skills can attend the courses.

In able to carry out the training it may have to be in employee’s spare time as the company may not be able to accommodate these courses during the working day as there won’t be enough staff there to carry out the day to day activities.


Overall in this assignment I have explained how the government supports the development of e-business, I have given some examples to support each point. Also I have produced a personal development plan to help an individual prepare for the increase use of e-business.


http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075385095&type=RESOURCES http://www.learndirect.co.uk/about/about-who/what-we-do/
Power points on Moodle
Richards, Catherine; Dransfield, Rob; Goymer, John. BTEC Level 3 National Business, Book 1. Harlow, Essex, GBR: Pearson Education Limited, 2010. p 421.
http://site.ebrary.com/lib/yeovil/Doc?id=10386311&ppg=431 Copyright © 2010. Pearson Education Limited. All rights reserved.

Government Support of E-Business Essay

Business Law Essay

Business Law Essay.

Question 1(a) The legal issue and problem in this question is whether Micky has a contract with Ureach Mobile Co. Section 11 of Contracts Act 1950 provides who are competent to contract, that is those who are of the age of majority according to the law to which she is subject, have sound mind, and not disqualified from contracting by any law to which he is subject (KrishnanL, RajooL, & VergisA.

C,2009). On the other hand, the Age of Majority Act 1971 states that the age of majority is 18 years and above, and anyone below that age would be regarded as a minor (LeeMeiPheng & IvanJeronDetta, 2009).

Thus, Micky, who is 17 years old, is regarded as a minor and is not competent to enter any contract. The general rule states that the contract entered into by a minor is not binding on him, that is void ab initio (KrishnanL, RajooL, & VergisA. C, 2009). In the Mohori Bibee v Dhurmodas Ghose (1903) case (KrishnanL, RajooL, & VergisA. C, 2009), the plaintiff loan a sum of money to the respondent, a minor, that secure on a house which was leased to the appellant (SlideShare Inc, 2012). Following that, the minor filed a suit to set aside the mortgage (KrishnanL, RajooL, & VergisA. C, 2009).

The council held that the contract is formulated with a minor is void (Reporter, 2010). Besides that, the Tan Hee Juan v Teh Boon Keat (1934) case (KrishnanL, RajooL, & VergisA. C, 2009), the plaintiff Tan Hee Juan had transferred ownership of a piece of land to the defendant Teh Boon Keat. The court held that the contract was void and ownership of the land had to be returned to the plaintiff. Plaintiff Tan Hee Juan who is a minor said that contract that involved a minor is said to be void. So, there is no contract at all (SlideShare Inc, 2012).

Thus, based on the rule and these cases, the contract entered into by Micky with Ureach Mobile Co for a 12-month smart phone plan is not binding on him. However, there is an exception to that because the contract he entered could be a contract for necessaries. An example of exceptions to the general rule is the contracts for necessaries. In Section 69 of Contracts Act 1950, if a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with the necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be eimbursed from the property of such incapable person (LeeMeiPheng & IvanJeronDetta, 2009).

There are 2 fold tests to determine if a contract entered by a minor is a contract to necessaries. Firstly, the status of status, at which if the subject matter suits the minor’s station of life, such as his family background, the contract is binding on him. Secondly, the test of need, whereby if the minor already has enough supply of the item in question and it is not a need to him, the contract is not binding on him. In the Nash v Inman (1908) case (KrishnanL, RajooL, & VergisA. C, 2009), Nash entered into a contract to supply Inman with 11 fancy waistcoats. Inman was a minor who was already adequately supplied with clothes by his father.

When Nash claimed the cost of these clothes Inman seek to rely on lack of capacity and succeeded at first instance. The court held that ‘An infant, is incapable of making a contract of purchase but if a man satisfies the needs of the infant by supplying to him necessaries, the law will imply an obligation to repay him for the services so rendered, and will enforce that obligation against the estate of the infant.

So the contract is void (ClarkeJ, 2010). The general rule to this is that if the contract for necessaries is binding, the minor must pay a reasonable price, not the full contractual price stated. Based on the two fold test, the smart phone plan suits his status of status whereby in his station of life, he is a son of a wealthy entrepreneur. Besides, he needs the smart phone for his studies. In conclusion, the contract is a contract for necessaries and is binding on Micky. He needs to pay Ureach Mobile Co a reasonable price, not the full contractual price of RM1500.

If he does not pay, he can be blacklisted by the company. Question 1(b) The legal issue and problem is whether Micky has a contract with the State government. According to Section 11 of Contracts Act 1950, those who are of the age of majority according to the law to which he is subject, have sound mind, and not disqualified from contracting by any law to which he is subject, are competent to contract (KrishnanL, RajooL, & VergisA. C, 2009). Besides, the Age of Majority Act 1971 states that the age of majority is 18 years and above, and anyone below that age would be regarded as a inor (LeeMeiPheng & IvanJeronDetta, 2009).

Micky, who is 17 years old, is regarded as a minor and is not competent to enter any contract. Based on the general rule, the contract entered into by a minor is not binding on him and is void ab initio (KrishnanL, RajooL, & VergisA. C, 2009). In the Mohori Bibee v Dhurmodas Ghose (1903) case (cch), the plaintiff loan a sum of money to the respondent, a minor, that secure on a house which was leased to the appellant (SlideShare Inc, 2012). Following that, the minor filed a suit to set aside the mortgage ((KrishnanL, RajooL, & VergisA. C, 2009)).

The council held that the contract is formulated with a minor is void (SlideShare Inc, 2012). Other than that, the Tan Hee Juan v Teh Boon Keat (1934) case (cch), the plaintiff Tan Hee Juan had transferred ownership of a piece of land to the defendant Teh Boon Keat. The court held that the contract was void and ownership of the land had to be returned to the plaintiff. Plaintiff Tan Hee Juan who is a minor said that contract that involved a minor is said to be void. So, there is no contract at all (SlideShare Inc, 2012).

Thus, the contract entered into by Micky with the State government for a state loan should not be binding on him. However, there is an exception to that because the contract he entered is a contract of scholarship whereby loan is within the section related. Based on Section 4 of Contracts (Amendment) Act 1976, for scholarships or loans given by the government or a statutory body or an educational institution, the scholarship agreement entered into by a minor is valid (KrishnanL, RajooL, & VergisA. C, 2009).

For example, in the Government of Malaysia v Gurcharan Singh & Ors case (LeeMeiPheng & IvanJeronDetta, 2009). In conclusion, the contract is a valid contract of scholarship and is binding on Micky. He needs to pay the State government the amount he borrowed when it is due. Question 2 The problem or legal issue to this question is whether a valid contract is formed between June, Yuna and Joanne with Phil, and whether Phil is obliged to pay them.

In Section 2(d) of Contracts Act 1950, it is stated that when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise (LeeMeiPheng & IvanJeronDetta, 2009). Due to the section stated above, there is a consideration to constitute a contract between June, Yuna and Joanne with Phil, because as requested by Phil, the three students performed at his daughter’s wedding party.

However, Phil never promised them that he will compensate them in a form of payment for their performance. So, Section 26(b) of Contracts Act 1950 is not applicable, in which a promise by a promisor to compensate the promisee for something the promisee has already done for the promisor, or for something which the promisor was legally compelled to do, is not void even though there is no consideration. (KrishnanL, RajooL, & VergisA. C, 2009). For example, Stilk v Myrick (1809) (KrishnanL, RajooL, & VergisA. C, 2009), two sailors out of eleven deserted a ship and from that the captain of the ship promised to pay rest of the crew extra money if they sail the ship back. However, he refused to pay.

It was held that the captain need not pay them because they were already bound by their contract to sail back thus promising to sail back in this situation is not considered a valid consideration (Law Teacher, 2012). Phil, also, never had the intention to create legal relations with the three music academy students because he is merely giving them an opportunity to practise in public.

It is generally stated about what constitutes intention to create legal relations, that is whereby an agreement reached between an offeror and an offeree will be a legally binding contract only if the parties intended that they should be legally bound (KrishnanL, RajooL, & VergisA. C, 2009). For social and domestic agreements, there is a presumption that these agreements are not meant to be legally binding unless the contrary can be proven. An example of these agreements is between friends or remote members of the family (KrishnanL, RajooL, & VergisA. C, 2009).

In June’s case, Phil is her uncle, who is a remote member of her family, and the agreement between them can only be regarded as a social and domestic agreement that not meant to be legally binding. As for business and commercial agreements, there is a presumption that there is intention to create legal relations and is regarded as legally binding because they are more formal in nature unless the contrary is proven (KrishnanL, RajooL, & VergisA. C, 2009). For example, as shown in the Edwards v Skyways (1964) case, a pilot was laid off and informed that he would be given an ex gratia payment. He sued when he failed o receive the payment.

The court held that this agreement relates to business matters and is binding. The words “ex gratia” are simply to indicate that the party agreeing to pay does not admit any pre-existing liability on his side (Law Teacher, 2012). . The performance by June, Yuna and Joanne in Gaya Street Sunday Market to entertain tourists and visitors are not profit seeking thus their performance is not considered as a business situation and the agreement made by them with Phil would not be regarded as a business and commercial agreement. In conclusion, the contract between June, Yuna and Joanne with Phil is not valid.

Phil is not liable to pay them the RM600 that they want to claim from him. Question 3 The problem or issue that relates to this question is whether Ian can keep the properties that he received from Ah Yun prior to her death. The principles that being applied are Section 2(d) of Contracts Act 1950, stating that when or at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise (LeeMeiPheng & IvanJeronDetta, 2009).

Past consideration is where a promise is performed before the formation of the contract. For example, in the Lampleigh v Brathwait case, Braithwait request Lampleigh to get a pardon for him after Braithwait killed someone. Lampleigh got the pardon and gave it to Braithwait who promised to pay lampleigh ? 100 for his trouble. But Braithwait in fact never pay him. The court held that althought it is a past consideration, but the service requested by the promisor eventhough there is no amount of money mentioned, but it is clear that promisor enter to the agreement that he would pay.

So Braithwait should have pay (SlideShare Inc, 2012). Beside that, Section 26(b) of Contracts Act 1950 also relate to this case whereby a promise by a promisor to compensate the promisee for something the promisee has already done for the promisor, or for something which the promisor was legally compelled to do, is not void even though there is no consideration (KrishnanL, RajooL, & VergisA. C, 2009). Therefore, past consideration exists if Ian promised to look after Ah Yun, in which he did, and in return she transfers all her property to Ian to compensate him for what he done.

According to Section 26(a) of Contracts Act 1950 is state that if an agreement made without consideration is void unless it is expressed in writing and registered under the law (if any) for the time being in force for the registration of such documents, and is made on account of natural love and affection between parties standing in a near relation to each other (LeeMeiPheng & IvanJeronDetta, 2009). For example, the Tan Soh Sim, Chan Law Keong & Ors v Tan Saw Keow & Ors case, in her last moment Ms. Tan Soh Sim expressed her wish to divide her estate among her four adopted children.

Her sisters and brothers renounced their rights in favour of the adopted children of Tan Soh Sim but the court held that the four adopted children could not get it because the contract was made on account of natural love and affection which could not be made valid due to facts that the four adopted children are not in near relation to the deceased. If it is in the case whereby there is an agreement between Ah Yun and Ian made in account of natural love and affection, the agreement will be void because Ian is an adopted son, thus prove that they are not standing in a near relation to each other.

Kay, who is Ah Yun’s son, have every right to claim back all the property that Ah Yun already transferred to Ian but he should, representing his mother, compensate Ian for everything he did for Ah Yun or any advantages Ah Yun got from Ian prior her death, which is in relation to Section 66 of Contracts Act 1950, When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it (LeeMeiPheng & IvanJeronDetta, 2009).

In conclusion, If it is a past consideration, Ian can keep the property that Ah Yun transferred to him and If it is an agreement made in account of natural love and affection, the agreement will be void and Ian cannot keep any of the property given to him by Ah Yun but he can be compensated for looking after Ah Yun prior her death.

Business Law Essay

Why I Want to Study Business Administration Essay

Why I Want to Study Business Administration Essay.

Having been looking for a college that would suit me as a student athlete, I turned to some of my senior of my seniors would had already entered college and had gone through the same process. I got impressive feedback but it was not until I received an email from Coach Jason Shaver with a link to UCCS website that my eyes opened up to the school I have known that I would like to study Business Adminstration for a long time.

This was inspired by my first visit to the United States in 2010.

Inspired by a visit to the United States for the first time in 2010, I chose Business Admisntration as because it will allow me to establish skills and generate ideas for developing my home country Zimbabwe. , a third world country in southern Africa . I had a short list of things I considered ideal for myself ,i in terms of the type of college and what it had to offer ,for example small classes.

Let’s face the facts, I am coming from a different country with a different education system.

I would not want to be in a big class with over 90 students it just would not work . I need one to one smaller classes in order to track my progress and identify areas of improvement After reading up on USCC I was happy to find what UCCS’ Business Admiration has to offer. I have learned of many unique aspects in the curriculum which include accreditation by AASB and its assurance that this will deliver the best business education and preparation for graduates to excel in their careers.

I find the Business Ethics Initiative a necessity as it offers ethical principles into the personal and organizational decision-making process , which would be of great use in my career. Most importantly I find the services offered by UCCS’ Internship and placement office to be of massive assistance in my job search. With all this in mind, I chose to study Business Administration at UCCS because it is the perfect fit for me. The program has a lot to offer and I am assured of a high quality education

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Why I Want to Study Business Administration Essay

Mind Your Own Business Essay

Mind Your Own Business Essay.

What makes someone a successful entrepreneur?

It certainly helps to have strong technology skills or expertise in a key area, but these are not defining characteristics of entrepreneurship. Instead, the key qualities are traits such as creativity, the ability to keep going in the face of hardship, and the social skills needed to build great teams. If you want to start a business, it’s essential to learn the specific skills that underpin these qualities. It’s also important to develop entrepreneurial skills if you’re in a job role where you’re expected to develop a business, or “take things forward” more generally.

It’s very easy to get lost trying to rate ourselves against our peers or even rate ourselves around society when it comes to success. Its actually depressing at times and inconclusive as you often get side tracked comparing apples to oranges. In our quest for success, we often look for some sort of ranking system to gauge how well we are doing and unfortunately decide to use others as the measure.

It is often an inaccurate scale as so many factors come into play, so many that it makes it unfair to compare yourself to others on any level. There are so many circumstances that dictate success it makes it impossible to find multiple people with identical circumstances to compare us to. Since we cannot compare ourselves to others, we must become our own competition and strive for perfection daily in order to move forward. We ultimately set the velocity at which we move. The results however are none that can be compared to others as every situation is as unique as the next.

The real point here is why do we worry about what others are doing if we ultimately shouldn’t compare ourselves to them. The answer is jealousy and should end immediately. If you are someone that often finds yourself worrying about what others are doing, how they are doing it and where their wealth comes from, then start minding your own business and instead focus your energy on yourself and your work which is what will get you there, not finding out if your neighbor is in the Mafia or indeed a real estate guru. The best way to check if you are yourself is to ask yourself if you often form conclusions when faced with an individual who has attained a higher level of monetary success. Do you often find yourself guessing that perhaps this person was given wealth from past generations or that they are involved in negative activities that have led to financial success?

One should rather focus our energy and efforts on our own growth and not criticize others whose level of success is above ours. If you find yourself in such a negative position where a friend or relative seems to feel that way, then identify them as one whose lack of effort and lack of motivation is ultimately going to be the reason they fail, and separate yourself from that energy instantly.

Defining Entrepreneurship

Some experts think of entrepreneurs as people who are willing to take risks that other people are not. Others define them as people who start and build successful businesses. Thinking about the first of these definitions, entrepreneurship doesn’t necessarily involve starting your own business. Many people who don’t work for themselves are recognized as entrepreneurs within their organizations.

Regardless of how you define an “entrepreneur,” one thing is certain: becoming a successful entrepreneur isn’t easy. So, how does one person successfully take advantage of an opportunity, while another, equally knowledgeable person does not? Do entrepreneurs have a different genetic makeup? Or do they operate from a different vantage point, that somehow directs their decisions for them?

Though many researchers have studied the subject, there are no definitive answers. What we do know is that successful entrepreneurs seem to have certain traits in common. Check for yourself if you have these traits:

•Interpersonal skills.

•Critical and creative thinking skills.

•Practical skills.

Optimism: Are you an optimistic thinker? Optimism is truly an asset, and it will help get you through the tough times that many entrepreneurs experience as they find a business model that works for them.

Vision: Can you easily see where things can be improved? Can you quickly grasp the “big picture,” and explain this to others? And can you create a compelling vision of the future, and then inspire other people to engage with that vision?

Initiative: Do you have initiative, and instinctively start problem-solving or business improvement projects? Desire for Control: Do you enjoy being in charge and making decisions? Are you motivated to lead others? Drive and Persistence: Are you self-motivated and energetic? And are you prepared to work hard, for a very long time, to realize your goals? Risk Tolerance: Are you able to take risks, and make decisions when facts are uncertain? Resilience: Are you resilient, so that you can pick yourself up when things don’t go as planned? And do you learn and grow from your mistakes and failures?

Interpersonal Skills

As a successful entrepreneur, you’ll have to work closely with people – this is where it is critical to be able to build great relationships with your team, customers, suppliers, shareholders, investors, and more.

Some people are more gifted in this area than others, but, fortunately, you can learn and improve these skills. The types of interpersonal skills you’ll need include: Leadership and Motivation: Can you lead and motivate others to follow you and deliver your vision? And are you able to delegate work to others? As a successful entrepreneur, you’ll have to depend on others to get beyond a very early stage in your business – there’s just too much to do all on your own!

Communication Skills: Are you competent with all types of communication? You need to be able to communicate well to sell your vision of the future to investors, potential clients, team members, and more.

Listening: Do you hear what others are telling you? Your ability to listen can make or break you as an entrepreneur. Make sure that you’re skilled at active listening and empathetic listening. Personal Relations: Are you emotionally intelligent? The higher your EI, the easier it will be for you to work with others. The good news is that you can improve your emotional intelligence! Negotiation: Are you a good negotiator? Not only do you need to negotiate keen prices, you also need to be able to resolve differences between people in a positive, mutually beneficial way. Ethics: Do you deal with people based on respect, integrity, fairness, and truthfulness? Can you lead ethically? You’ll find it hard to build a happy, committed team if you deal with people – staff, customers or suppliers – in a shabby way.

Critical and Creative Thinking Skills

As an entrepreneur, you also need to come up with fresh ideas, and make good decisions about opportunities and potential projects. Many people think that you’re either born creative or you’re not. However, creativity is a skill that you can develop if you invest the time and effort.

Creative Thinking: Are you able to see situations from a variety of perspectives and come up with original ideas? (There are many creativity tools that will help you do this.) Problem Solving: How good are you at coming up with sound solutions to the problems you’re facing? Tools such as Cause & Effect Analysis, the 5 Whys Technique, and CATWOE are just some of the problem-solving tools that you’ll need to be familiar with.

Recognizing Opportunities: Do you recognize opportunities when they present themselves? Can you spot a trend? And are you able to create a plan to take advantage of the opportunities you identify?

Practical Skills

You also need the practical skills and knowledge needed to produce goods or services effectively, and run a company. Goal Setting: Do you regularly set goals, create a plan to achieve them, and then carry out that plan? Planning and Organizing: Do you have the talents, skills, and abilities necessary to achieve your goals? Can you coordinate people to achieve these efficiently and effectively. And do you know how to develop a coherent, well thought-through business plan, including developing and learning from appropriate financial forecasts?

Decision Making: How good are you at making decisions? Do you make them based on relevant information and by weighing the potential consequences? And are you confident in the decisions that you make? Core decision-making tools include Decision Tree Analysis, Grid Analysis, and Six Thinking Hats.

You need knowledge in several areas when starting or running a business. For instance: Business knowledge: Do you have a good general knowledge of the main functional areas of a business (sales, marketing, finance, and operations), and are you able to operate or manage others in these areas with a reasonable degree of competence?

Entrepreneurial knowledge: Do you understand how entrepreneurs raise capital? And do you understand the sheer amount of experimentation and hard work that may be needed to find a business model that works for you?

Opportunity-specific knowledge: Do you understand the market you’re attempting to enter, and do you know what you need to do to bring your product or service to market? Venture-specific knowledge: Do you know what you need to do to make this type of business successful? And do you understand the specifics of the business that you want to start?


As a dreamer, you need to understand its significance and mind your own business. Never lose track of your vision for your life. Do not ever get so busy making a living that you forget to live your life.

Mind Your Own Business Essay

Four Phases of Business Cycle Essay

Four Phases of Business Cycle Essay.

Business Cycle (or Trade Cycle) is divided into the following four phases :- Prosperity Phase : Expansion or Boom or Upswing of economy. Recession Phase : from prosperity to recession (upper turning point). Depression Phase : Contraction or Downswing of economy.

Recovery Phase : from depression to prosperity (lower turning Point).

Diagram of Four Phases of Business Cycle

The four phases of business cycles are shown in the following diagram :-

The business cycle starts from a trough (lower point) and passes through a recovery phase followed by a period of expansion (upper turning point) and prosperity.

After the peak point is reached there is a declining phase of recession followed by a depression. Again the business cycle continues similarly with ups and downs.

Explanation of Four Phases of Business Cycle

The four phases of a business cycle are briefly explained as follows :-

1. Prosperity Phase

When there is an expansion of output, income, employment, prices and profits, there is also a rise in the standard of living.

This period is termed as Prosperity phase. The features of prosperity are :-

High level of output and trade.
High level of effective demand.
High level of income and employment.
Rising interest rates.
Large expansion of bank credit.
Overall business optimism.

A high level of MEC (Marginal efficiency of capital) and investment. Due to full employment of resources, the level of production is Maximum and there is a rise in GNP (Gross National Product). Due to a high level ofeconomic activity, it causes a rise in prices and profits. There is an upswing in the economic activity and economy reaches its Peak. This is also called as a Boom Period.

2. Recession Phase

The turning point from prosperity to depression is termed as Recession Phase. During a recession period, the economic activities slow down. When demand starts falling, the overproduction and future investment plans are also given up. There is a steady decline in the output, income, employment, prices and profits. The businessmen lose confidence and become pessimistic (Negative). It reduces investment. The banks and the people try to get greater liquidity, so credit also contracts. Expansion of business stops, stock market falls. Orders are cancelled and people start losing their jobs. The increase in unemployment causes a sharp decline in income and aggregate demand. Generally, recession lasts for a short period.

3. Depression Phase

When there is a continuous decrease of output, income, employment, prices and profits, there is a fall in the standard of living and depression sets in. The features of depression are :-
Fall in volume of output and trade.
Fall in income and rise in unemployment.
Decline in consumption and demand.
Fall in interest rate.
Contraction of bank credit.
Overall business pessimism.
Fall in MEC (Marginal efficiency of capital) and investment. In depression, there is under-utilization of resources and fall in GNP (Gross National
Product). The aggregate economic activity is at the lowest, causing a decline in prices and profits until the economy reaches its Trough (low point).

4. Recovery Phase

The turning point from depression to expansion is termed as Recovery orRevival Phase. During the period of revival or recovery, there are expansions and rise in economic activities. When demand starts rising, production increases and this causes an increase in investment. There is a steady rise in output, income, employment, prices and profits. The businessmen gain confidence and become optimistic (Positive). This increases investments.

The stimulation of investment brings about the revival or recovery of the economy. The banks expand credit, business expansion takes place and stock markets are activated. There is an increase in employment, production, income and aggregate demand, prices and profits start rising, and business expands. Revival slowly emerges into prosperity, and the business cycle is repeated. Thus we see that, during the expansionary or prosperity phase, there is inflation and during the contraction or depression phase, there is a deflation.

Four Phases of Business Cycle Essay

Business Environment in India Essay

Business Environment in India Essay.

1. How have businesses in India developed differently from their western counter parts?

India, from 1947 to 1991 followed the socialist system of industrial development, wherein the major industries were controlled by the state. The western countries have followed a policy of free market and capitalism during the same time period. The Indian economy was restricted by the License – Permit – Quota Raj, due to which the opportunities of developing new businesses were minimal. This policy insulated the Indian economy from the outside world , and led to monopolies in the public sector which were inefficient, similar to the U.

S.S.R. Post liberalisation, with removal of these restrictions, the businesses in India, free from the shackles of the permit system have grown as a fast pace with improving efficiencies. However several businesses, which could not cope with the competition, fell by the wayside.

The western economies have in the capitalistic environment, graduated from family run businesses to control by institutional investors to control by private equity firms in many cases, whereas, their Indian counterparts still have a large proportion run by family run businesses and institutional investors controlled by the government.

Many of the PSU’s in India which have survived the post – liberalisation opening up of the economy are monopolies in their respective markets and today are quite competitive on the global stage. The family run businesses compete fiercely with each other and look for opportunities in newer areas, including global markets. In the western world, there is a growing trend of consolidation with oligopolies emerging in almost all industries, which are being controlled by PE firms. Overall, India’s form of ownership has barely changed over the past decade. The division of profits made by family firms between those in their first, second and third or older generations has stayed pretty constant.

2. Why has Indian business developed in this way?

Indian businesses have developed this way mainly because of two reasons: 1. India followed the socialist policy post independence, which converted the British legacy to public run institutions, and followed a policy of nationalization whereby control of industrial output was controlled by the government. The license – quota – permit raj severely restricted the Indian entrepreneurs from developing new businesses. The family run businesses with deep pockets and good political connections expanded their sphere of influence from their core businesses into unrelated areas where they saw an opportunity to grow. With reforms taking place post 1991 in a gradual manner, many new and existing businesses managed very well to adapt to the changing environment, taking advantage of the technology advances which had already taken place in the western world.

2. With a largely agricultural based economy, the Indian government had focussed on related infrastructure, leading to a weak over all infrastructure for industry. This has led to difficulties in starting new businesses. Similarly, regulations involved in starting new businesses are severely restrictive and cumbersome which is discouraging to entrepreneurs

3. Will it continue to?

Major reforms in several areas are sorely required if Indian businesses and the Indian economy are to maintain the growth trajectory. If these happen, Indian businesses will transform into real global players in a few years. If reforms are soft-pedalled there is a very good chance the Indian business growth story will come to an early end.

4. Can the aspirations it has raised be met?

Yes, the aspirations it has raised can be met. There is every reason to believe that the decision makers in Indian governance recognize what needs to be done and will act accordingly, although not at the pace required. The overall momentum generated by India Inc. should carry it through the current set of problems it is facing. The pool of skilled professionals combined with a large population with a growing purchasing power will project India to the big league. The relatively slower growth rates in the developed economies will give Indian firms the opportunity to scale up to global level at a fairly rapid pace.

5. And is this new form of capitalism good for India—and the world?

The new form of capitalism called capindialism is good for India, at least for the coming generation. As India transforms into one of the largest economies of the world, the moderate growth rates as compared with China, and somewhat controlled, India will be able to protect itself and therefore the world from unexpected shocks. If the country maintains its current rate of growth it is expected to become the world’s third-largest economy sometime after 2030, and hundreds of millions of people will lift them out of poverty. The Indian businesses which survive the growth will be transformed into world class and be controlled indirectly by the Indian public.

Business Environment in India Essay

Strategic Business Objectives of Information System Essay

Strategic Business Objectives of Information System Essay.

We are in the age of information. Today there are more than 23 million managers and 113 million workers in the labor force depend on information system to accomplish their business in the United States of America. Information systems are essential to achieve strategic business objectives. Today’s global economy, transformation of industrial economies, transformation of the business enterprise, and the emergence of digital firm require information systems essentially in business. Information system is the pillar for excessing business today. In many businesses, survival and the ability to achieve strategic business goals is difficult without extensive use of information technology.

There are six reasons or objectives why businesses use information system:

Operational Excellence:

In any business improves its efficiency and accuracy of their operations in order to achieve higher profitability. Information systems are also important managers for achieving higher levels of efficiency and productivity in business operations. As an example I can include that Wal-Mart uses a Retail Link system, which digitally links its suppliers to every one of Wal-Mart’s stores.

as soon as a customer purchase an item , the supplier is monitoring the item , knows to ship a replacement to the stores.

New products, services, and business models:

Information system is one of the main elements for organization to create new products and services, and also a completely new business idea. Example, Apple inc transformed an old business model based on its iPod technology platform that included iPod, the iTunes music service, and the iPhone. Customer and supplier intimacy:

If a firm service its customers well, the customers normally respond by coming again and purchasing more products or services and firm can increased revenue and profits by that. The more a business engages its suppliers, the better the suppliers can provide vital inputs. These lower costs. Example: The Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of information systems and technology to achieve customer intimacy. They use computers to keep track of guests’ preferences, such as their preferred room temperature, check-in time, and television programs. There is another example; UPS got a tremendous result right after they introduced online tracking system. This made UPS the first choice of most of the target customers.

Improved decision making:

Many managers operate in an information bank, never having the right information at the right time to make an informed decision. These poor outcomes raise costs and lose customers. Information system made it possible for the managers to use real time data from the marketplace when making decision. Example: Verizon Corporation uses a Web-based digital dashboard to provide managers with precise real -time information on customer complains network performance. Using this information managers can immediately allocate repair resources to affected areas, inform customers of repair efforts and restore service fast.

Competitive advantage:

Only proper information system can make is possible to have important information about the competitors and ensure to have advantages from that. If a firm does not have the necessary information about its competitors, the firm could lose business. It is very important to have proper information about how the competitors how they are pricing and other things about the same products.


Business firms invest in information system and technology because they are necessities of doing business. These necessities are driven by industry level changes. Example: Citibank introduced the first automatic teller machine to attract customers through higher service levels, and its competitors rushed to provide ATM’s to their customers to keep up with Citibank. providing ATMs services to retail banking customers is simply a requirement of being in and surviving in the retail banking business. Firm turn to information system and technology to provide the capability to respond to these. I would like to conclude with my personal experience in my work place.

Olympic Industries Ltd which is one of the largest manufacturing company in Bangladesh. This company has a number of factories and office alone with a head office. The company used to has a customized program developed by its IT department but the managers were not happy with the performances of the program. Recently the industry successfully installed SAP (Systems Applications and Products in Data Processing) and the manager found the program really helpful. They got a keen controlled over the every part of the industry from the corporate departments to the production unites. It is like the company in controlled in just one switch. Which means for better business Information System is must.


Text Book
http://wiki.answers.com/Q/Why_are_information_systems_so_important_in_business_today http://www.ups.com/search/navigate?type=quick&results=25&view=both&match=ALL&query=dele%20very%20system&loc=en_US

Strategic Business Objectives of Information System Essay

Bidding on the Yell Group Essay

Bidding on the Yell Group Essay.

1. Introduction

Yell Group consists of two businesses that are operating across countries. Yellow Page is a classified directory business in the UK, while Yellow Book is an independent directory business in the USA. These businesses are currently owned by British Telecom which is under pressure to reduce its heavy debt load and had been wavering for months about the future of these two Yellow Pages divisions. Apax Partner and Hick Muse are two private equity firms that are interested in the acquisition of the Yell Group by using debt for a majority of the purchase price and equity for the remainder.

The deal is crucially important to both Apax and Hicks Muse because of its high visibility — simply by virtue of its size and complexity, it will leave its mark on the reputations of both PE firms. But the team faces a challenge when valuing a cross border business involved in the LBO. Not only are those business located in different markets, but they also are characterized by different growth rates and cash flow characteristics.

Furthermore, each business unit faces an immediate uncertainty.

2. Overview of LBO The Equity Sponsor borrows the debt portion of the purchase price, typically through public or private bonds and bank loans issued by the company and contribute the equity portion typically through a private fund. Debt is serviced and repaid with the company’s operating cash flows. The buyer later sells all or a portion of the company and realizes a return on its initial equity investment — Sale of Sponsor equity typically through an initial public offering or a sale to a strategic buyer or another LBO firm.

The LBO transaction focuses on cash flows generated by operations and the use of the cash to pay down debt, thereby increasing equity value. Additionally, improvements in operating performance can increase value. Assuming the enterprise value remains unchanged, as debt is repaid, value reverts to the equity holders, thereby generating equity returns. Through this cross-border LBO, our team wants to achieve three fundamental goals: a) Determining the enterprise value of Yell Group by measuring its ability to generate sufficient cash flows to meet required equity returns while complying with leverage parameters. b) Calculating financial ratios and other measurements to determine the balance sheet and credit impact of the LBO c) To justify whether they can get reasonable returns given financial projections and leverage assumption in the model. Our team is aim to use as much leverage as possible to minimize initial equity check and create an aggressive financing structure that can be effectively syndicated to the market.

3. Yell Operations

When valuing Yell, we find that Yell currently has two well-established business lines in two different markets. While the environment is different in each market, Yell’s business lines achieve somewhat steady cash flows that are on pace with market growth, even the OFT is expected to recommend the imposition of a limit on the annual increase in rates for advertising in the U.K. market. The projected EBITDA for both BT Yellow Pages in the U.K. and Yellow Pages USA combined are more than enough to cover the considerable interest expense. Furthermore, with the ambitious growth plan, Yellow Book hopes to capture much of the predicted market share gains. A good LBO candidate should have some characteristics on its business specific and industry specifics. That means, the underlying Yell fundamentals and competitive advantage should be much more scrutinized by the team. Indeed, BT Yellow Pages as a market-leader in the classified directory business and Yellow Pages USA as a market leader in the independent publisher of business directories.

Finally, shortly before Apax and Hicks Muse had initiated talks with BT executives about the future of Yell, the telecom giant had announced plans to pay down its debt, so this deal should be a fire-sale transaction, the sale of Yell is good for BT and its shareholders. However, BT Yellow Pages and Yellow Book USA represent two very different businesses. The U.K. business is subject to heavy regulation which will restrict the price. Thus the only way to expand profits is through the advertisement volume.

Unfortunately, the growth in the classified directories advertising market has been declining over the last few decades and will probably continue in this tendency even though the total advertising market has seen increasing growth. The potential good opportunities for this business could be the additional divisions that BT Yellow Pages owned. Prospective investment indicated these businesses are in the early stages. The U.S. market is an important source of new business for SMEs throughout the country and the independents are projected to increase their market share from 11% to 30% over the 2000 — 2005 period.

For Yellow Book, this growth is to be fueled by expansion efforts as launching new directories into contiguous markets and launching wide area books into cities without an independent presence. In terms of the industry life cycle, BT Yellow Pages is most likely in the late maturity / early decline stage while Yellow Pages USA was still in the growth phase. These factors combined with the buyers’ investment horizon will influence their exit strategy. Yell Group Ltd. provided Apax and Hicks Muse team with projections for both BT Yellow Pages and Yellow Book USA based on what a potential growth in the upcoming years.

Since Yell is trying to sell their business, we have to be careful about the assumptions used to come up with these projections. As a financial buyer, we tend to leave the day-to-day operations with management and thus would hope that they can meet their projections. These numbers should be viewed conservatively, as Yell would want to make the company look as attractive as possible to potential buyers. For BT Yellow Pages, their growth is dependent on the number of advertisements sold in a given year and the advertisements’ prices. Thus, as a potential buyer, these areas need to be scrutinized to come up with a reasonable projection. The growth rate (nominal) of advertisement volume from 2001 to 2007 may be as high as the rate of past years at 6.6%, and for SMEs, BT Yellow Pages were considered a “must buy”, since the yellow pages are their principal means of reaching customers in UK.

Yellow pages advertising expenditures tends to be more stable than other forms of media advertising and do not fluctuate widely with economic cycles. For advertisement prices, the trend is slightly increasing from 2001 to 2003 and flat thereafter. Yell’s management seems to be too optimistic here as the OFT is expected to announce its new recommendation for the following years soon. Since the cap is 6% below the inflation rate and the projections for inflation is 2.4% in 2002, 2.3% in 2003, and 2.0% thereafter, the advertising prices should be expected to show a decreasing trend. For example, the Weighted Average Advertisement Fee in 2002 should be 621.78 = 645 x (1 + 2.4% – 6%).

The year-over-year revenue growth for Yellow Book USA ranges from 10.0% to 15.0% with an average of 12.5% and a compound average growth rate of 12.4%. Organic growth in the US market is 4-5% and so the additional growth for Yellow Book USA must be coming from new market launches as well as increasing market share as an independent publisher. The growth rates seem quite aggressive and so additional new market launches may be required in years 2005 and 2006, currently not projected, to ensure that there is a buffer to hit revenue projections. It may make sense to also decrease the revenue growth rate to be more realistic and use yell’s projection as an upper limit case. We think it important to segregate organic revenues from new launch revenues and only apply an EBITDA margin to organic sales while separately adding in the impact of new launches in order to roll the two very different types of markets together.

This approach also affords an opportunity to give a more sophisticated treatment to operating income from new launches. We believe that a 17% EBITDA margin on organic sales is a more realistic target for 2002, improving at a 2% increase per year as business goes up until the 25% target rate is hit in 2005 and maintained thereafter. Capital Expenditure and depreciation also need to be reviewed as they are somewhat positively related, which means an increase in Capital Expenditure usually results an increase in depreciation and vice versa. Overall, the numbers for both markets should be viewed with skepticism as these are Yell’s projections and may not reflect the buyer’s expectations in terms of the growth in the market.

4. Transaction Assumption The following transaction assumptions must be considered at the beginning of LBO analysis:

a) BT Yellow Pages has its price adjusted for inflation as stated by the OFT. b) The U.K. discount rate is calculated using the comps Telefonica Publicidad e Informacion and Enriro. c) The U.S. discount rate is calculated using McLeod USA and World Pages. d) The model assumes the debt is held in the U.K. and the U.S. business line will have its cash flows converted to U.K. denominated pounds at the spot rate- For the base case, the terminal value growth rate of BT Yellow Pages is 3.47% which is a forecast of the compound average growth rate of FCF from 2002 to 2007 based on our projection. Sensitivity analysis should be applied to see how the growth rate of terminal value would affect the overall valuation. e) For the base case, the terminal value growth rate of Yellow Book USA is 4.3% which is the historical growth of the RBOCs. Sensitivity analysis should be applied to see how the growth rate of terminal value would affect the overall valuation. f) New launches in the U.S. are forecasted to return 5% EBITDA to Sales in the first year. This is a conservative estimate and sensitivity analysis should be applied to see how the EBITDA margin of new launches would affect the overall valuation. g) Once launched, the new markets are assumed to reach organic EBITDA margins in the following year. h) The risk premium of both markets is set as 6.5% and sensitivity analysis should be applied to see how the risk premium would affect the overall valuation.

5. Valuation Method

It is accepted that CCF valuation is widely used for LBO. WACC is not applicable here because the calculation of WACC assumes constant D/E ratio. Based on the debt repayment schedule, it is unlikely that the firm will be able to maintain a constant ratio. CCF is ideal for this transaction because the debt repayment schedule is known in advance. CCF separates the calculation into two parts: unlevered cash flow using unlevered cost of equity and tax shield using the unlevered cost of equity. For our calculation, CCF is more suitable due to the known debt repayment schedule and the more conservative valuation. Coming up with an accurate valuation becomes more complex when dealing with different currency of cash flows from cross border assets.

Yell’s two business line, BT Yellow Pages and Yellow Book USA, operates and generates revenue from their respective countries; therefore, we must look each asset as a separate part. We could do a separate valuation on each asset based on the home country’s currency and financial projections. To determine a representative discount rate, we used betas and Debt/EV ratios of comparable listed companies in Exhibit 10 from each region. For example, for Yellow Book USA, we only used betas and Debt/EV of comparable American firms and not European firms and we assume the risk premium is 6.5%. We also had to take into account difference in risk-free rates by looking at country-specific yield on 30 years Treasury Bills when calculating the cost of equity for each asset.

Depending on the capital structure, each asset may have tax benefit from tax-deductible interest payments. The interest tax shield must be calculated using the local country’s corporate tax rate; therefore, each business line may have different cost of debt. At Yell, we used the U.K. tax rate of 30% because the acquired company is incorporated in the U.K. thus everything is consolidated in pound. When building a valuation model, we also consider the growth potential of each asset separately as well.

We take into account the firm’s local business strategy, competitors, and overall market potential to develop a representative perpetuity growth rate. Once we get the enterprise values for both assets, we can then use the spot rate to convert the enterprise values into pound for comparison. All these factors play a vital role when forecasting revenue growth / free cash flows, determining the discount rate and eventually calculating a fair enterprise value for the firm. Using our pro forma assumptions and CCF valuation, the total acquisition fee is £2.09 billion (shown in excel). The U.S. business is valued and converted to the pound to reach a total valuation. These values include the 5% in transaction fees.

6. Sensitivity Analysis

Sensitivity is done on five major variables. The first variable is the terminal growth rate of the U.K. business since BT Yellow Pages represents a huge part of the total valuation (see excel file for the sensitivity of growth rate on BT Yellow Pages valuation). If the terminal growth rate is 5%, the total acquisition price with fees is £2.28 billion, compared to the £2.09 billion with the base case of 3.47% growth rate. The second variable is the terminal growth rate of Yellow Book USA. This scenario analysis doesn’t affect the overall valuation much as the Yellow Book USA only accounts for a small fraction of the overall valuation.

For the third variable, the analysis performed is the change in regulatory imposition when keeping the terminal growth rate of UK business at 3.47%. Currently the base case is that revenue decreases by the inflation subtracting 6% annually. The results are shown in Sheet ‘Sensitivity Tables’. When there is no regulatory imposition applied and the price grows with inflation, the acquisition price with fees is 3.01 billion. If they can negotiate with the UK government to reduce the rate to 5%, instead of 6%, the acquisition price with fees is 2.30 billion. It is highly sensitive to the change in regulatory imposition.

This implies there is significant upside if the regulatory imposition is lower than 6%. For the fourth variable, we change the projections of Yellow Book USA’s EBITDA margin of new launches in order to create a range where revenue projections are uncertainty. But there is not much of a difference among those valuations. The last scenario analysis performed is the risk premium for both markets, at the very beginning we assumed a 6.5% risk premium, but we also want to get a range of the valuation as the numbers changes. The results are from 2.4 billion to 1.85 billion. Overall, we are confident that the bid would be somewhere between £1.85 billion to £2.3 billion.

7. Conclusion For this financial acquisition, we are more opportunistic and thereby looking for value creation based on the assets itself in order not to overvalue the target firm and thus overbidding for the company. In addition, we are looking to expand its presence on the European LBO market. We viewed Yell as a compelling investment opportunity, particularly in light of the company’s growth potential, low valuation and leverage capacity. This deal will leave its mark on the reputations of both PE firms.

Bidding on the Yell Group Essay